Sitting of 2 July 1958

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

  TANGIER (MOROCCAN VISA REGULATIONS)
  Mr. Arbuthnotasked the Secretary of State for Foreign Affairs if he has now considered the petition extensively signed by members of the British resident community in Tangier, submitted to Her Majesty's Consul-General there, complaining of the inconvenience suffered by them under the existing Moroccan visa regulations; in view of the long-standing friendship between Great Britain and Morocco, what progress he is making in negotiating an agreement for the mutual abolition of visas; and if he will make a statement.
  The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): My right hon. Friend the Home Secretary and I have given careful consideration to the questions raised in the petition from the British resident community in Tangier. I am glad to inform my hon. Friend that instructions will shortly be sent to Her Majesty's Ambassador at Rabat to approach the Moroccan Government with a view to the negotiation of an agreement with Morocco for the mutual abolition of visas. In the light of the long-standing friendship between our two countries, I should welcome such an arrangement.
  Mr. Arbuthnot: Is my right hon. and learned Friend aware with what satisfaction his reply will be read by the residents of Tangier, who will be extremely grateful for the steps that he has taken?

  TELEVISION AND CINEMA FILMS
  Mr. Swinglerasked the Secretary of State for Foreign Affairs (1) on how many occasions his Department has
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  intervened to prevent the exhibition of films on television or in the cinemas for political or diplomatic reasons;
  (2) why his Department intervened to prevent the showing of the film "Holiday in Sylt" on Independent Television on 8th May.
  Mr. Selwyn Lloyd: The answer to the first Question is "None, Sir". The second Question therefore does not arise.
  Mr. Swingler: Is the Foreign Secretary then suggesting that the radio correspondents of practically all the Conservative newspapers, including the Daily Telegraph and the Daily Express, are liars? Is he aware they all reported that this film was withdrawn by Associated Rediffusion as the result of consultations with the Foreign Office and of representations received from the Foreign Office? Is the right hon. and learned Gentleman categorically denying and repudiating those reports, which were not denied at the time?
  Mr. Lloyd: I have no idea of the reports to which the hon. Gentleman is drawing my attention. If he will show me them, I will consider them. It is quite untrue that we intervened to prevent the showing of any film.

  UNITED NATIONS

    World Security Authority
    Mr. Pitmanasked the Secretary of State for Foreign Affairs when he intends to propose in the United Nations that a special commission be established alongside of, or as part of, the Disarmament Special Commission to study the transference of armaments to a world security authority, with a view to supervised and controlled total comprehensive disarmament, in view of the Government's suggestions in that respect.
    Mr. E. L. Mallalieuasked the Secretary of State for Foreign Affairs if he will take steps to sound opinion abroad with a view to implementing the suggestion of a world security authority with an international inspectorate backed by an international police force.
    Mr. Usborneasked the Secretary of State for Foreign Affairs if he will make a statement about the proposals recently made by Her Majesty's Government that

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    a world security authority should be created by the United Nations to enable complete disarmament to be enforced.
    Mr. Selwyn Lloyd: My right hon. Friend the Minister of Defence did not make any proposals. He suggested that we should think again about the feasibility of achieving comprehensive disarmament in a single step after due preparation. He examined what such an approach might involve. As my right hon. Friend also indicated, Her Majesty's Government's policy is to support the plan approved by the United Nations by 56 votes to 9 last autumn. That is not inconsistent with further thought being given to the feasibility of securing agreement on a more comprehensive plan. I am considering the suggestions made by my hon. Friend the Member for Bath (Mr. Pitman) and the hon. and learned Member for Brigg (Mr. E. L. Mallalieu).
    Mr. Pitman: May I thank my right hon. and learned Friend the Foreign Minister very much and warmly welcome the suggestion that Ministers of other nations besides our own defence Minister should begin to think in terms of this novel and potentially fruitful idea?
    Mr. Mallalieu: Is the Foreign Secretary aware of the very great encouragement which the statement of his right hon. Friend gave the other day to many of us who think that a world security authority offers the best hope of securing world peace, and will he press on in this direction and assure us that the whole Government will be behind him if he does?
    Mr. Lloyd: I am very much obliged to my hon. Friend the Member for Bath (Mr. Pitman) and to the hon. and learned Member for Brigg (Mr. E. L. Mallalieu) for what they have just said. My position is that it is certainly a matter to which further thought should be given, but, as my right hon. Friend the Minister of Defence was careful to point out, he was not making actual proposals. I think that would be premature.
    Mr. Bevan: Is the Foreign Secretary aware that most of us on this side of the House regarded the statement as a vague adumbration, neither precise nor novel?
    Hon. Members: Hear, hear.
    Mr. Lloyd: The right hon. Gentleman says that, but of course the statements are completely consistent with the Anglo-French plan of 1954.
    Mr. Usborne: If we are ultimately to get a paramount world authority, which I think everybody desires—[HON. MEMBERS: No."]—is it not probable that it will have to evolve, and would it not be a good idea if the present United Nations Emergency Force could be progressively replaced by a directly recruited United Nations constabulary? Would that not be a definite step in the right direction?
    Mr. Lloyd: I certainly agree with the hon. Member that this concept would have to evolve. The rest of his supplementary question is the subject matter of the next Question on the Order Paper.
    Mr. P. Noel-Baker: Since over the last eighteen months Her Majesty's Government have been saying in general terms that the United Nations should have some form of international force, will they propose at the forthcoming Assembly of the United Nations that a committee should be set up to study this matter in detail and to make proposals?
    Mr. Lloyd: The right hon. Gentleman did not hear what I just said. That is the subject matter of the next Question on the Order Paper.

    United Nations Force
    Mr. E. L. Mallalieuasked the Secretary of State for Foreign Affairs whether he will propose at the United Nations, or elsewhere, the creation of an individually-recruited permanent United Nations force; and whether Her Majesty's Government will, with the concurrence of the territory in question, offer a territory in the Colonial Empire as a permanent base for it.
    Mr. Selwyn Lloyd: As I informed the House on 19th February, Heir Majesty's Government hope that something of a permanent nature will develop from the United Nations Emergency Force, but we would like to await Mr. Hammarskjöld's report on the prospects of this before going further. The report is expected in the autumn. The second part of the Question does not therefore arise.
    Mr. Mallalieu: Has the right hon. and learned Gentleman's attention been

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    drawn to the statement of Mr. Hammarskjöld about the present United Nations observers in the Lebanon and how he is stated to have said that if they were to undertake any police work they would have to be much more numerous and well-equipped, and that the thing could not be organised in a hurry?
    Mr. Lloyd: That is quite true and quite consistent with Mr. Hammarskjöld's words when he said:
    "There is need for careful analysis and study of the U.N.E.F. experience in all its aspects in order to give the United Nations a sound foundation, should the organisation wish to build an agreed standby plan for a United Nations peace force that could be activated on short notice. … Steps have been taken for such a study to be undertaken in the Secretariat."
    It is the results of that study which we now await.

    Charter Review
    Mr. Awberyasked the Secretary of State for Foreign Affairs what proposals Her Majesty's Government intend to put forward at the United Nations with a view to amending the Charter in the light of the changes which have taken place in international and world conditions since the Charter was first agreed to.
    Mr. Selwyn Lloyd: The present position with regard to Charter Review is that the General Assembly of the United Nations last October confirmed a decision of the Charter Review Committee that it should remain in being and report to the General Assembly not later than its 14th Session, that is next year. The decision of the Charter Review Committee which consists of all members of the United Nations was unanimous except for the Soviet bloc, which abstained. The Soviet position was that any change in the Charter could only be for the worse. That remains the Soviet position. Her Majesty's Government would like to see the Charter amended in a number of respects, but I think we have to face the fact that, as the Soviet Government have a veto on any changes, we are wise to postpone the Conference until there is some sign of a change in the Soviet attitude.
    Mr. Awbery: Is the right hon. and learned Gentleman aware that his noble Friend the Earl of Home said in another place on 14th May that the Government would like to see a review of the United
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    Nations Charter—the right hon. and learned Gentleman himself repeated that this afternoon—and that that would lead to better international justice? What do the Government intend to do now to press for a review of the Charter?
    Mr. Lloyd: We are taking the wise course in waiting for a time because the Soviet Union, as a permanent member of the Security Council, has a veto on any changes. The Soviet Union said at the meetings of the Review Committee last year that she had every intention of exercising that veto and would not agree to any changes. We have to see whether we can arrive at a situation where the Soviet Union is likely to depart from that attitude.

  TERRITORIAL WATERS (FISHING ZONES)
  Mr. Wallasked the Secretary of State for Foreign Affairs what progress has been made in preparing for a conference of those nations interested in fishing in the North Atlantic, Arctic and North Sea areas.
  Mr. Awberyasked the Secretary of State for Foreign Affairs if he is aware of the confusion created by several nations taking unilateral action to change the three-mile limit for fishing purposes, in total disregard of the long-established rights of the fishing nations; and if he will make a further attempt to seek to bring about agreement by international machinery more comprehensive than a regional conference rather than wait until a trawler is arrested and the skipper prosecuted by one of these nations.
  Mr. Selwyn Lloyd: No progress has been made in preparing for a regional conference. I am aware of the confusion caused by unilateral actions to extend exclusive fishing zones; Her Majesty's Government strongly disapprove of such actions. The recent Geneva Conference on the Law of the Sea adopted a Resolution which requested the United Nations General Assembly to study, at this year's Session, the advisability of convening a second international conference. If this were agreed, Her Majesty's Government would make every effort to obtain international agreement on the breadth of the territorial seas and on limits for fishing purposes.
  Mr. Wall: Will my right hon. and learned Friend make it clear that Her Majesty's Government do not recognise the recent action of the Icelandic Government? Will he agree that the only alternative is a conference, and would it not be better to pursue the idea of a regional conference rather than one embracing the whole of the United Nations?
  Mr. Lloyd: We have made it absolutely clear that we will not accept unilateral declarations in this matter and that any changes must be arrived at by negotiation. There are three ways of negotiation, an international conference covering all the countries of the world, a regional conference, or bi-lateral negotiations. I am very anxious to arrive at a solution by any of those three methods.
  Mr. Awbery: Is the right hon. and learned Gentleman aware that only last week the Icelandic Government issued regulations widening the limit to 12 miles? Does that apply to 12 miles in the air as well as on the sea? What instructions is he giving to our trawlers—or does he intend to wait until a trawler is arrested and its gear confiscated before something definite is done?
  Mr. Lloyd: The regulations apply to fishing. Her Majesty's Government made their attitude perfectly clear in their declaration published some time ago when they first received intimation of the Icelandic intention. The regulations do not come into force until September and our hope is that in the intervening time we shall arrive at a mutually acceptable settlement by negotiation.

  CENTRAL EUROPE (RAPACKI PLAN)
  Mr. A. Hendersonasked the Secretary of State for Foreign Affairs, in view of the recent note of Her Majesty's Government delivered to the Polish Government rejecting the Rapacki Plan in its present form, whether it is now their policy not to have further discussions with the Polish Government on the plan prior to a meeting of the proposed Summit Conference.
  Mr. Selwyn Lloyd: The Note to which the right hon. and learned Gentleman refers makes it clear that Her Majesty's
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  Government do not regard the Polish Government's proposals as offering a solution to the wider issues which they raise. Now that we are engaged in preparatory talks with the Soviet Government which we still hope may lead to a Summit Conference, Her Majesty's Government do not contemplate a separate negotiation with the Polish Government.
  Mr. Henderson: In view of the Foreign Secretary's statement in a reply two or three weeks ago that Her Majesty's Government were willing to have discussions with the Polish Government either at a Summit Conference or in some other way, and in view of the delay in arranging the Summit Conference, is there not a good deal to be said for having further discussions with the Polish Government preparatory to the wider discussions which will obviously have to take place on this matter at the Summit Conference.
  Mr. Lloyd: I ask the right hon. and learned Gentleman to refresh his memory of the terms of our reply to the Polish Government in dealing with the Rapacki Plan. At present, I am certain that we are right not to envisage a separate negotiation.

  THE LEBANON
  Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether he will make a further statement on the situation in the Lebanon.
  Mr. Zilliacusasked the Secretary of State for Foreign Affairs (1) whether he will take the initiative in seeking to conclude an agreement between the permanent members of the Security Council interested in the Middle East, to wit, France, the United States of America, and the Union of Soviet Socialist Republics, on applying to the Lebanon the obligations of the Charter prohibiting interference in the internal affairs of members of the United Nations;
  (2) what communications have passed between the United Kingdom and the United States Governments, in pursuance of their joint membership of the military and subversion committees of the Bagdad Pact, relating to military action in the Lebanon in response to President Chamoun's request for help;

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  (3) what advice has been received from the Secretary-General of the United Nations, Mr. Dag Hammarskjöld, on the question of whether or not the situation in the Lebanon is to be regarded as the internal affair of that country.
  Mr. Brockwayasked the Secretary of State for Foreign Affairs what action Her Majesty's Government propose to take in regard to the Lebanon in view of the report by Mr. Hammarskjöld to the Security Council on his visit to the Middle East.
  Mr. Youngerasked the Secretary of State for Foreign Affairs if he will make a further statement on the situation with regard to the Lebanon.
  Mr. Swinglerasked the Secretary of State for Foreign Affairs what report he has received on the Lebanon situation from the Secretary-General of the United Nations; and what steps Her Majesty's Government will take, in view of such report, to relax tension in the eastern Mediterranean.
  Mr. Selwyn Lloyd: The Secretary-General of the United Nations has now published a report on the implementation of the United Nations Resolution debated on 11th June. It was issued on 28th June. The text will shortly be available in the Library and, in the meanwhile, I have arranged that extracts from it should be circulated in the OFFICIAL REPORT.
  A group of over ninety United Nations Observers is now deployed in the Lebanon. It is still too early to say whether this is adequate to fulfil the functions which were assigned to it by the Security Council Resolution. The Group is preparing a first report, which may be expected soon.
  I do not consider that the initiative suggested by the hon. Member for Gorton (Mr. Zilliacus) would help in view of the Resolution passed by the Security Council, for which the United States, France and the United Kingdom voted and upon which the Soviet Union abstained.
  We have had no communications with the United States Government pursuant to our joint membership of the Military and Counter-Subversion Committees of the Bagdad Pact, which have not discussed the matter.
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  It is the policy of Her Majesty's Government to do all within their power to see that the Security Council Resolution of 11th June is carried out. I would remind the House of the terms of the operative paragraph of that Resolution, which reads:
  "The Security Council … decides to despatch an observation Group to proceed to the borders of the Lebanon to ensure that there is no illegal infiltration of personnel or supply of arms or other material across the Lebanese borders."
  Mr. Henderson: Does the statement made by Mr. Dulles yesterday, that military intervention in the Lebanon was a policy of last resort, represent the policy of Her Majesty's Government? Are Her Majesty's Government in any way pledged to embark upon military intervention in the Lebanon even as a last resort?
  Mr. Lloyd: I have not seen the actual words of what Mr. Dulles said. I heard something of it on the radio this morning and I heard nothing with which I disagree. I have pointed out before that Her Majesty's Government would not act contrary to the Charter or established rules of international law. I would not disagree with what I heard of what Mr. Dulles said. We have received no request for military intervention from the Lebanon.
  Mr. Younger: Can the Foreign Secretary make that a little more precise? Can he assure the House that, apart from our general obligation under the Charter or under international law, we have not given any private undertaking which would fetter our complete discretion if we were to receive a request for intervention? Would we be quite free to take our decision then?
  Mr. Lloyd: We would certainly have to judge any request when it came, but it is not advisable to speculate about hypothetical circumstances.
  Mr. Bevan: Is it not true that the speculation is supported because of observations made elsewhere about military intervention being conceived of as an act of last resort? Would it not be better to back up the United Nations in this matter, having got a very good Resolution from the Security Council, rather than talk about alternative methods if that failed?
  Mr. Lloyd: I agree. All the talk about alternative methods has not come from me. It has arisen from the Question asked. I have said again and again that I believe that we have to give full support to the Resolution of the Security Council and ensure that the group is able to do the job given to it.
  Mr. Brockway: In view of the very considerable anxiety which has been caused by the massing of troops in Cyprus beyond the needs of security there and the indefinite reply which has been given from the Front Bench with reference to the statement by Mr. Dulles yesterday, will the right hon. and learned Gentleman make a categorical statement that Her Majesty's Government will not act in the Lebanon without the endorsement of the United Nations?
  Mr. Lloyd: I have dealt with that question again and again. I think I have made our position absolutely clear. I will not speculate about hypothetical circumstances, but I will give a pledge that we will not act contrary to the Charter or the established rules of international law.
  Mr. P. Williams: Is my right hon. and learned Friend aware of Press reports that there is danger to British subjects in the Lebanon? Will he give an assurance that whatever measures are necessary will be taken to defend the lives and property of these subjects?
  Mr. Lloyd: The question of the safety of British subjects is a matter that we have constantly and anxiously under attention.
  Mr. P. Noel-Baker: Has the right hon. and learned Gentleman seen reports in The Times and other newspapers that all the Western residents in the Lebanon are most anxious that there should be no intervention because they do not desire to share the fate of the British in Egypt eighteen months ago?
  Mr. Lloyd: I have read a great many speculations and reports, many of them having very little foundation.
  Mr. Zilliacus: In view of the Foreign Secretary's repeated assurance that the Government will take no action contrary to the Charter, will he give a definite assurance that there will be no military intervention in the Lebanon contrary to
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  the advice of the Secretary-General of the United Nations, which was to the effect that this is an internal affair of the Lebanon?
  Mr. Lloyd: We had all this last week. I said that the formula which I adopted was that which I believed any Government would adopt—I have said it again today—that we will not act contrary to the Charter or the established rules of inernational law.
  Mr. Swingler: Why will not the Foreign Secretary say that Her Majesty's Government will deal with the matter only under the authority of the United Nations? Is it not clear that any intervention, or threat of intervention, only worsens the situation in the Middle East? Why cannot he add to the assurance about the principles of the Charter that Her Majesty's Government will deal with the matter exclusively under the authority of the United Nations?
  Mr. Lloyd: Because there are certain other hypotheses and I do not think it profitable to speculate about them.
  Extract from the Secretary-General's second report of 28th June on the implementation of the Security Council Resolution of 11th June.
  As of 26th June, ninety-four officers from eleven countries were serving as military observers in the Lebanon. They have established a regular patrolling system of areas accessible and, since the implementation report of 16th June, have advanced further into areas outside Government control. Areas being regularly patrolled by the observer teams are the following:

  Around Tripoli and south of that city.

  The coastal road from Naquora to Demour, and roads branching off toward the interior;

  The Marjayoun area;

  The Chtaura area and north-east beyond Baalbec;

  The area north and east of Beirut and south of the city, except in the vicinity of Beit el Dine.

  Observer out-stations have been established in the following areas:

  Tripoli (with a sub-station at the Cedars),

  Chtaura,

  Zahle,

  Marjayoun,

  Saida, and at

  Saghbine south-east of Beirut.

  From these out-stations, patrol activities are extended into the surrounding countryside. Out-stations in several other places are now being established or are under consideration.
  In visiting areas outside Government control, the observers have met local leaders and have discussed with them freedom of movement in the Bekaa area north of Baalbec, the Chouf area south of Beit el Dine, and the area north of Tripoli. It was reported from the headquarters of the group on 25th June that for the time being further efforts at moving deeper into such areas were deferred at the following main points:

  The area north and north-east of Tripoli (where firing is in close vicinity and the roads are mined),

  The Beit el Dine area, and

  The North Bekaa area.

  The basic items of equipment for the observer teams are transport and communications, and arrangements have worked well for the delivery of jeeps and supporting transport at a rate compatible with the arrival in the area of the military observers. Thus, as of 26th June, there were seventy-four vehicles to ninety-four observers. A fully operating radio communication system has been installed for contact between the United Nations Observation Group in the Lebanon (UNOGIL) Headquarters, observer outstations and jeeps circulating within the areas assigned for observation.
  At the request of the Group, United Nations Headquarters has obtained two small helicopters. The helicopters arrived in Beirut on 23rd June and, with Norwegian pilots, are now in operation, Four light observation planes have also been requested and will be on hand soon, These, as the helicopters, will be used solely for aerial observation in pursuance of the group's task under the Security Council resolution. The Governments of neighbouring countries have been notified by the Secretary General of these observation flights over Lebanese territory in the proximity of the borders.
  Arrangements have been made by the group for receiving from the Ministry in charge of relations between the Government of Lebanon and the group, written communications on cases which the Lebanese Government desires to bring to the attention of the group. The group in turn submits these to independent study through its own means and in the light of supporting evidence provided. The group has received information concerning prisoners, said to be Syrians, taken by the Lebanese authorities. Such prisoners, when made available to the group, are being interrogated by the executive member of the group, Major General Bull, with the assistance of qualified military observers, concerning matters covered by the Security Council resolution.

  YEMEN (DIPLOMATIC REPRESENTATION)
  Mr. Sorensenasked the Secretary of State for Foreign Affairs whether the appointment of a British Minister in the Yemen has received further consideration.
  Mr. Selwyn Lloyd: The 1951 Exchange of Notes between Her Majesty's Government and the Yemeni Government provided for the establishment of normal diplomatic representation between the two countries, but the Yemeni Government never agreed to accept a British Minister in Taiz and Her Majesty's Government have been represented there by a Chargé d'Affaires. Since the expulsion of our Chargé d'Affaires in February, his assistant has been in charge of the Legation. I have nominated a new Chargé d'Affaires and in June asked the Yemeni Government for a visa. I am now waiting for a reply from them.
  Mr. Sorensen: Can the right hon. and learned Gentleman say whether the nominated Chargé d'Affaires is, in fact, the acting Chargé d'Affaires there?
  Mr. Lloyd: No, Sir.
  Mr. Sorensen: Can the right hon. and learned Gentleman say when the Chargé d'Affaires is likely to take over his duties.
  Mr. Lloyd: It depends on the visa.

  MIDDLE EAST (SLAVE TRADE)
  Mr. Sorensenasked the Secretary of State for Foreign Affairs what further information he has concerning commerce in slaves in the Middle East; and what action the Royal Navy is taking in intercepting this.
  Mr. Selwyn Lloyd: Her Majesty's Government have no reason to believe that there has been any increase in the scope of the slave trade in the Middle East. As the hon. Member is aware, this trade has been abolished either by treaty or by law in all Middle Eastern territories for whose international relations Her Majesty's Government are responsible. With regard to action by the Royal Navy, Her Majesty's Ships passing through the Red Sea or stationed in the Persian Gulf have general instructions to search craft suspected of carrying slaves but there have been no incidents connected with slave trading for a number of years.
  Mr. Sorensen: Is the right hon. and learned Gentleman aware that there is very strong suspicion that some kind of

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  slave raiding or slave trading still takes place? Has he had any evidence of this in recent months?
  Mr. Lloyd: I should like to have a specific Question on that subject. My impression is that we have no definite evidence. There is suspicion, but we have no definite evidence.
  Mr. Younger: As I understand that no permanent supervisory machinery was set up under the recent Convention, is the right hon. and learned Gentleman satisfied that some machinery exists for giving the information, or is he relying upon chance to bring it to his notice?
  Mr. Lloyd: The right hon. Gentleman will remember that we did not get our way with enforcement measures under the international convention. I admit that I do not think the machinery is satisfactory.

  NUCLEAR PLANTS (FISSILE MATERIAL)
  Mr. P. Noel-Bakerasked the Secretary of State for Foreign Affairs what proposals Her Majesty's Government have made for the establishment by the International Atomic Energy Agency of the system of permanent inspection of nuclear plants to prevent the use of fissile material for military purposes, as provided in Article 12 of the Statute.
  Mr. Selwyn Lloyd: It is for the Agency's Secretariat in the first instance to make proposals on the methods to be used in implementing the safeguard provisions in the Agency's Statute, but Her Majesty's Government will be glad to make available to them the fruits of our own technical studies on this subject.
  Mr. Noel-Baker: Since we and other nations are now supplying nuclear reactors to Italy and many other nations, will not the whole purpose of the Statute of the Agency be frustrated unless action is taken very soon? As a member of the Agency, cannot Her Majesty's Government put forward practical proposals?
  Mr. Lloyd: I am sure that the right hon. Gentleman knows that the safeguard provisions in the Agency Statute were a compromise between those of the United Kingdom and the United States, who wanted strict safeguards, and those of the
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  Soviet Union and India, who opposed strict safeguards. In the light of the compromise which has resulted in the Statute, I think we are wise to wait some time for the Agency itself to take the initiative.
  Mr. Noel-Baker: In view of the great urgency of this matter, is it not desirable that Her Majesty's Government should at least ensure that the Agency is taking some action and that work is going on?
  Mr. Lloyd: Certainly, Sir; but, in order not to give a false impression so far as the Agency is concerned, I would point out that it will be some considerable time before any reactor can come into operation.

  GENEVA CONFERENCE OF EXPERTS (NUCLEAR TESTS)
  Mr. A. Hendersonasked the Secretary of State for Foreign Affairs whether, in view of the recent Note delivered by the Soviet Government regarding the proposed Conference of Experts to be held in Geneva, he will make a further statement on Her Majesty's Government's policy with regard to the conference.
  Mr. Hamiltonasked the Secretary of State for Foreign Affairs, in view of the refusal of the Russian Government to attend the proposed conference of technical experts to discuss the possibilities of nuclear disarmament and control machinery, whether he will make a statement on Her Majesty's Government's policy in regard to the future of the conference.
  Mr. Selwyn Lloyd: I am glad to say that the Conference opened in Geneva yesterday as planned.
  Mr. Henderson: Is it the view of the Government that if agreement were obtained at the Conference of Experts it would make a substantial contribution to the eventual cessation of all nuclear tests?
  Mr. Lloyd: I agree that it would make a substantial contribution.

  RUSSIAN TRAWLER, SHETLAND (REFUGEE)
  Mr. Grimondasked the Secretary of State for Foreign Affairs what answer has been received to his protest against

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  the landing on Shetland by Russian seamen in pursuit of a refugee.
  Mr. Selwyn Lloyd: I have not yet received a reply to the protest.
  Mr. Grimond: If it proves that the facts are as stated, was not this an intolerable intrusion of a type which the Russians would be the first deeply to resent if it happened to them? Will the right hon. and learned Gentleman and his colleagues look into the whole situation of the Russian fishing fleet in our waters? We are not averse to having the Russian fishing fleet off the Shetlands, where it spends a large part of the year, but would it not be as well to regularise its position and encourage it to use Shetland ports if it is to be there at all?
  Mr. Lloyd: In reply to the first part of the hon. Gentleman's supplementary question, I am inclined to agree with him. I think it better to await the reply to the protest. In regard to the second part, I will certainly give that further consideration.
  Mr. Woodburn: Will the right hon. and learned Gentleman in his negotiations try to persuade the Russians to allow our fishing fleet to go as near the Russian coast as they come to ours?
  Mr. Lloyd: There is a great deal in what the right hon. Gentleman suggests, but I think we are getting a little away from the Question.

  CZECHOSLOVAKIA (BRITISH DIPLOMAT)
  Mr. Hydeasked the Secretary of State for Foreign Affairs what information he has about the expulsion by the Czechoslovak authorities of the Second Secretary at Her Majesty's Embassy in Prague; and if he will make a statement.
  Mr. Selwyn Lloyd: On 3rd April, Mr. Bedford attempted to smuggle a Czechoslovak national, Mr. Machacek, out of Czechoslovakia. The Czechoslovak authorities declared Mr. Bedford persona non grata on 4th April. The circumstances surrounding the discovery of Mr. Machacek in the boot of Mr. Bedford's car at the Czechoslovak frontier make it clear that the whole
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  affair was a prepared trap. The subsequent charges of espionage only recently made against Mr. Bedford are unfounded.
  Mr. Hyde: Is my right hon. and learned Friend aware that his Answer will give great satisfaction in this country to those who are interested in British-Czechoslovak relations? Will he give the strongest repudiation to the suggestions that Mr. Bedford received money for his attempted smuggling feat and that he was engaged in espionage activities?
  Mr. Lloyd: I think I have already covered the point about espionage. We have no evidence at all that Mr. Bedford received money.
  Mr. Bevan: If any effort is to be made on behalf of people wishing to escape in the boots of cars, might they not consult M. Soustelle?

  EMPLOYMENT

    International Labour Office (Report)
    Mr. Brockwayasked the Minister of Labour what conclusions Her Majesty's Government have reached on the recommendations of the Report on Unemployment, prepared for the International Labour Office, that Governments should proceed with advanced planning to forestall unemployment, including a programme for the production and export of large quantities of capital equipment and an expansion of international monetary reserves.
    The Minister of Labour and National Service (Mr. Iain Macleod): The International Labour Office Report on the World Employment Situation has not yet been referred to Governments for their consideration.
    Mr. Brockway: While it is clear that European nations are able to withstand the effect of a recession in America more effectively than in the inter-war years, is it not the case that the danger has not passed? Will the Minister look at these recommendations when they are before the Government, especially those which urge greater investment at home and, particularly, in Colonial Territories?
    Mr. Macleod: Yes, we will certainly study them but, as my answer made clear, they have not yet been referred to Governments.
    Mr. Boardman: While it is rather late in the day to talk about advanced planning in connection with Lancashire's unemployment problem, may I ask the Minister whether he will do what he can to encourage his Cabinet colleagues to bring about diversification of industry in Lancashire in view of the fact that Lancashire's current problems arise out of the single fact of exporting capital goods to other parts of the world?

    Dundee
    Mr. G. M. Thomsonasked the Minister of Labour (1) what was the percentage of unemployment in Dundee at the most recent convenient date in June; and what was the ratio of unemployed to unfilled vacancies; and
    (2) if he will give an analysis of the unemployment figures in Dundee at the most convenient recent date in June, according to the lengths of time insured workers have been unemployed.
    Mr. Iain Macleod: For the Dundee and Broughty Ferry areas combined the percentage of unemployment at 16th June was 6·5. At that date there were about five unfilled notified vacancies in this area for every 100 persons registered as wholly unemployed.
    I will circulate in the OFFICIAL REPORT an analysis of the number of unemployed at 16th June according to duration of unemployment.
    Mr. Thomson: Is the Minister aware that the unemployment figures are continuing to go up and that the number of unfilled vacancies continues to go down? Has his Department made any estimate of when this trend is likely to cease?
    Mr. Macleod: No. The trend is a very worrying one indeed. There has, I think, been a small drop in the figure of wholly unemployed in Dundee, but that it more than counterbalanced by the serious increase in the number of temporarily stopped. It is one of the most serious of the individual problems. We shall do everything we can to help Dundee.
    The following is the analysis:

    NUMBER OF WHOLLY UNEMPLOYED PERSONS ON THE REGISTER OF THE DUNDEE EMPLOYMENT EXCHANGE AT 16TH JUNE, 1958

    Duration of Unemployment

    Males

    Females

    Total

    Up to 2 weeks

    371

    186

    557

    Over 2 and up to 8 weeks

    619

    355

    974

    Over 8 and up to 13 weeks

    303

    234

    537

    Over 13 and up to 26 weeks

    518

    362

    880

    Over 26 and up to 39 weeks

    271

    158

    429

    Over 39 and up to 52 weeks

    139

    80

    219

    Over 52 weeks

    410

    107

    517

    TOTAL

    2,631

    1,482

    4,113

    Note.—The Table above excludes persons registered as temporarily stopped. The number in that category in Dundee at 16th June was 1,638.
    Mr. G. M. Thomsonasked the Minister of Labour how many persons were registered at employment exchanges in Dundee as being jute workers and building trade workers, respectively, at the most recent convenient date in June; and what percentages of these were unemployed.
    Mr. Iain Macleod: At 16th June, 2,445 workers in the jute industry and 225 in the building industry were registered as unemployed in Dundee and Broughty Ferry. The respective percentages were 15·6 and 4·6.
    Mr. Thomson: Has the Minister's attention been drawn to certain exchanges during the debate on the cotton industry in which the Government made it perfectly clear that they regarded the present State trading in jute as a temporary measure which the President of the Board of Trade disliked intensely? Does he not agree that the Government ought to give an assurance to Dundee that there will be no further interference with this State trading in jute, which protects employment in Dundee, at least until alternative jobs have been provided?
    Mr. Macleod: I will certainly give an assurance that there would be no major change without discussions. If the hon. Member wishes to press the matter further than that, perhaps he will put a Question to the President of the Board of Trade.
    Sir J. Duncan: Is the figure of 15·6 per cent. a figure for jute workers employed

    1319
    in Dundee or a figure for jute workers employed in the jute industry, which involves the district outside Dundee?
    Mr. Macleod: The figure is for the jute industry.

    Married Women
    Mr. Allaunasked the Minister of Labour (1) approximately how many married women who go out to work are not covered for unemployment insurance; how many of these have lost their jobs this year; and whether he will include such persons in the official unemployment figures;
    (2) if he will estimate the approximate number of married women who have become unemployed in Lancashire cotton mills in the last three years but who are not included in the number of unemployed because they are not covered by unemployment insurance.
    Mr. Iain Macleod: It is estimated that about two-and-a-quarter million married women who go out to work are not covered by unemployment insurance. It is not possible to say how many of them have lost their jobs. They are included in the monthly statistics of unemployment if they register at the employment exchanges for other work.
    Mr. Allaun: Does the Minister agree that with 440,000 registered unemployed, plus all these married women unemployed, not to mention the hundreds of thousands on short time, we now have easily the highest figure of unemployed since 1939? Are we again to have eleven men for ten jobs, as is so cold-bloodedly advocated in certain quarters as a means to undermine the trade unions?
    Mr. Macleod: That is absolute nonsense, and I am sure that the hon. Member knows it. I think that he also makes the mistake of assuming that the married women are not included in the unemployment figures if they are not eligible for unemployment benefit. That is not so. The unemployment figures include all those who are applicants for work, whether or not they are entitled to benefit.

    Whitley Councils
    Mr. Leeasked the Minister of Labour what changes Her Majesty's Government propose in the method of
    1320
    operating Whitley Councils in industries in which the Government is the employer.
    Mr. Iain Macleod: I have nothing to add to the reply which I gave to the hon. Member on 27th November last.
    Mr. Lee: Does not the right hon. Gentleman agree that the present position is quite impossible? The trade unions take their case to the Whitley Council and, under the present method used by the Government, if there is an agreement there is no guarantee that it will be carried out. If they fail to agree upon that, the Government say that in fact there is not a failure to agree between the parties and will not allow the unions to go to arbitration. Is the Minister aware of the great delays which the unions in the National Health Service have had? Is he aware that their case has only just gone to the Industrial Court? It is no good giving to the Industrial Court powers of infallibility and then refusing to allow the employees to use it.
    Mr. Macleod: I think perhaps the hon. Member is a little confused in his supplementary question. I do not think the same considerations can in any way apply to Industrial Court awards as apply to agreements on Whitley Councils. Answering the question about the National Health Service Whitley Council, the Government are not the direct employers in that case, but the decision, which I am sure is right, to have a Ministerial veto, if it may be so described, was taken by the hon. Gentleman's own party.
    Mr. Lee: Perhaps I did not make myself clear. I am not confused on the issue. It is a fact, is it not, that the Government having refused to agree to the official side's agreement with the trade unions, those unions could not have a failure to agree registered and could not use arbitration? Subsequently months and months have elapsed and a new application has been made which now has to be taken to the Industrial Court. I am asking quite seriously that the right hon. Gentleman should make it possible either for agreements at the Whitley Councils to be ratified or for failure to agree to be registered and for the trade unions to have the right to go straight to arbitration.
    Mr. Macleod: I understand that point. I do not think it follows that because there was one disagreement, I admit very difficult and serious, the system is necessarily wrong. If one were to insist on the official side always having its way it would mean a very considerable re-organisation of the membership of the official side of the Whitley Council, and I do not think that that would necessarily be for the benefit of smooth working. That is why I have no proposals for altering it.

    London Dock Strike
    Mr. N. Pannellasked the Minister of Labour the number of man-days lost as a result of the recent unofficial strike at the London docks.
    Mr. Iain Macleod: The number of working days lost in the recent stoppage in the London and Tilbury docks is estimated at about 330,000.
    Mr. Pannell: Will my right hon. Friend confirm that this was one of the most serious dock strikes since the introduction of the Dock Labour Scheme?
    Mr. Macleod: Yes. It had a very serious effect. It is not always easy to compare strikes, but it was probably as serious a strike as we have had for about ten years.
    Mr. N. Pannellasked the Minister of Labour what steps he proposes to take to avoid a repetition of the recent unofficial London dock strike.
    Mr. Iain Macleod: Unofficial strikes are unquestionably a most serious problem, and one that from their nature are difficult to resolve by normal methods. Few if any of the suggestions sometimes put forward for lessening the risk of strikes have much relevance to unofficial stoppages where the main responsibility for avoiding such stoppages rests on the trade unions concerned.
    I have appointed a Committee of Investigation to examine the causes and circumstances of the meat transport dispute, itself an unofficial strike in which the unofficial London dock strike had its origin.
    Mr. Pannell: Would not my right hon. Friend agree that these irresponsible unofficial dock strikes, which are so damaging to the country's economy, are symptomatic of a deep malaise in the industry
    1322
    and call for urgent discussions between representatives of the employers and of the trade unions with a view to amending the Dock Labour Scheme?
    Mr. Macleod: No, I was more sympathetic with the beginning of my hon. Friend's supplementary question than with the end. This was a very serious strike indeed, and serious unofficial strikes are, of course, a curse to industry and disruptive of the authority of the unions. There had, however, been a considerable period of peace in dockland before this strike took place. Although there are aspects of the Dock Labour Scheme which I am discussing and in due course will bring to the attention of the House, I would not suggest a radical amendment.
    Mr. Robens: Would the right hon. Gentleman not agree that there is adequate machinery within the present scheme for consultation between the employers and the trade union? Would he not agree also that the trade union officials in all these cases have worked with him and through their other officials to bring peace to the industry and are themselves very much against unofficial strikes?
    Mr. Macleod: Yes, I would agree with what the right hon. Gentleman has said; but it is also true that all the efforts that the union made in this long dispute in dockland failed, and as a result we have had these particular difficulties.

    London Omnibus Dispute
    Mr. Bonham-Carterasked the Minister of Labour whether he will make a statement on the settlement of the bus strike.
    Mr. Iain Macleod: The strike was ended following an agreement between the London Transport Executive and the Transport and General Workers' Union, the terms of which I will circulate in the OFFICIAL REPORT.
    Mr. Bonham-Carter: In view of the statements which colleagues of the right hon. Gentleman have made outside this House about bus fares, would the Minister inform the House whether either he or his right hon. Friend the Minister of Transport will make a further statement on the settlement of the strike?
    Mr. Macleod: I am not sure that that point arises directly out of the Question, but the position as to fares has been made

    1323
    clear with the exception of what are called scattered sub-standard fares, about which there has been an announcement in the House. There is no intention of trying to recover the amount by a general increase in fares.
    Following are the terms of the agreement:
    1. Central Road Services drivers and conductors to receive an increase of 8s. 6d. per week with effect from the date of resumption of work.
    2. Green Line single-deck coach drivers to receive an agreed increase with effect from the date of resumption of work.
    3. A joint review of the wages of the excluded staffs to be carried out on the merits of the case. This review to start on the day before the resumption of work and to be completed not later than 1st July. Any increase agreed as a result of this review to be payable on and from 2nd July.
    In an endeavour to remove any misunderstandings concerning the intentions of the review and to assist in securing an agreed and orderly resumption of duty, the London Transport Executive and the union agree that the intention of the review will be to provide an upward trend in wage levels.
    In so far as the maintenance staffs are concerned, any increase arising from the review will not be less than an adjustment in wages which may be granted to London Transport Executive works staff and Railway workshops staff arising from the present negotiations. This is in line with normal practice.
    In so far as the Country Services staff are concerned, it is not the intention that any decision arising from the review shall leave the wages of such staff in an unfavourable position compared with other staffs inside the London Transport Executive Road Services or comparable grades elsewhere.
    4. Neither staff whose labour has been withdrawn nor staff who have reported for duty during the period of withdrawal of labour shall be prejudiced either by the Executive or by the union by their actions during this period. The Executive and the union to undertake to use their best endeavours to ensure that this agreement is observed in the spirit as well as in the letter.
    5. It is agreed that the schedules posted for operation on 30th April, 14th May and 25th June will continue to remain as the basis of operation on resumption of work. Having regard, however, to the present financial position of London Transport and to meet the needs of the public and the staff, London Transport Executive and Transport and General Workers' Union agree to jointly examine the whole operation of the bus services, with a view to the necessary adjustments being made to provide a service commensurate with public demand.

    Taunton
    Mr. du Cannasked the Minister of Labour how many persons formerly employed by British Railways in Taunton
    1324
    and at the Pool Wall, Taunton, shirt factory of Messrs. McIntyre Hogg and Marsh and Company, Limited, have sought new employment through the local offices of his Department; for how many persons new employment has been found; what prospects exist of finding further employment; and if he will make a statement.
    Mr. Iain Macleod: Thirty-six workers discharged by British Railways at Taunton at the end of May have registered for employment at my local offices. Of these, 32 have obtained other work and four men are still unemployed; 133 workers from McIntyre Hogg and Marsh have registered for employment, but of these only 83 have so far been discharged; 45 are known to have obtained other employment and 13 women, 10 of whom are available for part-time work only, are registered as unemployed. The prospects of finding other employment for the remaining workers are reasonably good, particularly if the women are prepared to consider work outside their usual trade.
    Mr. du Cann: Is my right hon. Friend aware that everybody concerned is most grateful for the efficiency of his local officers, but would he not agree that there is a certain disbalance in employment in Taunton which may possibly be rectified by the introduction of a small amount of selected industry?
    Mr. Macleod: Taunton is reasonably well off in comparison with many of the other serious problems that we have. It is true that within the limits of that situation there are certain problems in Taunton, and if we can help we will.
    Mr. F. Noel-Baker: Although Taunton may be relatively well placed, is the right hon. Gentleman aware that there is a good deal of anxiety among railway workers throughout the Western Region of British Railways, not least of all in my own constituency, about the prospects? Will the right hon. Gentleman keep a close watch on the situation and keep in touch with his right hon. Friend the Minister of Transport?
    Mr. Robens: Is it not the case that there is no intention at this stage of introducing any new industries into Taunton to meet the unemployment situation there?

    Office Facilities, Raunds and Irthlingborough
    Mr. Lindgrenasked the Minister of Labour whether his attention has been called to the growing unemployment within the Wellingborough Parliamentary Division; and what action he proposes to take in regard to the provision of facilities for registration and payment of benefits for unemployed persons living in Raunds, Irthlingborough and adjoining villages who now have to travel to Rushden because of the closure of local offices which previously existed at Raunds and Irthlingborough.
    Mr. Iain Macleod: The numbers unemployed in the Raunds and Irthlingborough areas are greater by 11 and six, respectively, than those on the basis of which it was decided to close these offices. The present numbers of unemployed are not large enough to justify their reopening.
    Mr. Lindgren: Even if the unemployment figures are not large in comparison with other areas, does not the right hon. Gentleman realise that when a person has to pay 2s. or 2s. 4d. in bus fares to register for unemployment and to collect benefit, this is a considerable sum to be deducted from the benefit? Will the right hon. Gentleman's Department be prepared to meet the cost?
    Mr. Macleod: No, I could not undertake to meet the cost. If that were done we would have to do it everywhere else. Of course, distance from an office is recognised in the conditions. That is to say, persons who live between four and six miles from the office are asked to register only once a week, and those who live over six miles away are dealt with by post. I will watch the situation, but these figures represent a very small increase indeed on the ones on which I took my decision.

    Fire Escape Certificates, Coventry
    Mr. Edelmanasked the Minister of Labour (1) whether he is satisfied that the City of Coventry Council carry out its duties under Section 34 of the Factories Act, 1937, in a satisfactory manner; whether the City Council in the course of issuing upwards of 400 fire escape certificates has issued certificates protecting the workers in the former shadow factories; for how many years
    1326
    his Department has accepted such certificates as valid; and at what date and for what reason it has now declared them invalid;
    (2) approximately how many people protected by the Factories Acts are employed within the City of Coventry in the former shadow factories; at what date since the passing of the Factories Act, 1937, his Department informed the City Council that the responsibility for surveying the fire exits and issuing the statutory certificates lay not with it but with Her Majesty's Inspectors of Factories; and how many certificates, protecting how many workers, Her Majesty's Inspectors have in fact issued;
    (3) how many Inspectors of Factories have been taken off other duties in order to undertake the detailed surveys formerly carried out by the City of Coventry Council since his Department informed the City Council that fire escape certificates issued by them for the former shadow factories, and accepted by his Department for many years, were invalid.
    Mr. Iain Macleod: I am fully satisfied with the work of the Coventry City Council in issuing fire escape certificates. The Council has issued certificates for former shadow factories. These were accepted as valid until September, 1956, when on legal advice the City Council was informed that these shadow factories were Crown factories and that the Factory Inspectorate was accordingly responsible for issuing certificates because of the provisions of Section 150 of the Factories Act, 1937. The factories concerned employ about 10,000. Three certificates have been issued by the Inspectorate for factories employing 450. Two factories employing 5,000 have been surveyed by the Inspectorate and certificates are being prepared. One factory undergoing structural alterations, and another which has just been re-built, which together employ over 3,000, will be surveyed by the Inspectorate at an appropriate time. Three factories employing small numbers will be surveyed as soon as possible. No inspectors have been taken off other duties to do this work.
    Mr. Edelman: While thanking the Minister for his reply, may I ask whether it is not the case that the Coventry shadow factories are, as experience has shown, highly vulnerable to fire? Is it not the case that thanks to the operations of

    1327
    management and workers and the successful operation of the certificate system by the experienced inspectors of the Coventry City Council, there has not been a single fatality in a factory fire in Coventry within memory?
    Is it not now the fact that, unfortunately, despite the wording of the Act, the lack of inspectors available to his Department may reduce the efficiency of the formerly effective inspection of those factories? In those circumstances, will not the right hon. Gentleman consider some form of amendment in order to restore factory fire inspection to the experienced staff of the Coventry City Council?
    Mr. Macleod: I cannot promise an amendment. I should have to amend the 1937 Act to do so. The Coventry standard is very high indeed, and I pay tribute to that. It is purely because of this legal point which came to light as a result of the drive and initiative after the Keighley fire fatality that this matter was discovered. I hope to push on as quickly as possible, and I also hope to see that the standard set by the Coventry City Council is fully maintained by the inspector.
    Mr. Lee: The right hon. Gentleman will recall that at the time of the Keighley fire we suggested that greater co-operation between the fire officers of the local authorities and the factory department would yield good results. Could the right hon. Gentleman say whether there is a closer liaison between the two bodies now?
    Mr. Macleod: Yes, I think there is. In this case, for example, there have been consultations between the City Council and the Inspectorate, and we are anxious to maintain the high standard which already exists.

    Cotton Textile Operatives
    Sir J. Barlowasked the Minister of Labour the total number of cotton textile operatives on employers' books compared with June, 1953.
    Mr. Iain Macleod: The available figures include office, etc., staffs as well as operatives. The estimated total number of employees in employment in the cotton industry in Great Britain at the end of April, 1958, was about 238,000 compared with 284,000 at the end of June, 1953.
    Sir J. Barlowasked the Minister of Labour what are the percentages of male and female cotton textile operatives wholly unemployed and the percentage of temporarily stopped workers, including in both cases married women who are not eligible for unemployment benefit.
    Mr. Iain Macleod: The numbers of wholly unemployed males and females in the cotton industry in Great Britain at 12th May, 1958, represented 2 per cent. and 1·2 per cent., respectively, of the estimated total numbers of male and female employees in the industry. The corresponding proportions temporarily stopped were 4·5 per cent. for males and 6·5 per cent. for females. Married women who are not eligible for unemployment benefit are included in the figure if they register at employment exchanges for work. It is not possible to take account of those who do not register at employment exchanges when they lose their employment.
    Sir J. Barlow: While thanking my right hon. Friend for his answer, may I ask him if he could tell me whether temporarily stopped workers are really those who have extended holidays?
    Mr. Macleod: No, Sir. The definition of temporarily stopped goes much wider than that, but the increase in the temporarily stopped in Lancashire is certainly one of the worrying aspects of the situation.

    Southampton
    Dr. Kingasked the Minister of Labour what was the number of unemployed in the Southampton district for the latest available date, and for the same date in 1957, 1956 and 1955.
    Mr. Iain Macleod: Two thousand, seven hundred and eighty-two at 16th June, 1958, compared with 1,461 in June, 1957, 1,303 in June, 1956, and 1,354 in June, 1955.
    Dr. King: Is the Minister aware that these figures reveal that serious unemployment has broken out at Harland and Wolff's and Thorneycroft's in the shipbuilding and ship repairing industry? Will he give some attention to the question of enabling firms of this kind to get ship repairing contracts, and will he

    1329
    especially look into the problem of the ship repairing work going away from this country to Europe?
    Mr. Macleod: Yes; these figures are steeper at Southampton than for most other ports in the country, and are getting on for double the figures of last year and the previous year. I should like to consider with some of my colleagues in the Government what the hon. Member has said in his supplementary question.
    Mr. Osborne: Would not my right hon. Friend agree that much of the ship repairing work is being lost because German firms do the job much cheaper than firms in this country? What stops can any Government take to stop Germans doing their work cheaper and, therefore, obtaining the work?

    Training Schemes
    Mr. Leeasked the Minister of Labour how many retraining schemes for unemployed persons are available through his Department; how many such persons are being retrained; and for which industries.
    Mr. Iain Macleod: On 10th March, 1958, there were 83 trades in which persons were being trained under the Ministry's Vocational Training Scheme. Training in a number of those trades is confined to the disabled. The number of trainees was 3,258. It is not possible to say how many of these were receiving retraining, but it is estimated that about 80 per cent. were unemployed before entering training.
    Mr. Lee: While we are very glad to hear these figures, may I ask the right hon. Gentleman if he would not agree that the functions of his Ministry must now turn more and more to the problem of retraining people who are unemployed? We are now in July, and we have very high unemployment figures, and surely all the seasonal factors have now disappeared? Therefore, does it not come down to the fact that we must seriously consider the retraining of people who are unemployed?
    Mr. Macleod: I think that in the main it has always been a point that retraining as such should be done in industry, and that follows logically from both the 1944 and 1948 Acts. I think that the services,
    1330
    useful though they are, should always be regarded as a supplement to the work which industry does itself.
    Mr. Leeasked the Minister of Labour to what extent there is co-operation between his Department, employers and trade unions in order to widen the scope for the retraining of workers whose jobs are disappearing as a result of technical changes.
    Mr. Iain Macleod: There have been no recent discussions between the Ministry and employers' organisations and trade unions with a view to widening the range of trades in which training facilities are available under the Vocational Training Scheme. The number of training places available and the range of trades are considered adequate to meet current requirements, but these arrangements are kept under review.
    Mr. Lee: Will the right hon. Gentleman agree that it is now essential to get the full co-operation of employers and trade unions in an effort to absorb people who are now losing their jobs through technical change, and will continue to do so in ever-increasing numbers? Is he aware that the Ministry could do a very good job by bringing employers and trade unions into consultation before really heavy unemployment comes about?
    Mr. Macleod: I have some sympathy with that, but I claim that we have that co-operation from both employers and the trade unions on this matter, which has been discussed on more than one occasion by my N.J.A.C., and I think they agree with the approach which I have outlined in my Answer.

    Labour Relations
    Colonel Beamishasked the Minister of Labour what consideration is being given to the establishment of a code of conduct controlling the relations between trade unions and individual wage earners, whether union members or not, with particular reference to legislation which would protect the individual against discrimination or victimisation.
    Mr. Iain Macleod: I am aware that there is public concern, which of course I share, both within and outside the trade union movement, at the instances of victimisation and discrimination which occur from time to time. But I doubt

    1331
    whether new legislation or a code of conduct would achieve the object, which no doubt my hon. and gallant Friend has in mind, of ensuring harmony in industry and between individuals.
    Colonel Beamish: Is my right hon. Friend aware that, in spite of the fact that a number of responsible and respected trade union leaders have recently spoken up strongly against these malpractices, they do unhappily still exist? Has not the time come when we should ask ourselves whether moral condemnation is enough or whether it ought to be backed up by some legal sanction?
    Hon. Members: Meaning what?
    Mr. Macleod: I do not see how we can make men wiser or behave better towards their fellow men by law. Of course, this is a very serious problem indeed. I am merely saying that I do not think that legislation is the answer to it. We can impose such a code, but I do not see how we can enforce such a code, especially against unofficial action.

    Rabbit Trappers
    Sir W. Anstruther-Grayasked the Minister of Labour how the number of men presently employed in rabbit destruction compares with the figure four years ago, giving separate figures for Scotland.
    Mr. Iain Macleod: I regret that this information is not available.
    Sir W. Anstruther-Gray: Could my right hon. Friend not make some attempt to obtain that information so that it may be seen whether there is a sufficient pool of trappers available for any increase of rabbits which may take place?
    Mr. Macleod: I am told that the difficulty is that one cannot distinguish rabbit trappers in the statistics from other workers in agriculture. It is probably true, however, that there has been a considerable decrease over the last few years in the number employed.

    Motherwell and Wishaw
    Mr. Lawsonasked the Minister of Labour (1) what is the number of registered unemployed for the Burgh of Motherwell and Wishaw at the latest convenient date; and at the comparable date in 1957; and
    1332
    (2) how many of the registered unemployed in the Burgh of Motherwell and Wishaw are from the steel-making industry.
    Mr. Iain Macleod: Two thousand, four hundred and thirty-nine at 16th June, 1958, compared with 1,108 at 17th June, 1957. The former number includes 552 in the steel making industry.
    Mr. Lawson: Does the Minister appreciate that this must represent more than 7 per cent. unemployment among people living in the Burgh of Motherwell and Wishaw, at the heart of industrial Scotland, and is he aware that a depression in Motherwell indicates very gloomy prospects indeed for Scotland as a whole, since all Scotland depends upon Motherwell and what it produces? Will he take special steps?
    Mr. Macleod: I do not think that it is possible to calculate a separate figure for Motherwell and Wishaw because they are part of a larger travel-to-work area, but I do not disagree that the figure in North Lanarkshire is becoming very serious and is causing considerable concern.

  NATIONAL SERVICE

    Call-Up
    Mr. Doddsasked the Minister of Labour what decision has been reached with regard to the performance of National Service by men born during the last quarter of 1939.
    Mr. Iain Macleod: The position is not yet sufficiently clear for me to add anything to what was said about these men in the White Paper on Call-up of Men to the Forces.
    Mr. Dodds: While appreciating the difficulty of taking a decision in this matter, may I ask whether the right hon. Gentleman appreciates the difficulty of young men now approaching 19 years of age without any knowledge whatever of what the future has for them in this respect? When does he expect that the situation will be clear enough for him to make some declaration which will help them and their parents to draw up some programme?
    Mr. Macleod: I understand that very well. The position is that men born in

    1333
    the third quarter of 1939 are to be called up and the 1940 class have been told that they will not be called up. The last quarter of 1939, therefore, is our final reserve. Although I should like to make a pronouncement as soon as I can, it is one which I am not in a position to make at present.
    Mr. Chetwynd: Does the difficulty arise over the uncertainty about recruiting? Is that the main difficulty?
    Mr. Macleod: No, Sir. The main difficulty is that of estimating the needs of the Services and also the number which will be available to meet those needs.

    Teachers
    Miss Herbisonasked the Minister of Labour if, in view of the shortage of teachers, he will end the call-up of teachers for National Service.
    Mr. Iain Macleod: No, Sir. The existing arrangements for the deferment of teachers are the result of a careful review last year with the various interests concerned, and I do not contemplate any further extension at this time.
    Miss Herbison: Would not the Minister agree that British influence on world affairs depends not only on the strength of our defences but on the strength of our economy? Is he not aware that there are many objections to the many anomalies in the present deferment scheme? Will he have these examined and not wait until 1959 to ensure at least that in the field of science and mathematics teachers those who teach these subjects will not be taken for National Service?
    Mr. Macleod: I did not mean to imply, in answer to an earlier Question, that I would wait until 1959. It will be examined much sooner than that. I was talking about those who may be called up in 1959, and the arrangements for graduates for this year are, at the moment, far advanced. I do not feel that I can take the very large step which the hon. Lady suggests. We have made many improvements in the question of the call-up of those with graduate facilities, and I do not think that at the moment we can go further.
    Mr. Dugdale: In view of the Government's perfectly correct policy of
    1334
    exempting miners and other workers of whom there is a shortage, may I ask the right hon. Gentleman if he does not consider that there is a shortage of teachers, or does not he consider their work as important as that of other workers who are exempt?
    Mr. Macleod: No, of course not, but there are obvious differences between the two. Miners are not required in their occupation or calling in the Forces, but the Services today are a highly complicated profession and have a need for a certain number of skilled graduate teachers, which is one of the difficulties.
    Mr. V. Yates: Does the right hon. Gentleman realise that a very grave situation exists in certain parts of the country because of the very grave shortage of teachers, and especially in Birmingham and the Midlands area, and ought not something to be done to try to get more teachers?
    Mr. Macleod: This question was considered by my Technical Personnel Committee, which did not think it right to go further than the last concession which was announced in relation to those with third class honours and pass degrees in chemistry and biological science. I must, I am afraid, stick to the point that for the 1958 call-up I cannot go beyond the major concessions which the Government have announced.
    Mr. Dugdale: Does that answer really mean that only those teachers are called up who can actually be used as teachers in the Services?
    Mr. Macleod: No, it does not mean that. I wish it were possible to allot the pegs to the holes quite as precisely as that. I did not mean to imply that for a second. What I say is that there is a need in the Services today for many of these people.
    Mr. Robens: The right hon. Gentleman has said that for 1958 he did not propose to change the basis of the call-up, which presupposes that he may be considering a change for 1959. May I ask him whether, if that is the case, he would prepare a White Paper on the whole matter, because I think that the House will probably want to discuss the whole question of deferment? Teachers themselves are not the only people who have to be considered in this matter.
    Mr. Macleod: I should have thought that the various concessions that have been made are well-known to the House, but if it would help to have them brought together in a more convenient way, I will certainly look at that point.

    Science Graduates
    Mr. Oramasked the Minister of Labour whether he will extend to all graduates in physics the same conditions for deferment of National Service as apply to graduates in chemistry and the biological sciences.
    Mr. Iain Macleod: I would refer the hon. Member to the answer given on 19th February to a similar Question by the hon. Member for Maryhill (Mr. Hannan), of which I am sending him a copy.
    Mr. Oram: Is the night hon. Gentleman aware that the serious situation in the East Ham Grammar School, about which I wrote to him, is continuing and indeed is getting considerably worse, the school now being short of three science teachers? The headmaster has sought by all possible means to get applicants for the posts and the one person whom he has found is now due for call-up. Is not this symptomatic of what is happening throughout the country in the neglect of science teaching? Will not the Minister seriously consider relaxing the regulations so that the situation may be improved?
    Mr. Macleod: I cannot promise any relaxation for 1958. These decisions are taken on the advice of my Technical Personnel Committee. I intend to ask that Committee to review the position of the call-up for 1959.

VOTE OFFICE (DISTRIBUTION OF DOCUMENTS)
Sir J. Barlow: May I ask a question, Mr. Speaker, of which I have given notice: whether your attention has been drawn to the fact that a statement on behalf of the Manchester Corporation is
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being handed out from the Vote Office this afternoon? If so, is this in order?
Mr. Speaker: My attention has just been drawn to this matter. I myself received a copy of the document this morning, but it came by post in the usual way. As soon as I heard that these documents were being distributed by the Vote Office, I gave instructions that the issue from the Office should cease pending an inquiry by myself into the practice which prevails in the Vote Office.
I remember that, many years ago, even before the war, as a private Member I received with Private Bills statements by accredited Parliamentary Agents about the Bills. But I should like to have an opportunity of looking into the practice which prevails in the Vote Office. I am sure that there is no blame on the staff in the Vote Office, but I want to make sure that the practice conforms with the best interest of the Members of the House.
Mr. Paget: Is it not a great convenience, when one receives a Private Bill, to receive with it a statement from the promoters? If this practice is not regular, could it be regularised, Sir?
Mr. Speaker: I will take that into consideration, but this document is, I think, slightly different from an ordinary statement by an accredited Parliamentary Agent. I do not know whether the hon. and learned Member for Northampton (Mr. Paget) has seen it; it is a quite considerable volume, different from the usual form of Parliamentary Agent's statement. I wish to have an opportunity to examine the practice which prevails.
Mr. S. O. Davies: Could it be made clear that many of us, to my knowledge, have received these documents through the Post Office with our usual mail?
Mr. Speaker: I shall have to look into the matter. I heard about it only since I came into the House. It is clear that, before I say anything of very definite import, I should know exactly what I am saying.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee [Progress, 1st July].
  [Sir CHARLES MACANDREW in the Chair]

New Clause.—(EXTENSION OF TIME FOR REPAYMENTS TO TOBACCONISTS ON PENSIONERS' TOKENS.)
Paragraph 4 of the Sixth Schedule to the National Insurance (No. 2) Act, 1957 (which contained transitional provisions in connection with the withdrawal of the pensioner's tobacco relief under section four of the Finance Act, 1947) shall have, and be deemed to have had, effect as if the date specified in sub-paragraph (3) as the latest date on which tokens may be surrendered by a dealer had been the thirtieth day of September, nineteen hundred and fifty-eight (instead of in the events which happened, the thirty-first day of March).—[Mr. Simon.]
Brought up, and read the First time.
3.34 p.m.
The Financial Secretary to the Treasury (Mr. J. E. S. Simon): I beg to move, That the Clause be read a Second time.
The Clause is designed to relieve a hardship which has come to light as a result of the transitional provisions of the National Insurance (No. 2) Act passed last year relating to tobacco tokens. The transitional provisions are contained in paragraph 4 of the Sixth Schedule, and they work in this way. The last valid tokens, in the event which happened, that is, in view of the appointment of an appointed day, were those dated 20th January, 1958. Sub-paragraph (2) prescribed the last day on which valid tokens could be accepted by tobacco dealers. Because the appointed day fell before 31st January, the effect of the sub-paragraph was to determine 28th February as the last day for acceptance of the tokens. Sub-paragraph (3), which is the one the new Clause is designed to amend, prescribed the last day on which dealers could surrender tokens for reimbursement. That was, again in the event which happened, 31st March, 1958.
The period of one month for dealers to seek reimbursement in respect of tokens they had on hand was thought to give them a reasonable time to collect them together and present them to the Customs or their bankers. The period was, in fact, fixed as a result of advice from the
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National Union of Retail Tobacconists, and, of course, on the supposition that the retail tobacconists would be anxious to get the money as quickly as possible.
There was a number of belated claims. Although the advice was undoubtedly sound as regards the bulk of tobacconists—about 97½ per cent. of the 440,000 or so licensed tobacco dealers—there were undoubtedly many hundreds of appeals, and right hon. and hon. Gentlemen on both sides of the Committee wrote to me about those matters. Perhaps I may quote one extract from a letter from a tobacconist who said:
"I have supplied tobacco against these tokens and consider it morally wrong for the Department now to refuse to honour them."
The general excuse given was illness, absence, inadvertence of employees, or one of a number of other good reasons.
The matter was first dealt with by an extra-statutory concession by which payments were made on claims lodged up to 15th April or, in the case of illness and other good reason, until 30th April, 1958. Of course, the Public Accounts Committee would have to be and in any event will be, notified through the Comptroller and Auditor General of that extra-statutory concession. An extra-statutory concession of that sort, however, ought to be put right by legislation as soon as possible.
We found that there was a continued flow of belated claims even after the last of those dates. They have continued to come in until now. We have received about 1,700 appeals and there are, in addition, about 8,000 dealers who were refused payment but who have not appealed. In equity, they should be paid if they still have valid titles.
I hope that the new Clause will commend itself to the Committee. What it does is to put a new surrender date at some time in the future, giving sufficient time to allow all claims to be lodged and for there to be adequate publicity, which we propose to undertake in order to bring the new closing date to the notice of dealers. As hon. Gentlemen will see, the new Clause replaces the date 31st March, which I mentioned earlier, by a new date of 30th September. That has been chosen to give ample time for publicity.
The proposed new Clause does not involve any real cost, in that it permits payments which have already been allowed for, and it was obviously the

1339
intention of Parliament that they should be made. The individual claims which are now belated are mostly very small and the total sum involved probably does not exceed £50,000. I am sure that it is the wish of the Committee to put right the undoubted hardship to a number of small dealers. I therefore ask the Committee to pass the Clause.
Mrs. Eirene White: It would be out of order undoubtedly if I commented upon the feelings of retirement pensioners when they were told that they were to have an increase in pension and then told that they would lose their tobacco tokens. That matter has been discussed on a previous occasion.
We on this side do not oppose the principle of the Government's proposal. We certainly would not wish tobacco dealers to be out of pocket when they feel that there is a legitimate claim against the public. On the other hand, I feel that the Treasury was a little innocent if it supposed, in the first place, that all these claims would be made in one month, and the fact that it has now had to extend the period by six months seems to me to be a comment on the credulity of the Treasury when it was suggested to it that it could do it in a month.
Had the Treasury had a little more common sense in the first place, I am sure that it would have saved itself a great deal of correspondence, filing, and so on, and would also have saved a good deal of anxiety on the part of a number of small retailers who supposed that they might be losing altogether an amount for which they had not put in a claim by the previous appointed day.
Having made this false judgment and got itself into such a muddle over it, the Treasury is now wise to wait until 30th September, to give the trade ample time to be informed that all the claims will be considered. There is a considerable number, as the Financial Secretary said. Almost 10,000 claims have still got to be dealt with, and for that purpose I am sure that we agree, especially with the holiday period intervening, that it is not unreasonable to ask the Committee to bring forward the date from 31st March to 30th September.
I do not know whether this was the only way in which it could have been
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done, because it must have been obvious some weeks ago what was happening and one might have been able to do it by Statutory Instrument.
Mr. Simon Mr. Simon indicated dissent.
Mrs. White: In that case, we cannot raise any objection to the proposal in the new Clause. Having chided the Treasury, we shall not oppose the proposed new Clause.
Question put and agreed to.
Clause read a Second time, and added to the Bill.

New Clause.—(RESTORATION OF INVESTMENT ALLOWANCES FOR INVESTMENT IN INDUSTRIES OF SPECIAL NATIONAL IMPORTANCE.)
(1) Section fifteen of the Finance Act, 1956 (which suspends investment allowances with certain exceptions), shall cease to have effect and subsections (2) to (5) of section sixteen of the Finance Act, 1954 (which provide for giving investment allowances in respect of capital expenditure on certain new assets), shall apply to expenditure incurred after the commencement of this Act being expenditure incurred—

(a) on industrial buildings or structures, or on machinery or plant, in any industry prescribed as of special national importance; or

(b) on machinery or plant of any description prescribed as of special national importance.

(2) For the purposes of the last foregoing subsection an industry or a description of machinery or plant shall be prescribed as of special national importance, if, and only if, the produce of that industry or the use of machinery or plant of that description is of special value in increasing exports, saving imports or promoting technical development or the better use of national resources.—[Mr. Roy Jenkins.]
Brought up, and read the First time.
3.45 p.m.
Mr. Roy Jenkins: I beg to move, That the Clause be read a Second time.
The proposed new Clause proposes that investment allowances should be restored for industries of special national importance and that, broadly speaking, what is considered to be of special national importance shall be laid down by the Treasury if certain plant or machinery
"is of special value in increasing exports, saving imports or promoting technical development or the better use of national resources."
The assumptions underlying the proposed new Clause are, I think, central

1341
to the whole approach of hon. Members on this side to present economic policy. They are central in that we believe that it is vitally necessary now to give a further stimulus to the British economy. We want that stimulus to be applied primarily to the investment sector rather than to the consumption sector, and we are not in the least afraid of applying it on a selective basis to ensure that we get the best possible use of our resources and to safeguard against returning to the 1955 situation.
I now propose to deal with some of the more detailed considerations involved in the proposed new Clause. I do not think that there will be much dispute in the Committee about the effectiveness of investment allowances as a stimulus to investment. There is no doubt at all that they are far more powerful than the initial allowances. I do not wish to decry the initial allowance, which is a useful weapon in a minor key, but there is no doubt at all that the investment allowance is a much more powerful weapon. One would expect this to be so on a priori grounds. The investment allowance gives something to industry if it invests. The initial allowance, to some extent, is nothing more than an interest-free loan to industry, as hon. Members opposite have frequently pointed out.
One can see the difference in the relative degree of effectiveness by reference to what happened during the period when investment allowances, introduced by the Lord Privy Seal, were in operation. It so happened that when the investment allowances came into operation our level of industrial investment, in private industry in particular, was at a very low level. Also, investment allowances were allowed to remain in operation for all too short a period. But these two facts should not obscure what was undoubtedly the result of the investment allowance, namely, a rate of growth in investment which, as long as it was allowed to continue, and remembering that it started from a low level, was highly satisfactory. The effectiveness of this weapon is not in dispute, and I should be surprised if the Chancellor were to dissent from that.
The point about selectivity which is contained in our proposal may be open to more controversy. On this point, I would say two things. First, I do not
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think that there can be any difficulty of principle, from the Government's point of view, about introducing an element of selectivity. It would be possible to imagine an intellectual standpoint which could be taken, namely, that it is intolerable that the tax system should be used in a way that would place upon the Treasury the burden of deciding whether a certain form of industrial activity was more desirable than another. I do not accept that point of view, but I can see that it is a perfectly tenable intellectual point of view. However, it is not tenable for the present occupants of the Treasury Bench, because the principle has already been breached in several important respects—in the shipping industry, fuel-saving devices and scientific research.
The Chancellor and the Treasury Bench have been quite willing to introduce elements of selectivity into the use of investment allowances. So far as these three things are concerned, investment allowances, which were generally abolished in 1956, still persist. Therefore, it is clear that the Chancellor is willing that the Treasury should exercise its judgment or that he should exercise his own judgment on what is relatively more important and what is relatively less important. That is the first point that I make about selectivity.
The second point is that if the Chancellor, for what I think would not on the whole be good reasons, found the great difficulty about our new Clause to be its selective approach, then, if he prefers our new Clause, "Restoration of investment allowances," which is non-selective, then, although we certainly lean towards the one which I am now moving, we should be prepared to accept the other as second best. I therefore hope that he will not put forward as a decisive reason anything to do with the selective approach.
I now turn to what in a sense is the more crucial question, whether it is desirable at this time to stimulate investment—having disposed, I hope satisfactorily, of the question, if it was so desirable, whether the method we put forward is adequate. There is no longer any doubt about this issue, even in the mind of the Chancellor himself. He has swung round a good deal on this matter since the Budget. It seems to be becoming a habit of Chancellors of the Exchequer, under the present Government, to swing very sharply indeed

1343
between April and July in each year, since the right hon. Member for Monmouth (Mr. P. Thorneycroft) last year swung round equally sharply, although, of course, in the opposite direction. He introduced an expansionist Budget and then, by July, turned in favour of restriction.
The present Chancellor introduced what was, on the whole, a restrictive Budget and is now beginning to turn towards expansion. It is certainly true to say that the thoughts at the back of the Chancellor's mind in April were very different from those which now seem to be in the recesses of his mind. I quote one very important sentence from his Budget statement, when he said:
"At home our first priority must continue to be to win the battle against inflation and our success or failure there will largely determine our fortunes in the months and years ahead."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 53.]
That is one of the decisive sentences in his Budget statement.
While I am sure that he would not for a moment say that he has completely abandoned that battle, I doubt whether, if he were making a Budget speech today, he would give that first priority. At any rate, that is the impression which has emerged from his recent statements. However, I think that the change is nothing but a change for the good and I am glad to welcome it so far as it goes. However, I am bound to point out, as I did in more general terms on a previous occasion, that he cannot take the view that he is now moving towards relaxation and expansion because he has achieved the objectives which he inherited from the right hon. Member for Monmouth.
The objective clearly laid down by the right hon. Member for Monmouth was achieving a restrictive monetary and credit policy of complete price stability. What we have seen over the past seven months has been more restriction, certainly less expansion, more unemployment and a more dismal climate in industry, but a more rapid rate of price increase than we saw in the seven months of the previous year.
I have the figures for the month between October, 1957, and May, 1958. During that period, the Retail Price Index increased from 107·1 to 109·2, a move-
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ment of 2·1 points. Over the corresponding seven months of the year 1956 to 1957, the Retail Price Index rose from 102·8 to 104·6, an increase of 1·8 points.
Let us, therefore, be in no doubt that we have paid heavy penalties in seeking to achieve the objective of price stability, and yet we have got less near to it during the past winter than we did during the preceding winter. We should, therefore, not take the view that we are able to advance from the policy of the right hon. Member for Monmouth because the objectives which he laid down have been achieved. We are able to advance because the Chancellor, moving perhaps a little out of the shadow of his right hon. Friend, is beginning to feel at long last, and all too late, that the objectives which he inherited are intolerable objectives and that if he is to run the economy in any tolerable way, he had better abandon them, perhaps delicately, but as quickly as possible.
There can be no doubt that the reasons for thinking that a stimulus should now be applied to the economy, quite independently of what has happened to price stability, are now overwhelming. First, the figures for capital investment in private industry show a distinct falling off. New factory building, which is a significant guide to the future, in the first quarter of this year was lower than at any period since the end of 1953. It is clear that so long as nationalised industry has to operate under the rigidity of the Government's ceiling, there is no possibility of increases in investment in nationalised industry offsetting the fall off which is taking place in private industry.
Secondly, we have the Federation of British Industries' extremely interesting and valuable survey, which was published about ten days ago and which indicates a still more gloomy prospect for the future.
Thirdly, the Index of Industrial Production for May shows not merely—although that would be bad enough—a persistence of the stagnation to which we have now grown used, but, for the first time, a distinct dip downwards. For example, to take one aspect of the figures, steel production last month was no less than 15 per cent. below its level in May last year, a very severe falling off.
One can sum up the position as neatly and as clearly as in any other way by

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quoting the words with which the Financial Times leader this morning opened. It said:
"The arguments about the general balance of the economy have at last been brought to an end. The practical question now is not whether there will be a down-turn (unless effective measures are taken to maintain demand) but how fast the decline will come and how far it is likely to go."
We therefore have a situation in which there is an overwhelming and indisputable need for a further stimulus to be given to the economy.
The Chancellor has recently taken some faltering steps in the right direction, but they do not go far enough—the reduction of the Bank Rate, extension of initial allowances and so on. At the back of his mind, as indicated by his shrewd but disturbing speech to the Commonwealth Correspondents' Association luncheon on Monday, there is the disturbing thought that things will get worse. I hazard the prophecy that before the autumn the Chancellor will be desperately looking round for substantial measures to stimulate investment in British industry.
I appeal to the right hon. Gentleman to take those measures before the autumn and for once to give the impression of guiding events and not merely following them, and at any rate to accept some part of the proposals which we are putting forward now, at the beginning of July, instead of waiting for something, which I am sure he will have to do within three or four months, to give a further stimulus to investment to prevent this decline from continuing, a decline which is serious for the medium and long-term future of British industry, and serious from the point of view of maintaining prosperity, let alone moving back towards expansion, in the months ahead.
Mr. Geoffrey Stevens: In so far as his remarks were directly related to the new Clause, I would not dissent from anything which the hon. Member for Stechford (Mr. Roy Jenkins) said. He felt that it was necessary—and I have no quarrel with this—to add a certain amount of background, about which I might possibly argue with him on another occasion. However, apart from that, I could almost hear myself saying very similar things to what he said about the stimulating effect of investment allowances. I am sure that industry as a
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whole will be very pleased to read what he said about that, since industry as a whole is very anxious that investment allowances should be restored.
4.0 p.m.
However, since I supported my right hon. Friend the Lord Privy Seal when he introduced investment allowances I have rather gone back on what I then said. I have reconsidered the matter, and I am not so sure that I think that investment allowances are the best way of stimulating the capital investment which, I think, we all agree is desirable. I think that they have two serious drawbacks.
First, by the very nature of things, investment allowance is a form of subsidy. I cannot think of any other example in the whole range of our taxation law and practice of an Income Tax allowance which is more than 100 per cent. of the cost of the capital item affected, more than 100 per cent. of the loss which has been suffered. I cannot think of another example of subsidy in the whole of our taxation law and practice. We ought to regard that departure from the general rule very carefully before we reintroduce this investment allowance.
The other drawback which occurs to me readily is that investment allowances are highly selective for the purpose. Indeed, this new Clause is to make them even more so. Obviously, they cannon apply to those people who carry on a large part of the industry and commerce of this country but without a substantial amount of capital equipment. I have in mind the distributive trades. I agree that they use motor vehicles and things of that sort, but they also use a large amount of experience and skill in respect of which no initial allowance let alone investment allowance is made. Investment allowances are discriminatory as between one class of taxpayer and another class of taxpayer.
For these two reasons, the more I think about investment allowances the less I like them, though I am with the hon. Gentleman completely in the object which he has in mind.
Mr. Roy Jenkins: I cannot understand how it is possible to have any taxation device which will stimulate investment, and which is not discriminatory between those who invest and those who do not.
Mr. Stevens: I entirely agree, but one can marry the two. However, the investment allowance is, in fact, a subsidy, and there is no other taxpayer who is subsidised in that manner. I thought that I had made that fairly clear. I would take my own case. I am a professional man and get no kind of investment allowance or even initial allowance. Therefore, one thinks that there is an anomaly perhaps in that some other form of the business life of this country should receive a direct subsidy from the Exchequer in this way. That was the point I was trying to make.
I am not trying to quarrel with the hon. Gentleman. I am very sympathetic with the object which he has in view, but I myself believe that it could be achieved in a better and more equitable manner by a further extension of the initial allowances which are in no sense of the term a subsidy. The initial allowances do not give to the taxpayer more than 100 per cent. of the asset affected. My right hon. Friend in this Budget has increased the initial allowances to some extent. If the hon. Gentleman wants to do what I want to do, stimulate capital investment, I should like us to be joined for once in a while so as to encourage my right hon. Friend to go further along that road.
Mr. Roy Jenkins: I want to follow the hon. Gentleman's speech, which I have been trying to do very closely. As I understand, he puts two quite distinct objections. The first is that the investment allowance is a subsidy and that this is a departure in our tax practice. Then he makes an entirely separate point, which is that there are disadvantages about the investment allowance because it is discriminatory—against the retail trade, for instance, that being the example he cited, in that it does not employ a great deal of fixed capital assets.
I do not understand how his preference for the initial allowance deals with his second argument. Why we should accept a less effective stimulus to investment at one point of at least equal importance, to that one which is quite irrelevant, I do not follow.
Mr. Stevens: I suggested two rather separate points, I agree, but they are none the less correlated. I point out once more that investment allowance is
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a subsidy for a person trading with a great deal of fixed capital equipment when no investment allowance is given to another taxpayer who trades without a substantial amount of fixed capital investment. The recipient of the allowance gets 10 per cent. on his equipment, in the case of ships 140 per cent. of his capital investment. With initial allowance there is no element of subsidy at all, and therefore there is no discrimination to that extent between one class of taxpayer and another.
Mr. John Diamond: I wonder whether the hon. Gentleman will reconsider his statement that there is no element of subsidy in initial allowances, for, of course, there is the subsidy of an interest-free loan made by the Exchequer to the taxpayer.
Mr. Stevens: I accept that readily, but the element of subsidy is extremely small, as I think the hon. Gentleman will agree.
Therefore, I think that the object which the hon. Gentleman the Member for Stechford has in mind and which I, too, have in mind, of stimulating capital investment, would be better achieved by accelerating the initial allowances, by extending them, perhaps to commercial buildings beyond industrial buildings as at present, by extending them to 100 per cent. in the year of acquisition provided that the company which is the purchaser charges the cost of that asset against its profits at the time. I think that this is a better way of proceeding along the road which I think we all in this Committee want to travel, and for those reasons I do not feel inclined at the moment to support the new Clause.
Mr. H. Rhodes: I support the new Clause. I understand initial and investment allowances quite well from the practical point of view, having watched them come on, and go off, and initial allowances giving way to investment allowances, etc. It is not difficult, if one has a hand closely on a business which is expanding, to see the benefit of both kinds of allowance.
I want to ask for information and to say that even if the Chancellor cannot find it in his heart to accede to this request today, perhaps he will think over some of the things which we say and, by the Report stage, may be able to substitute investment allowances in some form or

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another for the proposal to increase initial allowances. The climate of industry, the background against which we are working, has changed enormously even since the Budget. Otherwise, there would be no point in the Chancellor's introducing the extra 5 per cent. of initial allowance. By the Report stage there can be an even larger change. If the right hon. Gentleman cannot answer me today, I should like to think that on Report he will give me his opinion. I ask him to be patient with me while I go over the matter.
As I understand, initial allowances were provided in 1945 on the basis of 20 per cent. for plant and machinery, 10 per cent. for industrial buildings, and 10 per cent. for mining. That went on quite merrily in an expanding economy where the investment was being made to repair the ravages of war. No alteration was made to that scale of initial allowances until 1949, when the allowance for plant and machinery was increased to 40 per cent. We all know what happened after that—and on this issue I would briefly put politics on one side. We all know the statement which was made by the then Chancellor of the Exchequer in 1951, when notice was served on industry that initial allowances would be taken off in April, 1952.
May I draw the Chancellor's attention to those years? The initial allowance was out of operation for only twelve months, that is, from April, 1952, to April, 1953, when it was reintroduced on the basis of 20 per cent. for plant and machinery, 10 per cent. for industrial buildings and, a rather large increase, 40 per cent. for mining. The reason for the announcement being made in 1951 that the initial allowances would be discontinued was that private investment had to give place to the gigantic armaments programme which was running at that time.
A glance at the fixed investment figures for 1951 to 1954 shows that there was a run-down in 1951–52 with a slight pickup in 1953, when the initial allowances were reintroduced. But the business climate was different then. There was more optimism. There was more certainty about the future. People were not so apprehensive. Then investment allowances were introduced for the first time in the House of Commons in April,
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1954. Although the investment of British capital between 1951 and 1953 had been slightly run down, it was just picking up by 1954. Why was there a case for applying investment allowances in 1954 when it is argued that there is no case today? I should have thought that there would have been enormous backing for the introduction of investment allowances at present if there was reason at all for their existence in 1954.
It may be that investment allowances are selective, and it may be a good thing if they are, but that is not quite the point that I want to make. I am seeking the Chancellor's reaction to the general usefulness of either one method or the other for the purpose of inducing businessmen to invest. When the investment allowances were introduced in 1954, people who had been doing well in business and had funds to spare immediately began to order machinery, irrespective of whether they needed them or not in many cases.
To a small extent, the argument which was produced in the debate on Monday about some of the more up-to-date plants in Lancashire being among the first to suffer, might have had its roots in the way in which the investment was made at a time when a closer examination of the economic needs of the industry might have paid better. These allowances were taken off in 1956. In support of what my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said about the effect of the investment allowances, I would quote from the Economic Survey for this year. I will not quote the figures, but I will give the percentage increases as I have worked them out.
4.15 p.m.
There was a period of stagnation from 1951 to 1953. The investment allowances, as I have said, were introduced in 1954, and I estimate that there was an increase of 4·8 per cent. in fixed investment in 1954 compared with 1953. In 1955, the increase was 15·9 per cent. on 1954.
The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I am following very closely what the hon. Member is saying, but I am not absolutely clear what these increases refer to. I may have missed a word or two.
Mr. Rhodes: On the previous year.
Mr. Amory: For what?
Mr. Rhodes: In fixed investments.
In 1955, the increase was 15·9 per cent. on 1954, and in 1956 the increase was 11·2 per cent. on 1955. In 1957, the increase was 2·9 per cent. on 1956. One realises that at that time the delivery of machines and capital equipment was long delayed, sometimes up to eighteen months and two years and in some cases for considerably longer. Therefore, it may be understood that there may be some relationship between the percentages which I have mentioned and the introduction of investment allowances, and the decline in fixed investments as soon as those allowances were taken off.
I remind the Chancellor again, however, that the climate in industry was different then from what it is now. Even in those days, a person who intended to spend money and had to watch every penny that he spent in fixed investment, would keep a close watch and choose his time. It was not merely the relief from taxation which he would receive that influenced him to invest. It was the feeling he had whether he would be able to sell his product or not.
If the Chancellor takes that point into consideration and compares the climate now with the climate then, I am sure that he will readily see that it needs something more than we had in 1953 to give industry any stimulus at all. I beg the Chancellor to think seriously about what I am saying and to consider whether, by the time we come to the Report stage, he will be able to introduce some form of investment allowance to give that shot in the arm which industry needs. In the meantime, I hope that someone will prepare a statement on the degree of importance which the Treasury attaches to initial and investment allowances, so that when we come to the remaining stages of the Bill we can make our contribution to the debate.
Mr. Alan Green: The hon. Member has a practical interest in these matters. Would he agree that, although investment allowances are a potent shot in the arm, it is even more important to make full and efficient use of the investment achieved? I am sure that the hon. Member would not want to leave an impression of creating a kind
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of dogma that investment allowances are the whole of the matter, without pointing out that the use of what is invested is at least of equal if not of more importance at present.
Mr. Rhodes: Yes, I tried to illustrate that point in a small way by drawing attention to what was said on Monday about firms which had installed new equipment going out of the cotton industry. If equipment is not used round the clock it is a waste of time to install it. That is why, if it is necessary during these next few months to have investment allowances, they may have to be made more selective.
Mr. John Cronin: This proposed Clause crystallises the real anxiety on this side of the Committee about the investment situation and the unfortunate way it has been developing over the last few years. First, I think that we should look at the background against which we are considering this proposed Clause.
Investment in this country has been stagnant for at least the last two years. I see the Paymaster-General wrinkling his brows. Probably he will suggest that at the moment investment is the highest it has ever been, but that is a superficial point of view because, by the very nature of things, one expects investment to increase every year and it is not increasing fast enough or as fast as that of other countries. We are lagging behind severely in the race with our competitors both in Europe and across the Atlantic.
The figures of the O.E.E.C. reports show that this country has probably the lowest rate of investment per capita of Western Europe. It is unfortunate that this deplorable state of affairs should be occurring just when we are considering entering a European Free Trade Area, just when we are considering competing with countries which have a very high standard of investment and, therefore, we are likely to suffer more severely. On top of this, we have entered a recession, and the first section of industry which is affected by a recession is the capital goods part. It seems, therefore, that investment will be depressed lower still.
Of course, investment has been most severely effected by the blunderbuss weapon of monetary policy used by a succession of Conservative Chancellors during the last two or three years. It

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is not enough merely to use monetary policy for discouraging inessential investment. It should be used for encouraging essential investment which is vital to our national interest. The really desirable point about this proposed Clause is its selectivity. The hon. Member for Portsmouth, Langstone (Mr. Stevens) was somewhat depressed by this selectivity. He seemed to think it very inequitable, but equity must on some occasions give way to the national interest. If the hon. Gentleman really felt so strongly about favouring one group of taxpayers against others, he might well have voted against the enormous subsidy given to the Surtax payers by the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) comparatively recently. So the hon. Gentleman should not shed these crocodile tears over equity amongst taxpayers.
Mr. Stevens: Will the hon. Gentleman explain how a reduction in Surtax amounts to a subsidy?
Mr. Cronin: That is simple for most people on this side of the Committee to understand.
Mr. Stevens: That is the "Alice Through the Looking Glass" mentality.
Mr. Cronin: If you are permitted not to pay what you normally would pay, it puts money in your pocket. But I think, Sir Charles, that I ought not to pursue this further, as it would clearly be out of order and I have noticed that any reference to Surtax causes such a state of distemperature on the other side of the Committee that it is not conducive to a high standard of debate.
Returning to what I was saying, we find these days that although the general standard of investment is low in this country, there is a lot of luxury and unnecessary investment. For instance, one has only to glance around London to see great masses of office building going up. This may be nice and desirable, but should this investment have priority when we consider the large number of manufacturing firms which are carrying on with inadequate and obsolescent machinery? The cotton industry is one example.
Over the last few years I have had occasion to drive to Loughborough. A few years ago one had to be careful to ensure that one's tank was full of petrol,
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but now one can fill the tank almost every few miles because of the large number of petrol stations that have been built. Are these really necessary? They are probably helpful to the oil companies, but should they have priority investment? On this side of the Committee, we feel that that should not be the case.
The investment allowance is obviously a powerful incentive to investment, and if the Chancellor really wants to increase investment this is clearly the mechanism he should use. Last night he referred to the Report of the Royal Commission on the Taxation of Profits and Income in rather favourable terms. If the right hon. Gentleman will look at paragraph 413 he will see that the Royal Commission came down strongly in favour of investment allowances as opposed to initial allowances. But does the Chancellor really want Ito increase investment? It is not very clear. What is his policy about this? If he could make it a little more clear today that would help us in assessing the future.
Initial allowances, which find favour with right hon. Gentlemen opposite, have the disadvantage of being uncertain and variable. They do not carry the same confidence to business and industry generally. The Chancellor knows that initial allowances have been used for some time and that they are not having a very useful effect. They are rather like a carrot put in front of a donkey which is constantly being drawn away. I believe that the donkey these days needs a carrot put into its mouth, with the promise of more carrots to come. People are much more likely to increase their investment plans if they have a real subsidy in the form of an investment allowance as opposed to what is really a revolving credit, which is really what an initial allowance is.
The average businessman is probably rather disturbed, too, by the extreme variability of Government policy over this matter in the last few years. There have been constant changes. Will he really feel enough confidence to increase his investment in plant and machinery and factory buildings merely by the prospect of getting an increased initial allowance?
Mr. Raymond Gower: The hon. Gentleman has referred to the constant

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changes, but under all Governments in this country, since the war, were not such changes, if not inevitable, rather likely, in view of our continuously precarious and delicately balanced position, which tends itself to change from time to time?
Mr. Cronin: The hon. Gentleman has made a fair point, but I think that we should try to achieve as much constancy as possible.
This brings me to another aspect. Industry in general will particularly welcome investment allowances of the type specified in this Clause because it has been put down by the Opposition. Both sides of the Committee must appreciate that, in the nature of things, there must be a General Election next year, and the betting appears to be in favour of a change of Government. I feel sure, therefore, that industry will be pleased to know that this Clause has been proposed by what will probably be the next Government and, therefore, can think in terms of some continuity of policy.
4.30 p.m.
I know that such an argument may not be popular with hon. Members opposite, but this is a very practical argument and one which is very much in the minds of businessmen. I saw last week an article in the Economist or the Financial Times, entitled, "Preparing for a Socialist Government". One feels that this consideration is very much in the mind of the Government and, therefore, should be given due weight by the Chancellor, on the assumption that he really has good intentions with regard to the future of industrial investment.
I think that the Chancellor, in his Budget speech, said that initial allowances would to some extent remedy the hardship suffered by firms which would normally plough back a large part of their profits into capital equipment and, therefore, be likely to suffer by the change in the Profits Tax. If the Chancellor is really concerned about doing justice to those firms—and there are many firms which go to a great deal of trouble to function for the national interest as opposed merely to the interests of their shareholders—I suggest that such firms should receive some encouragement and adequate compensation for what they
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have suffered as a consequence of the change in the Profits Tax.
Here is a very useful instrument for the Chancellor to make up for the damage which he has done by this change in the Profits Tax. We have had the arguments in favour of the proposed new Clause very well put from the economic point of view by my hon. Friend the Member for Stechford (Mr. Roy Jenkins) and from a practical and businessman's point of view by my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes). I hope that the Chancellor will study those arguments carefully and, if he cannot accept the new Clause, make some radical changes in his policy in the near future.
Mr. B. T. Parkin: In rising to support this new Clause, I should like particularly to refer to the importance of the words
"… industry prescribed as of special national importance"
and the definition that
"the produce of that industry … is of special value in increasing exports, saving imports or promoting technical development for the better use of national resources."
The value of this Clause, should the Chancellor be disposed to accept it, seems to lie in the fact that he can give some practical encouragement to selected industries along the lines suggested. I have no doubt that many hon. Members would wish to support the case in favour of industries in the constituencies which they represent. For myself, I should like to call the Chancellor's attention to the national importance of the hotel industry. That is, indeed, an important industry and much more important than the public, generally realise. I do not know whether it is generally realised, either in this Committee or elsewhere, that the hotel industry pulls in £130 million a year from foreign tourists. That is not something to be neglected.
I do not know whether my right hon. Friend the Member for Huyton (Mr. H. Wilson) has ever included this in one of his "league tables", but I think that it would be fairly high on the list of industries concerned with the export trade Furthermore, this industry uses resources which are equally available. In some cases it uses the scenery and architecture of this country, which costs nothing and which are still there after they have been used.

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The achievement of this high figure of foreign currency earned reflects very great credit on those charged with the duty of publicising tourism in Great Britain in foreign countries, and also upon hoteliers who have done a very good job without hitherto having had any encouragement from the Government.
Good as many good-class hotels are, anyone who looks around can see that too many were not built as hotels at all; they are converted private mansions. That means that the working of them, however ingeniously the conversion has been carried out, is necessarily wasteful of labour, and greater economies could be made if there were a drive to erect better and more up-to-date hotels.
I am not suggesting that all over the country there should be a great burst of new building of hotels, but I am seriously suggesting that it would do a great deal of good to the industry if a few new hotels could be built in London. London, after all, is the first place to which the foreigner comes; it is the show window of the world, and it is generally admitted that its hotel accommodation is inadequate. It would be an advantage to have a few examples of the latest products of the architects' skill and experience in hotel building.
Moreover, if the Chancellor saw fit to encourage this industry, he would increase the chances of bringing in more foreign currency and improving the morale of the industry, which is a little dejected because there are not many ways in which it can ask the Chancellor for assistance. It complains that it has to pay Purchase Tax on the tools of its trade because these are not distinguishable from the same articles used by ordinary domestic users. It complains that it does not get derated as other service industries got derated, and it complains that it cannot get mortgages because it is generally considered to be a risk to lend money on hotels. It has to bear various other burdens like the archaic monopoly tax, which it has to pay, and it does not get any investment allowance.
This is one way in which the industry could be encouraged. Apart from the industry, I submit to the Chancellor that the encouragement of the building of new hotels in London would be an experiment in new techniques in high building, which
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it is so important that we should develop and master in this country.
The spread of hotels—I will not say second-rate hotels, but hotels which are bound to be makeshift in so far as they consist of converted existing dwellings—is a serious erosion on the living accommodation in London. If some new hotels could be built that would be the easiest way to bring a profitable return to the industry. It would also give experience of new techniques and bring nearer the time when those new techniques could be applied to housing in general, which remains one of the greatest problems in London.
I think that if the Chancellor were disposed to accept the principle of this new Clause and to look selectively at the industries of this country, he would come to the conclusion that the hotel industry ranks high among those which would bring an increased return of foreign currency earnings if they were encouraged to invest more, and, at the same time, do something to solve other problems of London.
Mr. Gower: There is one comment which I should like to make about this new Clause. I am distrustful of the phrase
"… prescribed as of special national importance."
The question that one asks at all stages is: prescribed by whom? Is it to be prescribed by the Government of the day, by a committee of experts, by a special committee of the Treasury, or by Parliament as a whole, as the hon. Gentleman the Member for Paddington, North (Mr. Parkin) suggested?
The hon. Member suggested that there might be competing interests from the separate constituencies of hon. Members. I think that that is a most unsound basis for assessing the value of industry.
Mr. Parkin: I do not know whether it is worth While answering that, but I do not think any back bencher would suggest that Parliament itself should prescribe the industries. Parliament has to give the Chancellor a power which we think he ought to have because he has the maximum amount of information at his command. Obviously, individual Members of Parliament would make representations to him in debate as to

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which industries are in greatest need. Not only would Members of Parliament make such representations, but they would be made in the whole field of consultation which goes on every day between the Treasury and industries and the Board of Trade and industries throughout the country.
Mr. Gower: This seems a rather more subtle and perhaps more generous reassertion of the old phrase, "The gentleman in Whitehall knows best". I do not think it possible, nor indeed desirable—unless it is unavoidable in conditions of supreme emergency—for a committee of experts to forecast future economic developments. Who, twenty years ago, could have asserted that a certain industry would in the long run prove to be our most valuable export? A committee of experts might long ago have rejected, for example, such an industry as the confectionery industry, but I find it possible for such an industry in future to prove to be one of our best sellers overseas. A committee of experts may not foresee the potential of a new discovery. These future trends can generally only be proved by what is sometimes a rather painful and bitter experience.
There may be many hon. Members on both sides of the Committee who have a considerable amount of sympathy for expanding investment, but the whole question is one of very nice judgment by my right hon. Friend who, for the time being, has this dreadful responsibility. I am sure he recognises that both here and in other countries in the free world there is a great deal of apprehension about the discordant advice given by so many economists. There seems a tremendous divergence of view between fairly reputable economists upon the relationship, for example, between inflation and industrial activity. It may not have passed the notice of many hon. Members on both sides of the Committee that those who asserted that if one slowed down economic activity one would thereby prevent any future inflation at all have been demonstrably proved wrong.
On the other hand, it has seemed to me from many speeches they have made, in support of this Clause particularly, that hon. Members opposite are disposed to say one of two things—either that inflation is no longer a real danger, or that
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it is a lesser danger. They seem to be advocating that we should now take off the brakes and go ahead. That obviously would also have its danger. While we have sympathy with the idea of increasing investment, I hope that if my right hon. Friend has additional reasons for not accepting this Clause he will at all times be very ready, not only to increase investment, but to increase economic activity generally as and when that becomes desirable.
Mr. Harold Wilson: We have never suggested taking off all the brakes and, for the purpose of this recession, the suggestion is not to take off the brakes on consumption, but on investment. In the field of investment we suggest taking off the brakes for certain types of investment particularly necessary to the economy. The hon. Member was wrong in saying, perhaps by a slip of the tongue, that our policy was that of taking off all the brakes. What we need is more accelerator, less brake, but, above all, more steering wheel.
Mr. Gower: I accept that statement from the right hon. Member, but he will agree that the whole atmosphere that is expressed—that may be a mixed metaphor—is that there should be a great loosening up at this moment. I submit that the economic position is so obscure, both here and overseas, that my right hon. Friend should not lightly take this step. This is a step which he should hesitate to take before he has more information than is available to the House and the country at the moment.
4.45 p.m.
Mr. W. R. Rees-Davies: This subject has been fairly widely canvassed and it is my duty to be brief at this stage so that we can hear the Chancellor on the matter. A great deal of what I would have said has been covered, and I do not intend to say it over again.
Three things are important on the question of the particular selective industries. Hon. Members have referred to the tourists and catering industry. Very recently the Board of Trade has been doing stalwart work in encouraging and getting together various associations with consultation and conference particularly under my hon. Friend the Parliamentary Secretary to the Board of Trade. There

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are three things which the catering industry as a whole requires. First, there is a proper review needed of the Catering Wages Act; secondly there is encouragement of investment; and, thirdly, the question of a measure of derating for rateable hereditaments.
This Clause deals with one question. It is in accordance with the philosophy of the Socialist Party, namely, selective control. Hon. Members opposite ask that special national importance should be prescribed by the Government. I do not like the Clause for that reason. I think it is bad; I think it is unsound to leave completely and entirely in the discretion of the Chancellor, or of any Minister, an absolutely selective right to pick out one industry and exclude another at any given moment.
I strongly urge the Chancellor, not on the vehicle of this Clause but in its spirit, to have a look at the question of investment allowances in the forthcoming year and see that all the ordinary tools of trade of the catering industry can come within the ambit of provided plant. It seems to me that all the things which are necessary to this industry should be considered as part of the responsibility of a grant of investment or capital allowances which would enable the industry properly to capitalise itself.
Mr. Amory: We have had an excellent debate on this subject. I have listened to every word with great interest, and I think there has been great thought in many of the remarks that have been made and that every single word was relevant.
We have heard arguments advanced for extending investment allowances, either in part or whole, to a variety of industries, either selected by the Government as industries of special national importance or, as the hon. Member for Stechford (Mr. Roy Jenkins) said, if that was too difficult, just for a general extension. I want to make it clear at the start that I do not want to be dogmatic in this matter at all. I think there is great force in the arguments which have been advanced. Many of the aspects of this problem are matters of judgment, and judgment is subjective. I have had to exercise my judgment this year. I have done so to the best of my ability, but I frankly acknowledge that my judgment may not be right. I feel quite humble in this matter because it is an
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extremely difficult judgment I have to form this year.
Hon. Members have naturally referred to the fact that there are in existence at present investment allowances for certain purposes, scientific research, approved fuel saving equipment and for the shipping industry. I ought to remind the Committee of the basis on which those activities were selected for special treatment.
In the case of scientific research and fuel saving there is no question of a preference for a particular industry the investment allowance applies to all approved expenditure of that form, regardless of the industry in which it is used. I freely acknowledge that we did exercise a judgment and a discrimination in deciding, on grounds of national economy, that priority should be given to scientific research, but I do not think that anybody will quarrel with that decision. I acknowledge that, in a limited way, that is an exercise of discretion, and therefore a breach. That is why I have said that I do not want to be too dogmatic in this matter.
The extension of investment allowances to shipping comes into a slightly different category. My right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) described it in his Budget speech last year, when he said that the shipping industry was
"in a special position. It is faced with severe competition in a world market, often from ships sailing under flags of convenience with small tax liabilities. It finds it increasingly difficult to build up finance for the replacement of its ships when they become obsolete."
He went on to emphasise that this was
"a unique step for a unique industry which is the life line of our country …"—[OFFICIAL REPORT, 9th April, 1957; Vol. 568. c. 995.]
It has been generally accepted that that is a fair assessment of the position of the shipping industry, but again I acknowledge that the argument that it is unique at once invites the reply, "Well, possibly there are other strong cases, too." We have no regrets about giving investment allowances in those three cases, and I do not want to convey the impression that we are having second thoughts in that matter.
I described the economic situation as I saw it in my Budget speech, and I will not repeat what I said except that I

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pointed out that it seemed to me that the situation was changing and that we must keep our policies flexible for that reason, and that I should not hesitate to make such changes as I thought were required, in the light of future circumstances. I am trying to carry out that policy at present and, in accordance with it, I have thought it appropriate to increase the initial allowances that I announced at the time of the Budget to a greater extent than in my Budget proposals. As the Committe knows, I proposed that the increases should be doubled. At the time of the Budget I did not think it appropriate to extend the scope of investment allowances and I still do not think so. That is not to say that in no circumstance would it ever be right to consider doing so.
The effect of initial allowances, as an incentive to undertake fresh or additional investment expenditure—that is to say, expenditure which would not otherwise be undertaken—is limited. It is an incentive, but an investment allowance is a stronger incentive. But the problem is not as simple as that. It is possible at any time to over-stimulate investment, even in an industry of primary national importance, with a consequent extravagant and unwise expenditure.
Apart from having some incentive to additional investment, however, I believe that initial allowances are an important psychological incentive to writing off industrial assets over an appropriately short period. In saying that I speak from certain personal experience—as does the hon. Member for Ashton-under-Lyne (Mr. Rhodes). I believe that they are an encouragement to a very good practice.
Apart from the general proposal to substitute investment allowances for initial allowances, my objections to the Clause lie in matters of principle and practice. First, it is extraordinarily difficult—as my hon. Friend the Member for Barry (Mr. Gower) and my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) pointed out—to select industries as being of special national importance. We can pick out some, but I do not believe that we can ever make sure that we are doing absolute justice, particularly when we specify industries or certain assets which are going to lead to the better use of material resources. I should have thought
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that it was possible to argue that a very large proportion of capital investment has that as its aim.
The less we make it a Government responsibility to make selections of that kind the better it is. The Royal Commission pointed out the difficulties involved in discrimination between industries and said that it was sounder to discriminate between assets than between industries. I agree. My hon. Friend the Member for Barry rightly pointed out the changing importance of industries, and also the impossibility of estimating the real importance of new industries which are cropping up.
The hon. Member for Stechford chastised me in regard to the present degree of stability, but I believe that both in respect of our economy and the level of prices we are in better balance than at any time during the past few years. Statistics always work a little behind the clock, but I believe that they will show that we have achieved a higher degree of balance in price levels than at any time since the war.
Mr. Roy Jenkins: Can the right hon. Gentleman expand a little on that slightly cryptical phrase, "the balance of the price level"? I take it that he accepts my figures—which are in fact his own—and will agree that it has not shown itself over the past winter. Does he take the view that the prospect is much better for the next six months? Is that what he means by the word "balance"?
Mr. Amory: Yes. I take the view that the reductions in prices are working gradually through the economy but have not in all cases fully reached the consumer. I also believe that in the matter of wages there are signs that we are approaching a stage where, if everybody behaves sensibly, we shall achieve a greater measure of stability in production.
Coming back to the Budget, I want to make it plain that at that time I was trying to ensure two things; first, that there should not be a renewal of inflationary pressure and, as a consequence of that, fresh balance of payments troubles, and, secondly, that our policies should not be so rigid that they could not be adjusted as necessary from restriction to stimulation. The hon. Member for Ashton-under-Lyne, speaking from great practical experience, mentioned that the climate is

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different today from what it was in 1951, and that business men take a less happy view of the future than they did at that time.
Mr. Rhodes: I was speaking of 1954, when investment allowances were brought in.
5.0 p.m.
Mr. Amory: The point is the same, whether we take 1951 or 1954. We were in a period, particularly in 1951, of pretty brisk inflation. I would also remind the hon. Member for Ashton-under-Lyne that total investment is very much higher than it was in either of those two years. The hon. Member for Loughborough (Mr. Cronin) referred to the present level of investment and then to stagnation. If there is stagnation, it is at a relatively high level, and an all-time record for this country.
I was asked what I would like to see happen to investment. I would like to see private investment go still higher from the record level of last year. If it does go higher again, we must remember that there may be limits to the pace and we must be sure that the pace is within our resources. The hon. Member for Paddington, North (Mr. Parkin) and my hon. Friend the Member for Isle of Thanet referred to the hotel industry. It is our policy and practice to interpret the capital allowances for the hotel industry as generously as we possibly can, in regard to the interpretation of "plant and equipment." I agree entirely with the importance of the hotel and catering industries and we shall continue to keep the matter under sympathetic consideration.
I would add that I shall continue to study the effects of the investment allowances when they are applied and of the proposed higher initial allowances, to see what the consequences are. In the meantime, I believe that the step I have taken of raising the initial allowances, although I agree that it is a subjective judgment and that other people may take a contrary view—I am not going to be dogmatic about whether I am right or wrong—was a sensible decision. In the circumstances, I am afraid that I cannot advise the Committee to accept the proposed new Clause.
Mr. H. Wilson: With one thing that the Chancellor said I find myself in agreement, that this has been an interesting debate. In accordance with what I said
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at a very late hour last night or early this morning, it is right that these debates should be brief and pithy because there is a lot of ground to cover. I shall be brief in following the Chancellor.
In what the right hon. Gentleman has said he has given himself away. He is usually very cautious and usually says no word that means very much. The blessed word "flexible" covers a lot of vices and few virtues; the right hon. Gentleman usually gives nothing away. I have admired the way in which he makes his public speeches. However much one inspects them, as the City editors do, we find no real meaning or significance in what he has been saying. By some unaccountable lapse he has now given himself away. He said that his hope was to see private investment rise above last year's record level, yet we know that the right hon. Gentleman is holding down public investment so that it cannot rise above last year's level.
So far from holding the ring between the two forms of investment, whether essential or inessential, it looks as though the right hon. Gentleman, while holding down most of public investment which is highly essential, is giving private investment a bias in the wrong direction. For the first time I almost find myself in agreement with Government supporters about the "gentleman in Whitehall", who is now embarking upon a policy of selectivity but is selecting the wrong things to expand.
I said I would be brief. I spoke at some length on Clause 13 when the Chancellor made his epoch-making announcement about his fiddling little increase in initial allowances, and I do not want to repeat now what I said on that occasion. There will be an opportunity on Report, when the Chancellor tables his Amendment on initial allowances, but I want to make three comments to underline what the right hon. Gentleman said about the need for more capital allowances.
It is not really true, as the Chancellor said in reply to my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), that investment is now higher than it was in 1954. That year saw the beginning of an enormous boom. Although there is still a certain amount of spending going on it is the finishing off process of capital investment. They are putting on the last coat of paint to

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the factories started during the investment boom.
We now need a big increase in investment. If we look at the figures for Europe this will be evident. Many times in the House I have given an account of these, but now let me give figures which I have not previously given. In 1956 we were spending 15 per cent. of our national income in all forms of investment. In the same year, the Netherlands were spending 25 per cent., Germany 23 per cent., Italy 20 per cent. and France 17 per cent. It is not enough to say, after seven years of Tory freedom, business men's Government, etc., that we are devoting a smaller amount of our capital investment than France with all her problems. France has been almost continuously at war on some front or another for many years.
The whole Committee agrees about the need for more capital investment. The Chancellor made quite a reasonable speech a few days ago when he said that it was time to take off the brakes, to see ahead, to go round the corner, and so on. He wanted to see expansion begin by investment and not by consumption. We are all in complete agreement, because that was the theme that we have taken in these debates for many years past. During the peak of our boom we said, "Let us maintain investment and cut down inessential consumption und the inessential factors in investment." Since the recession began we have said, "Let us begin selectivity and expand investment." It was in the Budget debate, 1957, that I suggested to the then Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. P. Thorneycroft) that he should announce a forthcoming restoration of investment allowances. It was a great pity that he did not. We should have seen a piling up of investment in the third quarter of last year.
We agree with the Chancellor that we want to see expansion taking place in investment rather than in consumption, so let us be frank about this. We are not hesitant about saying it. It may be necessary in present conditions to hold down consumption by budgetary and other means in order that investment can have a go. I agree with what is sometimes said from Government benches
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that if we get to the point where inflation is a real danger it may be necessary and desirable to hold back consumption in order that investment can have a clear priority in its call on the resources of this country.
There are various means of encouraging private investment. We are all speaking about private investment at this point, because public investment could increase considerably if the Chancellor took off the brake on public investment. There are various means. Initial allowances have been mentioned and they are obviously a rather favourite method of the hon. Member for Langstone (Mr. Stevens). Investment allowances are proposed in the new Clause and there are other means. Some industrialists advocate a more rapid write-off of capital equipment as a means of increasing capital investment. We all know how powerful a factor that was, for example, in the United States during the Korean rearmament period, when America allowed a five-year write-off of war plants and plants in essential industry.
Other industrialists have advocated their different proposals. One which I have seen recently is a suggestion that Profits Tax should be levied—and Income Tax too—not on profits as at present calculated, but on gross profits, and that there should be an offset against taxation of 100 per cent. of actual capital investment expenditure within the year. That is an interesting proposition. We all see many snags in it. It is obviously a difficult one to propose. It would be, in effect, a levy on those firms which are not expanding their investment and a strong incentive to those who are. There are, therefore, various means within the taxation field of encouraging investment.
There are various means by which the Government could do it outside the taxation field, the most obvious being direct—
The Temporary Chairman (Sir Robert Grimston): The right hon. Gentleman is getting a little wide of the new Clause.
Mr. Wilson: I fully accept that, Sir Robert. I am trying to suggest the reasons why we favour the investment allowances among the various methods. In view of what you have said, I will not pursue the various other means which could be used. All we can do in discussing the new Clause is to refer to those within the

1369
taxation field and only those which do not in any way, directly or indirectly, impose a charge on any taxpayer. In the new Clause, we have proposed investment allowances, although we consider that this would be only part of a much wider scheme of expanding investment and that there are other means which must take place at the same time if the Clause was to be effective, means which, in view of your intervention, Sir Robert, I will not proceed to specify.
The Lord Privy Seal, who invented investment allowances, introduced them in 1954 with a great fanfare of trumpets and his great speech about "Invest in success". Most of those who did so have, of course, regretted it ever since. It was the present Prime Minister who abolished the investment allowances on 17th February, 1956. I sometimes feel that Members of this Committee, especially on this side, are a little unfair to the right hon. Member for Monmouth (Mr. P. Thorneycroft) in suggesting that he was the author of these restrictive policies. It started to some extent with the Lord Privy Seal, but the real author of restrictive policies was the Prime Minister. It was he who first enunciated as a matter of economic doctrine that we had been expanding too fast or producing too much and that we must apply the brake and reduce our national rate of production. All that the unfortunate former Chancellor, the right hon. Member for Monmouth, had to do was to intensify that policy when he got into a panic last September. As we know, he was advised by various obsolete economists and he carried his proposals to a point which went far beyond even the views of his advisers in the Treasury.
So we have had the investment allowances. There is no doubt, as, I think, hon. Members in all parts of the Committee will agree, that the Lord Privy Seal's introduction of them was accompanied with great success in expanding investment. He stood at the Dispatch Box year after year wringing his hands and complaining that the private sector would not expand its investment. The public sector was doing so in a very satisfactory manner. But it was when the right hon. Gentleman introduced the investment allowances that there was this great release, this great boom in investment, which unfortunately, because the Tory Party will not accept controls, nearly
1370
brought the country to the verge of bankruptcy because it went too far, it went in the wrong direction and it was accompanied with an uncontrolled consumption boom at the same time.
We say that provided there are the right controls and it is selectively done, it could be a great boom. I am prepared, as I always have been to pay tribute to the Lord Privy Seal for his initiative in introducing this idea of investment allowances as one part of a policy selectively to increase investment.
5.15 p.m.
The second thing I want to say, much more briefly, is that in the present industrial situation the need for an expansion of investment is urgent. We have disagreed with the right hon. Gentleman's assessment and diagnosis of our economic position. All the things that he is now saying with such an air of discovery, all the things that the Prime Minister apparently said in Washington, we said from these benches last summer and last autumn—all the questions about the need for expansion, the need for more liquidity in world trade and all the rest.
I am sorry for the Chancellor. I have expressed my sympathy for him before and I know that he appreciates this. Having to succeed his right hon. Friend the Member for Monmouth, the circumstances of whose going were marked by some rather special circumstances, the Chancellor has never been free—perhaps he is just becoming free now—to follow his own judgment about the economic situation. The one thing he had to do was to prove that he would out-Herod Herod in the matter of economic restriction and in the fight against an inflation which is long past.
Therefore, in this year's Budget, when, I say frankly, it was difficult for anyone in any part of the House to make an accurate forecast of the future—I admitted it at the time—the Chancellor leaned over backwards to show that he was a better restrictionist and a more doughty fighter against inflation even than his predecessor. It was because of that that he could not see what was happening to British industry.
In the debate on Clause 13, on the Question "That the Clause stand part of the Bill," when the Chancellor announced the increase in the initial allowances, I said that he must not be

1371
misled by the relatively small figures of unemployment. I gave figures to show that in each successive month of this year, the numbers unemployed compared with the same period of 1957 had been increasing. For example there were 70,000 more in March, 100,000 more in April and 130,000 more in May. I said also that the fact that there were only roughly 2 per cent. unemployed did not mean that industry was working at 98 per cent of capacity. There is a great waste and under-use of labour and capacity.
Speaking right off the cuff—I was not making considered statements—I said in the debate a fortnight ago that a large number of British firms could today increase their production by 10, 20, 30 or 40 per cent. without any increase in labour or without stretching their resources. Since then, we have had the F.B.I. report, which clearly underlines the truth of what I was saying.
I have no statistical knowledge on which to base myself, but we now know that the F.B.I. report shows that of some 540 firms, 76 per cent. consider that they are working below capacity. I know that that is a rather indefinable phrase. It needs interpreting with what the Chancellor would, no doubt, call a little flexibility. Nevertheless, if the same question had been put to British industry two, three, four, six or seven years ago, we should have had a very different answer.
It is clear that we are now facing a partial recession. I know that the Chancellor thinks—the Prime Minister has put the idea into his head—that if the recession develops, it will be easy to put it into reverse. I must, however, warn him again that that is not the position. Once a psychology of recession has been created, any amount of easement of credit squeezes and other restrictions will not of itself restore full production and the continuance of economic growth.
That is why we stress the importance of expanding investment. That is the point from which we begin, the escape from the recession which the Government have brought upon our economy. It is in any case the means of raising not only our standard of living, but our competitiveness with the other nations with whom we are meeting stronger and stronger export competition in the markets of the world.
1372
My third and final point is the principle of selectivity, which we have stressed in the new Clause. I know that there are difficulties about it. It means that someone must say which are the essential industries and which are not. Successive Chancellors in the past have said it when they have introduced investment allowances for certain industries, such as shipping and the others which have been mentioned in this debate. Somebody must take these decisions. Under the credit squeeze, it is the unfortunate bank managers who are being forced to take them. It is not that we have no control, but that we have a Government who are afraid of taking the responsibility for the controls which they introduce.
I suggest that on the principle enunciated in the proposed Clause the Government would have the clear responsibility of saying which sectors of the economy should expand. It is obvious that some are more essential than others. It is more important to be building up the steel industry than the breweries, despite the help given in the opposite direction by the Chancellor with his Profits Tax changes. It is more important to be building up the machine tool industry and the engineering industries, especially those with a big export demand, than industries which are merely useful and pleasant, such as laundries and commercial television. It makes sense to distinguish between them.
We are afraid that as soon as they feel that they are within a sufficient distance of the next General Election the Government will suddenly let up. Indeed, we know they will. As soon as the Prime Minister gets the scent of battle, he will, like an old political warhorse, be pounding the ground with his feet, and we know what will happen. He will cast aside all the warnings that we have heard from three or four successive Chancellors and say, "Now is the time for expansion". We shall then have an expansion such as we had in 1954 and 1955 on the eve of the General Election of that time. The General Election will then take place against a background of rising investment, full employment and overtime, and it will be left to the next Government, which will be supplied from this side of the House, to clear up the mess. It was a shock to the Tories last time when they found they had to clear up the mess created by the boom.

1373
Under Tory methods of encouraging investment, all we can get is a boom leading either to stagnation in investment or inflation, balance of payments crises, shortage of resources, and a scramble for materials and labour. That is why we have stressed in our Clause the importance of selectivity between essential and non-essential investment.
In view of the Chancellor's cautious attitude and, I am afraid, his regrettable recommendation that the new Clause should not be accepted, we have no alter-
native to pressing the matter in the Lobby, making it clear as we do so that we regard this as one important part—because of the rules of order, the only important part that we have sought to deal with on the Notice Paper—of a selective policy of expansion of investment in British industry.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 181, Noes 229.

Division No. 186.]

AYES

[5.23 p.m.

Ainsley, J. W.

Hastings, S.

Paget, R. T.

Albu, A. H.

Hayman, F. H.

Palmer, A. M. F.

Allaun, Frank (Salford, E.)

Healey, Denis

Parkin, B. T.

Allen, Arthur (Bosworth)

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

Paton, John

Awbery, S. S.

Herbison, Miss M.

Pearson, A.

Bacon, Miss Alice

Hobson, C. R. (Keighley)

Peart, T. F.

Balfour, A.

Holman, P.

Pentland, N.

Bellenger, Rt. Hon. F. J.

Houghton, Douglas

Plummer, Sir Leslie

Benson, Sir George

Howell, Denis (All Saints)

Popplewell, E.

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

Hoy, J. H.

Price, J. T. (Westhoughton)

Blackburn, F.

Hughes, Emrys (S. Ayrshire)

Price, Philips (Gloucestershire, W.)

Blenkinsop, A.

Hughes, Hector (Aberdeen, N.)

Probert, A. R.

Blyton, W. R.

Hynd, H. (Accrington)

Proctor, W. T.

Boardman, H.

Hynd, J. B. (Attercliffe)

Pursey, cmdr. H.

Bottomley, Rt. Hon. A. G.

Irving, Sydney (Dartford)

Rankin, John

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

Isaacs, Rt. Hon. G. A.

Redhead, E. C.

Brockway, A. F.

Janner, B.

Reeves, J.

Broughton, Dr. A. D. D.

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

Reid, William

Brown, Rt. Hon. George (Belper)

Jeger, George (Goole)

Reynolds, G. W.

Brown, Thomas (Ince)

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

Rhodes, H.

Burke, W. A.

Jenkins, Roy (Stechford)

Robens, Rt. Hon. A.

Butler, Herbert (Hackney, C.)

Johnston, Douglas (Paisley)

Roberts, Goronwy (Caernarvon)

Callaghan, L. J.

Jones, David (The Hartlepools)

Robinson, Kenneth (St. Pancras, N.)

Champion, A. J.

Jones, J. Idwal (Wrexham)

Shinwell, Rt. Hon. E.

Chapman, W. D.

Kenyon, C.

Short, E. W.

Chetwynd, G. R.

Key, Rt. Hon. C. W.

Silverman, Julius (Aston)

Clunie, J.

King, Dr. H. M.

Simmons, C. J. (Brierley Hill)

Collins, V. J. (Shoreditch & Finsbury)

Lawson, G. M.

Smith, Ellis (Stoke, S.)

Corbet, Mrs. Freda

Ledger, R. J.

Snow, J. W.

Craddock, George (Bradford, S.)

Lee, Frederick (Newton)

Sorensen, R. W.

Cronin, J. D.

Lee, Miss Jennie (Cannock)

Soskice, Rt. Hon. Sir Frank

Crossman, R. H. S.

Lever, Leslie (Ardwick)

Sparks, J. A.

Darling, George (Hillsborough)

Lindgren, G. S.

Stewart, Michael (Fulham)

Davies, Ernest (Enfield, E.)

Lipton, Marcus

Stones, W. (Consett)

Davies, Stephen (Merthyr)

Logan, D. G.

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

Deer, G.

Mabon, Dr. J. Dickson

Summerskill, Rt. Hon. E.

de Freitas, Geoffrey

McAlister, Mrs. Mary

Swingler, S. T.

Delargy, H. J.

McCann, J.

Taylor, Bernard (Mansfield)

Diamond, John

MacDermot, Niall

Thomas, George (Cardiff)

Donnelly, D. L.

McInnes, J.

Tomney, F.

McLeavy, Frank

Ungoed-Thomas, Sir Lynn

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

MacPherson, Malcolm (Stirling)

Viant, S. P.

Ede, Rt. Hon. J. C.

Mahon, Simon

Warbey, W. N.

Edelman, M.

Mallalieu, E. L. (Brigg)

Watkins, T. E.

Edwards, Rt. Hon. Ness (Caerphilly)

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

Weitzman, D.

Edwards, W. J. (Stepney)

Mann, Mrs. Jean

Wheeldon, W. E.

Evans, Edward (Lowestoft)

Mason, Roy

White, Mrs. Eirene (E. Flint)

Fernyhough, E.

Mikardo, Ian

Willey, Frederick

Fletcher, Eric

Mitchison, G. R.

Williams, David (Neath)

Foot, D. M.

Monslow, W.

Williams, Rev. Llywelyn (Ab'tillery)

Fraser, Thomas (Hamilton)

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

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

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

Moss, R.

Willis, Eustace (Edinburgh, E.)

George, Lady Megan Lloyd (Car'then)

Moyle, A.

Wilson, Rt. Hon. Harold (Huyton)

Gibson, C. W.

Neal, Harold (Bolsover)

Winterbottom, Richard

Gordon Walker, Rt. Hon. P. C.

Noel-Baker, Francis (Swindon)

Woodbum, Rt. Hon. A.

Greenwood, Anthony

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

Yates, V. (Ladywood)

Grenfell, Rt. Hon. D. R.

Oliver, G. H.

Younger, Rt. Hon. K.

Grey, C. F.

Oram, A. E.

Zilliacus, K.

Griffiths, David (Rother Valley)

Orbach, M.

Hall, Rt. Hn. Glenvil (Colne Valley)

Oswald, T.

TELLERS FOR THE AYES:

Hamilton, W. W.

Owen, W. J.

Mr. John Taylor and Mr. Rogers.

Harrison, J. (Nottingham, N.)

Padley, W. E.

NOES

Agnew, Sir Peter

Green, A.

Nugent, G. R. H.

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

Grimond, J.

Oakshott, H. D.

Alport, C. J. M.

Grimston, Hon. John (St. Albans)

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

Amory, Rt. Hn. Heathcoat (Tiverton)

Gurden, Harold

Orr, Capt. L. P. S.

Anstruther-Gray, Major Sir William

Harris, Frederic (Croydon, N. W.)

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

Arbuthnot, John

Harris, Reader (Heston)

Osborne, C.

Ashton, H.

Harrison, A. B. C. (Maldon)

Page, R. G.

Atkins, H. E.

Harvey, Sir Arthur Vere (Macolesf'd)

Panned, N. A. (Kirkdale)

Baldock, Lt.-Cmdr. J. M.

Harvey, John (Walthamstow, E.)

Partridge, E.

Baldwin, Sir Archer

Head, Rt. Hon. A. H.

Peel, W. J.

Barber, Anthony

Heald, Rt. Hon. Sir Lionel

Pickthorn, K. W. M.

Barlow, Sir John

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

Pilkington, Capt. R. A.

Barter, John

Henderson-Stewart, Sir James

Pitman, I. J.

Batsford, Brian

Hesketh, R. F.

Powell, J. Enoch

Barter, Sir Beverley

Hicks-Beach, Maj. W. W.

Price, Henry (Lewisham, W.)

Beamish, Col. Tufton

Hirst, Geoffrey

Profumo, J. D.

Bell, Philip (Bolton, E.)

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

Ramsden, J. E.

Bell, Ronald (Bucks, S.)

Holland-Martin, C. J.

Rawlinson, Peter

Bennett, F. M. (Torquay)

Holt, A. F.

Redmayne, M.

Bevins, J. R. (Toxteth)

Hope, Lord John

Rees-Davies, W. R.

Bidgood, J. C.

Horobin, Sir Ian

Renton, D. L. M.

Biggs-Davison, J. A.

Howard, Gerald (Cambridgeshire)

Ridsdale, J. E.

Bishop, F. P.

Hughes-Young, M. H. C.

Roberts, Sir Peter (Heeley)

Black, C. W.

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

Robertson, Sir David

Bonham Carter, Mark

Hyde, Montgomery

Robinson, Sir Roland (Blackpool, S.)

Bottom, Sir Alfred

Hylton-Foster, Rt. Hon. Sir Harry

Rodgers, John (Sevenoaks)

Boyle, Sir Edward

Iremonger, T. L.

Roper, Sir Harold

Braine, B. R.

Irvine, Bryant Godman (Rye)

Ropner, Col. Sir Leonard

Braithwaite, Sir Albert (Harrow, W.)

Jenkins, Robert (Dulwich)

Scott-Miller, Cmdr. R.

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

Jennings, Sir Roland (Hallam)

Sharples, R. C.

Brooke, Rt. Hon. Henry

Johnson, Dr. Donald (Carlisle)

Shepherd, William

Browne, J. Nixon (Craigton)

Johnson, Eric (Blackley)

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

Bryan, P.

Joseph, Sir Keith

Spearman, Sir Alexander

Burden, F. F. A.

Kerr, Sir Hamilton

Speir, R. M.

Butcher, Sir Herbert

Kershaw, J. A.

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

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

Kimball, M.

Stanley, Capt. Hon. Richard

Campbell, Sir David

Lagden, G. W.

Stevens, Geoffrey

Cary, Sir Robert

Leather, E. H. C.

Steward, Harold (Stockport, S.)

Channon, Sir Henry

Leavey, J. A.

Steward, Sir William (Woolwich, W.)

Chichester-Clark, R.

Leburn, W. G.

Stoddart-Scott, Col. Sir Malcolm

Cole, Norman

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

Storey, S.

Conant, Maj. Sir Roger

Legh, Hon. Peter (Petersfield)

Stuart, Rt. Hon. James (Moray)

Studholme, Sir Henry

Cooke, Robert

Lindsay, Martin (Solihull)

Summers, Sir Spencer

Cooper-Key, E. M.

Linstead, Sir H. N.

Sumner, W. D. M. (Orpington)

Craddock, Beresford (Spelthorne)

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

Taylor, Sir Charles (Eastbourne)

Crowder, Sir John (Finchley)

Lloyd, Rt. Hon. Selwyn (Wirral)

Taylor, William (Bradford, N.)

Dance, J. C. G.

Lucas, Sir Jocelyn (Portsmouth, S.)

Teeling, W.

Davidson, Viscountess

Lucas, P. B. (Brentford & Chiswick)

Temple, John M.

D'Avigdor-Goldsmid, Sir Henry

Lucas-Tooth, Sir Hugh

Thomas, Leslie (Canterbury)

Deedes, W. F.

McAdden, S. J.

Thompson, Kenneth (Walton)

Digby, Simon Wingfield

Macdonald, Sir Peter

Thompson, R. (Croydon, S.)

Donaldson, Cmdr. C. E. McA.

Mackeson, Brig. Sir Harry

Thorneycroft, Rt. Hon. P.

Drayson, G. B.

McKibbin, Alan

Thornton-Kemsley, Sir Colin

du Cann, E. D. L.

Mackie, J. H. (Galloway)

Tiley, A. (Bradford, W.)

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

McLaughlin, Mrs. P.

Tilney, John (Wavertree)

Duncan, Sir James

Maclean, Sir Fitzroy (Lancaster)

Turton, Rt. Hon. R. H.

Eden, J. B. (Bournemouth, West)

MacLeod, John (Ross & Cromarty)

Tweedsmuir, Lady

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

Macmillan, Rt. Hn. Harold (Bromley)

Vane, W. M. F.

Emmet, Hon. Mrs. Evelyn

Macmillan, Maurice (Halifax)

Vaughan-Morgan, J. K.

Errington, Sir Eric

Macpherson, Niall (Dumfries)

Vickers, Miss Joan

Farey-Jones, F. W.

Maddan, Martin

Vosper, Rt. Hon. D. F.

Finlay, Graeme

Markham, Major Sir Frank

Wade, D. W.

Fletcher-Cooke, C.

Marlowe, A. A. H.

Wakefield, Edward (Derbyshire, W.)

Fort, R.

Marshall, Douglas

Wakefield, Sir Wavell (St. M'lebone)

Fraser, Hon. Hugh (Stone)

Mathew, R.

Wall, Patrick

Fraser, Sir Ian (M'cambe & Lonsdale)

Maudling, Rt. Hon. R.

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

Gammans, Lady

Medlicott, Sir Frank

Ward, Dame Irene (Tynemouth)

Garner-Evans, E. H.

Molson, Rt. Hon. Hugh

Watkinson, Rt. Hon. Harold

George, J. C. (Pollok)

Moore, Sir Thomas

Webbe, Sir H.

Gibson-Watt, D.

Morrison, John (Salisbury)

Whitelaw, W. S. I.

Glover, D.

Nabarro, G. D. N.

Williams, Paul (Sunderland, S.)

Glyn, Col. Richard H.

Nairn, D. L. S.

Wilson, Geoffrey (Truro)

Godber, J. B.

Nicholls, Harmar

Wood, Hon. R.

Gower, H. R.

Nicholson, Sir Godfrey (Farnham)

Woollam, John Victor

Graham, Sir Fergus

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

Grant, Rt. Hon. W. (Woodside)

Noble, Comdr. Rt. Hon. Allan

TELLERS FOR THE NOES:

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

Noble, Michael (Argyll)

Sir Gerald Wills and

Colonel J. H. Harrison

New Clause.—(SIGNATURE OF BUSINESS ACCOUNTS SUBMITTED FOR INCOME TAX PURPOSES.)
Section twenty of the Income Tax Act, 1952 (which provides for a return of current year's chargeable income under respective schedules), shall be amended by adding a new subsection (5):—
"(5) Where a person supplies business accounts to support a formal statement, or in lieu of one, the accounts shall be

(a) accompanied by a decalaration signed by the person upon whom the notice has been served as to the accuracy and completeness of the underlying records, and

(b) deemed to be a statement delivered within the meaning of subsection (1) of this section."—[Mr. Houghton.]

Brought up, and read the First time.
Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.
The new Clause deals with the signature of business accounts submitted for Income Tax purposes. It proposes nothing elaborate. It is a requirement which seems perfectly reasonable that a taxpayer submitting business accounts for tax purposes should be asked to put his signature to a positive statement covering such major points as that all stock has been included in the stock figure, that the cash takings have been recorded in the books and that the stocktaking has followed some stated method of valuation.
After what was said yesterday by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) about recommendations of Royal Commissions, I am somewhat hesitant in relying upon the fact that this was a recommendation of the Royal Commission. My right hon. Friend said that recommendations of Royal Commissions were not Holy Writ. I am sure that the Committee agrees about that. Even if they were, there would be a disposition in some quarters to ignore them, perhaps especially on the benches opposite.
I remember that last evening, however, the Chancellor turned to the Royal Commission recommendations for most of his case on the unification of the Profits Tax. For this purpose, therefore, I think I shall trim my sails according to the prevailing wind and rely on the fact that this was a recommendation of the Royal Commission. It was one of
1378
a number of recommendations made by the Royal Commission to check information, and Chapter 33 of the Final Report of the Royal Commission deals exhaustively with various ideas which were canvassed for putting a check on tax evasion. The recommendation which is embodied in the new Clause is in paragraph 1058 on page 322.
In an earlier paragraph, 1053, the Royal Commission recommended that every trader should be required by law to keep records of his transactions—in other words, to keep simple accounts. Last year I moved a new Clause to implement that recommendation, but it was resisted by the Government. While I regret that decision, I would point out that the present proposal in no way depends upon the acceptance of the other. Many taxpayers already submit accounts in connection with their tax assessment, without any obligation to do so by law. It is a convenient, efficient and satisfactory way in which their liability can be correctly determined. Of those who already submit accounts in connection with their trade returns, some prepare their own, which for convenience I will call home-made accounts, and others go to professional accountants who prepare them in the conventional way.
I do not think it is necessary to dwell upon home-made accounts in this connection, because I believe that where a taxpayer, probably a shopkeeper or a person in a small way of business, keeps his own books and accounts, makes them up and sends them to the inspector of taxes along with the return, the Inland Revenue requires the taxpayer to sign the accounts and probably also to answer quite a number of questions on how they are made up and what sort of books he keeps. The Inland Revenue has no power to require a taxpayer to do anything about accounts unless it uses the powers which are given to it under Section 31 of the Income Tax Act, 1952, which gives the Commissioners of Inland Revenue, but not local inspectors, the power to require the production of books of account. I think there is also another provision under which the Additional Commissioners may issue what is called a precept for accounts in certain cases of appeals, but, normally, the Inland Revenue has no power, and does not exercise any power, to require taxpayers to produce accounts. On the

1379
other hand—and quite properly, I think—it does its best to persuade taxpayers whose businesses are expanding, and whose accounts are perhaps bearing obvious signs of being prepared at home, to take proper professional advice and to have the job done properly.
Mr. Stevens: The hon. Member is absolutely right in what he said, but is there not also in practice another sanction which the inspector has when in doubt? He issues an assessment substantially higher than the circumstances may warrant and it is up to the taxpayer to refute the figures given in the assessment.
Mr. Houghton: I freely acknowledge that the Inland Revenue often recommends to the Commissioners that an estimated assessment should be made and that it is frequently of such dimensions as to cause the taxpayer a certain amount of shock. He reacts to that, and the Inland Revenue then may ask the Commissioners to issue a precept for accounts or to use the other powers of Section 31 of the 1952 Act to which I referred.
I will not ask the Committee to dwell upon that, because I am dealing with accounts which are prepared by professional accountants, which bear the certificate of the accountants in proper form and which are submitted to the Inland Revenue, usually by the accountants on behalf of their client for tax purposes. It is those accounts which the Royal Commission recommended should be signed by the taxpayer verifying that the accounts are complete and fully disclose the extent of his business activities. The Royal Commission took the view that it would not be an imposition on taxpayers to require them to do this, that it would be reasonable to do so, and they thought it would be useful as a deterrent against evasion if this rule were introduced.
The Royal Commission put it in quite simple terms. It said:
"If a certificate cannot be signed, the accounts cannot even be expected to be correct."
The Commission went on to say in paragraph 1059:
"The requirement would have the advantage that it would bring explicitly to the mind of the trader the importance of his records being complete on these points; and considering that according to some of our witnesses a great deal of evasion begins with
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carelessness and neglect rather than with deliberate cheating, it would tend to protect him before it is too late."
By the phrase "before it is too late" the Commission means that he may be under-assessed for a period of years and then he may ultimately be confronted with a heavy liability and a back duty case.
It may be argued that the professional standards and integrity of accountants are by themselves a safeguard against inaccurate or fraudulent accounts. There are at least two accountants in the Committee at this moment, and, speaking for myself, I should be very interested to hear what they have to say about that. The accountant usually certifies that the accounts which he is submitting are true and correct according to the books and records that have been shown to him, and that to the best of his knowledge and belief they represent a true account of his client's affairs. But in the presence of accountants, not to mention business men, I need not dwell on the possibilities of accountants not being in full possession of the facts and figures at the time they draw up the accounts.
This certificate which is asked far would be an additional assurance to the professional man as well as to the Inland Revenue. But I do not want to minimise for a moment the value and importance of what I would describe as the standards of dual responsibility of the accountancy profession—a responsibility to their client and a responsibility to the Revenue. This dual responsibility, in which both the Inland Revenue and the client can rely on the integrity of the professional adviser, is unique as far as my investigations go, in fiscal machinery throughout the world.
Mr. Cyril Osborne: Is the hon. Gentleman aware that sometimes accountants' charges are so severe that we are tempted to think that they are charging us more than the Inland Revenue people do?
Mr. Houghton: I am sure that at times there are very frank conversations between taxpayers and their accountants. On the whole, I think it would be difficult to take the view that as a result of that taxpayers are paying too much——
Mr. Gerald Nabarro: What?
Mr. Houghton:—or paying more than they ought to be paying, perhaps I should say.
Mr. Nabarro: That is different.
Mr. Houghton: The hon. Gentleman knew in what context I was speaking.
The accounts are part of the statutory declaration of total income, and this statutory declaration of total income is at the very root of our system of self-assessment. The individual return is and always has been the basis of the Income Tax system. I know that its importance in some respects is modified by P.A.Y.E., tax deduction at source, but in this field—that is, of taxation of profits and gains—there is no doubt that the return made by the taxpayer is all-important especially when it is accompanied by a statement of accounts. These accounts are part and parcel of the tax return and should be signed with a suitable declaration, as the return form itself has to be signed by the taxpayer.
5.45 p.m.
That is the case for this proposed new Clause. I think that its acceptance depends upon whether the Committee believes that what the Royal Commission recommended as part of its attempts to check tax evasion will assist in this purpose without imposing an unreasonable requirement on the taxpayer. I cannot honestly believe that there would be any objection to asking a taxpayer personally to sign accounts which are submitted on his behalf. If they are reinforced by the signature of the taxpayer, who has a closer knowledge than the accountant and a heavier personal responsibility for his affairs, then I think it would be an appropriate requirement to impose.
I hope, therefore, that the Financial Secretary will feel able to respond to this fresh attempt on rather new ground to get some of the Royal Commission's recommendations on the Statute Book in the limited time that we have available for discussion of the Finance Bill.
Mr. Diamond: I believe that a responsibility rests on all of us who were here at two o'clock this morning, and who are likely to be here at two o'clock tomorrow morning, to speak very shortly. Therefore, I should like to support strongly, but briefly, what my hon. Friend the Member for Sowerby (Mr. Houghton) has said.
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May I make it clear that although in a previous incarnation I had the responsibility of putting forward in this Chamber from time to time the views of the accountancy profession as a whole, I have not been approached by the profession on this occasion and I have not the slightest idea what the profession as such may feel about this Amendment. Of course, the accountancy profession has its own means of approaching the Chancellor and the Treasury direct.
Speaking for myself, as a Member of Parliament with a little knowledge of these matters, I support the Clause entirely because it gives that added sense of responsibility which we should all wish to encourage. This deals with a rather limited section of cases—not the very small trader who prepares his own accounts, for he almost invariably, though perhaps not legally required to do so, signs his own accounts, and if he chooses to prepare his own figures and do his own battle with the Inland Revenue unaided, that is his misfortune.
I doubt whether the Inland Revenue has any complaint at all, having regard to the fact that it will undoubtedly collect more tax from the taxpayer who prepares his own accounts than from the taxpayer who takes professional advice, by and large, assuming them all to be honest and straightforward.
We are not dealing with the larger case of the limited company, where the balance sheet has to be signed by the directors who accept responsibility for the balance sheet itself. We are dealing for practical purposes with the rather limited area of the small trader or professional or business man who has a firm of accountants to prepare his accounts and who in normal circumstances does nothing, so far as the balance sheet is concerned, beyond listening to his accountant explaining it to him, saying as usual, "I do not understand these things. I leave it all to you", and the accountant doing his best to see that it is understood and accurate, and submitting it on his client's behalf.
So far as these cases are concerned, the suggestion is a suggestion of the Royal Commission. The Chancellor has many times in these debates told us that he pays great respect to the views of the Royal Commission, and, I am sure, will do so

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on this occasion, also. It would do nothing but good that clients should feel themselves more closely associated with the accountant who produces the accurate records. It does not derogate to the slightest extent from the reputation or integrity of members of the accountancy profession that they should have this additional assistance and close relationship between their clients and themselves. It is not asking the client to do too much to say that he is responsible for the underlying record.
It is not like asking him to sign a balance sheet which he necessarily does not understand, although it is well-known to all of us that we sometimes are asked to sign documents prepared by our lawyers many of which are pages long. They get most impatient if we proceed to read them word for word before signing; indeed, none of us laymen could possibly understand the full implications of every legal document which is put before us to sign. We have to accept a certain amount on trust. Why do we go to a professional man if we are not prepared to do so?
I do not think that it is asking too much to impose a new responsibility on the client to sign a statement to the effect that the underlying records are accurate and have been fully produced to the accountant. I think that it would associate the client himself more closely and assist the Inland Revenue in signing such a certificate, because an accountant's certificate is a thing of many colours. An accountant takes the precaution of certifying only what is well within his capacity to certify. I do not think that a certificate of the kind associated with the standard company balance sheet would normally be the kind of certificate which a practising accountant uses in the case of a small trader. He will vary his certificate according to circumstances, and, of course, the certificate itself does not mean everything.
I freely admit that I myself have on occasions invited a client to sign, in addition to my own signature. He has signed a balance-sheet, because I thought it was appropriate in a case like that that he should join with me and, by this act of signing, should identify himself more closely, and have it brought more closely to his mind that he was being responsible for what was done. Only too frequently
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the trader or taxpayer leaves it to his accountant. It is a satisfactory state of affairs that the accountant should be regarded both by the taxpayer and by the Inland Revenue as a person to whom it can be left. These things are rather left to the accountant and the person concerned is inclined to be a little irresponsible. These difficulties stem, in the first place, from irresponsibility, but they sometimes get to a more regrettable stage in their irresponsibility, and it is a pity that persons who are inclined to be a little irresponsible should fall back on the accountant, saying, "We do not have to bother about this; it is no concern of ours; be will sort it all out." I think that it will be of assistance to the accountant that the taxpayer should have this matter brought more closely to his mind.
I share the views of the Royal Commission on this matter. I cannot see—as the Royal Commission said, and I agree with what it said—that it would tend to hamper the accountants, or that it would hamper the inspectors. I should have thought that they would have welcomed it. I cannot see that the proposal would to any extent be derogatory to the status of the accountancy profession. I therefore hope that the Government will be able to accept it.
Mr. Simon: This new Clause is founded on two quite separate recommendations of the Royal Commission. The first, which is contained in paragraph 83 (b) of the summary of recommendations, is that a taxpayer who submits business accounts to an inspector of taxes should be required to give a personal certificate as to the completeness of the underlying records on which the accounts are based.
The second, which is contained in paragraph (b) of the proposed now subsection, contains a completely independent recommendation that a trader who submits inaccurate accounts should be liable to the same penalties as a taxpayer who enters an inaccurate figure of profits in a formal return. I see that both hon. Members who have spoken on the proposed new Clause, both of whom have great knowledge of this matter, agree that these are quite separate recommendations of the Royal Commission.
We have all been placed in a rather embarrassing position, so far as the recommendations of the Royal Commission are concerned, by the pronouncements of my right hon. Friend and of

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the right hon. Member for Bishop Auckland (Mr. Dalton). The answer is the one that we all adopt—that the recommendations of any Royal Commission, and particularly a Royal Commission of the eminence of that on Taxation of Profits and Income, which went into the matter with such great care, should be treated with the greatest deference, and that, prima facie, its views are entitled to very great weight. That, however, does not mean that one is not entitled, and even bound, to exercise an independent judgment and scrutiny, and it is in that spirit that I propose to examine these two proposals.
I examine them in the light of the desire, on which we are all united, that what we want to do is to prevent tax evasion. We want to prevent taxpayers evading their liabilities and thereby throwing their burdens on the rest of the community. So far as the first recommendation of the Royal Commission, contained in paragraph (a), is concerned, the proposal is open to objection. The objection is that, in the view and experience of the Inland Revenue, it will not have the effect which we all desire. The Royal Commission issued a warning. Referring to the certificate, the Report says:
"Its value would indeed be less the more that the signing of it came to be regarded as a matter of course."
It is true that the Royal Commission thought that that situation would not obtain, but I am bound to warn the Committee that the experience and view of the Inland Revenue is in the opposite direction. They have had some experience of adopting some such expedient, and I expect that the hon. Member for Sowerby (Mr. Houghton) will remember Form 81.
I am told that it used to be a matter of course that on that form, which had not statutory backing, the trader was asked to certify, in effect, that the records on which the accounts were based were complete and accurate. At one time, that form was used as a matter of course, and the experience of the Inland Revenue was that traders tended to sign it as a matter of course. That was the first disadvantage. Secondly, accountants tended to resent further inquiries which looked behind the signature after that form had been signed.
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As a result of that, the practice was changed, and nowadays the form is used selectively. It is used only in cases in which the inspector has some particular reason for seeking some further assurance. It has been the experience that the discriminating and carefully timed use of the form is far more efficacious in the prevention of evasion and in drawing the importance of the accuracy of the accounts to the attention of the trader.
I think perhaps that, if that was true so far as the use of Form 81 was concerned, it would be even more true if we had a universal provision on the lines suggested in paragraph (a). It is the view of the Government that it would be a far less effective check on unreliable accounts than the present discriminating and carefully timed use of the form.
There is another matter, on which I do not put anything like the same weight, but mention it for what it is worth. It is our fear that it might in some measure be interpreted by the less careful and responsible type of accountant as relieving them from the obligation of checking themselves their clients' records. As I say, I do not regard that as having anything like the same weight as the first consideration I mentioned, but it is because our view is that the proposal in paragraph (a) would impede rather than assist the drive against evasion that I cannot advise the Committee to accept it.
6.0 p.m.
Paragraph (b) provides a far more efficacious provision and, I believe, a workable one, namely, that accounts should rank as a return for the purposes of the assessment and penalty provisions of the Income Tax Acts, so that, if a trader submits false accounts, he will be liable to the same penalty as if he had entered an inaccurate figure of profit in a formal return. We regard it as reasonable that a taxpayer who puts in a false account should be liable to the same penalty as if he had entered an incorrect figure of profit in a formal return, and I am, therefore, prepared to accept in principle that recommendation of the Royal Commission and that part of the new Clause.
I ought to warn the Committee that the matter will require careful drafting. The hon. Member for Sowerby will not take it amiss if I point out one, at least, of the

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defects in the drafting of the present new Clause, quite apart from the fact that it hangs on paragraph (a). The new Clause as drawn would apply only where a taxpayer has been required to make a return under Section 20 of the Income Tax Act. Returns under that section are normally required only from companies and partnerships. Individuals are required to make returns under Section 19. It would obviously be anomalous to leave them out. For that reason, therefore, and for the other reasons I have given, I ask the hon. Gentleman to consider withdrawing his new Clause on the assurance that we propose to deal with the second part of it and implement that by a Government Amendment on the Report stage.
Mr. Cronin: My hon. Friends who have spoken in favour of the new Clause will be gratified that the Financial Secretary has seen fit to accept the principle of paragraph (b) of the recommendation of the Royal Commission, but I do not regard it as entirely satisfactory that he should reject the equally helpful paragraph (a). Some of the arguments the hon. and learned Gentleman put against it really do not bear very close examination. He suggested that to sign the accounts would soon become a matter of course and, therefore, the signature would not have the psychological effect we wish it to have. Exactly the same argument could, surely, be applied to signing the ordinary return of income itself which every taxpayer has to make. If one should not sign the accounts, why sign the actual return of income? The hon. and learned Gentleman further said that accountants would resent this apparent extra check on their work.
Mr. Simon: I said that accountants did resent the general use of Form 81 which has been in use so far.
Mr. Cronin: I accept that correction. We have just had my hon. Friend the Member for Gloucester (Mr. Diamond), a distinguished accountant, speaking in support of the new Clause, and he certainly did not express any resentment. Among hon. Gentlemen opposite, there are several distinguished members of the profession, and none has come here to protest against the new Clause. It is very difficult to follow the argument. The
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Financial Secretary has not produced any substantial evidence to indicate that accountants feel in that way.
The hon. and learned Gentleman said that the less responsible accountant would not trouble to check his clients' accounts if he found that the accounts were certified by the client. That seems to be an extraordinary reflection on the profession, and I am surprised that there was no interruption at that stage of his speech, particularly since many hon. Gentlemen opposite must use the services of accountants to a substanial extent.
The actual signature of business accounts has a most important psychological effect. The Royal Commission came down decisively in favour of the signature of the actual accounts. As hon. Members know, in many trades and some professions large sums of cash change hands. It is quite natural for people to forget that they have received large sums of cash. I think it was Freud who made extensive researches into these things and pointed out that we often forget what we do not wish to remember, things which cause us inconvenience. I suggest that a signature would be of substantial help in causing taxpayers to recollect matters such as sums received in cash.
The same argument applies to the quite large sums under the head of expenses which hon. Members of the Committee know are not always incurred wholly, necessarily and exclusively for the purposes of a man's profession or business. A signature would be very helpful in drawing a taxpayer's attention to the importance of keeping his own accounts in an accurate and careful manner. The consequent prevention of carelessness and neglect would be in the taxpayer's own interest.
I can see no possible disadvantage, and even the Financial Secretary went only so far as to say that he did not think that this particular remedy would be efficacious. He did not point to any disadvantage to the Government, to accountants, to inspectors of taxes or to the Inland Revenue. We have here something which a large part of the Committee regards as a useful reform, something backed by the Report of the Royal Commission, and something which the Financial Secretary himself cannot argue would cause any disadvantage. I cannot

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see that there is any satisfactory explanation for the Government not accepting the new Clause in toto.
Mr. Donald Chapman: I have considerable sympathy with what the Financial Secretary said, and I feel that we ought to consider very carefully whether to press the matter any further. In my view, the hon. and learned Gentleman is right in the way he sorted out the emphasis of the two signatures, the automatic signature of the account and the "challenge" signature, so to speak, which is involved in the use of Form 81.
I ask the Committee to consider the case of a man deliberately setting out to deceive the Revenue, particularly in cash transactions, which give most trouble here. If he feels that everybody is signing his accounts automatically, as proposed, he will quite happily sign anyway. He sets out to deceive. He has the cash and wishes to conceal the fact. His signature on the accounts, if everybody else signs, will add no great burden to his conscience.
On the other hand, if, on suspicion by the inspector, he is presented with Form 81, he knows perfectly well what is involved, and his accountant will very likely tell him, "This is a challenge to you now. There is some suspicion about you and you had better be careful before you sign this form." Perhaps it is not put as strongly as that, but there is a difference in emphasis between the automatic signature and what I call the "challenge" signature.
There is a third point which has not been made and about which I am not happy. There are cases in which an accountant has a sort of roving commission over the affairs of his client and, in fact, very largely keeps the books. It often happens, as I understand, in cases where an accountant is dealing with perhaps an aged person or someone in considerable difficulty in even looking after their own books. How far the responsibility for the actual collection of the figures is divided between the accountant and the person in whose name the return is being made with regard to the underlying records might lead to some difficulty, because the person concerned was not really keeping his own accounts.
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I put these last two points as a sort of make-weight for my general argument. In certain cases I could not possibly certify as being part of a correct underlying record a certain account because, in fact, those records are kept by the accountant. That is in cases where an amount for depreciation is written into the accounts and all sorts of weird and wonderful calculations have been made on a basis which I do not understand about the amount due to be debited for depreciation, and I should not like to certify that the records underlying that are accurate. That I leave entirely to my accountant, and there are calculations in my account which I do not understand and would not claim to be able to certify. On the whole, I think that possibly we ought to accept what the Financial Secretary has said.
Mr. Diamond: I should like the Financial Secretary to consider this matter again. As he says, there are two points at issue. I did not say a word about paragraph (b) because I regard that as a small and unimportant technicality which I felt certain the Government would accept. It is a pure technicality and does not require argument, and is merely in order to redress an omission in the original structure. The faot that a man is responsible for what he says in his Income Tax return but not responsible for the figures that go with it seems to me to be an unreasonable situation and possibly a legal lacuna which I thought the Government would naturally wish to fill.
Therefore, we are concerned with the other part of the proposal. The reason why I detain the Committee a moment longer is that the Financial Secretary's arguments, with the greatest deference, are insubstantial. The inspector of taxes, from whom the Financial Secretary draws his information, considers the matter in a different light from the accountant. One accountant can only have the experience of one accountant, but the Inland Revenue has the experience of dealing with many accountants. Therefore, one can only speak from one's own experience.
I thought that the argument the Financial Secretary adduced about familiarity breeding contempt was insubstantial. It may be true that the Inland Revenue during the period that it conducted this experiment—I do not know the details

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of how it worked and how long it lasted—came to certain conclusions. It may be equally true that other persons in considering the experiment might have drawn different conclusions. The only principle that emerged from what he said was that if one is required to sign documents year in and year out then no attention is paid to one's signature. As my hon. Friend the Member for Loughborough (Mr. Cronin) said, this would invalidate the request for a signature in respect of one's Income Tax return or, for that matter, anything else. It is an unreliable argument, and I hope that the Financial Secretary will reconsider it again.
Secondly, the argument that certain accountants resented this procedure is no doubt a statement of fact that is quite easily understandable when a selective issue of a particular form is concerned. When certain accountants are called upon in certain cases to ask their clients to sign a particular form which no other client is called upon to sign, it is regarded with perhaps slight resentment.
Mr. Simon: I said the opposite. When it was a general requirement accountants tended to resent inquiries which looked behind it.
6.15 p.m.
Mr. Diamond: I accept that as a statement of fact, but I again repeat that I do not regard it as important, and certainly once it was part of the law that every client should sign his accounts there would no longer be any ground for resentment. Resentment only arose because the Inland Revenue appeared to be doing something more than the law entitled it to do.
Therefore, I come back to the main point that I made earlier, and perhaps I may say a word to explain why I am pressing the matter. I do not think, although my hon. Friend the Member for Northfield (Mr. Chapman) gave some indication of it, that the real separation between the client on the one hand and the accounts produced by the accountant on the other is fully appreciated. My hon. Friend said that he would not care to take responsibility for some simple figures of depreciation which he said he did not understand. He is a very intelligent man. He is a Labour M.P. What further evidence need be produced? But
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the ordinary taxpayer—and I must be careful about this—is not even a Conservative M.P., and he is much less able to understand a balance sheet and profit and loss accounts and how they are prepared than my hon. Friend, who said he could not understand what I would regard as a fairly simple matter.
We are considering for this purpose the average taxpayer—not the small man, the bigger man, or the company, but the medium-sized trader. He regards this process as a method by which somebody, an accountant, takes over the responsibility of agreeing with the Inland Revenue what his contribution to the Exchequer should be. [An HON. MEMBER: "Oh."] My hon. Friend says "Oh", but, with deference, he is not an average client. He is an M.P. and can understand the matter a great deal more that the average client.
The average businessman is mostly-concerned with how to get his tax liability settled, and he regards that as an external matter. Because it is regarded as an external matter, the Inland Revenue is mistaken in the view and advice that it has no doubt given to the Financial Secretary that the signature of accounts as recommended by the Royal Commission should not be accepted. The real advantage would be that in every case the client would realise that he has a measure of responsibility and that the figures which are being prepared are not a piece of magic that he does not understand, but something in which he has to play a part, and he would realise that the Government and the system of collecting tax depend on him.
Therefore, although my hon. Friend proposes to agree to half a loaf rather than no loaf, I hope he will find it possible to press this matter, because it is a wholesome and good point. It has been recommended by the Royal Commission and it would be a great step forward in stopping tax evasion.
Mr. Eric Fletcher: I cannot claim to speak as an accountant, but I can claim to speak as one who has had some special experience from time to time in advising traders and others concerning their accounts submitted for tax purposes. In that connection, I have had the advantage of a certain amount of

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experience with different firms of accountants. For what it is worth, my experience coincides entirely with that of my hon. Friend the Member for Gloucester (Mr. Diamond).
Within my own knowledge and experience, I am unhesitatingly of opinion that the advice tendered by the Royal Commission is right. I believe that there are numerous cases in which the conscience of those who have to render accounts for tax purposes would be affected if they had to sign accounts when it is not affected in existing circumstances where they leave the preparation and signature of their accounts to the accountants.
I do not say that a number of traders deliberately shield behind the preparation of their accounts by accountants, but I do say that there is an inevitable tendency in a certain number of cases for people to be indifferent, forgetful or casual by sending their papers to an accountant and then dismissing the matter and thinking that they have thereby relieved themselves of the responsibility of applying their mind and their conscience in the way in which they would have to do if they were confronted with something to which they had to append their signature.
Therefore, I thought it right to give the Committee the benefit of my views based on my experience in this matter. I very much hope that on further reflection the Treasury will agree that the recommendations of the Royal Commission on this subject are well founded and that it would be of benefit to the Inland Revenue if the whole of the new Clause were accepted.
Mr. Houghton: I apologise to the Committee for having tied the new Clause to the wrong Section of the Income Tax Act, 1952. The risk of errors and omissions in preparing home-made accounts appears to apply to the preparation of home-made new Clauses, of which this is one.
I referred in my remarks to the need to make the submission of accounts an integral part of the rendering of an Income Tax return. That matter was referred to, as the Financial Secretary has pointed out, in paragraph 1057 of the Royal Commission's Report. What disappointed and confused me about the hon. and learned Gentleman's reply was the way in which he appeared to have separated paragraphs (a) and (b) in the
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new Clause. I should have thought that they went together.
The Royal Commission said:
"… accounts submitted in support are not in law themselves a return, although in many cases the words that the taxpayer uses in referring to them have the effect of incorporating them in and so making them part of a return."
The Royal Commission went on, however, to say:
"We think that there is no place for fine distinctions on this point and we recommend that the law should be amended so as to provide that whenever a taxpayer submits accounts to an assessing authority, either in support of a figure that he has returned or in lieu of a formal return, the accounts should rank as a return for the purposes of the assessment and penalty provisions of the Acts."
That is the clue to this part of the new Clause. It is important, the Royal Commission recommended, that the accounts should rank as a return for penalty purposes and leave no shadow of doubt about it. If the accounts are to rank as part of the return for penalty purposes, how can they do so until they are signed and how can they be signed until the taxpayer is required to sign them? As we have pointed out, many taxpayers submit through accountants accounts which they do not personally sign. Those accounts, the Royal Commission felt, stood in doubt as a part of the declaration of the total income of the taxpayer within the Act. The Royal Commission wished it to be put beyond any doubt that they were so included.
It distresses me to hear the Financial Secretary suggest that the signing of documents can become a matter of course. As my hon. Friend the Member for Loughborough (Mr. Cronin) pointed out, if the signature of accounts is to become a routine matter of course, why do we require the taxpayer to sign his return form? That is a matter of course, too. Not until we have the signature can we tie the taxpayer down to his declaration.
Although the Financial Secretary has kindly offered to consider drafting a new Clause for later consideration when dealing with paragraph (b) of the Clause, that is not enough. The two things must go together. If a taxpayer puts his signature to anything as a matter of course, at least the Inland Revenue can confront him with his signed declaration. That is important. Many declarations that we sign may be a matter of course to our own mind, but

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the authorities to whom we render our signatures have certain statutory rights when we have made those declarations. We have discharged the responsibility in law and we must stand by it. Surely that applies to what we are proposing here.
I hope, therefore, that the Financial Secretary will be able to assure the Committee that if he is taking something back for fresh consideration, it will be the two proposals and not only the second one, which would be ineffective without the requirement in paragraph (a). Otherwise, it would mean that only when the Inland Revenue asks the taxpayer to sign the
accounts will the Revenue have the right to proceed for penalty purposes upon any false declaration that is made. All taxpayers should conform to this requirement on the accounts in the same way as they conform to the requirement on the form of declaration itself. Therefore, unless the Financial Secretary has something more satisfactory to offer to the Committee, I am bound to advise my hon. Friends to divide on the new Clause.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 178, Noes 222.

Division No. 187.]

AYES

[6.27 p.m.

Ainsley, J. W.

Harrison, J. (Nottingham, N.)

Oliver, G. H.

Albu, A. H.

Hastings, S.

Oram, A. E.

Allaun, Frank (Salford, E.)

Hayman, F. H.

Orbach, M.

Allan, Arthur (Bosworth)

Healey, Denis

Oswald, T.

Awbery, S. S.

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

Owen, W. J.

Bacon, Miss Alice

Herbison, Miss M.

Padley, W. E.

Balfour, A.

Hewitson, Capt. M.

Paget, R. T.

Bellenger, Rt. Hon. F. J.

Robson, C. R. (Keighley)

Palmer, A. M. F.

Benson, Sir George

Holman, P.

Pargiter, G. A.

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

Houghton, Douglas

Parkin, B. T.

Blackburn, F.

Howell, Denis (All Saints)

Paton, John

Blenkinsop, A.

Hoy, J. H.

Pearson, A.

Blyton, W. R.

Hughes, Emrys (S. Ayrshire)

Peart, T. F.

Boardman, H.

Hughes, Hector (Aberdeen, N.)

Pentland, N.

Bottomley, Rt. Hon. A. G.

Hynd, H. (Accrington)

Plummer, Sir Leslie

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

Hynd, J. B. (Attercliffe)

Popplewell, E.

Brockway, A. F.

Irving, Sydney (Dartford)

Price, J. T. (Westhoughton)

Broughton, Dr. A. D. D.

Isaacs, Rt. Hon. G. A.

Price, Philips (Gloucestershire, W.)

Brown, Rt. Hon. George (Belper)

Janner, B.

Probert, A. R.

Brown, Thomas (Ince)

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

Proctor, W. T.

Burke, W. A.

Jeger, George (Goole)

Pursey, Cmdr. H.

Butler, Herbert (Hackney, C.)

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

Rankin, John

Callaghan, L. J.

Jenkins, Roy (Stechford)

Redhead, E. C.

Champion, A. J.

Johnston, Douglas (Paisley)

Reeves, J.

Chapman, W. D.

Jones, David (The Hartlepools)

Reid, William

Chetwynd, G. R.

Jones, J. Idwal (Wrexham)

Reynolds, G. W.

Clunie, J.

Kenyon, C.

Rhodes, H.

Collins, V. J. (Shoreditch & Finsbury)

Key, Rt. Hon. C. W.

Robens, Rt. Hon. A.

Corbet, Mrs. Freda

King, Dr. H. M.

Roberts, Goronwy (Caernarvon)

Craddock, George (Bradford, S.)

Lawson, G. M.

Robinson, Kenneth (St. Pancras, N.)

Cronin, J. D.

Ledger, R. J.

Shinwell, Rt. Hon. E.

Crossman, R. H. S.

Lee, Frederick (Newton)

Silverman, Julius (Aston)

Lee, Miss Jennie (Cannock)

Simmons, C. J. (Brierley Hill)

Darling, George (Hillsborough)

Lever, Leslie (Ardwick)

Skeffington, A. M.

Davies, Ernest (Enfield, E.)

Lewis, Arthur

Smith, Ellis (Stoke, S.)

Davies, Stephen (Merthyr)

Lindgren, G. S.

Sorensen, R. W.

de Freitas, Geoffrey

Lipton, Marcus

Soskice, Rt. Hon. Sir Frank

Delargy, H. J.

Logan, D. G.

Sparks, J. A.

Diamond, John

Mabon, Dr. J. Dickson

Stones, W. (Consett)

Dodds, N. N.

McAlister, Mrs. Mary

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

Donnelly, D. L.

McCann, J.

Summerskill, Rt. Hon. E.

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

MacDermot, Niall

Swingler, S. T.

Ede, Rt. Hon. J. C.

McInnes, J.

Taylor, Bernard (Mansfield)

Edwards, W. J. (Stepney)

McLeavy, Frank

Taylor, John (West Lothian)

Evans, Edward (Lowestoft)

MacPherson, Malcolm (Stirling)

Thomas, George (Cardiff)

Fernyhough, E.

Mahon, Simon

Fletcher, Eric

Mallalieu, E. L. (Brigg)

Tomney, F.

Foot, D. M.

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

Ungoed-Thomas, Sir Lynn

Fraser, Thomas (Hamilton)

Mann, Mrs. Jean

Viant, S. P.

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

Mason, Roy

Warbey, W. N.

George, Lady Megan Lloyd (Car'then)

Mikardo, Ian

Watkins, T. E.

Gibson, C. W.

Mitchison, G. R.

Weitzman, D.

Gordon Walker, Rt. Hon. P. C.

Monslow, W.

Wheeldon, W. E.

Grenfell, Rt. Hon. D. R.

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

White, Mrs. Eirene (E. Flint)

Grey, C. F.

Moyle, A.

Willey, Frederick

Griffiths, David (Rother Valley)

Neal, Harold (Bolsover)

Williams, David (Neath)

Hall, Rt. Hn. Glenvil (Colne Valley)

Noel-Baker, Francis (Swindon)

Williams, Rev. Llywelyn (Ab'tillery)

Hamilton, W. W.

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

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

Willis, Eustace, (Edinburgh, E.)

Woodburn, Rt. Hon. A.

TELLERS FOR THE AYES:

Wilson, Rt. Hon. Harold (Huyton)

Yates, V. (Ladywood)

Mr. Short and Mr. Deer.

Winterbottom, Richard

Zilliacus, K.

NOES

Agnew, Sir Peter

Gower, H. R.

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

Aitken, W. T.

Graham, Sir Fergus

Orr, Capt. L. P. S.

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

Grant, Rt. Hon. W. (Woodside)

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

Alport, C. J. M.

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

Osborne, C.

Amory, Rt. Hn. Heathcoat (Tiverton)

Green, A.

Page, R. G.

Anstruther-Gray, Major Sir William

Grimond, J.

Pannell, N. A. (Kirkdale)

Arbuthnot, John

Grimston, Hon. John (St. Albans)

Partridge, E.

Ashton, H.

Gurden, Harold

Peel, W. J.

Atkins, H. E.

Harris, Frederic (Croydon, N. W.)

Pickthorn, K. W. M.

Baldock, Lt.-Cmdr. J. M.

Harris, Reader (Heston)

Pilkington, Capt. R. A.

Baldwin, Sir Archer

Harrison, Col. J. H. (Eye)

Pitman, I. J.

Barber, Anthony

Harvey, Sir Arthur Vere (Macclesf'd)

Powell, J. Enoch

Barlow, Sir John

Heald, Rt. Hon. Sir Lionel

Price, Henry (Lewisham, W.)

Barter, John

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

Profumo, J. D.

Batsford, Brian

Henderson-Stewart, Sir James

Ramsden, J. E.

Baxter, Sir Beverley

Hesketh, R. F.

Rawlinson, Peter

Beamish, Col. Tufton

Hicks-Beach, Maj. W. W.

Redmayne, M.

Bell, Philip (Bolton, E.)

Hirst, Geoffrey

Rees-Davies, W. R.

Bell, Ronald (Bucks, S.)

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

Renton, D. L. M.

Bennett, F. M. (Torquay)

Holland-Martin, C. J.

Ridsdale, J. E.

Bevins, J. B. (Toxteth)

Holt, A. F.

Roberts, Sir Peter (Heeley)

Bidgood, J. C.

Hope, Lord John

Robinson, Sir Roland (Blackpool, S.)

Biggs-Davison, J. A.

Horobin, Sir Ian

Rodgers, John (Sevenoaks)

Bishop, F. P.

Howard, Gerald (Cambridgeshire)

Roper, Sir Harold

Black, C. W.

Hughes-Young, M. H. C.

Ropner, Col. Sir Leonard

Bonham Carter, Mark

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

Scott-Miller, Cmdr. R.

Bossom, Sir Alfred

Hyde, Montgomery

Sharples, R. C.

Boyle, Sir Edward

Hylton-Foster, Rt. Hon. Sir Harry

Shepherd, William

Braine, B. R.

Iremonger, T. L.

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

Bralthwaite, Sir Albert (Harrow, W.)

Irvine, Bryant Godman (Rye)

Spearman, Sir Alexander

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

Jenkins, Robert (Dulwich)

Speir, R. M.

Brooke, Rt. Hon. Henry

Jennings, Sir Roland (Hallam)

Stanley, Capt. Hon. Richard

Browne, J. Nixon (Craigton)

Johnson, Dr. Donald (Carlisle)

Stevens, Geoffrey

Bullus, Wing Commander E. E.

Johnson, Eric (Blackley)

Steward, Harold (Stockport, S.)

Burden, F. F. A.

Joseph, Sir Keith

Stoddart-Scott, Col. Sir Malcolm

Butcher, Sir Herbert

Kaberry, D.

Storey, S.

Campbell, Sir David

Kerr, Sir Hamilton

Stuart, Rt. Hon. James (Moray)

Cary, Sir Robert

Kershaw, J. A.

Studholme, Sir Henry

Channon, Sir Henry

Kimball, M.

Summers, Sir Spencer

Chichester-Clark, R.

Lagden, G. W.

Sumner, W. D. M. (Orpington)

Leather, E. H. C.

Taylor, Sir Charles (Eastbourne)

Clarke, Brig. Terence (Portsmth, W.)

Leavey, J. A.

Taylor, William (Bradford, N.)

Cole, Norman

Leburn, W. G.

Teeling, W.

Conant, Maj. Sir Roger

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

Temple, John M.

Cooke, Robert

Linstead, Sir H. N.

Thomas, Leslie (Canterbury)

Cooper-Key, E. M.

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

Thompson, Kenneth (Walton)

Craddock, Beresford (Spelthorne)

Lucas, Sir Jocelyn (Portsmouth, S.)

Thompson, R. (Croydon, S.)

Crowder, Sir John (Finchley)

Lucas, P. B. (Brentford & Chiswick)

Thorneycroft, Rt. Hon. P.

Crowder, Petre (Ruislip—Northwood)

Lucas-Tooth, Sir Hugh

Thornton-Kemsley, Sir Colin

Davidson, Viscountess

McAdden, S. J.

Tiley, A. (Bradford, W.)

D'Avigdor-Goldsmid, Sir Henry

Macdonald, Sir Peter

Tilney, John (Wavertree)

Deedes, W. F.

Mackeson, Brig. Sir Harry

Turner, H. F. L.

Digby, Simon Wingfield

McKibbin, Alan

Turton, Rt. Hon. R. H.

Donaldson, Cmdr. C. E. McA.

Mackie, J. H. (Galloway)

Tweedsmuir, Lady

Drayson, G. B.

McLaughlin, Mrs. P.

Vane, W. M. F.

du Cann, E. D. L.

Maclean, Sir Fitzroy (Lancaster)

Vaughan-Morgan, J. K.

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

MacLeod, John (Ross & Cromarty)

Vickers, Miss Joan

Duncan, Sir James

Macmillan, Rt. Hn. Harold (Bromley)

Vosper, Rt. Hon. D. F.

Duthie, W. S.

Macmillan, Maurice (Hallfax)

Wade, D. W.

Eden, J. B. (Bournemouth, West)

Maddan, Martin

Wakefield, Edward (Derbyshire, W.)

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

Maitland, Hon. Patrick (Lanark)

Wakefield, Sir Wavell (St. M'lebon)

Emmet, Hon. Mrs. Evelyn

Markham, Major Sir Frank

Wall, Patrick

Errington, Sir Eric

Marlowe, A. A. H.

Farey-Jones, F. W.

Marshall, Douglas

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

Fletcher-Cooke, C.

Mathew, R.

Ward, Dame Irene (Tynemouth)

Fraser, Hon. Hugh (Stone)

Maudling, Rt. Hon. R.

Watkinson, Rt. Hon. Harold

Fraser, Sir Ian (M'cmbe & Lonsdale)

Morrison, John (Salisbury)

Webbe, Sir H.

Gammans, Lady

Nabarro, G. D. N.

Whitelaw, W. S. I.

Garner-Evans, E. H.

Nairn, D. L. S.

Williams, Paul, (Sunderland, S.)

George, J. C. (Pollok)

Nicholson, Sir Godfrey (Farnham)

Wills, Sir Gerald (Bridgwater)

Gibson-Watt, D.

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

Wilson, Geoffrey, (Truro)

Glover, D.

Noble, Comdr. Rt. Hon. Allan

Wood, Hon. R.

Glyn, Col. Richard H.

Noble, Michael (Argyll)

Woollam, John Victor

Godber, J. B.

Nugent, G. R. H.

Gough, C. F. H.

Oakshott, H. D.

TELLERS FOR THE NOES:

Mr. Legh and Mr. Bryan.

New Clause.—(QUALIFICATIONS OF GENERAL COMMISSIONERS.)
Part III of the First Schedule to the Income Tax Act, 1952, is hereby repealed.—[Mr. Mitchison.]
Brought up, and read the First time.
Mr. G. R. Mitchison: I beg to move, That the Clause be read a Second time.
Part III of the First Schedule to the Income Tax Act, 1952, deals with the qualifications for the General Commissioners, but does not deal with the method of their appointment; and this new Clause provides the Government and all right hon. and hon. Gentlemen opposite with an opportunity of being mildly progressive in what is really an indisputable matter. The position is that these property qualifications first appeared in Pitt's Income Tax Act of 1799, and though they have changed from time to time they still bear traces of antiquity, not to say absurdity.
The General Commissioners, however appointed, have to have these qualifications originally; they have to keep them during their period of office. I suppose that if they failed to keep them some of their decisions might become rather doubtful since they would no longer be qualified. That might inure to the advantage of the taxpayer, or it might inure to the advantage of the Revenue, but nobody, I am quite certain, wants it to happen. These qualifications take one back a bit, as the saying goes.
First, they have to hold property. They have got to hold either land, real estate, or they have got to hold personal estate, or they have got to hold a combination of the two, up to a given value, and the given value varies according to where they are sitting and acting. Even the names of the towns indicate Ale antiquity of these qualifications, since apparently the General Commissioners who are sitting in King's Lynn require a higher qualification in property than those who are sitting in, for instance, Bradford, and I do not think that Bradford would like that, if it attaches any importance whatever to the qualifications of the General Commissioners.
See what the qualifications are. Within the high-class places like Birmingham and King's Lynn they are £200 a year of real estate, or £5,000 a year, producing an annual income of £200, of personal estate,
1400
or combined real and personal estate worth £200 a year. Then there is provision as to how to arrive at the values of these two things in combination. There are also the lower-class places. Wales is distinctly lower, but Scotland, in the county divisions, has fallen lamentably behind. The qualification in the county divisions of Scotland is £150 per annum, but the £ is the £ Scots and, as far as I know, this part of the Statute Book represents the latest if not the only appearance of the £ Scots in our legislation. But when it comes to personal estates in the county divisions of Scotland, they qualify in sterling, and the combined real and personal estates qualify again in £200 sterling per annum. It is obviously necessary, therefore, for the Government of the day to be well acquainted with the £ Scots, its value, and what I might call its permutation and combination possibilities.
This matter was raised six years ago. That was quite a long time after Pitt's Income Tax Act, but before the Report of the Royal Commission. We had what might be called a really cheerful debate about it on a Clause that at that time proposed a simpler qualification of £200 a year. We had not had at that time the Report on the Royal Commission, to which I shall refer on this as on other matters in a moment. We had put the Clause to the Government and the Government said, "The Report is not out yet. We must wait for it."
There was a terrible passage in which I took the opportunity of calling the attention of the present Attorney-General to the form of the qualification in £ Scots, and I asked him how much the £ Scots was. It is, of course, his official duty to expound legislation to the House and I regret to say that he replied:
"I cannot possibly express an opinion on the £ Scots without notice."—[OFFICIAL REPORT, 17th June, 1952; 502. c. 1062.]
Mr. Emrys Hughes: Shame.
6.45 p.m.
Mr. Mitchison: The Clause had been on the Notice Paper for some time and all that the Attorney-General, who was then Solicitor-General, was able to express at the end of the day was not the absolute certainty which is required in this matter, because if the £ Scots went

1401
wrong so would the General Commissioners. They would become disqualified, disabled and unable to act any longer. The Government did not accept the Clause. We divided on it and we left it at that.
The next step was that the Royal Commission got round to this matter. The Committee will be glad to hear that this was not one of the subjects on which there was any difference of opinion between the majority and the minority of the Commission. The Commission referred to Pitt's Income Tax of 1799 and said:
"The present qualification (which has continued unchanged since 1842) is set out in Part III of the First Schedule to the Income Tax Act, 1952"
and it added:
"It was represented to us that a property qualification is an anachronism; and that it stands in the way of the appointment of persons of ability who have no income but that which is derived from personal effort. It was pointed out that the great majority of taxpayers today are probably in this situation"—
that was about 1955, under a Tory Government—
"We agree that the property qualification is anomalous and we recommend its entire abolition."
I do not think that even the hon. Member for Langstone (Mr. Stevens) can find very much to quote about that. It is quite definite.
The Commission went on to say:
"The imposition of a property qualification was, at best, a very haphazard method of trying to secure that General Commissioners should have some understanding of the different sources of income giving rise to the assessments which they would have to deal with. We think it much more important that the system of appointment should be such as to facilitate the finding of persons willing to serve who possess the right personal qualities."
The Report went on to questions which really relate to the appointment and not to the qualifications of the General Commissioners.
It continued:
"It would be absurd to keep the Land Tax Commissioners in existence for the sole purpose of appointing General Commissioners …"
The Land Tax Commissioners kept themselves alive by appointing one another as General Commissioners. They were formerly appointed by what were called Names Acts. Be that as it may, we are concerned only with the qualifications.
1402
As far as one can be serious about the matter, I imagine that nobody in the Committee wishes to keep property qualifications nowadays and thereby debar people who might be earning a substantial but fluctuating income and let in people who, by way of qualifications, had nothing but the possession of a piece of personal or real estate to support them. One always wants any Government and Chancellor to have a mind of their own in these matters, but I hope that this quite simple proposition, and not a revolutionary suggestion, so readily and unreservedly adopted by the Royal Commission will now commend itself to the Government.
Let us say nothing about the past. The Government were entitled, six and a half years ago, to shelter behind the fact that the Commission had not yet reported. It has now reported. Its Report is quite clear. It does not even want the limited property qualifications which we suggested in June, 1952. I simply invite the Committee and the Government to accept the Amendment as getting rid of something which is quite anomalous, very ancient and by now very absurd.
Mr. Stevens: I am very happy indeed to be able to support everything that the hon. and learned Member for Kettering (Mr. Mitchison) has said. It is a sufficiently rare event to fill me with a warm and pleasing glow. Incidentally, it is very interesting to hear the hon. and learned Member quoting from the Royal Commission's Report with such evident signs of approval and pleasure. He cannot have been with us yesterday afternoon to hear his right hon. Friend the Member for Bishop Auckland (Mr. Dalton) referring in rather different terms to the Report as a whole and to the authors of it.
I agree, however, that the time has come to make a change. We should bear in mind that in 1842, when these property and money qualifications were specified, taxation was at a very much lower rate than it is today and it was very much easier, out of a reasonable earned income, to accumulate the savings necessary to give one the qualifications required. Those days are past. In the years to come, with further Tory Chancellors, taxation no doubt will be lowered and once more the possibility of saving will emerge. Meantime I agree entirely with what the hon. and learned Gentleman has said, and

1403
I hope that his words and his arguments will bear fruit in what the Financial Secretary has to say.
Mr. Simon: When the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) and my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) are in alliance, particularly when they are reinforced by the authority of the Royal Commission, it is difficult to withstand their arguments.
The arguments are really incontrovertible. In the first place, a property qualification of any kind these days in this type of appointment can hardly be defended. Secondly, as the hon. and learned Gentleman pointed out, the existing property qualifications are, in any event, in the highest degree anomalous. In view of what I shall say, it is perhaps unnecessary for me to assure him that a £ Scots is worth one-twelfth of £1 sterling. That is only one of many oddities in the property qualifications between the two countries.
Mr. Mitchison: I would like to tell the hon. and learned Gentleman that I ascertained this from the Chancellor of the Exchequer a day or two after the Solicitor-General, as he then was, expressed his inability to give an opinion on the matter.
Mr. Simon: I am sorry to have told thing he knew already.
Thirdly, as I indicated, this is a matter on which the Royal Commission has made a recommendation and, as I said on the previous Amendment, that is a factor to which we ought to attach great importance and considerable respect without, of course, letting it impair our judgment on any proposal.
Having said that, however, I will ask the hon. and learned Gentleman to withdraw his Motion and Clause. In the first place, it cannot be accepted as it stands. There are a number of references elsewhere in the Income Tax Acts to the property qualification, which would need revision if Part III of the First Schedule were repealed as suggested. Secondly, I think the property qualification ought to be dealt with in a wider context. We want also to deal with the method of appointment, which the hon. and learned Gentleman, on the edge of the rules of
1404
order as he put it, referred to, and also we want to deal with the payment of expenses of the General Commissioners of Taxation.
We propose to deal with this in the context of the Tribunals and Inquiries Bill, although it will be an Amendment of the Finance Act. I think that will relieve part of the pressure on the Report stage of this Bill, and it falls, I am assured, within the scope of the Tribunals and Inquiries Bill. For those reasons, assuring the hon. and learned Gentleman that we unreservedly accept the intention of this Clause, namely, that the property qualification of the General Commissioners shall disappear from our law, I hope he will not press the Motion.
Mr. Mitchison: Thanking, as I do, the hon. and learned Gentleman for what he has said, and rejoicing for myself that he proposes to cover a rather wider field than one could conveniently do in this Clause, and only anxious lest between us we are putting rather more work on his learned advisers who, at this time of the year are particularly busy, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(INCAPACITATED CHILD OVER THE AGE OF SIXTEEN.)
In subsection (1) of section two hundred and twelve of the Income Tax Act, 1952 (which relates to relief for children), after the words "if over the age of sixteen years at the commencement of that year, is receiving full-time instruction at any university, college, school or other educational establishment," there shall be inserted the words "or who, being over the age of sixteen years, but has not attained the age of twenty-one years at the commencement of that year is incapacitated by illness, infirmity or disablement from undergoing full-time instruction at any school or other educational establishment or from following any gainful occupation".—[Mr. Houghton.]
Brought up, and read the First time.
Mr. Houghton: I beg to move, That the Clause be read a Second time.
This proposed Clause deals with the position of an incapacitated child over the age of 16, and it proposes to give the parent of such a child between the ages of 16 and 21 the same allowance for Income Tax purposes as is now given in respect of those children over 16 who are receiving full-time instruction at a recognised educational establishment.

1405
This, again, is a recommendation of the Royal Commission, and after the speech of the Financial Secretary a moment or two ago one can be a little bolder in referring to the fact that these Clauses implement recommendations of the Royal Commission. In its second Report the Royal Commission drew attention in paragraph 193 to what it described as a very special situation.
The facts are simple. Child allowance, now graduated according to age in the Finance Act of 1957, applies to dependent children up to the age of 16, and beyond the age of 16, provided that they are undergoing full-time education. Up to the age of 16 the incapacitated child is in the same position as any other child. Child allowance is given to the parents of an incapacitated child under 11 of £100 and 11-plus of £125, but, at the age of 16, since the child is not usually able to benefit from extended education, the allowance ceases and then the parent may claim tax relief for that child as a dependent relative.
The relief for a dependent relative is tax relief on £60 as against tax relief on £125 for a child between 12 and 16, and £150 on a child over 16 undergoing full-time education. So the Committee will see that there is a big drop in the tax relief when the child passes out of the scope of child allowance and becomes eligible for dependent relative relief. This Clause would give to the incapacitated child, in the circumstances described in the Clause itself, tax relief on £150 between the ages of 16 and 21.
The Royal Commission referred to the drop in the tax relief for the parent when the incapacitated child reached the age of 16, but then the drop was only from £85 child allowance to £60 dependent relative, and the drop is now bigger than when the Royal Commission drew attention to this special situation and recommended that relief should be given in respect of the incapacitated child.
This proposal has been discussed twice before; first, on 25th June, 1956, when a new Clause was moved by my hon. Friend the Member for Loughborough (Mr. Cronin), and secondly on 16th July, 1957, when I moved an Amendment to the Finance Bill in column 1095 of the OFFICIAL REPORT. The replies given from the Front Bench
1406
opposite on those occasions were unfavourable.
Apparently, on the first occasion when we moved to give the special relief to an incapacitated child, we claimed 50 per cent. higher relief for it than was available to the normal child. That must obviously have been a formidable obstruction in the way of the success of the proposed change, because, as was pointed out, this would give the incapacitated child an advantage over the normal one as regards tax relief to the parent, whereas in many cases the normal child undergoing education imposes considerable additional expenses on the parents.
7.0 p.m.
So we failed in 1956. We tried again in 1957, and we fell into another pitfall of home-made new Clauses. We overlooked the fact that we had not put an upper age limit on our proposed relief—it would have gone on for all time. The Financial Secretary of the day pointed out that it would mean that the incapacitated child would go on with this relief indefinitely until it became an adult, and then an anomaly would arise as between the incapacitated child and the ordinary dependent relative of similar age, probably incapacitated by infirmity, who would qualify for much lower relief.
In the new Clause before the Committee we have claimed precisely the same reliefs as are applicable to the normal child undergoing full time instruction after the age of 16, but, in this case, in accordance with the recommendation of the Royal Commission, we have prescribed the upper age limit of 21.
The other defence which was mentioned almost in passing by the then Financial Secretary in 1956, but which was given much heavier weight by the Financial Secretary in 1957, was the bearing of National Assistance grants on this very special situation. The then Financial Secretary, the hon. Member for Wolverhampton, South-West (Mr. Powell), emphasised what had been alluded to by the Financial Secretary in the previous year, the present Minister of Housing and Local Government, that a child on reaching age 16 might qualify for a grant from the National Assistance Board if it had no resources or income in its own right and irrespective of the means of the parents. It was suggested that this was the real solution to this very special situation.

1407
I submit to the Committee that the parents should not have to go to the National Assistance Board on behalf of an incapacitated child as the only means of getting the relief to which they are entitled because of the dreadful infliction on their adolescent son or daughter. One might equally argue that parents who send their child to school after the age of 16 should get their relief from the National Assistance Board and not through the medium of tax relief. I feel sure that the Committee will not accept the doctrine that the availability of the National Assistance grant is the complete answer to the claim of the taxpayer for relief in these circumstances. Nor, indeed, do I think that the Committee or the Financial Secretary would suggest this is also the answer to the Royal Commission, which considered this matter with great care.
The Financial Secretary, replying to the debate in 1956, said that he had no desire to compel parents to go to the National Assistance Board if they did not think it was right and proper that they should ask for a grant for their child; but if parents are denied any relief, except by that means, it is a little difficult to see what choice they have except that of going to the National Assistance Board or getting no relief from any other source.
I hope, therefore, that the Paymaster-General, if he is to reply to the debate, will be able to give the Committee some better reply than was given on earlier occasions. The Committee will, I think, feel deeply that parents with a child who is unable to profit from education or to go out to work should have the sympathy of the Chancellor when he is dealing with tax reliefs. We have provisions for old people, for housekeepers, for widowers and widows, and reliefs which take into account domestic afflictions as well as domestic responsibilities of the more normal kind. I trust, therefore, that on this third occasion, the Government will have a more favourable reply to give to a claim for relief, which was dealt with in sympathetic terms and which was the subject of a unanimous recommendation by the Royal Commission.
Mr. E. H. C. Leather: I should like for one moment to
1408
urge on my right hon. Friend a sympathetic response to this new Clause. I have not had the opportunity of discussing it with him, but I have discussed it with the Financial Secretary on many occasions, and I feel very strongly in agreement with everything which the hon. Gentleman the Member for Sowerby (Mr. Houghton) has just said.
This Government have a very creditable record in approving tax allowances for all kinds of unfortunate people, particularly in the case of children. I cannot believe that it was a deliberate design that brought about the position in which generous and helpful allowances have been given to healthy children going on in education, but have been stopped in the tragic cases of incapacity, mental or physical or of some other kind.
Certainly no one would argue that there is any economic justification for it. I am sure that my right hon. Friend cannot make out any case, nor would be try to do so, for the person lucky enough to have a healthy child going on to advanced level or the university, which would cost the parent £X, on the ground that for the unfortunate parent, particularly of a mentally handicapped child, the cost of keeping that child would be considerably less.
I would have thought that for most parents with experience of this problem—I am glad to say that I have none myself, but I have a good deal of experience with constituents—the position is, if anything, the reverse. It seems inhuman and unreasonable. Secondly, it seems to me—I agree with the hon. Member for Sowerby—a monstrous answer to say, "Let them go to National Assistance." I should like to underline the point which he made. If we say, "Send these people to National Assistance," we know perfectly well that the vast majority will not go. It is all very well for the Treasury to say that officially that is the answer, but we all know what the vast majority of our constituents feel about National Assistance. If we say that about incapacitated children, we can say it about a dozen other cases as well, which the Government have admitted and accepted over the past few years. I hope that my right hon. Friend may find himself in a position to give us a sympathetic answer on this very deserving case.
The Paymaster-General (Mr. Reginald Maudling): I would not quarrel with the facts as deployed by the hon. Member for Sowerby (Mr. Houghton). I know him too well to quarrel with his facts unless I am sure they are wrong, which is very rare. Mention has been made of earlier discussions on this matter in 1954 when an answer was given by the Economic Secretary to the Treasury. He has the same job in a different capacity this evening.
I think that this is one of those cases which illustrate the immense difficulty of having a coherent pattern of personal reliefs in our claim structure. This point has been raised on a previous occasion and has been turned down. I am afraid that this evening I still cannot accept this proposition on behalf of the Government. I will try to set out the reason which, on the balance of the argument—and I admit that it is on the balance of the argument—seems to me to be a conclusive one.
The first question is about the National Assistance Board. The hon. Gentleman said that this was not a complete answer. I agree that it is not a complete answer, but I think that it is wrong to go further and totally disregard it. The fact that income is provided by the National Assistance Board to people because they are incapacitated seems to me a fact reasonable to take into account. It will certainly assist in cases of hardship. That, of course, is not the complete answer and I do not think it was ever argued that it is the complete answer.
Mr. E. Fernyhough: The right hon. Gentleman must know that the National Assistance Board does not provide people with assistance merely because they are incapacitated, but when they can prove need.
Mr. Maudling: The hon. Member is quite wrong in this case. Normally the National Assistance Board will accept an application at the age of 16 from or on behalf of a wholly incapacitated child with no capital or income of its own for an assistance grant in its own right regardless of its parents' resources. This is a special case in which an exception is made.
Mr. Fernyhough: Regard is had to the applicant's resources.
Mr. Maudling: Regard is taken of the applicant's resources, but, as I said, no regard is taken of the parents' resources.
1410
We must look at the relation of these allowances to allowances for other children and other dependant relatives. That seems the fundamental difficulty. It is true that in the case of the child at home, dependent on parents, the parents do not get the same allowance as the parents of the child who is being retained at school. The purpose of increasing the allowance for children of that age who stay at school is part of a general drive to encourage children to stay at school and to improve education in the country, but, as so often happens, when we make a move on one front we create anomalies on another, and there is an anomaly here.
If we increased the allowance for the dependant child, how could we possibly keep the present level of dependant relative allowance? I do not think we could say that those supporting children between the ages of 16 and 21 should have a higher allowance than those supporting dependant relatives generally. Therefore, I think the argument should be for a general increase for dependant relatives. That is a matter which is often pressed on the Committee, and often with considerable force. There is quite a substantial amount involved—although I have not the actual figures in terms of tax allowance—and, therefore, it is not a matter which my right hon. Friend could have contemplated this year even if that further general advance had been put forward as a proposition.
The difficulty here is that there is a choice to be made between retaining the present situation, which admittedly involves a disparity between the allowances, or changing it and creating a new anomaly, which would give rise to widespread grievance by giving a special allowance to dependant relatives of this particularly limited character. I have been studying this matter and have found, after four years, that the balance of argument is a fairly narrow one, but, even after taking into account the arguments of my hon. Friend the Member for Somerset, North (Mr. Leather), I am forced to the conclusion that it should be left as it is, and, therefore, we cannot accept the Amendment.
Mr. Mitchison: I wish to ask the right hon. Gentleman one question. How much would this new Clause cost?
Mr. Maudling: I could not give an exact figure—it is a very small amount—but I was not basing my argument in any way on the cost of this actual proposal.
Mr. Leather: Before my right hon. Friend ends his speech, may I say that a sense of grievance and an anomaly already exist. I do not think he would question that. Therefore, a sense of grievance and an anomaly which resulted from accepting this Clause would be no worse than the present position; it would merely be shifted somewhere else. My right hon. Friend said that a general case for an increase in dependent relative allowance was a worthy thing which at some stage might be admitted. Is he arguing that it is too much to ask to shift the anomaly so as to allow another worthy section of the public, which feels this sense of grievance very deeply, to have the grievance removed, rather than stand absolutely pat on refusing to do anything at all?
7.15 p.m.
Mr. Mitchison: I found the reply of the right hon. Gentleman profoundly disappointing. All I can say to him is that I do not myself believe he gave that reply at all gladly. He said as much at the end of his speech. We have had the Government telling us time and time again that we must pay attention to the recommendations of the Royal Commission. We have a perfectly clear recommendation here which, as has already been said, was made in relation to what it described at that time as "a needless hardship". The amount of that hardship has been increased now because of the change in the rates and the consequent increase in the size of the change.
Mr. Maudling: I quite agree that the difference has been changed, but I think it going a little too far to say that the hardship has been increased. People do not get any less as a result.
Mr. Mitchison: People may not get less as a result of the change, but the Report stated:
"In these circumstances, the drop in the allowance from £85 to £60 seems a needless hardship."
If that were so, surely a larger drop is an even larger needless hardship. As he
1412
himself admitted, this is obviously a concession that, in terms of money, would be quite small. We have this quite definite recommendation about it. We have the Royal Commission describing it—it was not speaking in terms of "penny dreadfuls"—as "a needless hardship". The question the Government have to consider is: are they, or are they not, prepared to remove a needless hardship which has increased since the time when the Royal Commission noted it?
It is well within the knowledge of the whole Committee that at that time, in 1954, such point as there is in connection with National Assistance already existed and we must take it that these highly competent and industrious people were well acquainted with National Assistance. I think that they were quite right to disregard it for this purpose, partly for the reason that has been given already and was admitted by the right hon. Gentleman, that National Assistance is not meant to be, in the hands of the Government, an excuse for not doing what otherwise would be right. Nor is it meant to be something which the claimant must first exhaust as a remedy before he can get any relief in taxation.
There is, after all, a tax allowance made to a claimant who is a parent. National Assistance allowance is one which is made and only becomes in point because it is made to the child itself. Consequently, we are dealing with two different things. I do not think that even on the most ruthless view of the matter—the Government have been ruthless about this—we can say that those two things necessarily overlap or cover one another.
We have to deal with people in various circumstances. There may be cases in which National Assistance is the only relief which is given in respect of the child. There will be others where the family is a little better off and in which the stage is reached at which Income Tax reliefs become appropriate. The question is whether there ought to be a relief in recognition of family obligations.
The next argument of the Government is, "Well, this may be a needless hardship, but you cannot put it right because you might create another anomaly which would be unpopular with some people." If we are really going to conduct amendments of fiscal legislation on those lines we shall never move at all. If we say

1413
that we cannot put one thing right because there is something else which ought to be put right, too, and at the moment we cannot afford to put the second thing right, we are leaving two possible grievances Where only one is required. Dependent relatives either do or do not need an increase. If they do not, their grievance—if any—is misplaced. If, as I think is much more likely, they do, they have a grievance already, and all that we are doing here is buttressing it up by comparison with another set of people.
If we are to defend ourselves from curing a needless hardship simply by saying, "We might upset some other people by doing so," it seems to me that we abnegate our responsibilities in fiscal legislation and assume the mantle of inhumanity which is sometimes attributed to our fiscal legislators and which I feel the right hon. Gentleman wears only reluctantly. The mantle may or may not
extend to the question of dependent relatives; I do not know. But let the right hon. Gentleman throw his mantle aside, and if he has to tear it in half—as St. Martin once had to—to clothe these cases, let him not hesitate to do so for fear of not being completely consistent.
This is an obviously human claim: It involves a small amount. The Government and the party who support them are taking the responsibility of doing something which they know themselves to be wrong, and doing it not for a fiscal reason—because that was not put forward—but simply because they hesitate to correct one injustice in case another possible injustice may be created or reinforced.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 166, Noes 203.

Division No. 188]

AYES

7.22 p.m.

Ainsley, J. W.

Grimond J.

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

Albu, A. H.

Hall, Rt. Hn. Glenvil (Colne Valley)

Mann, Mrs. Jean

Allaun, Frank (Salford, E.)

Hamilton, W. W.

Mikardo, Ian

Allen, Arthur (Bosworth)

Harrison, J. (Nottingham, N.)

Mitchison, G. R.

Awbery, S. S.

Hastings, S.

Monslow, W.

Bacon, Miss Alice

Hayman, F. H.

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

Balfour, A.

Healey, Denis

Moyle, A.

Benson, Sir George

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

Neal, Harold (Boisover)

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

Herbison, Miss M.

Noel-Baker, Francis (Swindon)

Blackburn, F.

Hewitson, Capt. M.

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

Blenkinsop, A.

Hobson, C. R. (Keighley)

Oliver, G. H.

Blyton, W. R.

Holman, P.

Oram, A. E.

Boardman, H.

Holt, A. F.

Orbach, M.

Bottomley, Rt. Hon. A. G.

Houghton, Douglas

Oswald, T.

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

Howell, Denis (All Saints)

Owen, W. J.

Broughton, Dr. A. D. D.

Hoy, J. H.

Padley, W. E.

Brown, Thomas (Ince)

Hughes, Emrys (S. Ayrshire)

Paget, R. T.

Burke, W. A.

Hughes, Hector (Aberdeen, N.)

Palmer, A. M. F.

Butler, Herbert (Hackney, C.)

Hynd, H. (Accrington)

Parkin, B. T.

Callaghan, L. J.

Hynd, J. B. (Attercliffe)

Paton, John

Champion, A. J.

Irving, Sydney (Dartford)

Pearson, A.

Chapman, W. D.

Isaacs, Rt. Hon. G. A.

Peart, T. F.

Chetwynd, G. R.

Janner, B.

Pentland, N.

Clunie, J.

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

Popplewell, E.

Collins, V. J. (Shoreditch & Finsbury)

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

Price, Philips (Gloucestershire, W.)

Corbet, Mrs. Freda

Jenkins, Roy (Stechford)

Probert, A. R.

Craddock, George (Bradford, S.)

Johnston, Douglas (Paisley)

Proctor, W. T.

Cronin, J. D.

Jonas, David (The Hartlepools)

Pursey, Cmdr. H.

Darling, George (Hillsborough)

Jones, J. Idwal (Wrexham)

Rankin, John

Davies, Ernest (Enfield, E.)

Kenyon, C.

Redhead, E. C.

Deer, G.

Key, Rt. Hon. C. W.

Reeves, J.

de Freitas, Geoffrey

Lawson, G. M.

Reynolds, G. W.

Delargy, H. J.

Ledger, R. J.

Rhodes, H.

Diamond, John

Lee, Frederick (Newton)

Robens, Rt. Hon. A.

Dodds, N. N.

Lee, Miss Jennie (Cannock)

Roberts, Goronwy (Caernarvon)

Donnelly, D. L.

Lever, Leslie (Ardwick)

Robinson, Kenneth (St. Pancras, N.)

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

Lewis, Arthur

Shinwell, Rt. Hon. E.

Ede, Rt. Hon. J. C.

Lindgren, G. S.

Short, E. W.

Edwards, W. J. (Stepney)

Logan, D. G.

Silverman, Julius (Aston)

Evans, Edward (Lowestoft)

Mabon, Dr. J. Dickson

Skeffington, A. M.

Fernyhough, E.

McAlister, Mrs. Mary

Smith, Ellis (Stoke, S.)

Fletcher, Eric

McCann, J.

Snow, J. W.

Fraser, Thomas (Hamilton)

MacDermot, Niall

Sorensen, R. W.

George, Lady Megan Lloyd (Car'then)

McInnes, J.

Soskice, Rt. Hon. Sir Frank

Gibson, C. W.

McLeavey, Frank

Sparks, J. A.

Gordon Walker, Rt. Hon. P. C.

MacPherson, Malcolm (Stirling)

Stones, W. (Consett)

Grenfell, Rt. Hon. D. R.

Mahon, Simon

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

Griffiths, David (Rother Valley)

Mallalieu, E. L. (Brigg)

Summerskill, Rt. Hon. E.

Swingler, S. T.

Watkins, T. E.

Willis, Eustace (Edinburgh, E.)

Taylor, Barnard (Mansfield)

Weitzman, D.

Wilson, Rt. Hon. Harold (Huyton)

Taylor, John (West Lothian)

Wheeldon, W. E.

Winterbottom, Richard

Thomson, George (Dundee, E.)

White, Mrs. Eirene (E. Flint)

Woodburn, Rt. Hon. A.

Tomney, F.

Willey, Frederick

Yatas, V. (Ladywood)

Viant, S. P.

Williams, David (Neath)

Zilliaoue, K.

Wade, D. W.

William, Rev. Llywelyn (Ab'tillery)

Warbey, W. N.

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

TELLERS FOR THE AYES:

Mr. J. T. Price and Mr. Simmonds.

NOES

Agnew, Sir Peter

Gower, H. R.

Nugent, G. R. H.

Aitken, W. T.

Graham, Sir Fergus

Oakshott, H. D.

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

Grant, Rt. Hon. W. (Woodside)

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

Alport, C. J. M.

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

Orr, Capt. L. P. S.

Amory, Rt. Hn. Heathcoat (Tivarton)

Green, A.

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

Anstruther-Gray, Major Sir William

Grimston, Hon. John (St. Albans)

Osborne, C.

Arbuthnot, John

Gurden, Harold

Page, R. G.

Ashton, H.

Harris, Frederic (Croydon, N. W.)

Pannell, N. A. (Kirkdale)

Atkins, H. E.

Harris, Reader (Heston)

Partridge, E.

Baldock, Lt.-Cmdr. J. M.

Harrison, Col. J. H. (Eye)

Peel, W. J.

Barber, Anthony

Harvey, Sir Arthur Vere (Macclesf'd)

Pickthorn, K. W. M.

Barter, John

Harvey, John (Walthamstow, E.)

Pike, Miss Mervyn

Batsford, Brian

Heald, Rt. Hon. Sir Lionel

Pilkington, Capt. R. A.

Baxter, Sir Beverley

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

Pitman, I. J.

Beamish, Col. Tufton

Henderson-Stewart, Sir James

Powell, J. Enoch

Bell, Philip (Bolton, E.)

Hesketh, R. F.

Price, Henry (Lewisham, W.)

Bell, Ronald (Bucks, S.)

Hicks-Beach, Maj. W. W.

Profumo, J. D.

Bennett, F. M. (Torquay)

Hirst, Geoffrey

Rameden, J. E.

Bevins, J. R. (Toxteth)

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

Rawlinson, Peter

Bidgood, J. C.

Holland-Martin, C. J.

Redmayne, M.

Biggs-Davison, J. A.

Hope, Lord John

Rees-Davies, W. R.

Bishop, F. P.

Horobin, Sir Ian

Ridsdale, J. E.

Black, C. W.

Howard, Gerald (Cambridgeshire)

Robertson, Sir David

Bossom, Sir Alfred

Hughes-Young, M. H. C.

Rodgers, John (Sevenoaks))

Boyle, Sir Edward

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

Roper, Sir Harold

Braine, B. R.

Hyde, Montgomery

Ropner, Col. Sir Leonard

Braithwaite, Sir Albert (Harrow, W.)

Hylton-Foster, Rt. Hon. Sir Harry

Russell, R. S.

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

Iremonger, T. L.

Scott-Miller, Cmdr. R.

Brooke, Rt. Hon. Henry

Irvine, Bryant Godman (Rye)

Sharples, R. C.

Browne, J. Nixon (Craigton)

Jenkins, Robert (Dulwich)

Shepherd, William

Bryan, P.

Jennings, Sir Roland (Hallam)

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

Bullus, Wing Commander E. E.

Johnson, Dr. Donald (Carlisle)

Spearman, Sir Alexander

Burden, F. F. A.

Johnson, Eric (Blackley)

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

Butcher, Sir Herbert

Joseph, Sir Keith

Stanley, Capt. Hon. Richard

Cary, Sir Robert

Kaberry, D.

Stevens, Geoffrey

Chichester-Clark, R.

Kerr, Sir Hamilton

Steward, Harold (Stockport, S.)

Clarke, Brig. Terence (Portsmth, W.)

Kershaw, J. A.

Stoddart-Scott, Col. Sir Malcolm

Cole, Norman

Kimball, M.

Storey, S.

Cooke, Robert

Lagden, G. W.

Stuart, Rt. Hon. James (Moray)

Cooper-Key, E. M.

Leavey, J. A.

Studholme, Sir Henry

Craddock, Beresford (Spelthorne)

Leburn, W. G.

Summers, Sir Spencer

Crowder, Sir John (Finchley)

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

Sumner, W. D. M. (Orpington)

Crowder, Petre (Ruislip—Northwood)

Linstead, Sir H. N.

Taylor, Sir Charles (Eastbourne)

Davidson, Viscountess

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

Temple, John M.

D'Avigdor-Coldsmid, Sir Henry

Lucas, Sir Jocelyn (Portsmouth, S.)

Thomas, Leslie (Canterbury)

Deedes, W. F.

Lucas, P. B. (Brentford & Chiswlok)

Thompson, Kenneth (Walton)

Digby, Simon Wingfield

Lucas-Tooth, Sir Hugh

Thompson, R. (Croydon, S.)

Donaldson, Cmdr. C. E. McA.

Macdonald, Sir Peter

Thornton-Kemsley, Sir Colin

Drayson, G. B.

Mackeson, Brig. Sir Harry

Tiley, A. (Bradford, W.)

du Cann, E. D. L.

McKibbin, Alan

Tilney, John (Wavertree)

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

Mackie, J. H. (Galloway)

Turner, H. F. L.

Duncan, Sir James

McLaughlin, Mrs. P.

Turton, Rt. Hon. R. H.

Duthie, W. S.

Maclean, Sir Fitzroy (Lancaster)

Tweedsmuir, Lady

Eden, J. B. (Bournemouth, West)

Macmillan, Rt. Hn. Harold (Bromley)

Vane, W. M. F.

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

Macmillan, Maurice (Halifax)

Vickers, Miss Joan

Emmet, Hon. Mrs. Evelyn

Macpherson, Niall (Dumfries)

Vosper, Rt. Hon. D. F.

Errington, Sir Eric

Maddan, Martin

Wakefield, Edward (Derbyshire, W.)

Farey-Jones, F. W.

Markham, Major Sir Frank

Wall, Patrick

Finlay, Graeme

Marlowe, A. A. H.

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

Fletcher-Cooke, C.

Marshall, Douglas

Ward, Dame Irene (Tynemouth)

Fraser, Hon. Hugh (Stone)

Mathew, R.

Webbe, Sir H.

Fraser, Sir Ian (M'cmbe & Lontdale)

Maudling, Rt. Hon. R.

Whitelaw, W. S. I.

Gammans, Lady

Medlicott, Sir Frank

Williams, Paul (Sunderland, S.)

Garner-Evans, E. H.

Morrison, John (Salisbury)

Wilson, Geoffrey (Truro)

George, J. C. (Pollck)

Nabarro, G. D. N.

Wood, Hon. R.

Gibson-Watt, D.

Nairn, D. L. S.

Woollam, John Victor

Glover, D.

Nicholson, Sir Godfrey (Farnham)

Godber, J. B.

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

TELLERS FOR THE NOES:

Gough, C. F. H.

Noble, Michael (Argyll)

Sir Gerald Wills and Mr. Legh.

7.30 p.m.
The Temporary Chairman (Dr. Horace King): The next new Clause selected is "Rebates of customs duty and excise duty on hydrocarbon oils for use in public service vehicles."
Mr. Hector Hughes: Before we turn to that new Clause, I desire to raise a point of order about a Clause standing in my name and dealing with the reduction of duty on publicans' licences. Apparently this has not been selected owing to some misunderstanding.
I know, Sir Charles, that I am not entitled to ask you for your reasons for not selecting it, but may I, with the greatest respect, suggest that you have probably not selected it under the powers given to you by Standing Order No. 31? I do not want to delay the Committee, but I should like to refer to the usual reasons why Clauses are not selected. Some of the usual reasons are that the Clause is not important; or that it is remote from the purposes of the Bill; or that it has already been discussed. Obviously, on reading the Clause it will be seen that none of those reasons could apply to it.
In further support of the argument which I venture to address to you, Sir Charles, I ask you to look at the Standing Order with which, of course, you are familiar. It reads:
"In respect of any motion, or in respect of any bill under consideration either in a committee of the whole House or on report, Mr. Speaker, or in a committee the Chairman of Ways and Means, and the Deputy Chairman, shall have power to select new clauses or amendments to be proposed, and may, if he thinks fit, call upon any member who has given notice of an amendment to give such explanation of the object of the amendment as may enable him to form a judgment upon it."
It is obvious that the Standing Order gives you a discretion, but, with respect, the discretion is limited. That discretion has been dealt with in several parts of that great authority, Erskine May. I will refer to only one, on page 455, where we read:
"Experience has shown that in such cases the discretion conferred on the Chair by Standing Order No. 31 to select the amendments which may be moved is the best method of securing reasonable opportunities for all varieties of opinions. This power is exercised by the Chair in such a way as to bring out the salient points of criticism. …"
If my Clause were selected it would certainly bring out unique points of
1418
criticism, because it is the only Clause of its kind on the Notice Paper. Erskine May continues:
"to prevent repetition"
—there could be no repetition because my Clause is the only one of its kind on the Notice Paper—
"and overlapping"
—the same line of thought applies—
"and, where several Amendments deal with the same point"
—they do not; mine is the only one—
"to choose the more effective and the better drafted."
I do not want to detain the Committee, but I should like to point out that this new Clause has appeared on the Paper for several years and was approved by former Chancellors of the Exchequer but by a series of accidents was never argued. One of those Chancellors was the right hon. Member for Woodford (Sir W. Churchill) and another was my right hon. Friend the Member for Bishop Auckland (Mr. Dalton). In my submission, there has been some misunderstanding as to the meaning of the Clause and its relevance, and I ask you, Sir Charles, to reconsider its selection.
Sir James Duncan: Further to that point of order. May I make a comment in support of the hon. and learned Member for Aberdeen, North (Mr. Hector Hughes)? I believe that I am right in saying that an Amendment on similar lines was discussed a year or two ago, but since then other laws have been changed which raise a new situation. If it cannot be discussed on this Bill it will be urgent to reach a settlement on this matter with the Government, if possible before 1961, when revaluation takes place.
The Chairman: I thank the hon. and learned Member for what he said. I was aware of these powers which are put on me for selecting Amendments. It is a most unpleasant business. I would much rather call them all, but as there are 91 new Clauses on the Notice Paper that would be impossible. If I gave my reasons for selection they would be argued, especially by the legal profession. I therefore do not give them. But I have a very good reason for not selecting this new Clause, and if the hon. and learned Member comes to the Chair I will tell him it privately in about two minutes' time.

New Clause.—(REBATES OF CUSTOMS DUTY AND EXCISE DUTY ON HYDROCARBON OILS FOR USE IN PUBLIC SERVICE VEHICLES.)
On and after the first day of August nineteen hundred and fifty-eight, there shall be allowed from the customs duty a rebate at the rate of two shillings and sixpence a gallon and from the excise duty a rebate at the rate of one shilling and threepence a gallon on the delivery of hydrocarbon oil for use in any mechanically propelled vehicle licensed as a public service vehicle for the carriage of passengers.—[Mr. McLeavy.]
Brought up, and read the First time.
Mr. Frank McLeavy: I beg to move, That the Clause be read a Second time.
The purpose of this new Clause is to exempt all public service vehicles for the carriage of passengers from fuel oil taxation. Before going into the details of the case, I must say that the industry was confidently expecting that at long last some relief from this heavy penal taxation would be forthcoming in the Budget. All the facts of the serious financial position and difficulties of the industry have been placed clearly before the Chancellor. He has been left in no doubt whatever as to the urgency of substantial tax reliefs.
I very much doubt whether the Chancellor can point to any other industry which has been confronted with so many increases in taxation over so short a time. Before the 1950 Budget the tax on fuel oil was 9d. a gallon. By the action of successive Chancellors over a period of three years, 1950–52, the tax was increased to 2s. 6d. a gallon, bringing the taxation on fuel oil to over 200 per cent. The tax represents between 10 and 15 per cent. of operation costs, varying with the type of vehicle used and the type of services run. In other words, the tax is the equivalent of 2½d.-3d. a vehicle-mile.
The passenger transport industry has been caught up in a cycle of ever-increasing prices of vehicles and materials over the last five years, coupled with an increased wage bill arising directly from the Government's economic policy. The industry has never enjoyed the same freedom as private industry in other fields; it has never been able to pass on immediately to the customer its increased costs. There is always a long process of presenting its case to the Traffic Commissioners, and applications for increased
1420
fares in any part of the country are carefully and critically examined by the commissioners. It is perfectly clear that even if the commissioners agree to an increase in fares, the increase comes very much behind the increased cost of running the undertaking.
The Municipal Passenger Transport Association recently undertook a survey of this position, and the results show that more than two-thirds of the municipal operators in the country will end the current financial year with a deficit amounting in total to over £1 million. The survey also shows that fewer passengers are now using the services, and this trend is gathering momentum. During the five-year period to March, 1957, local authority operators lost about 7 per cent. of their passengers. But the quickly worsening position becomes more evident when late 1957 figures are compared with the similar period in 1956. Statistics show that as many as 10 per cent. fewer passengers were being carried in 1957.
What is the reason for this reduction in traffic? It is due to competition from other forms of transport and to a change in the habits of the people. There are more private motor cars, scooters and light motor cycles on the roads than ever before, and the railways are extending the scope of their diesel engine railway cars, which is beginning to have a very serious effect upon the receipts of road services. Television is keeping potential passengers at home in the evenings. All such changes in travel and habits reflect themselves upon the receipts of the bus undertakings.
The financial problem of passenger transport is not one which can be clearly sectionalised into city, urban or rural problems. It is one which affects the whole industry. I would say that the city and urban services were interdependent upon each other, while the rural services—I should like the Chancellor to make a note of this point—are entirely dependent upon these other services for the standard and quality of service provided in the rural areas.
If the city and urban undertakings can reasonably be expected to provide economic services to the countryside, they must have the financial resources to do so. The Traffic Commissioners, who are always pressing bus services, whether municipally-owned or privately-owned, to

1421
provide the maximum amount of service in the countryside of an unremunerative character, cannot expect or demand that these services should be provided if the financial position of the bus industry is difficult.
7.45 p.m.
It is important that we should know the views which have been expressed by the various associations representing the road passenger transport industry. I should like to read to the Committee an important joint statement upon the effects of fuel oil taxation, which was recently issued by the Public Transport Association, the Municipal Passenger Transport Association, the Passenger Vehicles Operators' Association and the Scottish Road Passenger Transport Association.
Dealing with the question of rural services, the statement makes these points:
"No one is more worried about the deteriorating situation in rural services than the bus industry itself. It has always been a tradition of which this industry is proud to run a very high percentage of services at a loss, these being subsidised by the better paying services. Today, however, it is the scale of the losses incurred in running marginal and rural services that is making this plan impossible. Before the war losses on these services would range from, say, 1d. to 2d. per mile. Today, the losses can be 1s. or more per mile.
Our industry appreciates that it is providing an essential public service and finds it distressing to have to suffer ill-informed criticism because it is forced by the retention of this penal tax into making more and more cuts in rural mileage. It is fully aware from the national point of view of the evils, such as the withdrawal of farm labour, which derives from an insufficiency of rural buses, but the difficulties are not of the bus industry's seeking, and the miracle is that the cuts have not been much bigger than they have been hitherto—and that it has been possible to delay them for so long.
This has been largely due to the industry's persistent pursuit of new economies in operation, e.g., lightweight vehicles with lower fuel consumption, and, where practicable, of one-man buses. But, lamentable though it may be the present position is that country mileage is now being reduced wholesale and it must be a matter of real doubt whether in a few years there will be virtually any country services left at all. It is impossible to believe that this is a situation which any Government could desire."
That is a very considerable indictment of the persistent policy of the Government in refusing to meet the fair and justified claims for exemption from the fuel oil taxation. If that is not strong
1422
enough in itself, I should like to read to the Committee a statement made by Mr. J. Spencer Wills, chairman of the Birmingham and Midland Motor Omnibus Company, Limited, a statement which was made at the annual meeting of the company on 7th May, at Stratford-on-Avon, which I think is important. I am quoting a statement which was published in The Times on Friday, 9th May, 1958. Under the heading, "Rural Services", Mr. Spencer Wills said:
"The only major 'economy' left is the drastic pruning of services, even to the extent of giving up same altogether. In a company like yours"—
he was addressing the shareholders—
"which, throughout its long history, has never ceased to expand, every effort is made to avoid this kind of 'economy'. Nevertheless, facts must be faced. Sixty-five per cent. of services, and 43 per cent. of our mileage, are run at a loss, and a great deal of this type of operation is in the rural areas. As everybody knows, the position of rural services today, all over the country, gives rise to the gravest concern. Passengers are so few and costs are so high that services are being slashed wholesale; many are being abandoned altogether. The industry has been making the strongest possible representations to the Government to do the only possible thing to help save the situation—abolish the tax on our fuel oil.
This year, it was confidently expected that our advice would be taken, and it was with mingled feelings of amazement and disgust that we found that the recent Budget had disappointed us once more. It is even more galling when we read of the tax on many luxuries being reduced to figures like 30 per cent. While our tax is left at over 200 per cent.
One thing is clear: the blame for the plight of the rural bus services must be placed fairly and squarely on the shoulders of the Government."
That is not the statement of a Socialist. It is the statement of a responsible chairman of a private bus undertaking. I want to say quite frankly to the Chancellor that it is monstrous that the bus undertakings should be called upon to meet this heavy penal taxation at a time when the Government are crying out for industry to keep down the cost of living. I do not think that there is anything which has a greater bearing on the cost of living than increased bus fares. They affect the man going to and from his work, and they affect him again if he decides to go to some place of amusement in the evening or wishes to take his family out for a trip. They affect the housewife when she goes to the shops. They affect the children going to and from school. These

1423
factors have a decisive effect upon the cost of living of the people.
It is because of these facts that I cannot for the life of me understand why we should be denied this remission of taxation, which is essential if we are to maintain our standard of services. I know that the rural services are very dear to the heart of the Chancellor, but it is no good having sympathy and saying "I am sorry that I cannot do anything." There is nothing in the world to stop the Chancellor of the Exchequer and the Government from doing something now to ensure that the rural bus services are maintained and that the bus industry throughout the country is able to provide the type of service which is essential for the common well-being of society.
The Minister of Transport has been thinking in terms of miniature 12-seater buses for country services. He seems to have the extraordinary idea, probably derived from lack of knowledge of the position, that by some way or another between the milking of a cow or the ploughing of a field someone will provide a kind of makeshift service for the countryside. This is fantastic. What the people in the countryside want, and what they are entitled to receive, is the type of service which will be efficient, reasonably regular, and, in every sense of the term, reliable.
It is no good people talking about subsidising the farming industry. I am not complaining about it, but we excuse that industry all kinds of taxation because it is a national necessity for the well-being of the community. Yet we deny to a struggling bus undertaking, which is finding it difficult and almost impossible to carry out its obligations and its desire to provide these rural services, the relief which will enable it to do it. This does not make sense.
There is another point which the Chancellor ought to bear in mind, quite apart from the arguments which we have put over the last few years for the remission of this taxation. There is the point that when fuel oil is used for manufacturing purposes, or for heating or for diesel railcars, which are now running—and I am not complaining about it—in competition with road transport, and in some cases doing very considerable harm, but nevertheless benefiting the railways—they are
1424
free from taxation. It is only when the oil is used by road transport that it is taxed at all, and it is extraordinary that road transport consumes only about one-sixth of the total amount. Surely the Chancellor must realise how unfair this position is.
8.0 p.m.
I want to put to the right hon. Gentleman three points which I think he ought to consider. First, he should not hesitate at all to consider most seriously the exemption of passenger vehicles from the tax altogether. If he feels that that is too great an immediate change, there is nothing to stop him taking the second course open to him, that is to say, cutting the tax by not less than half. He could say that here, at least, there was something to go on with and he would review the position in the next Budget to see whether a further reduction was justified and the country's financial position allowed it.
If it is his intention that the tax must remain, he ought to consider spreading it over all users of the oil. Quite frankly, that is not a monstrous proposal, yet, when it is made—it would bring a reduction of tax to passenger transport of about 1s. 2d. per gallon—all kinds of difficulties and snags are raised. I quite appreciate that manufacturers and other users of the oil who have never paid the tax would stant to yell about it. But the right hon. Gentleman really must make up his mind about what he will do.
Is the Chancellor determined to insist upon the present tax yield remaining, and is he determined that it shall come from the passenger transport operators only, or is he prepared to consider, if it is to be a permanent feature and the tax yield must come from one source or another, that the burden should be spread evenly over the broader shoulders of all users? There is no justification at all for the passenger services bearing the present penal rate of tax while the others go soot free. The industry is entitled to know precisely where it stands so that it can make plans to meet its difficulties.
It may well be that, during the next twelve months, the financial difficulties of the bus industry arising from further increases in wages and probable further increases in costs due to rises in the general cost of vehicles, repairs, materials and so forth, will considerably worsen.

1425
The passenger transport industry has played a very important part in our economic life. It has never refused to provide the maximum amount of uneconomic services in the countryside and elsewhere. It is an industry which, even during the war, kept its prices down to what might be called an artificial level, and kept its wages down in very much the same way. It is an industry which, in war and peace, has served the community faithfully and well, and it is entitled to receive from the Chancellor some definite help.
The matter is urgent. There is always a tendency for some people to say about our proposal that it is a "hardy annual". It is not just a hardy annual. The transport industry is in a very serious position, and the Chancellor has a duty to say firmly tonight where he stands and what he will do to remove the burden of this penal tax which cannot, on any ground, now be justified.
Sir Robert Cary: I support many of the sentiments expressed by the hon. Member for Bradford, East (Mr. McLeavy). In my opinion, the matter is most urgent. I do not say to my right hon. Friend the Chancellor of the Exchequer that the degree of urgency has reached crisis point so that something must be done by 1st August next, but I feel, as does the hon. Member for Bradford, East that there is coming to the road transport industry a phase which will perhaps be the most difficult in its long history.
Recent events lasting over seven weeks showed how independent members of the public are becoming of an industry which has served them so well in the past. It is startling to read in the newspapers of recent returns showing that at least 13 per cent. of the traffic on the Greater London area road services which existed until eight weeks ago has not returned to those services during the last ten days of resumed operations. The matter is very serious, and I doubt whether much more of that missing 13 per cent. will return at all.
There are changes of habit among the public. Television, domestic entertainments, lighter loadings on public service vehicles late at night, the development of the small motor scooter and independent forms of transport will have a most serious impact upon our road passenger
1426
services in two or three years. It will be hard to sustain those services at their present rate in two years' time.
There is a rather frightening aspect to the history of London transport. The wage claim recently acknowledged automatically had repercussions in the provinces. Notice has been given that a wage claim is to be advanced on behalf of the provincial men which will make it almost impossible for provincial services to continue, not their town and urban services, but many of their rural services. This is the difficulty confronting many Members of this Committee who represent rural constituencies, where, perhaps, in the coming winter many services valuable to villages and small market towns will have to be cancelled because of the inability of the local provincial transport undertakings to provide the services hitherto maintained.
May I reinforce and emphasise what was said by the hon. Member for Bradford, East, that it is in the rural services that the first effects of the decline in road passenger transport will occur? I know perfectly well the Chancellor's difficulty. If I could here and now produce a formula to the Committee which would neatly separate rural services from urban and town services and the Chancellor could take a step linked purely to rural services, he might even be tempted to do so, for the benefit of the Committee, by 1st August. But it is because it is impossible to separate any of these services that we must consider the whole problem.
Without denying the Treasury any revenue, it might be possible to shift the burden on fuel oil to other quarters of our economy and thereby lighten it on road passenger services. Of course, the happiest step of all would be to abolish the duty. But perhaps that is asking too much of the Chancellor. Therefore, one searches for variations and I ask my right hon. Friend, before the Finance Bill comes to its ultimate close, seriously to consider, without denying his Department one kopeck of revenue, whether he could shift the incidence of present taxation so that it might fall a little more lightly on road passenger service vehicles.
Mr. David Jones: Far be it from me to try to teach the Chancellor of the Exchequer the difficulties that are being experienced at

1427
present in rural bus services. He knows a good deal more about the consequences of the severe costs on rural bus services than ever I could tell him. But of the total fuel oil imported into this country, as my hon. Friend the Member for Bradford, East (Mr. McLeavy) pointed out, about one-sixth of it is used in the road passenger service. The other five-sixths is already duty-free, whether it is used for manufacturing, for heating or in diesel rail cars. The total cost of the concession which the proposed Clause would deny him is roughly 30 million.
Towards the end of yesterday's business in the House I heard the Chancellor vehemently defending his Government as a moderate Government who were concerned with moderate profits and moderate wages. But the effect of what he is doing to this industry is destroying it completely. If the Press is to be believed, hon. Members who sit behind the Chancellor representing rural constituencies had the opportunity the other day of listening to the right hon. Gentleman and the Minister of Transport when they heard of the difficulties that are being experienced by both privately-owned and publicly-owned bus companies in running rural services. There is a depot in a rural part of Northumberland where the United Omnibus Company runs fourteen services. Each one of these services has to be run at a loss and would have been long since withdrawn but for the fact that the urban services are helping to maintain them. But that position is quickly worsening.
The hon. Member for Manchester, Withington (Sir R. Cary) said that it might be possible to separate rural services from urban services. But the problem is now creeping into the urban services. The Municipal Passenger Transport Association estimates that in the financial year ended April, 1958, about 64 of the 95 municipal omnibus authorities will reach the end of the financial year with a deficit, and the total deficit of the 64 towns will be something over £1 million. Those services are mainly used in the urban areas.
Many of the privately-owned bus companies, such as the Midland Red Motor Services and the United Omnibus Company, are finding difficulty in even trying to maintain some of their rural services with any minor surplus that might arise
1428
from urban services. When a service loses about a shilling per mile, as has been said, it is very difficult to get urban services to support them. The result is that rural services were substantially cut many months ago. The now semi-urban and rural services are being cut, and, while the hon. Member for Manchester, Withington says that difficulties were experienced in London, what would have been the difficulties in Manchester or Birmingham where there is no tube service to help the situation?
8.15 p.m.
What are the facts of operation? The Chancellor knows as well as I that the tax is 2s. 6d. per gallon and a diesel-driven double-decker bus runs approximately 10 miles to the gallon. In other words, for every mile that that bus runs during the day the first 3d. collected in fares has to be handed over to the Chancellor. Before the platform costs, the cost of maintaining the service, and the costs of running the services are met, the first 3d. in every mile has to be handed over to the right hon. Gentleman. With regard to single-decker buses, where it might be possible to get twelve or 12½ miles to the gallon, the first 2½d. collected in every mile has to be handed over to the right hon. Gentleman. Does he really believe that in these difficult times it will be possible for companies to continue, whether they be publicly or privately owned, to do this kind of thing when the first 3d. in every mile is handed over to the Chancellor?
Let me give one or two other figures. "Headway" is a term used in the industry. It means roughly the number of miles the bus travels during the time it is out of the garage, and the average for the country is roughly 20 miles headway. In other words, the bus travels 20 miles every hour that it is out of the garage. If we assume that the bus is on the road for fifteen hours a day, it means that during the day it will travel roughly 300 miles trying to collect passengers. In other words, it will consume thirty gallons of diesel oil. At 2s. 6d. a gallon that works out at £3 15s. per day. So that the first £3 15s. of revenue that is earned by every double-decker bus that leaves a garage for a full day of fifteen hours £3 15s. has to be handed over to the right hon.

1429
Gentleman before the lad who sweeps the bus after it arrives in the garage at night is given his wages.
The Chancellor may say, "What about the single-deckers?" If we take the figure of 12 miles to the gallon, they would consume roughly 25 gallons of fuel. In other words, the Devon General Buses running to Tiverton have to hand over to the right hon. Gentleman £3 2s. 6d. every day before they start to pay the conductor. In these circumstances, how can the Chancellor expect the industry to operate? It must inevitably go out of business. Whether it will be a good or bad thing for the urban, semi-urban and semi-rural people to be without their bus services, I should not like to prophesy; but I know that if the public passenger services operating in the Chancellor's constituency have to be withdrawn there will be an awful lot of discontented people in Tiverton.
All this will cost the Chancellor roughly £30 million. At an earlier stage of the Committee, I heard him say that the country's economy was beginning to become stable and that there was an element of buoyancy about it. Is he prepared to risk what he thinks is the beginning of a stable economy by prejudicing or imperilling our passenger transport service, which enables many thousands of workers, school children and business people to travel backwards and forwards each day? All this is in jeopardy so that the Chancellor can get £30 million more revenue than he would get if he accepted the Clause.
I suggest to the right hon. Gentleman that if wants the recovery of the country to start, if he wants to make a gesture of what he claimed last night to be his policy in relation to wages, a steady cost of living and profits, he should accept the Clause and find other means of raising the £30 million.
Mr. Amory: The Clause asks for the exemption of duties on hydrocarbon oils used by public service passenger vehicles. I shall be frank straightaway and say that the main reason why I have not been able to do anything in this direction in this year's Budget was that I could not afford the loss of the revenue which is brought in. If I had agreed to the exemption which is suggested in the Clause, it would amount in the case of diesel vehicles only
1430
to £28 million and in the case of diesel and petrol to £33 million.
It would, however, be extremely unlikely to stop there. If an exemption of this kind were given for passenger-carrying vehicles, the goods vehicle operators would produce a strong case to set against it. If the concession were extended to goods traffic vehicles, for diesel only the cost would be a further £37 million and if it were extended to diesel and petrol goods vehicles it would involve a much larger figure.
Mr. McLeavy: Does the right hon. Gentleman not appreciate that there is a tremendous difference between passenger transport vehicles and the ordinary road haulage vehicles? Road haulage vehicles are not compelled by licence to run a service. They run only if it is economically profitable for them to do so. As against that, the buses must run a schedule of service approved by the Traffic Commissioner. In many cases, they may be only half or a quarter full, but the services must be maintained whether or not they are profitable.
Mr. Amory: I agree with the distinction that the hon. Member makes. On the other hand, of course, goods traffic concerns would, no doubt, make a case on the ground of cost, which enters directly into the cost of production and so interferes with our competitiveness. I agree that in the case of passenger transport, too, that is a cost which also affects the costs of production, although not quite so directly.
In February, before the Budget, I had the pleasure of a talk with the hon. Member for Bradford, East (Mr. McLeavy and with my hon. Friend the Member for Withington (Sir R. Cary). I do not dispute the nature of the problem that they put to me on that occasion and which has been put clearly to us this evening. Nor do I dispute the figures put forward by the hon. Member for The Hartlepools (Mr. D. Jones). Although I was not able to check them in detail, I have no doubt that the figures he produced were substantially accurate and relevant to this problem.
This problem, which I agree goes wider than the rural areas, is nevertheless seen in its most acute form in those areas. I looked carefully not only at the general question of the possibility of relief to passenger road services, but also to see

1431
whether there was any way in which at least something could be done in the rural areas. I know very well, as the hon. Member for The Hartlepools mentioned, the difficulties that arise in my own area. I know, too, that part of the difficulties is due to the rapid development of private vehicles, motor bicycles and motor scooters, which means that in many areas there is a lower demand for public service passenger transport. Having said that, however, I realise that in the rural areas this represents an acute problem.
After looking into that problem, I had to reach the conclusion—and no hon. Member who has spoken has disputed this—that it would be extremely difficult to design a relief which would apply only to rural transport. I informed myself about the contents of what is called the Northumberland Report, which recommended selective relief for rural operators. I understand that the passenger transport associations are strongly against any such discrimination, but I believe that, in practice, if relief were given, it might be very difficult to avoid the relief extending further and wider than passenger transport.
The hon. Member for Bradford, East mentioned the rate of tax as being 200 per cent. That is the tax on the fuel itself. I think the right way to look at it, when comparing it with other taxes, is as a tax on the transport service, that is to say, on the fares. The tax would be approximately 14 per cent., not an insignificant tax, I agree, even then. In terms of its effect on the Cost-of-Living Index the tax would represent about one-third of a point.
Mr. McLeavy: Has the right hon. Gentleman considered a tax upon the seating capacity of the buses?
Mr. Amory: No. Does the hon. Gentleman mean the Purchase Tax on the vehicle?
Mr. McLeavy: No, I mean a tax on the seating capacity of the buses.
Mr. Amory: No. I have not. I agree that if we are taking the total tax on the transport, that is a relevant consideration. Indeed, I think one could go further and propose a fuel tax on the vehicle itself. However, I do not want to dwell too much on that point, though the hon.
1432
Gentleman is quite right to pull me up upon it.
8.30 p.m.
The hon. Member for Bradford, East suggested the possibility, which I think we discussed at the interview in February to which I referred, of spreading the duty over all the users of hydrocarbon oils. I believe that that would average out at a duty of 1s. 1d. a gallon. Of course, it would have to be applied to all heavy fuel oils used by industry and agriculture. The current price of those heavy oils is about £9 or £10 a ton, and so a tax of 1s. 1d. a gallon would mean about doubling the price. It would have to be applied also to kerosene, which is so much used for domestic heating, and would be a tax on that for the first time.
I was asked about my future plans and whether I could announce them so that bus concerns would know where they were. It would be quite impossible for me to say what might become possible in the future. One simply cannot do that. I know it is a bit early in the year to say that I cannot anticipate my next year's Budget statement, but it is absolutely impossible so to look forward and to say what reductions of taxation—if any, I cautiously say—might become possible on another occasion.
All I can say is that I regret the necessity for the existence of the present very substantial rate of duty on fuel. I recognise that 2s. 6d. a gallon is a heavy charge. I have very considerable sympathy with the case made out moderately and fairly by the hon. Gentlemen who have spoken to this new Clause, and so it is in no very cheerful spirit that I end by saying again that I am afraid that this year I feel myself unable to afford the loss of revenue, Which would make, I fear, no significant impact on the solution of this problem.
Mr. Ernest Davies: Disappointing as is the Chancellor's reply to this new Clause, I will say this for him, that the Treasury has produced a new brief tonight in reply to our hardy annual. In the past we have been brushed off with the suggestion that the discrimination as between one set of users and another would be impossible to administer.
Mr. Amory: What I said tonight was quite without any prejudice to anything which my predecessors may have said on other occasions.
Mr. Davies: Then we will see next yeas what the right hon. Gentleman's predecessor has said this year.
The only two reasons which the Chancellor has produced for rejecting this new Clause are, first, that the cost would be too great, and secondly, that if it were given to the road passenger services there would be considerable pressure put upon him from goods traffic operators, and that he felt he would be unable to resist it. Judging from the behaviour of the Chancellor during our debates on this Bill and his resistance to so many suggestions which have been put forward, I should have thought that he would have been quite successful in resisting the goods vehicle operators if they wanted the same treatment as the road passenger service operators.
Although the Chancellor seems to appreciate to some extent the difficulties which are being experienced by bus operators in the rural districts, it is not only the rural areas which are suffering, as everybody who has spoken in this debate has made quite clear. Moreover, I do not feel that the right hon. Gentleman appreciates sufficiently the urgency of this problem and the necessity for taking some action. Action by taxation is not the only action which could be taken, but there is an urgency which requires that the Government should reconsider the position of the public services and should try to formulate a policy which will save them from further serious deterioration.
The cause and the root of this problem is surely this drift from public to private transport. Whatever action is taken, that tendency will continue, and to some extent it reflects a rise in the cost of living. With the increased number of private cars, scooters, motor cycles, and so on, that tendency will continue, and it cannot be halted. But I think that certain action can be taken which will minimise the effects of the drift from one form of transport to another and, in a way, cushion the position.
The reasons for this drift from public to private transport are quite clear and have been referred to in the debate. It is regrettable that the services which are most needed are those which are affected first and most severely, and also that those people who use the public services most are the most needy. That is to say, it is
1434
the unremunerative services, which serve the sparsely populated areas where transport is essential, that suffer first; and it is those people who live in those areas and must travel to and from work and cannot afford private transport who suffer as a consequence. They suffer not only because there are more difficulties in getting to work and in travelling for other purposes, but because the greater the decline in overall traffic the higher the fares must be.
It is the responsibility of any Government in power and of all the other authorities concerned to consider this problem and maintain the public services. I know that certain suggestions have been made and that the bus and coach operators themselves are taking what action they can. There has been a great increase in the number of one-man driver-conductor buses. Other steps are also being taken, but the extent of this decline is not fully appreciated and the necessity for action does not seem to have been brought home to the Government, particularly with respect to transport policy generally, as we know from debates in the House of Commons.
To give one example of the decline in the public services, I should like to quote from the British Transport Commission's Report for last year which has just been published. The Report summarises the traffics over the last ten years of operation of London Transport and the provincial and Scottish buses between 1948 and 1957. The number of passenger journeys operated by London Transport in 1948 was roughly 4,000 million, but by 1957 that figure had fallen to a little more than 3,000 million journeys. In other wards, there was an actual drop of 800 million journeys per year in the last ten years. That is evidence of the steady decline about which something must be done.
It is not possible for the bus operators to raise their fares to recoup the losses from the declining traffics. It is a known fact that they have reached the law of diminishing returns and that any attempt to raise fares will result in a further loss of revenue, or at least in a further decline in traffics. Fares are not high today compared with pre-war. They have not risen anywhere near as much as the general cost of living.

1435
The Commission's report for last year shows that the average fare per mile charged by London Transport is 1·98d., compared with 1·14d. ten years ago. That is to say, the rise has been only 70 per cent. We know that there has been a very much greater rise in the cost of the general run of commodities and services. But although the fares are low compared with this general rise, any further increase would have a serious effect on the travelling public as a whole.
The reduction of the duty or its abolition so far as public service vehicles are concerned would make a difference to the undertakings, both for their rural and urban services, and it seems to be the only direct and immediate way of helping them pending consideration of the general matter of policy. It is estimated that the actual operating cost of between 10 and 15 per cent. is represented by the fuel tax, and, therefore, a reduction of it, or its abolition, would certainly have some effect on these companies. It might prevent a further rise in fares, which, unfortunately, seems inevitable if there is a further wage increase.
A point which the Chancellor must also bear in mind is that if relief is not given to these companies, and they are forced to resist the wage increases of those who rightly demand them, then,
in a sense, it is the workers themselves who are subsidising these companies. So not only is this causing industrial difficulties, but there is the danger that the pressure of the rising cost on the operators will cause their resistance and the workers will, in effect, be subsidising the companies.
I suggest to the Chancellor that, although the cost of this concession is high, it is not enough to cause him to reject the Clause, or to refuse to take any immediate action. I wish the Chancellor had told the Committee that he was considering taking action of some kind, and that he appreciated the urgency of so doing. I believe that the outlook for the bus and coach companies is so serious today that, unless some action is taken, the continuance of many public services, not only in the rural areas but in urban areas, too, which are essential to the industrial and social life of large sections of the community, will be in danger.
I think that the industry is heading for subsidies and I suggest to the Chancellor that in preference to getting into a situation where subsidies to the public transport are inevitable, it would be better to bring relief now by reducing the tax.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 162, Noes 201.

Division No. 189.]

AYES

[8.42 p.m.

Ainsley, J. W.

Darling, George (Hillsborough)

Hoy, J. H.

Albu, A. H.

Davies, Ernest (Enfield, E.)

Hughes, Emrys (S. Ayrshire)

Allaun, Frank (Salford, E.)

Deer, G.

Hughes, Hector (Aberdeen, N.)

Allen, Arthur (Bosworth)

de Freitas, Geoffrey

Hynd, H. (Accrington)

Awbery, S. S.

Delargy, H. J.

Hynd, J. B. (Attercliffe)

Bacon, Miss Alice

Diamond, John

Irving, Sydney (Dartford)

Balfour, A.

Dodds, N. N.

Isaacs, Rt. Hon. G. A.

Benson, Sir George

Ede, Rt. Hon. J. C.

Janner, B.

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

Edwards, W. J. (Stepney)

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

Blackburn, F.

Evans, Edward (Lowestoft)

Jeger, George (Goole)

Blenkinsop, A.

Fernyhough, E.

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

Blyton, W. R.

Fletcher, Eric

Jenkins, Roy (Stechford)

Boardman, H.

Fraser, Thomas (Hamilton)

Johnston, Douglas (Paisley)

Bonham Carter, Mark

Gibson, C. W.

Jones, David (The Hartlepools)

Bottomley, Rt. Hon. A. G.

Gordon Walker, Rt. Hon. P. C.

Jones, Jack (Rotherham)

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

Grenfell, Rt. Hon. D. R.

Jones, J. Idwal (Wrexham)

Braddock, Mrs. Elizabeth

Griffiths, David (Rother Valley)

Kenyon, C.

Broughton, Dr. A. D. D.

Grimond, J.

Key, Rt. Hon. C. W.

Brown, Thomas (Ince)

Hall, Rt. Hn. Glenvil (Colne Valley)

Lawson, G. M.

Burke, W. A.

Hamilton, W. W.

Ledger, R. J.

Butler, Herbert (Hackney, C.)

Harrison, J. (Nottingham, N.)

Lee, Frederick (Newton)

Callaghan, L. J.

Hastings, S.

Lee, Miss Jennie (Cannock)

Champion, A. J.

Hayman, F. H.

Lever, Leslie (Ardwick)

Chapman, W. D.

Healey, Denis

Lewis, Arthur

Chetwynd, G. R.

Herbison, Miss M.

Lindgren, G. S.

Clunie, J.

Hewitson, Capt. M.

Logan, D. G.

Collins, V. J. (Shoreditch & Finsbury)

Hobson, C. R. (Keighley)

Mabon, Dr. J. Dickson

Corbet, Mrs. Freda

Holman, P.

McAlister, Mrs. Mary

Craddock, George (Bradford, S.)

Holt, A. F.

McCann, J.

Cronin, J. D.

Houghton, Douglas

MacDermot, Niall

McInnes, J.

Pentland, N.

Summerskill, Rt. Hon. E.

McLeavy, Frank

Popplewell, E.

Swingler, S. T.

MacPherson, Malcolm (Stirling)

Price, J. T. (Westhoughton)

Taylor, Bernard (Mansfield)

Mahon, Simon

Price, Philips (Gloucestershire, W.)

Taylor, John (West Lothian)

Mallalieu, E. L. (Brigg)

Probert, A. R.

Thomson, George (Dundee, E.)

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

Proctor, W. T.

Tomney, F.

Mann, Mrs. Jean

Pursey, Cmdr. H.

Viant, S. P.

Mitchison, G. R.

Rankin, John

Wade, D. W.

Monslow, W.

Redhead, E. C.

Warbey, W. N.

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

Reeves, J.

Watkins, T. E.

Moss, B.

Reynolds, G. W.

Weitzman, D.

Moyle, A.

Rhodes, H.

Wheeldon, W. E.

Neal, Harold (Bolsover)

Robens, Rt. Hon. A.

White, Mrs. Eirene (E. Flint)

Noel-Baker, Francis (Swindon)

Roberts, Goronwy (Caernarvon)

Willey, Frederick

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

Robinson, Kenneth (St. Pancras, N.)

Williams, David (Neath)

Oram, A. E.

Short, E. W.

Williams, Rev. Llywelyn (Ab'tillery)

Orbach, M.

Silverman, Julius (Aston)

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

Oswald, T.

Skeffington, A. M.

Willis, Eustace (Edinburgh, E.)

Owen, W. J.

Smith, Ellis (Stoke, S.)

Wilson, fit. Hon. Harold (Huyton)

Padley, W. E.

Snow, J. W.

Winterbottom, Richard

Palmer, A. M. F.

Sorensen, R. W.

Woodburn, Rt. Hon. A.

Pargiter, G. A.

Soskice, Rt. Hon. Sir Frank

Yates, V. (Ladywood)

Parkin, B. T.

Sparks, J. A.

Paton, John

Stones, W. (Consett)

TELLERS FOR THE AYES:

Pearl, T. F.

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

Mr. Pearson and Mr. Simmons.

NOES

Agnew, Sir Peter

Fletcher-Cooke, C.

Lucas, Sir Jocelyn (Portsmouth, S.)

Aitken, W. T.

Fraser, Sir Ian (M'cmbe & Lonsdale)

Lucas, P. B. (Brentford & Chiswick)

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

Gammans, Lady

Lucas-Tooth, Sir Hugh

Alport, C. J. M.

Gamer-Evans, E. H.

Macdonald, Sir Peter

Amory, Rt. Hn. Heathcoat (Tiverton)

George, J. C. (Pollok)

Mackeson, Brig. Sir Harry

Arbuthnot, John

Gibson-Watt, D.

McKibbin, Alan

Ashton, H.

Glover, D.

Mackie, J. H. (Galloway)

Atkins, H. E.

Godber, J. B.

McLaughlin, Mrs. P.

Baldock, Lt.-Cmdr. J. M.

Gough, C. F. H.

Macmillan, Maurice (Halifax)

Barber, Anthony

Gower, H. R.

Macpherson, Niall (Dumfries)

Barter, John

Graham, Sir Fergus

Maddan, Martin

Batsford, Brian

Gram, Rt. Hon. W. (Woodside)

Markham, Major Sir Frank

Baxter, Sir Beverley

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

Marlowe, A. A. H.

Beamish, Cel. Tufton

Green, A.

Marshall, Douglas

Bell, Philip (Bolton, E.)

Grimston, Hon. John (St. Albans)

Mathew, R.

Bell, Ronald (Bucks, S.)

Gurden, Harold

Maudling, Rt. Hon. R.

Bennett, F. M. (Torquay)

Harris, Frederic (Croydon, N. W.)

Medlicott, Sir Frank

Bevins, J. R. (Toxteth)

Harris, Reader (Heston)

Morrison, John (Salisbury)

Bidgood, J. C.

Harrison, A. B. C. (Maldon)

Nabarro, G. D. N.

Biggs-Davison, J. A.

Harrison, Col. J. H. (Eye)

Nairn, D. L. S.

Bishop, F. P.

Harvey, John (Walthamstow, E.)

Nicholson, Sir Godfrey (Farnham)

Black, C. W.

Heald, Rt. Hon. Sir Lionel

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

Bossom, Sir Alfred

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

Noble, Michael (Argyll)

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

Henderson-Stewart, Sir James

Nugent, G. R. H.

Boyle, Sir Edward

Hesketh, R. F.

Oakshott, H. D.

Braine, B. R.

Hicks-Beach, Mal. W. W.

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

Braithwaite, Sir Albert (Harrow, W.)

Hill, Mrs. E. (Wythenshawe)

Orr, Capt. L. P. S.

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

Hirst, Geoffrey

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

Browne, J. Nixon (Craigton)

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

Osborne, C.

Bryan, P.

Holland-Martin, C. J.

Page, R. G.

Bullus, Wing Commander E. E.

Hope, Lord John

Pannell, N. A. (Kirkdale)

Burden, F. F. A.

Horobin, Sir Ian

Partridge, E.

Butcher, Sir Herbert

Howard, Gerald (Cambridgeshire)

Peel, W. J.

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

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

Pickthorn, K. W. M.

Carr, Robert

Hyde, Montgomery

Pike, Miss Mervyn

Clarke, Brig. Terence (Portsmth, W.)

Hylton-Foster, Rt. Hon. Sir Harry

Pilkington, Capt. R. A.

Cole, Norman

Iremonger, T. L.

Pitman, I. J.

Cooke, Robert

Irvine, Bryant Godman (Rye)

Powell, J. Enoch

Cooper-Key, E. M.

Jenkins, Robert (Dulwich)

Price, Henry (Lewisham, W.)

Craddock, Beresford (Spelthorne)

Jennings, Sir Roland (Hallam)

Profumo, J. D.

Crewder, Sir John (Finchley)

Johnson, Dr. Donald (Carlisle)

Ramsden, J. E.

Crowder, Petre (Ruislip—Northwood)

Johnson, Eric (Blackley)

Davidson, Viscountess

Joseph, Sir Keith

Rawlinson, Peter

D'Avigdor-Goldsmid, Sir Henry

Kaberry, D.

Redmayne, M.

Deedes, W. F.

Kerr, Sir Hamilton

Rees-Davies, W. R.

Digby, Simon Wingfield

Kershaw, J. A.

Ridsdale, J. E.

Donaldson, Cmdr. C. E. McA.

Kimball, M.

Roberts, Sir Peter (Heeley)

du Cann, E. D. L.

Lagden, G. W.

Robertson, Sir David

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

Leather, E. H. C.

Robinson, Sir Roland (Blackpool, S.)

Duncan, Sir James

Leavey, J. A.

Rodgers, John (Sevenoaks)

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

Leburn, W. G.

Roper, Sir Harold

Emmet, Hon. Mrs. Evelyn

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

Ropner, Col. Sir Leonard

Errington, Sir Eric

Legh, Hon. Peter (Petersfield)

Russell, R. S.

Farey-Jones, F. W.

Linstead, Sir H. N.

Shepherd, William

Fell, A.

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

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

Finlay, Graeme

Lloyd, Rt. Hon. Selwyn (Wirral)

Spearman, Sir Alexander

1438

1439

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

Thomas, Leslie (Canterbury)

Ward, Dame Irene (Tynemouth)

Stanley, Capt. Hon. Richard

Thompson, Kenneth (Walton)

Webbe, Sir H.

Stevens, Geoffrey

Thompson, R. (Croydon, S.)

Whitelaw, W. S. I.

Steward, Harold (Stockport, S.)

Thornton-Kemsley, Sir Colin

Williams, Paul (Sutherland, S.)

Stoddart-Scott, Col. Sir Malcolm

Tilney, John (Wavertree)

Wills, Sir Gerald (Bridgwater)

Storey, S.

Turton, Rt. Hon. R. H.

Wilson, Geoffrey (Truro)

Stuart, Rt. Hon. James (Moray)

Tweedsmuir, Lady

Wood, Hon. R.

Studholme, Sir Henry

Vane, W. M. F.

Woollam, John Victor

Summers, Sir Spencer

Vickers, Miss Joan

Sumner, W. D. M. (Orpington)

Vosper, Rt. Hon. D. F.

TELLERS FOR THE NOES:

Taylor, Sir Charles (Eastbourne)

Wakefield, Edward (Derbyshire, W.)

Mr. Hughes-Young and

Teeling, W.

Wall, Patrick

Mr. Chichester-Clark.

Temple, John M.

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

New Clause.—(EXEMPTION FROM EXCISE DUTY OF SCOTTISH SHALE OIL.)
(1) On and after the sixth day of August, nineteen hundred and fifty-eight, hydrocarbon oil produced from shale mined in Scotland shall be exempted from excise duty, and accordingly, on and after that date section two of the Finance Act, 1950 (which imposes a duty on hydrocarbon oils), shall have effect with the addition at the end of subsection (2) of that section of the following words, that is to say, "or
(c) to oils produced from shale mined in Scotland".
(2) The powers of the Commissioners of Customs and Excise to make regulations under section one hundred and ninety-eight of the Customs and Excise Act, 1952 (which empowers those Commissioners to make regulations relating to hydrocarbon oils), shall include power to make such regulations as appear to the Commissioners to be required to give effect to the last foregoing subsection.
(3) Where excise duty has been charged before or after the passing of this Act, and by virtue of this section no such duty should have been charged, or the duty should have been charged at the lower rate than that at which it was in fact charged, the person by whom the duty was paid shall be entitled to repayment of the amount of the overcharge.—[Mr. John Taylor.]
Brought up, and read the First time.
Mr. John Taylor: I beg to move, That the Clause be read a Second time.
We are still dealing with oil, though now not with the use of oil, but with its production. This Clause deals only with oil produced from shale mined in Scotland. It does not affect oil produced by any other means, or from any other source. Therefore, its scope is strictly limited and the amount involved on this occasion is very small. Nevertheless, the Clause is of vital importance to the shale oil industry. It is not an exaggeration to say that this really is a matter of life and death to the industry.
The shale oil industry of the Lothians was the very first oil-producing industry in the world. It started to produce oil from shale mined in Midlothian and West
1440
Lothian in 1858, just 100 years ago. The production of oil is now a mammoth industry involving countless millions of capital, bedevilling international politics and constantly threatening the uneasy balance of world peace. But the pioneer oil industry of Midlothian and West Lothian has no responsibility for those troublous consequences. For 100 years it has steadily continued to produce oil from shale. First it produced burning oil, later motor spirit and then Derv, diesel oil, which is peacefully pumped into the home market without involving the use of tankers, pipelines, payments to desert sheiks or Texan oil barons, without treaties, pacts or guarantees, without any protecting fleets, armies or aircraft
It is more costly to produce oil from shale than from wells, but because it involves none of these gigantic incidental expanses, shale oil for the Government is the cheapest oil in the world. The shale oil industry never had any substantial financial difficulties or problems until the introduction of the Excise Duty on oils, but from that day onwards it has had an unceasing struggle for existence. That is not because it was inefficient or badly managed, or badly served by its employees. It is a highly efficient industry, extremely well managed and loyally served by a devoted, but, alas, diminishing body of operatives. The industry's present financial difficulties are created entirely, wholly and exclusively by taxation.
As the right hon. Gentleman knows, from time to time reductions in the rate of duty per gallon have been made in recognition of the fact that it is unjust to place the same burden on a struggling home industry as is borne by the product of the relatively prosperous import industry, which is produced at a much lower cost per gallon. At the moment, the level of duty on all home-produced hydrocarbon oils is 1s. 3d. per gallon. In practically every other section of the indigenous oil industry, oil is a by-product,

1441
but in the shale oil industry it is the main product.
I have said that it is more costly to produce oil from shale than to get it out of the desert, pipe it, tank it, refine it and transport it—yet the retail price of motor spirit or Derv is the same in all pumps, whether the pump delivers spirit from Kuwait or from West Lothian, so that our pioneer native oil industry has to sell its main product at a price fixed by its competitors—who have a much lower cost of production per gallon—and then it has to pay 1s. 3d. tax on every gallon sold. The shale oil industry cannot do both these things. The fact is that on the acceptance or rejection of the Clause depends the life or death of the industry.
The right hon. Gentleman can be sure that I would not seek exemption for the industry without very compelling reasons. I will mention a few. First, this is a unique industry. It is the only industry in Britain which produces oil from shale; in fact, it may be the only industry in Europe producing oil from shale, with the exception of Sweden. Secondly, the industry has made every conceivable endeavour to cut its costs to the irreducible minimum. Last year it cut out its least productive sections and closed down some of its mines and establishments, at the cost of the jobs of 700 workers in the industry—and that is a heavy cost. This year more establishments are being closed down, and another 300 oil workers have lost their jobs.
One-third of the labour force of the industry has been sacrificed in two years in this endeavour to continue the industry, and the 1,000 people involved have become redundant in an area which already has a difficult unemployment problem, and in which there is no sign of any replacement industry. In any case, as we all know, a replacement industry for any industry affected by changes in industrial techniques cannot be established in a week, a month, or even a year; it takes a long time to replace one industry by another.
Any insistence upon continuing to extract this duty will sooner or later—and I feel that it will be sooner rather than later—mean the closing down of the industry. If, unhappily, that should happen, the Treasury would lose not only its present revenue, but also all the
1442
normal taxation yield which comes from an operating industry.
9.0 p.m.
I take it that the whole Committee will agree that it is unwise strategically for this nation to sacrifice any source of oil, however small. The existing shale measures in the Lothians are sufficient to keep the industry in production for at least twenty years, and possibly twenty-five years. In that period it would produce, at the most conservative estimate, 300 million gallons of oil, which is not an inconsiderable amount.
That is what is at stake in this Clause. It is not the £750,000 or rather less which the Treasury would lose in duty if the Clause were accepted. It would lose that in any case if the industry closed. Also at stake—and to me this is a very important consideration—is the livelihood of the 2,000 workers and their families and the tradespeople and other incidental people who depend indirectly on the industry. Their livelihoods are at stake.
An oil worker said to me the other day, "Why do the Government continue to persecute this little industry? What have they against it?" No amount of argument or reasoning will ever convince these people that the industry is not being deliberately strangled by the stubborn insistence of the Treasury on its pound of flesh. I am no Portia, but the insistence on this pound of flesh will have the same result on the victim as that intended by Shylock.
Last year, when we debated an almost identical Clause, the then Financial Secretary seemed to hold out a gleam of hope. He said that the Government could not agree to help the industry by fiscal means. He said that the Government did not think that that was the right way to do it, but he also said that there were other ways of assisting the industry. We wondered what they were, but because he made the statement so definitely and, it seemed, with some degree of hopefulness, we waited expectantly. The oil industry wondered what was meant. Perhaps there were ramifications involved. The company concerned, Scottish Oil Limited, is a subsidiary of B.P., and it was thought that as the Government held the majority of shares in B.P. they might have in mind some other means in that direction.
We waited, but nothing happened, and at last, in the spring, the industry, thinking that nothing was to happen, had to take

1443
these very drastic steps and to make these further closures of mines and establishments which were efficient and which had a good production potential. They had to be closed, and the country has lost the source of oil from those mines.
If the Government accepted the Clause the industry would continue to produce its quota of this precious commodity for twenty years. I said earlier that the industry started 100 years ago in 1858. It has served the country well for 100 years. At one time it was one of Scotland's major industries. People in Scotland are regarding the fate of the shale oil industry with more than usual concern. It is not merely another Scottish industry going under; it is something symbolic. It is so easy to assist this industry, at a cost of less than £250,000, and to allow it to continue its useful work for another two decades without any substantial loss to the Treasury.
Feelings in this matter are deep, strong and sincere, even outside the bounds of my constituency or that of my hon. Friend the Member for Midlothian (Mr. Pryde), who would have been glad to be here had he been well enough and who has fought for so many years for the same end as that which I am trying to achieve tonight. I wish that we could celebrate the centenary of the industry in a more fitting manner by giving it not only a reprieve but a new lease of life.
The industry has said, "If we could have this relief and not have to continue struggling and cutting down and pruning until we die the death of a thousand cuts, we should be able to develop and bring new methods of production into the extraction of the oil, which would enable us to get more oil per ton of shale produced from the mines."
I ask the Government not just to say "No" on this occasion, but to give the matter some consideration. I hope they will say "Yes", because I believe the case is unanswerable. There can be no reasonable ground for turning down this request. The argument that other sections of the indigenous hydrocarbon oil industry would expect the same treatment is not sound, because other sections of the industry appreciate the special and unique circumstances of the Scottish shale oil industry.
1444
If the Chancellor has hardened his heart and is asking for his pound of flesh, I hope that he will hesitate for a moment and will not bluntly turn down this request as has been done on previous occasions. I hope that, instead, he will consult with us and with the industry, and if the fiscal means of achieving what is desired are distasteful to him, will see what other means can be used.
The case for the abolition of the duty on this valuable, efficient, pioneering and important section of our Scottish home industries is very strong. This industry has in its day supplied many pioneers to the oil industry all over the world. Technicians have gone from the Lothians to oil refineries all over the world. The Chancellor has had some experience of industry dying in his own part of the country. There is no need for this industry to die. It ought to live, and I hope the right hon. Gentleman will encourage it to do so.
Sir James Henderson-Stewart: I was impressed by the case made by the hon. Member for West Lothian (Mr. J. Taylor). He always puts his case so modestly and moderately that a moderate and modest man like the Chancellor of the Exchequer must be bound to be impressed.
I know the arguments against taking action along the lines suggested in this proposed Clause. I have used them myself from the Front Bench. They are substantial arguments from the Treasury point of view. Yet I have always wondered whether this or any Government would be right to accept only the Treasury view.
When I was a very young man I remember being on the staff of Lloyd George and hearing him say "Remember, the State has many ledgers." That is a very wise remark. What he meant was, "You may well be losing money in one Department, but you may be making money in another." The Government may well be saving or gaining money for the Treasury by maintaining this present duty, but if, at the same time, by that very means they are losing in the general revenue of the nation, is it not the duty of the Chancellor to take the broader national view?
I put this with great deference to my right hon. Friend, because he is a man of very liberal views, and I know that

1445
he will understand me in the somewhat difficult position in which I find myself tonight. The Chancellor must know that today is a very difficult moment in Scotland at which to look complacently upon an industry, however minor, gradually falling away. This morning, we have the Report of the Scottish Council for Development, and it is in all the Scottish papers. I am bound to say that it is a disturbing report. I do not accept everything that the Council says, any more than I did when I was a member of the Council, but this much it brings out—that the recession or the contraction, whatever we like to call it, north of the Border appears to be more intense than it is south of the Border. We have undoubtedly pockets of unemployment that cause all of us, and must cause my right hon. Friend, acute anxiety, and we do not, for the moment, see any easy or ready means of relieving their distress.
The Lothians, where this industry is carried on, like other parts, is suffering distress. I know that the Government are doing what they can—and I was in at this at the early stage—to introduce new industries. I know that they have made strenuous efforts, but we also know that not much success has attended those efforts. It is not their fault. It is very difficult to bring new industry anywhere. We have to get the people available, provide the sites and a number of other things in order to induce people to go. We cannot compel them to go, and, while I think it is nobody's fault, the fact is that we have not had in the last year or two the introduction of these compensating industries which might have relieved the situation to some extent.
I think, with great respect, that my right hon. Friend ought to pause before he rejects this proposed new Clause outright. I know very well that the total output of this industry in this form of oil is minute compared to our national needs. I think the total production amounts only to a quarter per cent. of the total United Kingdom need. That is true, and it is no use pretending that it is anything else. We may say, therefore, that it does not matter very much to the total United Kingdom needs if that small amount of oil were to disappear; but is that argument quite as sound as it appears? Is it wise in a world like this, where there is so much uncertainty, to
1446
destroy even this small part of the indigenous oil production? I ask myself this question, and I do not find it easy to answer. It does not seem to me to be sound nationally to allow even some indigenous oil production to fall away.
For these and a great many other reasons which I could adduce, I feel disposed to support the hon. Member for West Lothian in this Amendment, at any rate to the extent of pleading with my right hon. Friend not to turn down the case he made. I have no authority to speak for my Scottish colleagues on this side of the Committee, but I have a strong impression that most of them share my views on this matter, and I think that the majority of Scottish people share my views.
Therefore, while I do not ask or expect the Chancellor to come tonight with a cast-iron answer to our problem and our plea, I do ask him not to reject this Amendment out of hand. If he cannot accept this Amendment in its present form, I beg him to offer us the opportunity, as the hon. Gentleman opposite has said, to confer with him and with the industry in order that we may achieve a form of alternative so that this small indigenous but important part of Scottish industry can be maintained.
9.15 p.m.
Mr. Thomas Oswald: I have some personal knowledge of the industry itself. I am more than grateful to the hon. Gentleman the Member for Fife, East (Sir J. Henderson-Stewart) for what he has said. Although he suggested that he has not a mandate to speak for all his colleagues, I am certain that he was echoing their sentiments about this Scottish industry and the sentiments of the Scottish people also.
The historical background to the industry has been stated in the House of Commons on many occasions by hon. Members of both sides. My main concern in making an appeal to the Chancellor is this. If he is not prepared to assist, he will be condemning this very important industry to death. Not long ago there were over 12,000 operatives working in and dependent upon the industry in the Lothians. Today, there are only 3,000 people working, and there is the likelihood of a very large number becoming redundant in the very near future, the more so if the Chancellor is not prepared

1447
to accept the new Clause before the Committee at the moment. Only one-quarter of the original staff is being retained.
Just a few weeks ago, 300 men were declared redundant at the Addiewell Crude Oil Works and also at the Bum-grange pit itself. We have information also that the Roman Camp Crude Oil Works and the three supporting units are being dismantled. It is hardly credible that, at this moment, the plant is actually being dismantled. This, of course, has thrown more than 1,000 men out of work.
The unemployment figure for Scotland is just under 80,000. If we cannot save this industry, we shall automatically put many more highly skilled people on the industrial scrapheap. I ask the Chancellor particularly to take note of developments at the Westwood Oil Works. It is the most up to date in the world. All expansion in that establishment has been halted because its work is being strangled.
Whole communities in West Lothian and Midlothian have been asked to stand still because, and only because, the existing tax on oil produced in the Scottish shale oil field is crippling the industry. The future of the industry rests squarely with the Chancellor and with no other person. His decision will spell either encouragement for the future or it will spell despair and the end of a very important industry.
The industry is on record as saying that, if the present tax is removed, it is ready, willing and prepared to undertake to re-employ all the dismissed personnel and, indeed, to employ others in addition to those already declared redundant. On top of that, they are ready, willing and prepared to spend at this moment £1 million on new plant to enable them to continue their development. I know that the Chancellor's argument is that the Government cannot afford to lose the £700,000 which is collected annually in tax from shale oil products. But, of course, if the Chancellor persists in this crippling burden on the industry he will stop all production and will lose £700,000 every year. It is like the present-day theme that the workers have to produce more, but we cannot expect them to produce more if we deny them the right to produce.
The Scottish situation has always required nursing, because we live mainly
1448
on the basic industries. In Scotland, we do not have a diversification of industry. In the areas where we have had diversification in the past we find that much of the new factory space is standing empty because those whom we persuaded to come north of the Border are now telescoping their industries, with the result that many people in the Lothians are unemployed, even outside the shale industry. It is estimated that about 450 million tons of crude shale are still untapped in the area. What a tremendous potential. Must this source of valuable oil be allowed to remain untouched if the industry goes bankrupt?
It is on record that the Scottish motor trade, in making representations to the Government, has pointed out that the shale industry supplies four-fifths of the needs in running public transport in Scotland alone. Over 18 million gallons of diesel oil are produced annually from the existing plant. If an opportunity were granted to the industry to develop, the total gallonage could be vastly improved and would enable a tremendous amount of dollars to be saved through our not having to import the oil.
A very important factor is that it has been shown that the quality of the oil is very much superior to other oils. That is unchallenged. That is supported by the Report of the Falmouth Sub-Committee on Oil from Coal by the Ministry of Power and by the Institute of Petroleum Technology. It is reported that the latter body has said that Scottish shale oil is an ideal base for diesel oil. The industry supplies as one of its byproducts 5,000 tons of paraffin wax annually, which is purchased by manufacturers of electrical installations and is used in the making of matches and cosmetics. A very important factor arises from this. There is no comparable source of this wax anywhere else in Britain. If the industry is forced to close down, then the total tonnage required will have to be imported at an annual cost of well over 1 million dollars.
Unemployment is mounting in the Lothians. There is little or no other industry. Even the light industries recently introduced into the area are closing down. It seems tragic that the pioneer industry of the world's oil production should be deliberately throttled

1449
by the Government, as it is being throttled if the Chancellor is not ready and willing to repeal this tax.
The industry is not asking the Government for a subsidy. It is ready and prepared to go ahead itself. All it is asking is to be relieved of this dreadful burden. It is asking to be kept alive. If a remission of this tax can be granted tonight, salvation will come to the industry and it will be enabled to continue production.
For 107 years, oil has been continuously produced. It has proved a useful source of revenue to succeeding Governments. To my mind, it is sheer folly to kill the goose that lays the golden eggs or deliberately to crush the industry to extinction, as is now happening. As far back as 1851, the original intention of Robert Young, the man who started production of oil, was to produce paraffin oil for household use and the lamps that we had at that time. Then, just a century ago, we really went into production in producing in quantity.
Since the inception of the industry a century ago, great strides have been made not only in the production of the oil but with numerous by-products. Even the spent shale is being recovered and made into bricks for house and factory building. At the £6½ million B.P. chemicals plant at Grangemouth, the whole of the ground was recovered from the sea with spent shale and the whole of the new plant was built with bricks made from spent shale in the Lothians.
The producing company has had many setbacks in the past century, but it has continued, even in adversity, to keep the retorts and the refineries in production. Today the industry is dying, but the Government can resuscitate it by the simple expedient of conceding the new Clause, which has been introduced by my hon. Friend the Member for West Lothian (Mr. Taylor) in his usual able manner. I, too, regret that my hon. Friend the Member for Midlothian (Mr. Pryde) is not present, as his constituency is very much affected as a consequence of the present position.
I appeal to the Chancellor, with all the sincerity I can command, that if he gives remission of this tax he will be enabled to save an important industry in Scotland and bring relief to the hundreds of families who are still dependent upon
1450
the production of oil from the shale industry.
Sir David Robertson: Like all other Scottish Members, I am very anxious about the situation of the shale industry in West Lothian and I intensely dislike the thought of any industry being closed down, particularly one where it all began. This is the pioneer oilfield, I believe, of the world. The original research was done by the chemist Robert Young in extracting oil from shale. In this day and age, when it is the only oil we have produced in Britain, it seems extraordinary that any Government should want to put it out of business.
Men have gone out from this field to all over the world, to the fields in America, in the Middle East and elsewhere. Lord Strathalmond, who recently retired from the chairmanship of the British Petroleum Company, was, I think, the grandson of the original Robert Young. At least, his grandfather, his father and he himself were all trained in the oil industry at Pumpherston, and he became the head of the great British Petroleum Company which brought great wealth to this country.
Alexander Fraser, an old friend of mine who went to school with me in Glasgow, went from the same company in West Lothian to become the President of Shell Oil and of Shell Union in America. Not only, therefore, was this a pioneer project which has been carried on for over a century, but its men have gone out and made a great contribution to the oil industry of the world.
9.30 p.m.
For those reasons alone I think the Government should look very carefully before they decide, because of the tax, to close this industry. Hon. Members who have already spoken have made it abundantly clear that it is only the imposition of the tax, levied by this Committee, which is causing this industry to be threatened with extinction. That is wrong, and it is within the power of this Committee, provided, of course, the Chancellor and his colleagues in the Treasury agree to the arguments which have been put so well before us tonight, to say this industry should be allowed to continue.
But there is surely another reason why it should. We are spending vast sums of

1451
the £5,000 million which we are raising from the taxpayers of this country every year in trying to defend overseas oil on which we are so largely dependent. Both sides of the Committee seem to approve this expenditure to protect oilfields abroad on which we are so dependent, but is it right to do that and, at the same time, deliberately to close down an oil industry which, as the hon. Member for Edinburgh, Central (Mr. Oswald) stated a moment or two ago, is producing four-fifths of the diesel oil to run Scottish transport? Can Britain afford to do that? It may be, as my hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart) stated, a very small quantity, taking into account the United Kingdom's need for oil, but it is home-produced. It requires no defence money spent upon it. And it provides valuable employment for our men.
I am fully convinced from what I have heard from people much better qualified to speak on this matter that this industry can produce shale oil more cheaply and more economically than has been done in the past. Now it is threatened with extinction by a tax levied by this Committee—by us, every one of us in this Chamber. That seems to me to be wholly wrong. This principle of "Do not break the front" is one which I can never understand. There are always exceptions to every good rule. Cannot there be an exception to this one? I am perfectly satisfied that Scotland does not like this tax. I do not like it. I do not think any Scottish Member likes it, and I strongly urge the Chancellor to look again at this and make an attempt to save this industry simply by taking off the tax.
Dr. J. Dickson Mabon: The Chancellor will have gathered by now that what cotton is to Lancashire and jute is to Dundee shale oil is to The Lothians, and I do not apologise for intervening in this debate at this juncture. I should like to put the point in two ways, first, as a Scotsman, a Scottish Member, who knows intimately Scotland's economy.
It seems to me absolutely outrageous and insane that in one and the same country and at one and the same time we should be trying to create opportunities for employment in some localities while in another locality by fiscal action
1452
affecting capital arrangements we are closing down a source of employment. It seems to me a ridiculous position. This paradox has to be explained, if it is a paradox, in some way.
Last year we were told by a Treasury Minister that there were other measures by which this industry could be helped. We have not seen any apparent demonstration of those other methods, and if they have failed, or if they do not exist, then surely the Chancellor should tell us tonight that it is the Government's policy that this industry is doomed and that we shall have to find alternative means of giving employment to its people. Any other answer would be equivocal, unless the Chancellor accepts the new Clause and the industry thus has a new lease of life.
If he does not say so quite bluntly and in so many words does it not follow—and now I speak as a United Kingdom Member—that we are to spend a great deal of money in building factories to provide alternative work for the men rendered unemployed by the closing down of the shale oil industry?
I understand that it will cost the Government half a million pounds if they carry out their promise, as I certainly hope that they will, to build a factory in Greenock which will employ 500 men in 1960. If this industry is to be bankrupted in a few years' time, it follows that we shall have to spend a great deal more money to establish factories of that kind. This seems to me absolutely crazy finance. I cannot see the logic of imposing a tax which brings in this amount of money and pulls down an industry, while, at the same time, we face the fact that we should have to spend a great deal more money in resurrecting the area if the industry closes down.
Mr. James H. Hoy: In addition, there is the tremendous cost of unemployment benefit.
Dr. Dickson Mabon: I accept that very valid point.
While the Chancellor may have been engrossed in the historical background of this industry and have regarded us Scotsmen as sentimental about it, he should face the stark physical financial facts of the position and tell us how in all sanity this tax can be defended at

1453
present. If he were to say that temporarily it would be suspended, that would be welcomed by both sides of the Committee. That would be satisfactory in itself, even if in the process of time we could not save the industry completely.
Miss Margaret Herbison: I support the new Clause. My hon. Friend the Member for West Lothian (Mr. J. Taylor) is my next-door neighbour. My constituency borders on The Lothians, and I add my plea to those made on behalf of this industry from both sides of the Committee. Every Scottish Member who has spoken is in full support of the Clause. It seems to me senseless that the Government, for the sake of £¾ million in such a huge Budget, intend to accept the responsibility for closing down completely this oil industry in Scotland. I know the villages in the Lothians. I know the people well, and I can vouch that the men and women in these villages just cannot understand the Government's attitude on this matter of taxation.
Mr. E. G. Willis: Neither can anybody else.
Miss Herbison: Today the Minister of Labour, in the course of answering Questions from Scottish Members, showed quite clearly that he was worried about the high and growing level of unemployment in Scotland. I am sure that if the Chancellor had a word with the Minister of Labour he would find that his right hon. Friend, if he is seriously worried, would be adding his voice to the voices which have been heard tonight in support of taking away this taxation from the industry.
The hon. Member for Caithness and Sutherland (Sir D. Robertson) has spoken very clearly and forcibly about the amount of money that we are spending on defence, some of it to safeguard oil interests in other parts of the world. Are the Chancellor and the Government quite certain that at no time in the future they will greatly regret that we do not have this indigenous supply of oil? That point ought to be taken into consideration when a decision on this new Clause is taken.
Tonight we are not asking for a subsidy for this industry. We find that in this country heavy subsidies are given for
1454
agriculture, running into over £300 million a year at present. That money is spent on agriculture because, as a nation, we feel that it is of the greatest importance for us to supply at least half of the food we need, and how grateful we have been from time to time when the international situation has been serious that we have had this supply of food in our country.
Mr. William Hamilton: Will my hon. Friend bear in mind the subsidy to other industries in the form of derating?
Miss Herbison: My hon. Friend is correct about the derating of other industries. I want to stress again to the Chancellor of the Exchequer that we are not asking for even the smallest subsidy to put against that huge subsidy to agriculture. We are asking only that the Chancellor should not take from this industry £¾ million a year.
Again, some of my hon. Friend's constituents sign on at an Employment Exchange in my area. We are seriously worried, not only in Lanarkshire but also in the Lothians, about the increase in unemployment. My hon. Friend the Member for Edinburgh, Central (Mr. Oswald) spoke of the difficulties of finding alternative work. The big stretch of The Lothians next to my constituency has not had any new factories provided for it.
Mr. Willis: Neither has Midlothian.
Miss Herbison: I am speaking of the part I know so well and of the distress and the misery there caused by present unemployment. I ask the Chancellor to give the gravest consideration to the plea that is being put forward to save this industry for the nation and to give some hope to those 2,000 shale oil miners and their families.
Mr. Amory: My hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart) recalled the time when he used to sit on this Bench. I devoutly wish he was sitting here this evening to answer this point because, if I were to be guided only by my heart and not by my head, I would find it tempting to support the Clause.
I feel much sympathy on human grounds for the case which was put so persuasively by the hon. Gentleman the Member for West Lothian (Mr. J. Taylor), but we must try to consider the facts as

1455
objectively as we can. The blunt fact is that the production of oil from shale in Scotland cannot compete on anything approaching equal terms with imported oil. The industry has been kept going on a diminishing scale by reason of a substantial preference in the duty. That preference since 1928, if added up, amounts to protection to the shale oil industry of close on £20 million.
Mr. Hamilton Mr. Hamilton indicated dissent.
Mr. Amory: I think it does, if we relate it to the production of oil over that period. The hon. Gentleman will find that it comes out at a substantial figure.
The object of the proposed Clause is that this oil production should receive total exemption from the Excise Duty. That, in effect, would be doubling the present preference, whilst leaving the existing preferential rates still applicable to other indigenous oil produced in other sections of the oil industry. It has been said, and it is I think a fact, that the shale oil industry produces one-sixth of our requirements for paraffin wax, about one-half per cent. of the total usage in the country of Derv and light oil, and about 8 per cent. of the total indigenous production of oil.
9.45 p.m.
I recognise, straightaway, that this industry has been the mainstay of employment in West Lothian, but when we take into consideration these facts, we must bear in mind that the existing preference is the equivalent of a protective duty of 100 per cent. on the oil. The hon. Lady the Member for Lanarkshire, North (Miss Herbison) referred to agricultural support, but I do not think that there is any agricultural product which receives a protective duty in the form of subsidy or duty of 100 per cent. of its value. That protective duty, if worked out per head of those engaged in the industry, amounts to nearly £5 per week per worker.
If the exemption were extended to other indigenous oil production, it would amount to not £750,000 but approaching £10 million, and on administrative grounds, although it might not be impossible to devise a way of differentiating, it would be quite difficult to do so because, as hon. Members representing Scottish constituencies know, shale oil and other crude oils are refined in the same
1456
refinery. I cannot find any sufficient justification—I wish I could—for further assistance to this industry on the ground of oil supplies.
One has to look at some of these harsh facts. I think that an hon. Gentleman said that if further relief was not given to this industry we might lose the whole of the £750,000 which is at present receivable. If one looks at that purely objectively, and that oil were replaced by imported oil, the Revenue would obtain twice the rate of duty that it obtains at present.
The total number of employed in the industry now is 2,300 and already that is costing in protection £750,000 a year. I feel that the relief which is being given, amounting to 100 per cent. of the value of the oil produced, is as much as can be possibly justified. As I have said, per head per worker it amounts—and this is relevant when one is considering the proper use of our manpower resources—to the equivalent of about £5 per head per worker. From the evidence that I have I cannot feel, unfortunately, that further relief in this case will provide a permanent solution to this problem.
Mr. Oswald: I am sorry to interrupt the right hon. Gentleman. I am grateful to him for giving way. It seems passing strange to me that the right hon. Gentleman has quoted precisely the same figures tonight as those quoted by the Financial Secretary in reply to a similar debate last year. His argument was that we were giving an equivalent sum of between £4 and £5 per head of the population in the industry. Today, we have only 2,300 people working in the industry, as against 12,000 last year. In the past two years that has been reduced annually. The figure quoted last year was between £4 and £5 and the same figure has been given tonight. It seems a very phoney argument.
Mr. Amory: I do not think so, because production has dropped in the meantime. [HON. MEMBERS: "Oh."] That is the answer, and, if the hon. Member works it out, he will see that the figures I have quoted can be reconciled. The best solution in the long term was to do, first, what I understand is being done at present, cut out the less productive sections of the industry—[An HON. MEMBER: "There will be none left."]—and, in the longer term, to help

1457
in every way we can to encourage new industries to come to the area to absorb those for whom this industry cannot any longer provide employment.
Very reluctantly, I have come to the conclusion that on present evidence I should not be justified in accepting the proposal made in this new Clause.
Mr. Willis: That is a shocking answer.
Mr. Thomas Fraser: If the Chancellor had any supporters in Scotland before he made his speech tonight and his speech is reported in Scotland, he will have precious few tomorrow. The Chancellor said that if he were to decide this matter by his heart and not by his head of course he would make the concession. By what he has said he has convinced us that the Government have no heart at all.
Mr. Willis: No head either.
Mr. Fraser: The Chancellor made it clear to the people of the Lothians area in particular and of the whole of Scotland generally that the Government have no heart and are not willing to consider the plight of a great many people. He has been looking at this matter on cold fiscal grounds, making what will be regarded in Scotland as quite irrelevant calculations, and then rejecting the plea which has been made. The Chancellor said the protection this industry enjoyed had cost £20 million over the last thirty years. What did the Suez episode cost eighteen months ago? That was for the purpose of protecting oil being brought from another part of the world. What does it cost us every year to keep the shipping lines open to ensure that we get oil from other parts of the world?
The Chancellor replied to my hon. Friend the Member for Lanarkshire, North (Miss Herbison), who made reference to farm subsidies, that this relief was in no way comparable to farm subsidies. Of course it is not. He said that would work out at about £4 to £5 per week per worker. My hon. Friend the Member for Edinburgh, Central (Mr. Oswald) was right in saying that this was the calculation made by the Financial Secretary twelve months ago today, on the 2nd July, 1957, at which time there were more than 3,000 workers in the industry, and today we are told there are 2,300 and the amount of money is
1458
£750,000. I want to remind the Chancellor that he added nothing to what was said a year ago.
We are not here asking that the Chancellor should dip into taxpayers' pockets and subsidise this industry at the rate of £4 or £5 per week per worker employed. Whilst I remind him of that, I would also tell him that, according to the estimates, he is obliged to dip his hands in the taxpayers' pockets to find £47 million for farm subsidies in Scotland. That £47 million for farm subsidies is a sum greatly in excess of the total amount received in wages by all farm workers in Scotland, and it is being found out of the pockets of the taxpayers. Will he bear some of these things in mind and reconsider the speech he made tonight?
Incidentally, it is worth bearing in mind that that £47 million represents more than £9 per head of the total population of Scotland, men, women and children. There are 5 million people in Scotland. I have not been asking for cuts in farm subsidies; I have just been asking that other industries—and other people who are employed in industries which are of some importance to the nation as a whole—should be given some consideration by the Government.
The Chancellor said that if this oil were replaced by imported oil he would get from the duty double the income that he gets at present. One of my hon. Friends interjected to ask what it would cost to protect our shipping lines to bring it in. Why did the Chancellor make that point? Was it to show that he was being generous in what he is doing, and that if he is taking this £750,000 he is sacrificing another £750,000? That is the only point that can be made from his statement.
Mr. Willis: He is trying to justify murdering the industry.
Mr. Fraser: Yes. He said that the real way to help the area was to get new industry there. He is the Chancellor of the Exchequer. What is he doing about that? Are there any new industries growing up in the area. The answer is "No."
We have listened to many speeches from that Box, and from Government supporters in Scotland, protesting that the Government were most anxious to deal with unemployment wherever it

1459
existed at a high and persistent level, and that new powers being taken under a Bill now before Parliament. The Government did not have to take powers under a new Bill; they have had the powers since 1945, but they have not been exercised in order to get new industries into this part of Scotland. Hon. Members on both sides of the Committee who know this part of Scotland or have travelled through it will readily agree that it is the one part of central Scotland which causes distress to anyone passing through it.
I represent a constituency in central Lanarkshire. It was right in the centre of the old distressed area. We still suffer a lot of distress in Lanarkshire, but we have some new industrial estates. We have a lot of new factories—not enough, but there is evidence of new life in Lanarkshire. But one goes through West Lothian—through this shale mining area—and sees only evidence of industries dying and communities decaying.
Last year, in rejecting a similar Clause, the then Financial Secretary—the hon. Member for Wolverhampton, South-West (Mr. Powell)—offered some hope. He said:
"I repeat that that does not mean that because the fiscal method is impracticable—and certainly highly unselective—there may be no case for other means being used for the assistance of the industry, as the hon. Member himself mentioned. That is not a question for the Treasury. I am concerned here only with the fiscal question. I would ask the Committee, however, not to deduce that, because I feel obliged to advise it against making a concession upon the Excise Duty, the Government are unaware of the difficulties under which the shale oil industry is placed, and that for this reason the application of other means is necessarily ruled out."
That hope was offered to this industry by the official spokesman for the Government a year ago today. There was a hope that other measures would be taken.
Before finally rejecting the Clause, will the Chancellor tell us what are these other measures? What are the measures that were suggested twelve months ago? Are other measures being taken, or are they going to be taken? Hon. Members who will support the Government later were satisfied in the course of the debate a year ago. The hon. Member for Glasgow, Pollok (Mr. George) said:
"I confess that I am not able to answer the argument put forward by the Financial Secretary regarding the impossibility of separating
1460
the products of the shale oil industry from other oil products. I can quite appreciate that that is a tremendous difficulty, but, though I may be putting it too high, I felt that in not ruling out some other method of assisting the industry, my hon. Friend had gone a very long way to giving us hope"—
then my hon. Friend the Member for Glasgow, Central (Mr. McInnes) said:
"Could the hon. Member say what the other methods are?"
and the hon. Member for Pollok said:
"I would not press that issue at this stage. I am quite happy to feel that the Government are thinking along other lines to assist—".—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 997–1000.]
I hope that the hon. Member is in the Committee tonight, because we have not been told what the other measures are.
A year ago the Government got away with their opposition to this Clause on the promise that they would take other methods to assist this industry. If there is no other assistance for this industry and no other assistance for this part of the country, this industry, which has shed many hundreds of workers since the debate a year ago, is likely to shed a great many more before the year is out.
10.0 p.m.
Mr. Amory: I thought I had implied towards the end of my remarks that the other measures which the Government had in mind were to encourage in every way they could new industries to go there and to assist those who wished to do so.
Mr. Fraser: The right hon. Gentleman is somewhat inexact in what he has said, because a year ago the Financial Secretary did not say that the Government would take other measures to assist the area and the hon. Member for Pollok did not repeat a promise to assist the area. The Financial Secretary promised other measures to assist the industry, not the area. The Chancellor has waited a long time to say that we shall get other measures to assist the area. I ask him to remember that he was inexact in saying that the promise was to assist the area, because the promise was to assist the industry.
In any case, it is not enough to reject the new Clause, which will protect the existing industry in the area, by saying that the Chancellor, at some unspecified date in the future, will undertake to assist in the attraction of other industries into the area. He must be a great deal more specific than that. We have waited

1461
a long time for some evidence of some new industrial activity in this area, and there is none as yet. In the absence of a more specific assurance about the area than we have had up to now, I should like to think that every hon. Member representing a Scottish constituency will find it very easy to go into the Lobby tonight in support of the Clause.
Mr. H. Wilson: Anxious as we are to make progress, the Chancellor cannot leave the position where it is. I submit that he must reply to the last point made by my hon. Friend the Member for Hamilton (Mr. T. Fraser). Does he now repudiate the pledge given a year ago on the Finance Bill that other means would be found to help the industry? It is not an answer to say that the Government will sit in Whitehall trying, by all the pussy-footing methods at their
disposal, or that they are willing to use, to persuade other industries to come to the area.
We know that Development Area policy under this Government is a dead letter, because they will not use the controls available, but last year a pledge was given which clearly affected the decision of at any rate one hon. Member and perhaps many more on how they would vote in the Division. Will the Chancellor tell us whether he now repudiates that pledge or whether he has some plan, secret so far from the Committee and perhaps secret from himself, which he intends to carry out?
Question put, That the Clause be read a Second time:—
Time Committee divided: Ayes 157, Noes 188.

Division No. 190.]

AYES

[10.4 p.m.

Ainsley, J. W.

Herbison, Miss M.

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

Albu, A. H.

Hewitson, Capt. M.

Oram, A. E.

Allaun, Frank (Salford, E.)

Hobson, C. R. (Kelghley)

Orbach, M.

Awbery, S. S.

Holman, P.

Oswald, T.

Bacon, Miss Alice

Holt, A. F.

Owen, W. J.

Benson, Sir George

Houghton, Douglas

Padley, W. E.

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

Howell, Charles (Perry Barr)

Palmer, A. M. F.

Blackburn, F.

Hoy, J. H.

Pargiter, G. A.

Blenkinsop, A.

Hughes, Emrys (S. Ayrshire)

Parkin, B. T.

Blyton, W. R.

Hughes, Hector (Aberdeen, N.)

Paton, John

Boardman, H.

Hunter, A. E.

Peart, T. F.

Bonham Carter, Mark

Hynd, H. (Accrington)

Pentland, N.

Bottomley, Rt. Hon. A. G.

Hynd, J. B. (Attercliffe)

Popplewell, E.

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

Irving, Sydney (Dartford)

Price, J. T. (Westhoughton)

Braddock, Mrs. Elizabeth

Isaacs, Rt. Hon. G. A.

Price, Philips (Gloucestershire, W.)

Broughton, Dr. A. D. D.

Janner, B.

Probert, A. R.

Brown, Rt. Hon. George (Belper)

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

Pursey, cmdr. H.

Brown, Thomas (Ince)

Jeger, George (Goole)

Rankin, John

Burke, W. A.

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

Redhead, E. C.

Callaghan, L. J.

Jenkins, Roy (Stechford)

Reynolds, G. W.

Champion, A. J.

Johnson, James (Rugby)

Rhodes, H.

Chetwynd, G. R.

Johnston, Douglas (Paisley)

Roberts, Albert (Normanton)

Collins, V. J. (Shoreditch & Finsbury)

Jones, David (The Hartlepools)

Roberts, Goronwy (Caernarvon)

Jones, Jack (Rotherham)

Robinson, Kenneth (St. Pancras, N.)

Corbet, Mrs. Freda

Jones, J. Idwal (Wrexham)

Short, E. W.

Craddock, George (Bradford, S.)

Kenyon, C.

Silverman, Julius (Aston)

Cronin, J. D.

Key, Rt. Hon. C. W.

Skeffington, A. M.

Crossman, R. H. S.

Lawson, G. M.

Smith, Ellis (Stoke, S.)

Darling, George (Hillsborough)

Ledger, R. J.

Snow, J. W.

Davies, Ernest (Enfield, E.)

Lee, Frederick (Newton)

Sorensen, R. W.

Deer, G.

Lee, Miss Jennie (Cannock)

Soskice, Rt. Hon. Sir Frank

de Freitas, Geoffrey

Sparks, J. A.

Delargy, H. J.

Lever, Leslie (Ardwick)

Stones, W. (Consett)

Diamond, John

Lewis, Arthur

Summerskill, Rt. Hon. E.

Dodds, N. N.

Lindgren, G. S.

Swingler, S. T.

Ede, Rt. Hon. J. C.

Logan, D. G.

Taylor, Bernard (Mansfield)

Edwards, W. J. (Stepney)

Mabon, Dr. J. Dickson

Taylor, John (West Lothian)

Evans, Edward (Lowestoft)

McAlister, Mrs. Mary

Thomas, George (Cardiff)

Fernyhough, E.

McCann, J.

Thomson, George (Dundee, E.)

Fletcher, Eric

MacDermot, Niall

Tomney, F.

Fraser, Thomas (Hamilton)

Molnnes, J.

Ungoed-Thomas, Sir Lynn

George, Lady Megan Lloyd (Car'then)

MacPherson, Malcolm (Stirling)

Viant, S. P.

Gibson, C. W.

Mahon, Simon

Wade, D. W.

Gordon Walker, Rt. Hon. P. C.

Mallalieu, E. L. (Brigg)

Watkins, T. E.

Grenfell, Rt. Hon. D. R.

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

Weitzman, D.

Grimond, J.

Mann, Mrs. Jean

Wheeldon, W. E.

Hall, Rt. Hn. Glenvil (Colne Valley)

Mitchison, G. R.

White, Mrs. Eirene (E. Flint)

Hamilton, W. W.

Moss, R.

Wilcock, Group Capt. C. A. B.

Harrison, J. (Nottingham, N.)

Moyle, A.

Willey, Frederick

Hayman, F. H.

Neal, Harold (Bolsover)

Williams, David (Neath)

Healey, Denis

Noel-Baker, Francis (Swindon)

Williams, Rev. Llywelyn (Ab'tillery)

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

Winterbottom, Richard

TELLERS FOR THE AYES:

Willis, Eustace (Edinburgh, E.)

Woodburn, Rt. Hon. A.

Mr. Pearson and Mr. Simmons.

Wilson, Rt. Hon. Harold (Huyton)

Yates, V. (Ladywood)

NOES

Agnew, Sir Peter

Grant, Rt. Hon. W. (Woodside)

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

Aitken, W. T.

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

Noble, Michael (Argyll)

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

Green, A.

Nugent, G. R. H.

Alport, C. J. M.

Gresham Cooke, R.

Oakshott, H. D.

Amory, Rt. Hn. Heathcoat (Tiverton)

Grimston, Hon. John (St. Albans)

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

Arbuthnot, John

Gurden, Harold

Orr, Capt. L. P. S.

Ashton, H.

Harris, Reader (Heston)

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

Atkins, H. E.

Harrison, A. B. C. (Maldon)

Osborne, C.

Baldock, Lt.-Cmdr. J. M.

Harrison, Col. J. H. (Eye)

Page, R. G.

Barber, Anthony

Harvey, John (Walthamstow, E.)

Pannell, N. A. (Kirkdale)

Barter, John

Heald, Rt. Hon. Sir Lionel

Partridge, E.

Batsford, Brian

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

Peel, W. J.

Baxter, Sir Beverley

Hesketh, R. F.

Pickthorn, K. W. M.

Beamish, Col. Tufton

Hicks-Beach, Maj. W. W.

Pike, Miss Mervyn

Bell, Philip (Bolton, E.)

Hill, Mrs. E. (Wythenshawe)

Pilkington, Capt. R. A.

Bell, Ronald (Bucks, S.)

Hirst, Geoffrey

Powell, J. Enoch

Bennett, F. M. (Torquay)

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

Profumo, J. D.

Bevins, J. R. (Toxteth)

Holland-Martin, C. J.

Ramsden, J. E.

Bidgood, J. C.

Hope, Lord John

Rawlinson, Peter

Bishop, F. P.

Hornby, R. P.

Redmayne, M.

Black, C. W.

Horobin, Sir Ian

Rees-Davies, W. R.

Bossom, Sir Alfred

Howard, Gerald (Cambridgeshire)

Ridsdale, J. E.

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

Hughes-Young, M. H. C.

Roberts, Sir Peter (Heeley)

Boyle, Sir Edward

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

Robinson, Sir Roland (Blackpool, S.)

Braine, B. R.

Hyde, Montgomery

Rodgers, John (Sevenoaks)

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

Hylton-Foster, Rt. Hon. Sir Harry

Roper, Sir Harold

Browne, J. Nixon (Craigton)

Iremonger, T. L.

Ropner, Col. Sir Leonard

Bullus, Wing Commander E. E.

Irvine, Bryant Godman (Rye)

Shepherd, William

Burden, F. F. A.

Jenkins, Robert (Dulwich)

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

Butcher, Sir Herbert

Jennings, Sir Roland (Hallam)

Spearman, Sir Alexander

Carr, Robert

Johnson, Dr. Donald (Carlisle)

Stanley, Capt. Hon. Richard

Chichester-Clark, R.

Johnson, Eric (Blackley)

Stevens, Geoffrey

Clarke, Brig. Terence (Portsmth, W.)

Joseph, Sir Keith

Steward, Harold (Stockport, S.)

Cole, Norman

Kaberry, D.

Stoddart-Scott, col. Sir Malcolm

Conant, Maj. Sir Roger

Kerr, Sir Hamilton

Stuart, Rt. Hon. James (Moray)

Cooke, Robert

Kershaw, J. A.

Studholme, Sir Henry

Cooper-Key, E. M.

Kimball, M.

Summers, Sir Spenser

Craddock, Beresford (Spelthorne)

Leather, E. H. C.

Sumner, W. D. M. (Orpington)

Crowder, Petre (Ruislip—Northwood)

Leavey, J. A.

Taylor, Sir Charles (Eastbourne)

Davidson, Viscountess

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

Teeling, W.

D'Avigdor-Goldsmid, Sir Henry

Legh, Hon. Peter (Petersfield)

Temple, John M.

Deedes, W. F.

Linstead, Sir H. N.

Thomas, Leslie (Canterbury)

Digby, Simon Wingfield

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

Thompson, Kenneth (Walton)

Donaldson, Cmdr. C. E. McA.

Lloyd, Rt. Hon. Selwyn (Wirral)

Thompson, R. (Croydon, S.)

Doughty, C. J. A.

Lucas, Sir Jocelyn (Portsmouth, S.)

Thornton-Kemsley, Sir Colin

du Cann, E. D. L.

Lucas, P. B. (Brentford & Chiswick)

Tilney, John (Wavertree)

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

Lucas-Tooth, Sir Hugh

Turton, Rt. Hon. R. H.

Macdonald, Sir Peter

Tweedsmuir, Lady

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

Mackeson, Brig. Sir Harry

Vane, W. M. F.

Emmet, Hon. Mrs. Evelyn

McKibbin, Alan

Vickers, Miss Joan

Errington, Sir Eric

Mackie, J. H. (Galloway)

Vosper, Rt. Hon. D. F.

Finlay, Graeme

McLaughlin, Mrs. P.

Wakefield, Edward (Derbyshire, W.)

Fletcher-Cooke, C.

Macmillan, Maurice (Halifax)

Wakefield, Sir Wavell (St. M'lebone)

Gammans, Lady

Macpherson, Niall (Dumfries)

Wall, Patrick

Garner-Evans, E. H.

Maddan, Martin

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

George, J. C. (Pollok)

Markham, Major Sir Frank

Ward, Dame Irene (Tynemouth)

Gibson-Watt, D.

Marlowe, A. A. H.

Webster, David

Glover, D.

Marshall, Douglas

Whitelaw, W. S. I.

Glyn, Col. Richard H.

Mathew, R.

Wilson, Geoffrey (Truro)

Godber, J. B.

Maudling, Rt. Hon. R.

Wood, Hon. R.

Goodhart, Philip

Medlicott, Sir Frank

Woollam, John Victor

Gough, C. F. H.

Nabarro, G. D. N.

Gower, H. R.

Nairn, D. L. S.

TELLERS FOR THE NOES:

Graham, Sir Fergus

Nicholson, Sir Godfrey (Farnham)

Sir Gerald Wills and Mr. Bryan.

New Clause.—(ONE HUNDRED PER CENT. DISABLED.)
The following section shall be added to Part VIII of the Income Tax Act, 1952:—
"228A. If the claimant proves that during the whole of the year of assessment—

(a) he has been in receipt of a war disablement pension or an industrial injury pension granted by the Ministry of Pensions and National Insurance and determined by reference to one hundred per cent. disablement, or

(b) though not in receipt of a one hundred per cent. disablement pension or industrial injury pension he nevertheless is disabled in manner and degree equivalent to one hundred per cent. disablement,

he shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on one hundred pounds".—[Mr. E. Evans.]
Brought up, and read the First time.
Mr. Edward Evans: I beg to move, That the Clause be read a Second time.
Although for some reason my name is omitted from the list of names in support of the new Clause, I claim a very intense interest in this subject, and have had for many years. This new Clause, and, indeed, the one which follows it, which has not been selected and which relates to blind persons, can almost be described as a hardy annual, because for many years we have been striving to induce Conservative Chancellors of the Exchequer to unbend from the rigid attitude they have adopted in this matter.
I have myself on many occasions been a member of deputations to the Financial Secretary to the Treasury to present the case which we are now making for this relief, or something on similar lines. We have always had a sympathetic hearing, and very little more, with a promise that the matter would be examined with sympathy, but nothing has happened yet. I hope that tonight we are going to have from the Financial Secretary a much more accommodating response to our appeal. One would have thought, in view of the rising sympathy of the general public for the welfare of the disabled, as has been evidenced by the number of debates we have had in the House during the past year on the subject, and in view of the obvious merits of the case, that the Government would have relaxed a little.
1466
It is with this hope in mind that I have the temerity to move the Second Reading of this new Clause.
10.15 p.m.
We make our claim for disabled persons who are the victims of such grave disability that they are assessed on the basis of 100 per cent. disablement either through war service or industrial injury as defined in paragraph (a) of the new Clause. In addition, we urge consideration for another group of persons, namely, those who
"though not in receipt of a one hundred per cent. disablement pension or industrial injury pension"
are nevertheless
"disabled in manner and degree equivalent to one hundred per cent. disablement."
We press the Chancellor to allow a deduction of £100 from the Income Tax with which such people are chargeable, a very modest sum.
The proposed beneficiaries under paragraph (a) are readily identifiable, but the Chancellor has, I believe, objected that it is not so easy to identify those mentioned in paragraph (b). On this matter, I make to the Financial Secretary the suggestion which was made about two years ago, when a similar Clause was brought before the Committee, for overcoming the difficulty. In the Blind Persons Act, 1920, there is a statutory definition of blindness. There is a register of blind persons. As far as I am aware, blindness is the only disability having a statutory definition. As the Committee knows, the welfare provisions of the National Assistance Act, 1948, make it the duty of local authorities, if they submit schemes for welfare services which are approved by the Minister, to maintain a register of handicapped persons, and a definition of a handicapped person is one "severely and permanently handicapped". When we were discussing not long ago a Private Member's Bill on a similar subject, that definition was embodied in it.
The persons covered by the new Clause fall into certain categories. There are the obvious ones—the blind, the deaf, the dumb, the physically handicapped, the crippled—this category embracing a large variety of disablements—spastics, polio

1467
cases, those suffering from muscular disorders, epilepsy, and so forth. I am convinced that these people will go on the local authority registers only after a strict examination of the extent of their disabilities. If the Minister has doubts about that, the safeguard could easily be reinforced by a medical endorsement as regards the degree of disability when a person was applying for a rebate. If the Minister is not prepared to accept those persons whose names go on to the local authority registers under the National Assistance Act, there is the disabled persons employment register, section 2 of which contains a long list of disabilities, sufferers from which are entitled to receive training and rehabilitation in a sheltered workshop.
It would be easy, on purely humanitarian grounds, to deploy a case for consideration by the Committee. We all know, probably intimately, severely handicapped persons who make a grand struggle to keep going.
I should like to present a case on economic grounds. We know that by National Assistance the Government recognise that blind persons and those suffering from pulmonary tuberculosis should have additional grants. That is because, of course, their disability causes added cost to their living amenities. This is equally valid in respect of those outside the scope of National Assistance. It applies with considerable force to those disabled persons who are not so handicapped that they are able to engage in remunerative work, some as employees and some as self-employed.
The proposed Clause aims to encourage disabled persons to work and to do as much to support themselves as possible. Very many of them do. But the numbers of disabled are increasing and there are many agencies, both voluntary and statutory, which help them to find suitable work. There are the blind employment factories which are run by voluntary societies and local authorities, the wonderful workshops at Leatherhead, and Remploy. All of these provide employment under sheltered workshop conditions. But there are many who work in competitive open industry in various skilled trades. There are many in professional and semi-professional life and
1468
they are making a very good contribution to the national economy.
For many years it has been the aim of successive Governments and voluntary societies and those of us who are interested in the handicapped person to provide facilities for education and training. The Ministry of Labour has a very fine record in this regard. The Piercy Committee, which last year presented its Report, and other bodies competent to give advice, stressed the value from a rehabilitation point of view of remunerative employment as a factor in building up, and, indeed, rebuilding, the morale of a handicapped person. It is tremendously vital that those suffering from a disablement, through accident or any other cause, shall feel that they are not cast aside by society after they have learned their trades, but are able to earn their living and thereby contribute to the national economy.
The Committee must be aware of the fundamental issue here. It must of necessity cost more for a 100 per cent. disabled person to live and work than it does for a normally endowed person. He requires more help, special apparatus and at times special drugs and surgical appliances, and in many cases adapted tools for his job. A blind person requires readers and Braille books, and if he is a professional man, such as a lawyer or physiotherapist, he will require special means to keep in contact with modern progress and modern legislation. The term "cripple" is a very embracive term, but in the wider sense cripples very often need special travelling facilities.
I was impressed during the bus strike to see how blind persons and crippled persons who had been used to a normal means of communication where they received the help of sympathetic conductors and public managed to get to their work. I was standing at the bus stop in Parliament Street when a blind woman came out of one of the Ministries. The conductor immediately recognised her, helped her on the bus and knew precisely where she wanted to go. But for the fact that this lady was working on a bus route her means of getting to work would have been very costly, as, incidentally, it was for me during the bus strike.
The modified domestic arrangements of disabled persons necessitate additional

1469
cost. How many disabled persons living alone, for instance, are able both to run their houses and go to work? My whole case depends upon the realisation that it costs more to be a handicapped person than a normally endowed person and that we, claiming as we do, to be humane and progressive, have our duties and obligations to these people. Many of them have suffered their disability through having fought for us. To have to pay Income Tax at the present rate is a handicap to them. Our duty is to try to make their life less irksome and to encourage them.
I shall bring to our aid the Second Report of the Royal Commission on the Taxation of Profits and Income, paragraphs 201 and 202. The Commission's recommendation was that these persons suffering from 100 per cent. disability should be granted what are, in effect, the terms of the two new Clauses, one of which has been called and the other has not been selected.
In paragraph 202, the Royal Commission stated:
"Our general conclusion is that grave disability"—
it does not suggest 100 per cent. disability—
"ought to be the subject of allowance."
Nothing could be clearer or more unequivocal. The Report continues:
"It presents itself to us as a personal circumstance that sets apart those who suffer from it and directly affects their relative capacity to pay. We do not mean that it affects their earning capacity."
We are asking what we consider to be a reasonable concession and one which it is well within our power to give to those who deserve our sympathy, which is not all that we can give. We should give them real tangible help.
The Royal Commission said:
"What we are thinking of is a range of additional expense attendant upon the conduct of their normal life, not least upon the maintenance of their earning capacity, which yet goes unrelieved under the existing code."
The idea underlying the Royal Commission's Report was that the granting of this concession would, help disabled persons to become a greater economic factor in our affairs. To deny them this con-
1470
cession does a disservice not only to the disabled but to the country.
As I understand it, the Royal Commission desired such relief as would enable the handicapped to maintain their capacity to work, to contribute by their industry to the national economy and so to make them feel that they are a useful and respected element in the community. We urge the Chancellor to give his most sympathetic consideration to the Clause. It cannot cost a great deal, but if conceded it would do something to make life for the handicapped a little more tolerable.
10.30 p.m.
Sir Eric Errington: I support, if not in detail, the general principle of this new Clause. The situation was brought to my notice with considerable force through a constituent of mine who was blinded on the Woomera atomic range. He came back to Farnborough and has been employed in the Royal Aircraft Establishment there. As a condition under which he could fulfil his employment it has been necessary for him to obtain a guide dog. That guide dog naturally costs money.
We have heard a good deal about the expenses which are difficult to evaluate. In this case which I have in mind the evaluation of the expenses is quite simple and quite definite. If perchance my constituent's assessment were under Scehdule D instead of Schedule E he would be entitled to claim the expenses necessary for him to expend upon the guide dog. I think the amount is about £50 a year.
This new Clause deals with the general matter and fixes the figure, which may be too little or too much by the limitation to £100, but it seems to me complete nonsense that a man who, in order to do the work which fortunately he is capable of doing, has to expend money to do it, and who happens to be paid on the Schedule E basis, is unable to claim any relief at all from Income Tax.
There is on the Paper another new Clause, which I anticipate will not be called, in my name and the names of others associated with me, in which we ask that the allowance should be made
"in respect of expenses necessarily incurred by him by reason of his said disablement in the performance of his duties."

1471
Even if the difficulty of arriving at an appropriate figure for the Income Tax allowance is too great to overcome in the Clause under discussion, surely that would help the people of the type I have mentioned, who could be dealt with on the basis of Schedule D so that relief could be given in respect of their actual out-of-pocket expenses.
I ask the Government most seriously to consider this matter, because I believe all those who know of cases of this character are very much concerned as to the unfairness.
Mr. John Cronin: I support the Motion moved by my hon. Friend the Member for Lowestoft (Mr. Edward Evans) in a very able and well-argued speech. We on this side of the Committee welcomed very much the intervention by the hon. Member for Aldershot (Sir E. Errington). It indicated that on both sides of the Committee there is a very strong feeling that something should be done on behalf of these very unfortunate people. We can say without doubt that everyone feels that the person who is 100 per cent. disabled is entitled to all possible assistance by the community, and it is a well-recognised fiscal principle that for anyone who has to earn his living and has to incur expenses which are essential to earn his living those expenses should be deductible from his income before it is assessed for Income Tax.
My hon. Friend has already pointed to the expenses of transport, of special attendance, of special housing, of special appliances, Braille, and so on. The Committee ought to bear particularly in mind the wide difference which exists between expenses which are incurred by 100 per cent. disabled persons, and expenses as known to the rest of the business community.
I am talking now of people like company directors, business men and industrialists. We on this side of the Committee think, for example, that a paralysed man who has to travel to work in a special invalid carriage deserves at least the same consideration as a company director who has to have a Rolls-Royce to take him to and from his various factories.
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There are arguments in favour of enabling a 100 per cent. disabled man to earn a living. But it is sometimes not worth while for a 100 per cent. disabled person to go out to work because of the expenses incurred if he does not receive tax relief. The result is that the nation is deprived of that person's productive capacity.
There is another argument which should not be neglected. If a seriously disabled person finds himself unable to work, he feels rejected by the community. He develops psychological changes. He goes steadily downhill until soon the State has to find him a place in hospital or give him nursing assistance. The result is that the cost to the country is very much more than the cost of this concession.
There is nothing new in the principle of assistance for the disabled. We already give taxation assistance to the aged, and there is the curious anomaly that the 00 per cent. disabled person already receives this concession if he has an unmarried daughter living with him. The Royal Commission refers to this anomaly in its second Report. It seems absurd that only in that special situation does the 100 per cent. disabled man get the concession.
The Financial Secretary to the Treasury sits on the Front Bench armed with a formidable brief of arguments to deal with the new Clause. I shall attempt some rather crude clairvoyance and suggest some of those arguments in advance. The hon. and learned Gentleman will point out, first of all, that there are administrative difficulties. He will say that it is very difficult to ascertain what is a 100 per cent. disablement.
Mr. H. Wilson: Before my hon. Friend is put off by that argument—and I am sure that he will not be—will he consider how much more difficult it is administratively to say what is an overseas corporation, a subject on which we spent many days last year? I hope, therefore, that we shall not hear that argument tonight.
Mr. Cronin: I am glad that my right hon. Friend has pointed that out. When it comes to the administrative difficulties of the business community the mountains

1473
are moved and the difficulties are overcome rapidly, but when it comes to the administrative problems involving those who are less able to look after themselves, these difficulties appear to be very formidable indeed.
As has been pointed out, a large proportion of these cases are self-evidently 100 per cent. disabled, for example, those who are blind in both eyes or who are unable to walk. Surely it would not be at all difficult from an administrative point of view to draw up a schedule of prescribed disabilities which will be recognised as 100 per cent. and will automatically receive this tax concession.
Under the National Insurance Act there is such a table of prescribed 100 per cent. disabilities. There should be no difficulty in compiling a similar schedule for this purpose. Even for those people who would be outside such a schedule and who were not obviously 100 per cent. disabled, it would not be difficult to arrange examination by one of the medical boards of the Ministry of Pensions, or an industrial injuries medical board.
The Financial Secretary may suggest another difficulty. I hope he will forgive me for making his speech in advance. He may say there is difficulty in drawing the line at 100 per cent. disablement and ask why a person who is 80 per cent. disabled should not also have the concession. That at first may seem a reasonable argument, but it cannot be suggested that one category, the 100 per cent. disabled, should receive no helpful treatment because simultaneously we cannot include another category. We can do at least part of this good work even if we cannot do the whole of it. Is it really the case that we cannot do the whole of it? There should be no real difficulty in arranging a graduated tax concession for those less than 100 per cent. disabled. That would be going somewhat beyond this Clause, but it is important to emphasise it in order to deal with the argument that it is difficult to draw the line at 100 per cent. disablement.
It may be pointed out that age itself can cause 100 per cent. disablement. That argument can be dealt with by providing that a certain statutory age can
1474
be fixed as an age entitling one to the 100 per cent. disablement consideration for tax purposes. The Financial Secretary may point out that already many 100 per cent. disabled persons are receiving tax-free benefits and that confusion might be caused. That could be dealt with easily by giving such persons a choice between taking the tax-free benefit or this tax concession which would apply if this Clause were accepted.
Finally, it may be suggested by the Financial Secretary, as was suggested by the Paymaster-General in a debate on a similar new Clause proposed by my hon. Friend the Member for Sunderland, North (Mr. Willey) in 1954, that direct benefits are more satisfactory and that they should be made to 100 per cent. disabled persons. As everyone knows, a substantial proportion of the people who receive war disablement and National Insurance pensions are receiving direct disablement benefit, but a large proportion are not receiving any benefit at all. I do not think we on this side of the Committee can accept the idea that we should forgo this new Clause simply because these people can receive direct benefits, because we were told the same in 1954 and the Government have made no appreciable moves in that direction.
In view of the lateness of the hour, I do not wish to deploy these arguments further. This is a case to which the Government should give sympathetic attention.
Dame Irene Ward: I shall not detain the Committee by asking about the details of the proposal contained in this new Clause. I can appreciate that there are many difficulties, but I am anxious to ascertain from my hon. and learned Friend the Financial Secretary that we are really going to tackle the difficulties and see that they are eliminated.
After quite a long period spent in watching Chancellors of the Exchequer and Financial Secretaries dealing with new Clauses in Finance Bill debates, I have noticed that if they can call in aid of their arguments Royal Commission Reports they do so, but that if those Reports can be called in aid of a new Clause they do not do so. I have observed that, and consider it a deplorable

1475
technique. I agree about all the difficulties of the administration, and presumably the Royal Commission knew all about that when it made its recommendations. I am also alive to the fact that only in last year's Budget we were promised a comprehensive review of taxation, based on the Report of the Royal Commission, and although we have some concessions on the subject, we have very little attention being paid to these more humane recommendations. That seems to pass by the Parliamentary officers of the Treasury, and I want to know specifically why we do not have some really first-class recommendations made by the Royal Commission translated into legislation.
10.45 p.m.
I have also observed that when mistakes are made in taxation, if there is a powerful outcry, the Chancellor, who is a big-hearted and big-minded individual, immediately comes to the House and says he has made a mistake—and, hey presto, we have won the battle. When we come to discuss a question of this kind, on which both sides of the Committee feel extremely strongly, because of the Parliamentary procedure there is no national outcry, because no one knows what Clauses are to be selected by the Chair for discussion and, as discussion quite often takes place at a late hour, it is impossible to organise the support which would be forthcoming throughout the country on behalf of an imaginative scheme of this kind.
In a way, the new Clause is perhaps complicated. I accept that, but what I am waiting to hear from my hon. and learned Friend is what steps he is proposing to take to put into a proper form the germs of the idea which are included in the new Clause. Time and again I have said that I am heartily sick and bored with hearing how difficult it is to find anything to do for those who are living mostly on small fixed incomes. But here is something. It has the backing of the Royal Commission, of both sides of the Committee, and would have the backing of the vast number of organisations interested in the disabled.
I would remind my hon. and learned Friend that he had to withdraw that ridiculous Purchase Tax on baskets, etc.,
1476
made by the blind because those in the country knew that it was unfair and unjust. What I want to hear from him now is not just an answer which is given year after year—and this was under discussion in 1954—but that the great brains of the Treasury have got down to the recommendations made by the Royal Commission. The Treasury Ministers have great brains, but if they do not put their great brains into operation I do not see what use they are to this section of the community, which has a right to use the brains of the Treasury.
We can find answers to the most complicated questions relating to the laws of inheritance, and taxes on inheritance. We had a case recently, when two people presumably died at the same time. In such cases we rightly take note of the situation and provide for it in our legislation, because all the newspapers are alerted to the great injustice involved. But I am much more interested in discussing these small and simple humane points, which affect people who are not as fortunate as many hon. Members.
It is no good my hon. and learned Friend continually turning over the pages of his brief; if it is going to be as nonsensical and inhuman as the briefs of the last four years have been, he would do far better to tear it up and throw it on the floor. What I want to know now is whether we are going to have a little bit of sound, humane common sense from him. How he ought to enjoy saying that he welcomes the recommendations of the Royal Commission, and that, of course, they will be embodied in legislation.
Mr. Victor Collins: The case for the Clause has been convincingly and comprehensively put by my hon. Friend the Member for Lowestoft (Mr. Edward Evans), and the possible administrative arguments against it have been answered in advance by my hon. Friend the Member for Loughborough (Mr. Cronin). I do not want to repeat what they have said, except to say that on the score of expense for disabled and blind people, it is not only the question of getting to work across London that is involved; often the act of getting across the room is a painful and expensive venture. There is no question that the Clause is entirely justified on the ground

1477
of the extra expense to which these people are subjected.
No mention has been made of the very low earnings of the vast majority of people with whom we are here dealing. I admit that if the Clause is accepted, since in many cases the taxable earnings of these people are marginal, it will mean that they will pay no tax at all, and I should be very happy about that, as I am sure all hon. Members would. We are all aware that many disabled people—blind telephonists, typists, liftmen, and so on—are able to earn the same wages as able-bodied people doing the same work, but the plain fact is that the earnings of blind people and Section II disabled people in sheltered employment are normally about one-third of those of able-bodied people doing similar work.
Their wages are made up to a more reasonable level by various forms of augmentation. Blind people receive an augmentation of about £150,000 a year; the House votes £2½ million annually for Remploy, and large sums are contributed to voluntary organisations by private people. All the sums contributed by private people are out of their already-taxed incomes, and the sums paid to local authorities by the Treasury for disbursing in augmentation to blind persons are paid by the Treasury out of the nation's taxed income, as is the £2½ million which goes to Remploy. Those sums are paid for the sole purpose of augmenting the admittedly inadequate earnings of these disabled people, up to a level which allows them a very modest standard of living, and a modest living standard in some cases makes them liable to taxation.
What possible or ethical justification can there be for submitting to taxation money which already in one way or another has been subject to tax from other quarters? It seems to me that if the taxpayers are willing to augment the earnings of disabled people in this way, it is impossible to justify taxation of the marginal excesses over their allowances. I hope the Financial Secretary to the Treasury will say that this will no longer be a hardy annual and that he will accept this new Clause.
Mr. Simon: I think all who heard the moving and humane speech with which this Clause was moved by the hon. Member for Lowestoft (Mr. Edward Evans), and which has been supported
1478
by other hon. Members, some of whom have devoted a great part of their lives to the help and relief of the sort of people with whom we are concerned, may have been reminded of a story that Lincoln once told about a small boy he found going up a hill with another boy, scarcely less small, on his back. He said to the boy, "You ought not to be carrying a burden like that." The boy replied, "This is not a burden this is my brother."
I think nobody in the Committee would argue against the proposition that the community as a whole has a responsibility towards the people who are severely disabled. The only question is how that responsibility is best discharged. Is it best discharged through the fiscal system or through the social services? We have the National Health Service, and I need not remind the Committee of the resources of the Service which are peculiarly adapted for the disabled. The same with the National Assistance Act. There are the tax-free pensions, which have the advantage that they are susceptible to infinite gradation according to the degree of disablement.
The hon. Member for Tynemouth (Dame Irene Ward) asked what had been done for these people since 1954. For one thing these tax-free pensions have been increased on more than one occasion. I submit that that is the better way of helping those with whom we are concerned.
The hon. Lady also asked about the Royal Commission and rather suggested that that was a matter of which the Government took no account. We have already this evening accepted one and a half recommendations of the Royal Commission. But, in point of fact, what the Royal Commission recommended in this sphere is not what is embodied in this Clause. It did recommend that there should be a disability allowance for 100 per cent. disablement, but went on to recommend that that should not be given in addition to a tax-free disability benefit.
The hon. Member for Loughborough (Mr. Cronin) suggested that that should be a necessary provision and that there should be an option to take either the tax-free benefit or the allowance. But that is not laid down in this Clause.
Secondly, the Royal Commission recommended the withdrawal of a

1479
number of existing allowances. That, again, is not laid down in this Clause. I do not make these observations in order to suggest that the Clause should not be examined on its merits, but it is impossible here to say that we are turning down a recommendation of the Royal Commission as if that ended it.
11.0 p.m.
I suggested just now that the way to discharge our responsibility to the disabled is by the direct social services rather than by means of fiscal methods; that is, by way of the social service benefits and pensions. The real reason is that the fiscal method is very much a matter of hit and miss; we may help some who admittedly need help, but also some who may not. We may not help those who most need it. For example, the hon. Member for Loughborough mentioned that we are concerned with the lower income groups; and his hon. Friend the Member for Shoreditch and Finsbury (Mr. Collins) mentioned the low earnings of those with whom we are concerned. But, if the earnings are really low, this proposed benefit will be of no assistance at all. Provided that the taxpayer is below the Income Tax limit, then this exemption is of no assistance. Those most in need do not benefit by this allowance and some of these cases may be those of the greatest relative hardship.
If the taxpayer has part of his income subject to the standard rate of 8s. 6d. on at least £100 of his income, the allowance would be worth £42 10s. That, in practice, would be the measure of the capricious incidence of this new Clause. If it ranked for Surtax, then the disparity would be greater still.
It was suggested by the hon. Member for Lowestoft and also by the hon. Member for Loughborough that extra expenses are incurred by the disabled. In many cases that is undoubtedly true, but it is not true in all cases. Here the allowance is tied to the 100 per cent. disability and not to the degree of extra expense incurred. It is not related even to the impairment of earning capacity.
The hon. Member for Shoreditch and Finsbury told us that many of the disabled bravely and industriously manage to earn their own livings, but they may
1480
incur no extra expense in so doing. So, in reality, if that argument has got some foundation and even although it is true that extra expense is incurred by many of the 100 per cent. disabled, this allowance is not tied to the expense, as I have already tried to show.
The extra expense is again better recognised, and better met, by the social services. For example, the hon. Member for Loughborough mentioned the war pensioner who had to use a motor car; but that is precisely one of the services which is supplied by the Ministry of Pensions to a disabled war pensioner in certain cases.
Mr. Edward Evans: Not all of them.
Mr. Simon: Not all, but in some cases.
Then there is the question, why should we stop at 100 per cent. disablement. I know it can be said that we must stop somewhere, but to draw a line at 100 per cent. disablement again demonstrates the complete capriciousness of dealing with the problem by allowances rather than by direct help. If a taxpayer has lost two legs below the knee, that ranks as 100 per cent. disablement, but what of the man who has lost one leg above the knee? That is a 90 per cent. disablement, but it can be just as severe and involve just as much extra expense; but it would not be covered by the Clause. If we moved from 100 per cent. disablement, we should find an infinite complication in the fiscal code. If we are to recognise the disablement in a taxpayer, why not in the taxpayer's wife, who may also be involved in extra expense?
I mention these things not to emphasise that we should do nothing but to show that the right way is not to move through the fiscal system; this would merely create anomalies, unfairness and inequities between one citizen and another. The right way is through the social services. In, addition, there are administrative difficulties into which I do not propose to go, although they are formidable. I refer, for instance, to medical assessment for those who are outside the 100 per cent. disablement register.
With all the sympathy which we should show in a tangible way to these people, the fiscal method is not the right method. There is a reported conversation between a Quaker and an acquaintance who was protesting that he too felt for the poor.

1481
The Quaker asked, "Friend, where do you feel? Do you feel in your pocket?" We should feel in our pocket, but the pocket in which we should feel is that of the social services and not that of the fiscal system.
Mr. Houghton: Those of us who know the Financial Secretary as a warmhearted and considerate man realise what a disagreeable job he had. My hon. Friend the Member for Loughborough (Mr. Cronin) tried to overlook what was in that fat file of briefs on the bench opposite. I am a little closer to it. It it entitled, "All the Reasons for Saying No." At the end of the long explanation of difficulties and anomalies and reasons for saying "No" is one phrase—I have seen it: "It is assumed that this new Clause will be resisted." The hon. and learned Member is running true to form as a Financial Secretary.
A moment ago he claimed some virtue in having accepted this day one and a half recommendations of the Royal Commission. The half has not a long history, but the one recommendation which he accepted was the subject of a Royal Commission recommendation in 1920, of the Codification Committee in 1936, of a debate in the House in 1952, of a recommendation of the Radcliffe Commission in 1955, and of an Opposition new Clause down today, in 1958. That is the history of the one Royal Commission recommendation which the hon. and learned Gentleman has accepted today. If he claims virtue in that, I say that he is easily satisfied.
The one and a half recommendations which have been accepted cost the Exchequer nothing. Although we shall be glad to see local Commissioners of Taxes who are not men of property, it will make no difference to the Exchequer. It may make some difference to the administration of taxation, and for that we shall be truly grateful.
The new Clause has been criticised on traditional lines. The moving speech of my hon. Friend the Member for Lowestoft (Mr. Edward Evans), out of the wealth of a lifetime of experience in this field, should surely have produced something more satisfactory than we have had from the Financial Secretary. The trouble with the Financial Secretary is that he has not been in the job long enough,
1482
nor has his right hon. Friend, to get clear of those ugly twins, one on either elbow—reactions and repercussions—who will kill his heart, curb his emotions and restrain his endeavour for advance and social progress. The whipping that he has had from the hon. Lady the Member for Tynemouth (Dame Irene Ward) seems to have made no impact on him at all.
The dividend strippers and the anti-retrospective legislators have knocked the Chancellor for six within a fortnight of his Budget statement. Yet the few hon. Members on the benches opposite with compassion left in their hearts can make no impact on the Front Bench. He has had two opportunities of giving taxation reliefs based on compassionate grounds, and it would be worthy to reflect in our system of tax allowances the claims of those who are the most unfortunate members of the community. I do not think that if these concessions were granted other taxpayers would carp and criticise and say "They have got this relief; we ought to have a corresponding relief."
The Royal Commission is composed, in making a unanimous recommendation, of exactly the same kind of people on whom the Chancellor of the Exchequer relied when introducing his proposals in Clause 20 for the unification of the Profits Tax. He thought the Royal Commission was composed of men of wit, intelligence and public service to back him on the Profits Tax, and yet we find their emphatic recommendation in this respect turned aside. The Royal Commission did in this respect emphasise its view about the need for this allowance.
As regards the problem of the 100 per cent. disability and nothing less, the Financial Secretary knows that the answer to that is in paragraph 203 of the Second Report of the Royal Commission, where it is stated:
"We thought it right to concentrate upon some extreme measure of disability, because, if there is to be an allowance at all, it should, at any rate initially, be related to personal circumstances which are reasonably capable of identification and which demonstrably set the person concerned apart from others."
Another point that the hon. and learned Gentleman raised was the general principle that these circumstances should be met through the social services. But there are many people who would qualify for this relief and who are not taken

1483
care of by the social services. They have no disability pensions—either industrial or war disability pensions. They are ordinary members of the community who have suffered, either by birth or by accident, grave disability which they have to bear for their lifetime without the comfort of the social services.
The hon. and learned Gentleman mentioned that the Royal Commission had said that if the 100 per cent. disability cases had the advantage of this sort of relief they should forgo the tax-free allowances which they get in other directions. If those are the terms upon which the hon. and learned Member is prepared to introduce this disability relief, let him say so. We for our part would not suggest anything so mean as to deprive disabled persons of the allowances that they have as a condition of giving them tax relief They are entitled to all that we can give them to get them
through life with comfort, reassurance and happiness.
The administrative difficulties are perennial in all these matters. But, upon my soul, if one wants administrative difficulties, what about overseas trade corporations, double Income Tax relief, obsolescence allowances and Schedule E expenses? The whole paraphernalia of tax administration is riddled with difficulties, and these would be comparatively light because the numbers would be small and the Inland Revenue would be assisted by medical evidence.
We can only dismiss the hon. and learned Gentleman's arguments with regret and contempt, and with confidence ask the Committee to go into the Lobby to support us on this new Clause.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 117, Noes 159.

Division No. 191.]

AYES

[11.15 p.m.

Ainsley, J. W.

Houghton, Douglas

Price, Philips (Gloucestershire, W.)

Albu, A. H.

Howell, Charles (Perry Barr)

Probert, A. R.

Allaun, Frank (Salford, E.)

Hoy, J. H.

Pursey, Cmdr. H.

Awbery, S. S.

Hughes, Emrys (S. Ayrshire)

Redhead, E. C.

Bacon, Mist Alice

Hughes, Hector (Aberdeen, N.)

Reynolds, G. W.

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

Hunter, A. E.

Rhodes, H.

Blackburn, F.

Hynd, H. (Accrington)

Roberts, Albert (Normanton)

Blenkinsop, A.

Hynd, J. B. (Attercliffe)

Roberts, Goronwy (Caernarvon)

Blyton, W. R.

Irving, Sydney (Dartford)

Robinson, Kenneth (St. Pancras, N.)

Bonham Carter, Mark

Janner, B.

Short, E. W.

Bottomley, Rt. Hon. A. G.

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

Silverman, Julius (Aston)

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

Jeger, George (Goole)

Skeffington, A. M.

Braddock, Mrs. Elizabeth

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

Smith, Ellis (Stoke, S.)

Broughton, Dr. A. D. D.

Jenkins, Roy (Stechford)

Sorensen, R. W.

Brown, Thomas (Ince)

Johnson, James (Rugby)

Soskice, Rt. Hon. Sir Frank

Champion, A. J.

Jones, David (The Hartlepools)

Sparks, J. A.

Chetwynd, G. R.

Jones, Jack (Rotherham)

Stones, W. (Consett)

Collins, V. J. (Shoreditch & Finsbury)

Jones, J. Idwal (Wrexham)

Summerskill, Rt. Hon. E.

Corbet, Mrs. Freda

Lawson, G. M.

Swingler, S. T.

Craddock, George (Bradford, S.)

Lee, Miss Jennie (Cannock)

Taylor, Bernard (Mansfield)

Cronin, J. D.

Lever, Leslie (Ardwick)

Taylor, John (West Lothian)

Crossman, R. H. S.

Lewis, Arthur

Thomas, George (Cardiff)

Deer, G.

Mabon, Dr. J. Dickson

Thomson, George (Dundes, E.)

Delargy, H. J.

McAlister, Mrs. Mary

Ungoed-Thomas, Sir Lynn

Diamond, John

McCann, J.

Wade, D. W.

Dodds, N. N.

MacDermot, Niall

Watkins, T. E.

Ede, Rt. Hon. J. C.

Mahon, Simon

Weitzman, D.

Edwards, W. J. (Stepney)

Mallalieu, E. L. (Brigg)

Wheeldon, W. E.

Evans, Edward (Lowestoft)

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

White, Mrs. Eirene (E. Flint)

Fernyhough, E.

Mann, Mrs. Jean

Wilcock, Group Capt. C. A. B.

Fletcher, Eric

Mitchison, G. R.

Willey, Frederick

Fraser, Thomas (Hamilton)

Neal, Harold (Bolsover)

Williams, Rev. Llywelyn (Ab'tillery)

George, Lady Megan Lloyd (Car'then)

Noel-Baker, Francis (Swindon)

Willis, Eustace (Edinburgh, E.)

Gordon Walker, Rt. Hon. P. C.

Oram, A. E.

Wilson, Rt. Hon. Harold (Huyton)

Grenfell, Rt. Hon. D. R.

Palmer, A. M. F.

Winter-bottom, Richard

Grimond, J.

Pargiter, G. A.

Woodburn, Rt. Hon. A.

Hall, Rt. Hn. Glenvil (Colne Valley)

Pearson, A.

Yates, V. (Ladywood)

Hayman, F. H.

Peart, T. F.

Herbison, Miss M.

Pentland, N.

TELLERS FOR THE AYES:

Holman, P.

Popplewell, E.

Mr J. T. Price and Mr. Simmons.

Holt, A. F.

NOES

Agnew, Sir Peter

Amory, Rt. Hn. Heathcoat (Tiverton)

Ashton, H.

Aitken, W. T.

Anstruther-Gray, Major Sir William

Atkins, H. E.

Alport, C. J. M.

Arbuthnot, John

Baldock, Lt.-Cmdr. J. M.

Baldwin, Sir Archer

Hesketh, R. F.

Partridge, E.

Barter, John

Hill, Mrs. E. (Wythenshawe)

Peel, W. J.

Batsford, Brian

Hirst, Geoffrey

Pickthorn, K. W. M.

Baxter, Sir Beverley

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

Pike, Miss Mervyn

Bell, Philip (Bolton, E.)

Holland-Martin, C. J.

Pilkington, Capt. R. A.

Bennett, F. M. (Torquay)

Hornby, R. P.

Powell, J. Enoch

Bishop, F. P.

Horobin, Sir Ian

Profumo, J. D.

Black, C. W.

Howard, Gerald (Cambridgeshire)

Ramsden, J. E.

Bossom, Sir Alfred

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

Rawlinson, Peter

Boyle, Sir Edward

Hyde, Montgomery

Redmayne, M.

Braine, B. R.

Hylton-Foster, Rt. Hon. Sir Harry

Rees-Davies, W. R.

Bryan, P.

Irvine, Bryant Godman (Rye)

Ridsdale, J. E.

Bullus, Wing Commander E. E.

Jenkins, Robert (Dulwich)

Robinson, Sir Roland (Blackpool, S.)

Butcher, Sir Herbert

Johnson, Dr. Donald (Carlisle)

Rodgers, John (Sevenoaks)

Carr, Robert

Johnson, Eric (Blackley)

Roper, Sir Harold

Clarke, Brig. Terence (Portsmth, W.)

Joseph, Sir Keith

Ropner, Col. Sir Leonard

Cole, Norman

Kaberry, D.

Scott-Miller, Cmdr. R.

Conant, Maj. Sir Roger

Kerr, Sir Hamilton

Shepherd, William

Cooke, Robert

Kershaw, J. A.

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

Cooper-Key, E. M.

Kimball, M.

Spearman, Sir Alexander

Craddock, Beresford (Spelthorne)

Leather, E. H. C.

Stevens, Geoffrey

Davidson, Viscountess

Leavey, J. A.

Steward, Harold (Stockport, S.)

D'Avigdor-Goldsmid, Sir Henry

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

Steward, Sir William (Woolwich, W.)

Deedes, W. F.

Legh, Hon. Peter (Petersfield)

Stoddart-Scott, Col. Sir Malcolm

Digby, Simon Wingfield

Linstead, Sir H. N.

Stuart, Rt. Hon. James (Moray)

Donaldson, Cmdr. C. E. McA.

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

Studholme, Sir Henry

Doughty, C. J. A.

Lloyd, Rt. Hon. Selwyn (Wirral)

Summers, Sir Spencer

du Cann, E. D. L.

Lucas-Tooth, Sir Hugh

Sumner, W. D. M. (Orpington)

Emmet, Hon. Mrs. Evelyn

Macdonald, Sir Peter

Taylor, Sir Charles (Eastbourne)

Finlay, Graeme

Mackeson, Brig. Sir Harry

Teeling, W.

Fletcher-Cooke, C.

McKibbin, Alan

Temple, John M.

Garner-Evans, E. H.

Mackie, J. H. (Galloway)

Thomas, Leslie (Canterbury)

George, J. C. (Pollok)

McLaughlin, Mrs. P.

Thompson, R. (Croydon, S.)

Gibson-Watt, D.

Macmillan, Rt. Hn. Harold (Bromley)

Thornton-Kemsley, Sir Colin

Glover, D.

Macmillan, Maurice (Halifax)

Turton, Rt. Hon. R. H.

Glyn, Col. Richard H.

Maddan, Martin

Tweedsmuir, Lady

Goodhart, Philip

Markham, Major Sir Frank

Vane, W. M. F.

Gower, H. R.

Marlowe, A. A. H.

Vickers, Miss Joan

Graham, Sir Fergus

Marshall, Douglas

Vosper, Rt. Hon. D. F.

Grant, Rt. Hon. W. (Woodside)

Mathew, R.

Wakefield, Edward (Derbyshire, W.)

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

Maudling, Rt. Hon. R.

Wall, Patrick

Green, A.

Nabarro, G. D. N.

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

Gresham Cooke, R.

Nairn, D. L. S.

Webster, David

Grimston, Hon. John (St. Albans)

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

Whitelaw, W. S. I.

Gurden, Harold

Noble, Michael (Argyll)

Wills, Sir Gerald (Bridgwater)

Harris, Reader (Heston)

Oakshott, H. D.

Wilson, Geoffrey (Truro)

Harrison, A. B. C. (Maldon)

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

Woollam, John Victor

Harrison, Col. J. H. (Eye)

Orr, Capt. L. P. S.

Harvey, John (Walthamstow, E.)

Osborne, C.

TELLERS FOR THE NOES:

Heald, Rt. Hon. Sir Lionel

Page, R. G.

Mr. Hughes-Young and

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

Pannell, N. A. (Kirkdale)

Mr. Chichester-Clark.

Henderson-Stewart, Sir James

New Clause.—(TAX RELIEFS AND DEFERMENT OF TAXATION FOR EMPLOYEE'S SAVINGS ACCOUNTS.)
(1) Where, in accordance with the provisions of this section, a special banking account (hereinafter referred to as an "Employee's Savings Account") is opened on behalf of an individual, he shall be entitled to such relief from income tax as is provided in this section.
(2) An Employee's Savings Account shall be an account deposited with a joint-stock bank or with a trustee savings bank or such other institution as the Commissioners of Inland Revenue may on application approve, and the Commissioners shall on application approve any institution which is in their opinion capable of handling such an account, bearing in mind the conditions hereinafter provided, the interests of persons on whose behalf accounts are opened and the need to protect Her Majesty's revenue.
(3) An Employee's Savings Account shall be operated subject to the following conditions—

(a) it may be opened by any employer on behalf of an employee, or, in the case
1486
of a self-employed person, on his own behalf;

(b) sums of money, stocks and shares or other securities may be placed in an account by an employer on behalf of the holder of the account, or, in the case of a self-employed person, on his own behalf;

(c) the total value of any moneys or shares or securities so deposited in an account shall not exceed in any year of assessment the sum of one hundred pounds;

(d) interest or dividends due on any money or securities held in an account may be paid into the said account,

(e) without prejudice to paragraph (g) below, no other money may be paid into an Employee Savings Account, nor any other shares or other securities deposited there;

(f) any moneys or shares or other securities deposited in an account shall thereby become the sole property of the individual on whose behalf they have been deposited and this shall not in any way be affected by any subsequent change of employment;

1487

(g) any individual on whose behalf an account has been opened may at any time at his own discretion sell shares or other securities held in his account, may withdraw or leave in the account the money raised by such sale, may purchase new shares or securities with funds standing to his credit in the account, or withdraw any money standing to his credit in the account;

(h) any joint-stock bank or other approved institution may offer and pay interest on moneys deposited in an account; and

(i) no person may have more than one Employee's Saving Account opened on his behalf.

(4) Where the total income of an individual for the year of assessment includes, or would but for this section include, any sum deposited in an Employee's Savings Account by his employer on his behalf or, in the case of a self-employed person, by himself, or any sum equal to the value of shares or other securities so deposited, such sum shall be disregarded for all the purposes of the Income Tax Acts other than the furnishing of information:
Provided that in the event of any individual withdrawing any money from his account other than dividends or interest, an amount shall be chargeable to his assessment under Schedule E income tax for the year in which the withdrawal takes place equal to

(a) the original amount of the money withdrawn from the account at the time at which it was deposited in the account, or, in the case of shares or other securities which have been disposed of and the proceeds withdrawn, their original value at the time at which they were so deposited; or

(b) in the event of any shares or securities being worth less than this at the time at which they were sold or exchanged, regardless of whether they were withdrawn from the account at that time or subsequently, the value realised in such sale or exchange.

(5) Where the total income of an individual for the year of assessment includes, or would but for this section include any sum paid or credited to an Employee's Savings Account in respect of interest on moneys deposited therein or of interest or dividends on shares or other securities deposited therein, those sums shall be disregarded for al: the purposes of the Income Tax Acts other than the furnishing of information if or in so far as they do not exceed fifteen pounds.—[Mr. Wade.]
Brought up, and read the First time.
Mr. Donald Wade: I beg to move, That the Clause be read a Second time.
During the debates on Profits Tax yesterday, which seems a rather long time ago, those who objected to the removal of the special rate of tax based their case in part on the ground that it might lead to an increase of dividends. They felt that
1488
this would be unfair because there are many people who receive no dividends. It seems to me that much of that criticism was misdirected. It may be true that only a minority of people receive dividends from industrial shares, but the fault lies in the maldistribution of the ownership of shares. The Committee should be concerned about this uneven distribution of ownership rather than the question of the distribution of profits.
If the ownership of shares were much more widely spread, much of the heat that is engendered about the distribution of profits would vanish. Our aim is to bring about a much more widespread distribution of the ownership of shares in industry. Unfortunately, industrial shares are held in the main by a small minority of the community. I believe that to be a social evil which should be put right and which Parliament can assist in putting right.
I and my hon. Friends have for some years advocated profit sharing. There is a great deal to be said for it, and I would like to see more of it, but I do not think that that is enough. We need the greater distribution of ownership as well as profit sharing. Only in that way shall we bridge the gulf between capital and labour.
One of the ways whereby the ownership of shares could be more widely spread would be by the encouragement of employee shareholdings. Unfortunately, there are obstacles and some of them are due to our present taxation system. Some large firms have found ways and means of overcoming these tax difficulties, but many smaller firms have found these obstacles insuperable and, for that reason, have abandoned schemes which they might otherwise have adopted. Therefore, we must try to take practical steps to remove the difficulties which prevent the adoption of employee shareholding schemes.
The Clause is designed to meet some of those difficulties. I would like to give one simple illustration of what we are trying to do. For example, if shares are allotted to employees on favourable terms, the employees are at once taxed on the notional benefit or profit which they are deemed to receive. If an employee acquires a share for 10s. and its value at that date on the Stock Exchange is 12s. 6d., the employee will be at once

1489
taxed to the extent of the difference, namely, 2s. 6d., assuming that he himself has provided the 10s. The following day, the value of the share might fall to 10s. or less, but he will nevertheless be taxed on that benefit which he is deemed to have received. It may be that the employing firm will provide the money to pay the tax for him, but that does not alter the fact that the tax is payable. This is a discouragement both to employees and to firms who wish to adopt employee shareholding schemes.
The essence of the proposal in the new Clause is that the principle of deferred tax liability should be applied to this type of case. I recognise that this is somewhat unusual. There is, of course, a precedent. The principle of deferred tax liability is well known. It is applied in the case of superannuation policies. It is, however, somewhat revolutionary to apply it to the case of shareholdings. But we want a revolution. That is the purpose of our endeavour, although we of course wish to see that it is a peaceful revolution; but, nevertheless, a social revolution of great importance. We believe that this would be a practical step in helping to bring about this revolution.
11.30 p.m.
We suggest that the shares or the money which is used in the purchase of shares should be recorded in a special savings account. No tax liability would arise till the shares from the proceeds of sale were withdrawn from this special savings account. Furthermore, the liability would be assessed in accordance with the income of the employee, of the person withdrawing this money, at the time of withdrawal. Therefore, if the employee leaves his shares in the account till he is unemployed or till he retires, it is probable that the amount of tax he will have to pay will be very much less; he may not have tax to pay at all.
There are several advantages in that. One sometimes hears of employees being unwilling to work overtime because of the additional tax. I do not often find that. I generally find willingness to obtain the extra earnings by overtime. However, there would be an encouragement in being able to earn, say, up to £2 a week extra without any additional tax, on condition the money were put in the special savings account and invested, and no tax would be payable till it was withdrawn. I sug-
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gest one further encouragement, namely, that the first £15 of income or dividends from those shares would be free of tax, in the same way as is the first £15 interest on deposits in the Post Office Savings Bank. We are in favour of removing the artificial distinction between dividends from industrial shares and money invested in the Post Office Savings Bank.
The point may be made whether some employees would benefit from this while others would not. Under our scheme we suggest that anyone might be able to benefit, even the self-employed; anyone would be entitled, if he wished, to open this special kind of account, the only condition being that there would be a limit of £100 per annum in any one year. I have no doubt it would result in some loss of revenue to the Exchequer, but I believe that this would be more than offset by the very great encouragement to saving.
I think there are three great advantages in this proposal. In the first place there would be no hindrance to mobility of labour. The argument has been put in the past that some of these employee shareholding schemes are such a hindrance, but under our scheme the employee could move from one job to another and still retain the shares or the money in this special account. He would not be under any obligation to remain in one firm. Secondly, he would not necessarily have to put all his eggs in one basket; it would not be necessary to hold shares only in the firm in which he works. More enlightened firms already have appreciated the importance of this, and in adopting employee shareholding schemes have enabled their employees to spread the risk over shares other than those in the firm in which they are working. This would be in keeping with the proposal we put forward. Thirdly, it would not be limited to a few employees. As I have pointed out, it could be spread over the whole, and every working person would have the opportunity of taking advantage of this new idea.
I believe that it is an advance on some of the earlier ideas on employee shareholding and should be adopted. It may be that the Chancellor would care to make some minor alterations in the wording of the Clause. I am prepared to accept suggestions under that heading, but I hope that he will accept the

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Clause in principle and accept it without delay.
Mr. Arthur Holt: History has a way of repeating itself apparently, even in respect of Liberal Party proposals on ownership and the encouraging of savings to be put into industry, because it was at about this time of night two years ago that we last had a debate on this subject. We hope tonight that we shall have a more favourable reception to our improved proposals, on account of having as Chancellor of the Exchequer a man whom we know has this cause very close to his heart, because he has been for a long time, and I believe still is, President of the Industrial Co-partnership Association.
The basic element in our proposals two years ago, as in the present proposals, is that when shares are given completely or at less than their Stock Exchange value to employees the recipients should not pay tax on them until they actually cash them. Just after the debate two years ago, the Economist, in commenting upon these proposals, regretted that the Government had not agreed to them and said in its issue of 30th June, 1956:
"These proposals, if they had been adopted, would have been an incentive to saving instead of spending. It is a pity that the Government did not let them go through."
Since that time other people have shown increased interest in this kind of proposal.
We do not stand dogmatically by any single detail of them. We are concerned to find really satisfactory and practical ways of achieving our object. Quite recently a book called "The Challenge of Employee Shareholdings" by George Copeman was published. It has had very favourable reviews in the financial and economic Press. Many hon. Members will have seen the long review by Harold Wincott in the Investors' Chronicle a short time ago. It was an extremely favourable review which said that the book was a "must" reading for every company director and executive. In addition, the city editor of The Times said on 31st March:
"It is clear that any further extension of private shareholding schemes in industry depends on some concessions from the Chancellor."
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It may well be argued that if these are good things they should develop automatically of their own accord, but we know that there are many discriminations in our tax system. It has been found before that when people decide that something is worth while and should be encouraged it has been accepted by the House of Commons that tax concessions should be given. Undoubtedly, the wildfire advance of personal insurance in the last generation must be ascribed not only to the improved standard of living all round but to the very substantial tax concessions which have been given to pension funds of one kind and another.
All we are asking here is that if the Committee agree with our object it should examine the impact of the present taxation system on this kind of thing and give consideration to what tax obstacles should be removed or tax concessions given to enable this development to take place. My hon. Friend the Member for Huddersfield, West (Mr. Wade) has dealt with the Clause in detail and I do not wish to weary the Committee by going over that again.
One of the developments of our proposals, as distinct from those we made twelve months ago, is that this system of having a special bank account would enable everybody who is employed to join in these benefits, not only those in private industry but those in nationalised industry as well. One of the criticisms of schemes we put forward before was that they did not provide for those in nationalised industries, in local government, those who sweep the streets, or civil servants. Anyone who is employed could benefit from this scheme as laid out in the new Clause.
The objects are twofold—to encourage employee shareholding, and, where that is moving satisfactorily, to encourage shareholding in industries other than the one in which the person is employed, and also to encourage savings up to a limit of £100 a year. I do not think the Committee can be in any doubt that we need greatly to encourage savings. The White Paper, Cmnd. 398—Preliminary Estimates of National Expenditure, 1952 to 1957—shows on page 7 a considerable improvement in savings in recent years. Those figures are questioned because they are residual figures for those in the table and do not make allowance for depreciation

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and the like. But we cannot pretend that they are satisfactory for, as the Chancellor is only too well aware, he has to take in £500 million odd more from the taxpayer for capital development which he has to carry below the line in the Budget because there are not yet sufficient savings.
In the present Budget the Chancellor has had to allow £100 million for local authorities, £45 million for the National Coal Board, £290 million in loans to other nationalised industries and £50 million to the railways. That is just short of £500 million, which is a formidable sum if it has to be raised by private savings outside. Of course, great advantages in tax reductions could follow if ways and means could be found of raising this outside. So, presumably, the Chancellor would be sympathetic to this scheme, which would encourage extra savings. We suggest that is precisely what our proposals would do. Not only would they do that, but they would encourage companies and employees to take a wider interest in employee shareholding.
It is very difficult to get accurate figures on who hold shares at the moment. The only figures which appear to be of any value at all are those produced by the Survey of National Incomes and Savings carried out by Oxford University in 1952. These show that 1,250,000 people hold negotiable securities of any kind. Various attempts have been made by them to find out how many people actually own industrial shares, and any estimates of this cannot be anything other than very approximate. But Copeman did reckon that between 100,000 and 150,000 people only owned at least half of all the quoted company shares.
We can recognise from these figures that shares are held by a very small section of the community, and anything that we can do to spread this ownership must be generally beneficial, and, I would have thought, widely acceptable as a good objective by most people here.
11.45 p.m.
We hope that the Chancellor will like our new Clause, especially in view of the constant avowed interest of Conservative leaders in spreading property-owning democracy. This has gone on in numerous speeches, including the first speech of the previous Prime Minister in the House after the 1955 Election, and
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has been repeated by individual backbenchers at different times, some of whom take a genuine and deep interest in this.
We feel that if these proposals are not acceptable as they stand, at least we should know what the Government propose doing in a practical way to further this cause of a wider distribution of the ownership of industry and, at the same time, a great interest in personal savings.
Mr. Amory: I have looked carefully at the interesting suggestion made in the Clause moved by the hon. Member for Huddersfield, West (Mr. Wade). I have looked at it with a not unfriendly eye, because for many years I have interested myself in schemes of profit sharing and employee shareholding and believe that in appropriate circumstances both can be very desirable developments and sensible manifestations of good industrial relations. So I am sure that the objects of this Clause are extremely good, and I agree that it would be an excellent thing to encourage in some practical way the ownership of industry to become more widespread.
As I understand them, the proposals in this Clause envisage employers opening savings bank accounts for employees, or self-employed people opening savings accounts for themselves. Money, or stocks or shares, can be deposited in those savings accounts up to the value of £100 a year, and those deposits would be the property of the individual concerned. The Income Tax effects of this Clause would be that the appropriations that would be made by employers, if in the form of stocks or shares, would be chargeable against tax at 110 per cent. of the actual appropriation. The deposit to the beneficiary would be free of tax at the time of deposit, and if and when they were withdrawn they would become taxable.
I see one difficulty there. A savings account which has been running for a considerable time might have considerable deposits in it, and if the owner decided to withdraw them all at once it might bring him into a considerably higher bracket of taxation, and it could even put him, for one year, into the Surtax category.
I gather it is also suggested that the interest on the savings bank accounts would be free of tax, up to £15 a year. That scheme seems to go considerably

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wider than the encouragement of co-ownership. It sets out to encourage general investment, and one has to ask whether it is a legitimate use of Income Tax relief to do that. The Royal Commission, in Chapter 3 of its Final Report, came to the general view that Income Tax relief to encourage savings was inequitable, and that however desirable the encouragement of savings might be, it should be outside the sphere of the Income Tax system. The one exception the Royal Commission made was provision for old age.
That was the view of the Royal Commission. I am not saying that I accept it in its entirety, but I doubt whether schemes of profit sharing or employee shareholding, excellent as they are, can in general effeotively be encouraged with advantage by fiscal measures or tax concessions.
Mr. Wade: I hope the right hon. Member will appreciate that it is not merely a case of encouraging it but of removing the actual obstacles which exist at present.
Mr. Amory: That is one form of encouragement, anyhow. Already, disbursements made are a charge against profits. But I have always felt that schemes of profit sharing and employee shareholding are not so much a method of ensuring good industrial relations as a manifestation of their existence. They depend for their success not so much on practical, material and fiscal incentives as on there being a spirit of true partnership behind them.
In general, it seems to me that the principle on which we work—and I think it is a sound one—is that Income Tax should fall impartially on all income from all sources, regardless whether that income is spent or saved. The proposal made in the Clause conflicts with that principle. It goes wider than encouraging employee shareholding, because the relief applies to stocks and shares other than the stocks and shares of the employing company. I can only guess the cost, but it might amount to a considerable sum, and though I will always promise to consider any constructive scheme—and this is a constructive scheme—for a good object like this. I am forced to the conclusion that the
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proposal would prove not only a rather complicated way but also a very expensive way of encouraging personal savings, so it is with some regret that I do not feel able to recommend the Committee to accept the Clause.
Mr. Douglas Jay: I wonder whether the Chancellor needs to be quite so negative as he seemed to be in his remarks. When the Liberal Party advocates a revolution we ought to examine it with great care, even if it is repeating what it said two years ago. The aim of this Liberal revolution is thoroughly laudable. It is the spread of ownership of shares over a higher proportion of the individuals of the community. It is all too true, as the two speakers from the Liberal Party have said, that at present only a very small minority of the population holds industrial shares of any kind. I had always understood the figure was more like one million or 1¼ million. It is certainly a small proportion of the population. It is always much easied to point out how small this proportion is than to produce a constructive scheme for spreading the ownership of shares more widely. That is why the party opposite is always talking about a property-owning democracy but never manages to do anything practical about it.
The suggestion from the Liberal Party, if I understand this proposed revolution aright, is two-fold. First, there is to be tax relief on the capital amount of the deposit when first placed to the credit of the employee in so far as it now bears tax, and the first £15 of the interest or dividend on the money in this account is later to be made free of tax.
I see great difficulty about the second proposal. If we are going to say that the first £15 interest on this particular type of saving is to be free of Income Tax, I do not know how you can justify not applying that to, say, the interest on co-operative shares and deposits, building societies, personal bank deposits or the interest on small amounts of securities held by some elderly or retired person.
Mr. Holt: The right hon. Gentleman seems to be under the same misapprehension as the Chancellor of the Exchequer. We have two quite large methods of saving at the moment which are tax-free—Savings Certificates and the famous Premium Bonds.
Mr. Jay: One might also add the first £15 in the Post Office. These breaches in the principle, so to speak, have already been made. But my difficulty is to see how one can include this particular form of saving and not include certain other things. I do not feel entirely convinced that one can overcome this.
I was not so sure that the Chancellor gave a sound reason for rejecting the other suggestion, giving tax relief on that capital. The Chancellor expounded the normal Inland Revenue doctrine that all income is income and ought to be equally taxable. I would have thought the capital sum paid into a savings account by an employer to provide his employees with shares or securities was not really income in the normal meaning of the word. I would haw, thought there was room for argument here, and even if the Chancellor feels the same difficulty as I do on the first £15, it might be worth looking again at the other part of the proposal.
Mr. Amory: The right hon. Gentleman will agree that when it was paid it was a charge against the profits of the employer concerned.
Mr. Jay: Yes, but the fact that it is a charge against the profits of the employer, which no doubt gives him the right to deduct it from this profits for Income Tax, does not establish that it is necessarily the income of the employee.
Mr. Cronin: I agree with my right hon. Friend the Member for Battersea, North (Mr. Jay) that this new Clause does raise the interesting suggestion that there should be some tax concession for workers savings. Apart from that, this Clause seems to produce no other matter of interest except that the Liberal Party's new Clauses vary inversely to the strength of the Liberal Party.
It does seem to me that one of the great weaknesses of this scheme is that workers at present have the utmost difficulty in maintaining their standard of living at all as a result of the steady decrease in the value of the £ and the Government's measures to prevent wage claims materialising. So I think that the Clause is rather optimistic on those grounds alone. After all, small savings are held at a rather unsatisfactory level, largely because of the Government's monetary policy, and a somewhat sinister
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matter is the Chancellor's avowal of his liking of profit-sharing and co-partnership schemes.
12 midnight.
The right hon. Gentleman must have realised from his personal experience that these schemes have so far been largely unsuccessful.
Mr. Wade: The evidence is rather to the contrary. I should like to tell the hon. Member that I have made some investigations and it is surprising how small is the percentage of the shares which is sold.
Mr. Cronin: That is certainly different from the information I have received. These industrial shares are realisable only for the lowest values at the time when the worker most needs money, at a time when there is a recession or a slump. When the worker finds that his job is threatened, and when he is in need of help, then he will find that his shares have their lowest value. The Chancellor may talk of co-partnership schemes as helping to foster good labour relations, but that is an argument which will not apply in times of recession when the worker discovers that his holdings are of much less value than when he obtained them.
The big slump of 1931 was largely triggered off because the holding of equity shares had been popularised and had caused instability. This Clause can only be said to be of value to stockbrokers and the holders of equity shares. Apart from that, there is no merit in it.
Question put and negatived.

New Clause.—(AMENDMENT OF S. 11 OF CUSTOMS AND INLAND REVENUE ACT, 1889.)
Subsection (2) of section thirty-eight of the Customs and Inland Revenue Act, 1881, as amended by subsection (1) of section eleven of the Customs and Inland Revenue Act, 1889, is hereby further amended as follows:
"Notwithstanding the provisions of the said section eleven the charge under the said section thirty-eight shall not extend to money received under a policy of assurance effected by any person dying on or after the ninth day of April, nineteen hundred and fifty-seven, on his life, if he shall have made no payment in or towards keeping up such policy during the five years immediately preceding his death".—[Major Hicks Beach.]
Brought up, and read the First time.
Major W. Hicks Beach: I beg to move, That the Clause be read a Second time.
Let me say at the outset that this Clause is in exactly the same terms as a proposed new Clause moved by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens) exactly a year ago. The purpose of it is exactly the same as it was then, namely, to overcome a decision in what is known as the Hodge case, made then in the court of first instance and since confirmed in the Court of Appeal.
I have here a full report of the case, and I should like to give the Committee a brief summary. Shortly, where a person took out a policy of insurance many years before his death, and assigned it five years before his death when it was fully paid up to another person—probably a member of his family—the lower court, and later the Court of Appeal, held this to be the position; that, in certain circumstances, where that person had made a contribution to the premium, the policy was liable for duty on the death of the donor, although it had been handed over to the donee more than five years earlier.
I shall not take up much of the time of the Committee, but I would like to refer to what was said by the then Financial Secretary to the Treasury, the hon. Member for Wolverhampton, South-West (Mr. Powell). He said, in his reply to the debate on this same Clause:
"The case of Hodge deceased in the High Court, to which my right hon. and learned Friend has referred, certainly discloses a position in the law which it is impossible to defend, that Estate Duty should be paid on a policy fully paid up more than five years before the relevant death by the person to whom it is assigned. It is the more difficult to defend that position in that if the policy were fully paid up before assignment then, although all the other circumstances were exactly the same, Estate Duty would not be payable. My right hon. Friend therefore recognises that this position at law calls for review. However, the law has not yet been settled"—
it now has been settled—
"since the case to which my right hon. and learned Friend"—
that is, my right hon. and learned Friend the Member for Kensington, South—
"referred has gone to Appeal. The Committee would agree that it is unwise to venture to set about amending the law until one knows what it is. On the other hand"—
this is the important statement—
"I accept that the state of affairs disclosed, if it be confirmed on appeal, from the judgment of Mr. Justice Harman, calls for
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amendment."—[OFFICIAL REPORT, 3rd July, 1957; Vol. 572, c. 1163.]
We could not have a more unequivocal statement than that. It was a statement that if the Court of Appeal confirmed the decision in the Hodge case, something would be done.
On Second Reading this year the Financial Secretary, in his usual honest and frank way, said:
"There is one last thing which, perhaps, I should say about Estate Duty, though it is something which is not in the Finance Bill rather than something which is. We know that many hon. Members have looked in the Finance Bill for some provision concerning life assurance policies, in view of the undertaking for review which my predecessor, the hon. Member for Wolverhampton, South-West (Mr. Powell), gave during the debate last year on a new Clause moved by my right hon. and learned Friend the Member for Kensington. South (Sir P. Spens)."[OFFICIAL REPORT, 12th May, 1958; Vol. 587, c. 49.]
To give the facts briefly, what my hon. and learned Friend openly said was, "We are not introducing legislation to put right this gross injustice. What we propose to do is to give what the Revenue call an extra-statutory concession."
I think it would be useful if I quoted what the judges of the Court of Appeal said in this case. The Hodge case came before the Court of Appeal in the latter part of last year and the Master of the Rolls gave a long and detailed judgment which I will not quote but in which he said that as far as he understood the law he had to confirm the decision of the judge below. Lord Justice Romer said:
"I agree. This claim for duty appears to me to be wholly devoid of any merit at all, and it is quite shocking to think that this policy should be liable to estate duty as representing property which was deemed to pass on the death of the plaintiff's father."
That is a fairly sweeping statement by a Lord of Appeal. I also want to quote Lord Justice Ormerod. He agreed, and said:
"The only thing which I think I need say is that I, too, share the sense of shock which my brothers obviously have felt at the thought that the moneys receivable under this policy should attract estate duty on the death of the assured."
What is the position? We had a specific undertaking from the then Financial Secretary last year that if this decision were confirmed by the Court of Appeal, legislation would be introduced. He quite

1501
rightly said, "properly introduced". Now we are given by the Financial Secretary—and I do not criticise him personally—the mere undertaking that this matter will be put right by what the Revenue are pleased to describe as an extra-statutory concession.
This is not good enough. It is certainly not proper for any Conservative Party to rule by extra-statutory concession, which is merely government by decree. In the first place, it gives the Revenue too much power. After all, the taxpayer is entitled to be protected just as much as the Revenue. I do not criticise the officials of the Estate Duty Office with whom I have had many negotiations; in fact, my own father was a civil servant——
Mr. Mitchison: Do I understand the hon. and gallant Gentleman and the Conservative Party to want all existing statutory concessions abolished?
Major Hicks Beach: Certainly not, but there are too many of them. I do not know if the hon. and learned Gentleman knows the number. If I may say so, the hon. and learned Gentleman, being a member of the legal profession, should realise that it is essential to have extra-statutory concessions in some cases, but they should be in due course incorporated in the law of the country, because it is not fair to the taxpayer that extra-statutory concessions should be left as a bargaining power in the hands of the Revenue. I should have thought that that would have had the support of all hon. Members, and I am surprised that the hon. and learned Gentleman should suggest that they should be abolished. Perhaps he believes in government by decree.
Mr. Mitchison: I have never made any such suggestion.
Major Hicks Beach: This gives the Revenue much too much power. We are told by the Financial Secretary, for whom I have the greatest respect, that they have not had time to review the law so far as this case is affected. The Revenue had a year to consider this matter. It is not particularly complicated, and if the Revenue cannot produce an answer, I would with all respect suggest that it calls on private enterprise and accepts my new Clause.
The Solicitor-General (Sir Harry Hylton-Foster): The intention was and is to amend the law in so far as it governs a case to which my hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach) referred. I think I am more sympathetic to what he was saying about extra-statutory concessions than is the hon. and learned Member for Kettering (Mr. Mitchison). The taxpayer, I suppose, is entitled to say, "I want better security than a mere extra-statutory concession."
Mr. Mitchison: I made an inquiry. I expressed no opinion.
The Solicitor-General: I am very glad to understand that the hon. and learned Gentleman is more sympathetic to my view than he appeared to be, but it seems an odd way to describe it as giving power to the Revenue, because this concession is a subtraction from that power as it stands.
On the basis that it is reasonable not to legislate on this topic this year, I am rather surprised that my hon, and gallant Friend is not a bit happier about the concession, because on the face of it, it it is an extremely generous one. It is more generous than his proposed new Clause. I do not want to weary the Committee by repeating it, and I will not, but it does not mean that policies given to a beneficiary absolutely and indefeasibly during an assured's lifetime outside the five years will be exempt from duty.
It is better for the taxpayer than this proposed Clause because the Clause would impose total liability in respect of the policy if even one premium had been paid within the five years, whereas under the concession all that would become liable would be the appropriate proportion corresponding with the premiums paid within the five years. It is not unreasonable to follow what is a longstanding usage where one is contemplating comprehensive legislation, and to use the means of an extra-statutory concession to get rid of the anomaly while one is preparing the comprehensive legislation.
12.15 a.m.
There is one matter on which I quarrel with my hon. and gallant Friend, and that is his description of what my hon. and learned Friend the Financial Secretary said on Second Reading about our activities. He did not say that we were

1503
examining the law relating to this case only. No doubt, the particular case is relatively simple and straightforward. The problem involved in the Estate Duty treatment of policies not forming part of the deceased's estate is extremely complicated and varied, and one cannot set about a review of it without examining the matter in its much wider aspects. The present review undertaken by the Revenue is not concerned only with settled policies. It has to go into many other matters dealing with things like life policies which provide annuities, and, indeed, the whole subject of the Estate Duty treatment of superannuation benefits and purchased annuities.
As my hon. and learned Friend said on Second Reading, we have not yet got satisfactory answers to all the many complicated problems, and it seemed wiser not to legislate piecemeal, by taking out one little fraction of it, before we were prepared to legislate for the whole. That is why the device was adapted, in order to bridge the gap and ensure that there should be no continuation of the hardship involved until the more comprehensive legislation is ready.
I am bound to point out what seems to me to be a fatal objection to accepting the new Clause, namely, that it would operate in some cases to impose a charge of Estate Duty retrospectively. I am sure that that is not what my hon. and gallant Friend wants to do. I ought to explain why I say that so as to make the point good to him.
Let us suppose that a policy is settled on the spouse of the assured for her life; that is quite common form. If, as now, duty is payable on the death of the assured, the policy would be exempt on the death of the life tenant spouse on the principle of the provisions which exempt property which has already borne duty on the death of the spouse to die first. But, of course, if, under the new Clause, the policy were to be exempt on the death of the assured, then it would become liable to duty on the death of the life tenant spouse, and the claim might well be larger because the rate might be greater owing to aggregation of other property and so on.
The matter is not negligible, because the 9th April, 1957, was a very long time
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ago, and, no doubt, more than one pair of spouses have died in succession since then. I submit to the Committee that, on that ground alone, it would not be right to accept the new Clause.
Major Hicks Beach: I am extremely grateful for the observations of my right hon. and learned Friend. I cannot, I am afraid, accept his interpretation of my new Clause, but what I do accept with gratitude is his statement that there will be a review of the whole subject of Estate Duty, presumably in the immediate future. If I am lucky enough to be in the same place in a year's time, I shall certainly hold him to his promise. It is high time that there was a thorough review of the whole subject of Estate Duty. In the circumstances, I beg to ask leave to withdraw the Motion.
Motion and Clause by leave withdrawn.
Mr. H. Wilson: I beg to move, That the Chairman do report Progress and ask leave to sit again.
I will make it quite plain that I have no intention of pursuing this matter to the ultimate and I am prepared to withdraw the Motion when we have had a brief discussion about the future course of business tonight. We gave the Chancellor an undertaking that we were prepared to facilitate the passage of this Finance Bill by the end of this sitting, whatever time that will be. There is certainly no suggestion on our part that there should be an variation of that undertaking, or that the debate be postponed to another day.
It should be said at this stage, however, that we look like sitting until very late indeed if all these Clauses on the Paper, most of which, I understand, are likely to be selected, are to be debated as fully as we have been debating them up to this point. We were rather late last night, and we always have this solicitude for the Chancellor's health and welfare which is the mark of all responsible Oppositions.
We are prepared, if it is going to help, to withdraw or to abstain from moving our official Opposition Amendments in the hope that we might bring them back at a later stage of the Bill. I know that there could not be any guarantee that they would be selected, but I wanted to make this offer now, because

1505
otherwise we shall get a very late sitting and I am not sure that we are now at a stage of the evening when the Committee is necessarily at his best to discuss some of these complicated points. I hope that if we take this step we might find a similar willingness by hon. Members opposite to help facilitate the Chancellor's job and enable him to get to bed at a reasonable time.
Mr. Amory: I am grateful to the right hon. Gentleman the Member for Huyton (Mr. Wilson) for raising this point. We had a formidable programme in front of us today. Progress has been a little disappointing, and I am sure that we must now go on and finish our work. I am grateful for the right hon. Gentleman's solicitude for my health. I assure him that I think it is just good enough to enable me to get through the night, if necessary, and complete this work. If hon. Members opposite and Members on this side of the Committee find it possible to help by not moving any of their new Clauses, that would lighten the burden. Whether they would be called if they put them down again on Report stage is not for us to decide. It is in the hands of the Chair.
I hope the right hon. Gentleman will agree that we should go on and finish our work.
Mr. Wilson: I want to make it quite clear that when I expressed solicitude for the Chancellor's health it was not the usual Opposition gambit of saying that the Chancellor looks tired and that we should adjourn until tomorrow. I am a little worried, however, about the Patronage Secretary, who sometimes gets a little bad tempered at about this time. He did so last night. But we have undertaken to facilitate this Bill going through tonight. In view of the Chancellor's statement, and having been able on this Motion to make it clear where we stand, I would beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

New Clause.—(STAMP DUTY ON RECEIPTS.)
From and after the commencement of this Act no stamp duty shall be chargeable upon a receipt (as defined in subsection (1) of section one hundred and one of the Stamp Act, 1891) and subsection (2) of the said section and sections one hundred and two and one hundred
1506
and three of the said Act shall be repealed and any stamp duty chargeable under the heading "Receipt" in the First Schedule to the said Act shall be nil:
Provided that if any person upon the request of a payee refuses to give a receipt in respect of any money, bill of exchange or promissory note or the settlement, satisfaction or discharge of a debt or demand as defined in subsection (1) of section one hundred and one of the said Act he shall incur a fine of ten pounds.—[Mr. Page.]
Brought up, and read the First time.
Mr. Graham Page: I beg to move, That the Clause be read a Second time.
I cannot accept the offer of either Front Bench. When one has the opportunity to move a Clause from the back benches, even at this hour, one takes that opportunity, and does it briefly.
The intention of this Clause is to abolish the 2d. stamp on receipts. I have endeavoured to estimate how much the Chancellor is obtaining from this source of Revenue at present. For the year 1956–57, the revenue from 2d. receipt stamps amounted to a little over £5 million. That was an estimate of the amount, because that is the sum which the Post Office paid to the Inland Revenue Department as representing the 2d. stamps on receipts In October, 1957, the Cheques Act took effect. It did not change the law concerning receipts, but it drew attention to the fact that a paid cheque was evidence of receipt. Hon. Members know the practice which has been adopted since then of not giving receipts for payments made by cheque unless those receipts are requested.
I have no figure for the revenue from 2d. receipt stamps subsequent to October, 1957, but it can be estimated fairly accurately. The revenue from the 2d, stamps on the receipts printed on the backs of cheques has almost entirely gone. It was estimated that of the 800 million cheques drawn each year about one in every five had the printed receipt on the back. Therefore, I calculate that the Chancellor has already lost Ell million of his £5 million by the abolition of the receipt on the backs of cheques. Therefore, he is down to £3⅔ million from that cause.
Of the remaining cheques, some 650 million of them, it is reasonable to assume that half were paid in circumstances in which a receipt was formerly

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given and is now no longer given. These receipts brought in revenue of £2¾ million, the loss of which brings the Chancellor's present revenue from 2d. receipt stamps, as I estimate it, to £975,822, or less than £1 million.
When I say that the Chancellor has lost over £4 million, he has not lost it all, because the 2d. receipt stamp was a deductible expense for tax purposes. Although one hopes that now that it is not a necessary expense its equivalent has gone to reduce the price of commodities, no doubt part of it has gone to swell profits and to that extent the Chancellor gets a certain amount of it back in tax.
There has, however, been more saving out of this than the mere 2d. stamp. There has been immense saving in the expenses of making out receipts. It has been fairly reliably calculated that the clerical work, the printing, posting, and so on, costs 3d. or 4d. and, with the postage stamp and the receipt stamp, every receipt probably costs about 8d. Totalling that up for the number of receipts which were being given before the Cheques Act came into operation, one calculates that there has been a saving to commerce, industry and the professions of something like £13½ million. Although, again, one hopes that much of that has gone to reduce the price of commodities, undoubtedly a considerable proportion of it has gone to swell taxable profits and the Chancellor has got back in that respect more than he has lost in the reduced use of the 2d. receipt stamp.
12.30 a.m.
It would be most ungrateful of the Chancellor not to abolish the 2d. receipt stamp and give up this comparatively small sum of less than £1 million in return for the considerable amount which he is gaining from another source. The story of the Chancellor's gains as a result of the Cheques Act does not end there. There have been economies in the Government Departments by the abolition of endorsements, and similar economies in other offices. So it does seem that there would be a net gain to the Revenue out of it, even if the 2d. receipt stamp were now abolished.
Of course, one must still retain the obligation to provide a receipt when it is asked for. A receipt is still necessary for payment by cash, and a receipt is still
1508
necessary for some payments by cheque, for example, for payments of rent, in respect of which a receipt has certain legal results. That, however, is no reason for retaining the 2d. stamp on the receipt. Here there is a dwindling revenue. The Chancellor is fighting a rearguard action against this loss of the 2d. receipt stamp. The continued requirement of it is now involving quite unproductive time, out of proportion to the return. I hope that the Chancellor can see his way to abolishing it altogether and relieving commerce, industry and the professions of this pettifogging tax.
Mr. Simon: I do not propose to follow my hon. Friend the Member for Crosby (Mr. Page) into the economic and fiscal effects of the Cheques Act, although I certainly must not be taken as accepting his figures and estimates. It is sufficient for me to answer his question what this new Clause would cost. The loss of revenue cannot be precisely estimated, but so far as we can judge it would be between £2 million and £3 million. It is certainly worth the cost of collection. There are other defects in the new Clause, but in view of the fact that my right hon. Friend is not prepared to forgo such a large sum by way of revenue and certainly would not put this in the highest priority if the sum were available, I do not think it is necessary for me to go further into the matter, but merely say that I could not advise the Committee to accept the new Clause.
Mr. Edward du Cann: In view of the fact that there are a number of other arguments which could well be put forward on this matter, would my hon. and learned Friend be so kind as to preserve an open mind on the question?
Mr. Simon: I need hardly say that I would be delighted to discuss this with my hon. Friend at any time which is convenient.
Question put and negatived.

New Clause.—(ALLOWANCE FOR EXPENDITURE ON PAYMENT TO CATTLE BREEDING OR PIG BREEDING SOCIETIES.)
Section three hundred and thirty-five of the Income Tax Act, 1952, shall be amended by the addition of the following paragraph
"(d) pays any sum to be used for such scientific research as is mentioned in paragraph (b) of this section to any such cattle

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breeding or pig breeding society as is for the time being prescribed by regulations made under the Improvement of Livestock (Licensing of Bulls) Act, 1931, as an approved breeding society for the purposes of subsection (3) of section six of the Agriculture (Miscellaneous Provisions) Act, 1944".—[Mr. Turton.]
Brought up, and read the First time.
Mr. R. H. Turton: I beg to move, That the Clause be read a Second time.
This is a narrow point, but one of considerable importance to the agricultural industry. The difficulty has arisen because at present subscriptions to progeny testing stations are not eligible for tax relief. The law is governed by Section 335 of the Income Tax Act, 1952, by which relief is given for subscriptions for any activities in natural or applied science for the extension of knowledge. But the decision as to what is a natural or applied science is not left to the Commissioners, or to the Special Commissioners on appeal, or to a court of law, but to the appropriate research council.
Progeny testing, being an agricultural pursuit, is left to the Agricultural Research Council, which has taken the view that progeny testing cannot be regarded as eligible because the data found would have to be put to some further experimental purpose if knowledge is to be extended. This matter has been sent to counsel for opinion, and they advise that this interpretation is not realistic. Unfortunately, owing to the drafting of the Act, there is no way of upsetting this decision except by amending the law. Therefore, counsel have advised a Clause in these terms to cover the point. I am sorry that the Chancellor is not here, because I know that he understands the importance of progeny testing. If British agriculture is to compete with Danish or Swedish agriculture we must go in for progeny testing.
Mr. Mitchison: How is it done?
Mr. Turton: I do not want to waste the time of the Committee by explaining to the hon. and learned Member how we test progeny, but I could take him to a testing station and allow him to have the measurements taken——
Mr. Mitchison: It seems to me a question for another place.
Mr. Turton: This is an important matter. If we are to compete in the bacon market we must have a progeny testing station. My right hon. Friend the Chancellor himself established a Ministry station. If it is to succeed, all the breeding societies must also have their progeny testing stations. Unlike the cement manufacturers or the Industrial Research Association, these breeding societies have their subscriptions taxed. This is clearly an anomaly which was not foreseen when the 1952 Act was passed. Therefore, I ask my right hon. Friend to accept the new Clause.
Mr. Maudling: My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) said that my right hon. Friend the Chancellor of the Exchequer is, by reason of his previous activities, an expert on these matters. I am informed that the essence of progeny testing is the testing of the quality of the sire by the assembly of information regarding the value of his progeny for their purpose, for example for meat or milk production in the case of cattle and meat production in the case of pigs. It seems a reasonable definition. On the question whether it is a research activity, I should have thought that it is hardly a matter of scientific research as of routine quality testing. The point is not whether or no it is scientific research, but who is to determine whether it is.
Under Section 335 of the 1952 Act the duty of determining whether a body of this kind is engaged in scientific research rests with the appropriate research council, in this case the Agricultural Research Council. The question whether any activities constitute scientific research falls to be decided by the appropriate research council under Section 340 of the Act.
The purpose of the new Clause is to treat one form of activity specifically by name and to say that the determination whether it is scientific research shall be made not by the appropriate body but by statute. My right hon. Friend, who has studied this matter in his present and previous capacities, feels that it is much better for the Agricultural Research Council to determine whether these activities can be properly described as scientific research.
I urge that in these matters it is right that this Committee should lay down the principles, but the particular application

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in matters of such detail should be left to those bodies with the highest technical qualifications. In this case my right hon. Friend feels the highest qualifications reside in the Agricultural Research Council. Of course, by rejecting this new Clause, he is not commenting on the individual case—which would not be right for him to do—but he feels that the principle must be maintained and that the determination of individual cases should be left to the existing system under Section 335 of the Act of 1952.
For that reason, without in any way disagreeing with what my right hon. Friend the Member for Thirsk and Malton said about the importance of progeny testing in relation to the Danish industry and the strain of pigs produced in this country, I am afraid my right hon. Friend cannot accept this new Clause.
Sir James Duncan: I am sorry that my right hon. Friend has taken that line because, although this is a narrow point, it is of some importance. Up to now progeny testing has been done mainly to protect the pig, but I am certain that milk yield is going to depend more and more, not on prize-winning or even breeding, but on progeny testing. It is only just starting.
I cannot say that I agree with my right hon. Friend in leaving this matter to the Agricultural Research Council. The real point is who should decide the law? Section 340, which is the definition Section, of the Income Tax Act, 1952, says:
"'Scientific research' means any activities in the fields of natural or applied science for the extension of knowledge".
Progeny testing is one of those things which is an extension of knowledge. If we disagree with that, or are doubtful about agreeing, surely it is right that it should be tested before the Special Commissioners, or in the last resort in the courts, rather than being left to the Agricultural Research Council. The Council comprises experts and technicians, but they are not experts in interpreting the law.
As it is late, I shall not say more, but I hope that my right hon. Friend the Paymaster-General will report this short debate to the Chancellor, who understands these things, because I believe the Paymaster-General has not quite appre-
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ciated the narrow but important point in the interests of future breeding and the future value of stock, particularly pedigree stock, of this country.
Mr. Turton: In the hope that my right hon. Friend will consider this matter further, I beg to ask leave to withdraw the Motion.
Motion and Clause by leave, withdrawn.

New Clause.—(DEDUCTIONS ALLOWABLE FOR DIRECTORS' REMUNERATION.)
As respects chargeable accounting periods ending after the thirty-first day of March, nineteen hundred and fifty-eight, paragraph 11 of the Fourth Schedule to the Finance Act, 1937 (as amended by section thirty-four of the Finance Act, 1952), shall be amended by omitting from sub-paragraph (1) the reference to two thousand five hundred pounds and substituting a reference to two thousand five hundred pounds for each such director, by omitting sub-paragraph (2) and by omitting from sub-paragraph (1) and sub-paragraph (3) the reference to fifteen thousand pounds and substituting a reference to thirty thousand pounds.—[Mr. Arbuthnot.]
Brought up, and read the First time.
Mr. John Arbuthnot: I beg to move, That the Clause be read a Second time.
At the time when distributed Profits Tax was at the highest rate, it was understandable that allowances for directors' remuneration had to be fixed at a low level, but with the conversion of Profits Tax into a straight corporation tax of 10 per cent., the danger of loss of revenue by the temptation to draw salaries which were unreasonably large in relation to services rendered has diminished. I therefore hope my right hon. Friend will be able to give favourable consideration to this new Clause.
Mr. Maudling: I do not think my right hon. Friend would quarrel with many of the arguments that underlie this proposal, and it is true that some time has passed since the limits were fixed in the Budget of 1952, but I am not sure that I would accept entirely the argument used by my hon. Friend the Member for Dover (Mr. Arbuthnot). The reason why my right hon. Friend cannot accept it is because the cost would be £4 million, and he does not feel that he could accept a proposal costing that amount this year. But I would point out that he does not for that reason close his mind to considering proposals on these lines on a subsequent occasion.

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This year, however, the cost would be prohibitive.
12.45 a.m.
Mr. Arbuthnot: I am grateful for the statement from my hon. Friend that our right hon. Friend's mind is not closed to this matter, and I hope he will be producing a fruitful result in the future. In view of this, I beg leave to ask leave to withdraw the Motion.
Motion and Clause, by leave withdrawn.

New Clause.—(DEDUCTION OF EXPENSES OF REALISING VALUE OF PROPERTY PASSING ON DEATH.)
For the purposes of all the enactments relating to estate duty, in estimating the value of the property passing on death, and the property deemed to pass on death, there shall be deducted the costs actually incurred within two years of the death in disposing of the property.—[Mr. Stevens.]
Brought up, and read the First time.
Mr. Geoffrey Stevens: I beg to move, That the Clause be read a Second time.
This Clause deals with the deduction of expenses which are incurred in the realisation of property in the event of the death of a person. I know this is really a very wide subject and that one has in mind, for example, that shares which are in the possession of the deceased person are valued as at the Stock Exchange price, if there is one, at the date of death and that when realisation takes place they may realise a lesser or, indeed, a larger sum. It seems clear that where, for example, a house is concerned the question of the estate agent's charges and that kind of thing are an inevitable expense of realising that property, and it seems unrealistic that death duties should be payable on the gross sum and not on the gross sum reduced by the amount of these essential expenses.
I mention only house property, but there are many other forms of property similarly affected. The logic and reasons seem clear, and I cannot see any argument against them. For that reason, I hope my right hon. Friend will be able to accept the new Clause which I now propose.
Mr. Maudling: I have approached this new, Clause with considerable sympathy, but having seen all the arguments against
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it, I am convinced that it would not be right for the Committee to accept it. I think it is an argument of metaphysics—what is the true value of an asset—whether it is the market value or the market value after deduction of the necessary expenses of realising—and I will not enter that argument now. But there are other objections to this proposal. There is the objection of principle: that less duty would be paid in a case where the asset is sold than in a similar case where the asset is retained. That is an objection to the Clause as drafted.
Secondly, there is the practical objection, that there could be no income in the administration of any estate until at least two years have elapsed since the death, unless all the property liable for duty on the death had already been sold. Thirdly, there is the objection of cost to the revenue, of which I cannot give an exact figure, but which I am assured could not be negligible, and in so far as it brings a real benefit it must bring a real loss to the Exchequer.
Finally, there are undoubtedly real, practical difficulties in giving such a reduction in a manner that would be fair between taxpayers. One could only use a rough, arbitrary allowance, representing a rough average, and this would be very difficult to arrive at.
So, certainly in the case of the Clause as drafted, there are difficulties of principle and practice which lead me to advise the Committee not to accept it. I would that I could say that my right hon. Friend will give the matter further consideration, but he does not feel that he could go even that far at the moment.
Speaking personally, I would be delighted if my hon. Friend at a subsequent date could find stronger arguments in support of this proposal, because I should very much like to be convinced that it was the right thing to do—but I am not yet entirely convinced, on balance.
Mr. Stevens: So far as my right hon. Friend's first argument goes—that the expense is not suffered if the asset is not sold—I should have thought that that was one of the things that Punch used to call a blinding glimpse of the obvious; and the new Clause does not refer to such a case. It refers to cases where an asset is sold and the expense incurred.

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I did not follow his point about averages. Once again, the Clause deals only with cases where expense is incurred. However, I heard him say that his right hon. Friend's mind is not entirely closed to this matter. I entirely agree that in drafting a new Clause it is very easy for an amateur such as myself to go wrong, and in the hopes that in the not far distant future the Chancellor will be able to draft a new Finance Bill Clause incorporating the principle underlying this one, I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(ALLOWANCES FOR CAPITAL EXPENDITURE ON UNITED KINGDOM MINERAL DEPOSITS.)
(1) Subject to the provisions of this section an allowance (in this section referred to as "a depletion allowance") shall be made to a person carrying on a trade which includes the working of a mine, oil well or other source of mineral deposits in respect of the wastage of that source resulting from the working thereof during the year of assessment.
(2) The amount of the depletion allowance in respect of any source shall be the amount which results from applying to the residue of the qualifying expenditure the fraction of which—

(a) the numerator represents the output from the source in question in the basis period for the year in question; and

(b) the denominator represents the sum of that output and the total potential future output of the source estimated as at the end of that period,

or the fraction one-twentieth, whichever is the greater.
(3) Where the source ceases to be worked, the person carrying on the trade may elect that the depletion allowance, if any, for the year of assessment in which that event occurs and each of the five previous years of assessment shall be computed as if the reference in subsection (2) of this section to the total potential future output of the source estimated at the end of the basis period were a reference to the actual output of the source between the end of the basis period and the happening of the said event, and the said allowances shall be computed accordingly and, notwithstanding anything in the Income Tax Acts limiting the time for the making of assessments or the allowance of claims for repayment, all such repayments and additional assessments shall be made as are necessary to enable effect to be given to the subsection:
Provided always that where the qualifying expenditure consists of or includes expenditure on acquiring the site of a source and that site is subsequently sold there shall be made for the year of assessment in the basis period
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for which the sale takes place a balancing charge equal to the excess (if any) of the total of the depletion allowances made for previous years of assessment over the difference between the cost and the proceeds of sale of such site.
(4) (a) In this section "qualifying expenditure" means capital expenditure incurred after the passing of this Act on the acquisition of the site of or of rights in or over a source of mineral deposits but does not include any expenditure on the acquisition of buildings or structures or of plant and machinery.
(b) references in this section to the residue of any qualifying expenditure are references to the amount thereof which remains after deducting therefrom any depletion allowances made in respect of that expenditure or any part thereof for any previous year of assessment.
(5) This section shall be read as one with Part X of the Income Tax Act, 1952, and the provisions of section three hundred and eight thereof (which deals with the sale of a source or part of a source as a going concern) and section three hundred and twenty-seven (which makes special provision for certain sales) shall have effect in relation to depletion allowances including balancing allowances and charges as they have in relation to allowances under that Part of that Act but with the substitution for "the appointed day" in the said section three hundred and eight of the date of the passing of this Act.
(6) Nothing in this section shall authorise the making of any depletion allowance in respect of expenditure which qualifies for the grant of an intial or annual allowance under any of the provisions of Part X of the Income Tax Act, 1952.
(7) No company or person shall by virtue of this section be liable to pay any more tax than that company or person would have been liable to pay if this section had not been passed.—[Mr. Braine.]
Brought up, and read the First time.
Mr. Bernard Braine: I beg to move, That the Clause be read a Second time.
The object of the Clause is to give effect to a recommendation of the Royal Commission on the Taxation of Profits and Income that in future a depletion allowance should be made in respect of the cost of the acquisition of mineral-bearing land. I would add that the Clause as drafted includes a method of computing the allowance and provides reasonable safeguards for the Revenue against collusive transactions.
It will not have escaped the attention of the Committee, even at this late hour, that the Clause as drafted has attracted powerful support from hon. Members on both sides of the Committee and, what is equally significant, from every part of

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the United Kingdom. More than 80 hon. Members have added their names to mine, and I believe a great many more would have done so.
Mr. Stevens: Can my hon. Friend also give the Committee the number of hon. Members who have subsequently withdrawn their names from the Clause?
Mr. Braine: To the best of my knowledge over 80 hon. Members have added their names to my Clause. Their names still stand in support of it, and that is surely almost a record for a proposal of this kind. I have difficulty in understanding the purpose of my hon. Friend's intervention.
I am not surprised at the large number of hon. Members who have added their names to the Clause, because the proposal we have to make is modest and fair, and does not go one inch beyond the recommendations of the Royal Commission. Anyone who would wish to pursue the matter beyond the recommendations of the Royal Commission would have very little chance of persuading the majority of this Committee—and certainly my right hon. Friend—of the validity of his case.
As the Committee knows, a mining concern is allowed to deduct all expenditure of a revenue character incurred in the course of winning minerals from the earth, and where mineral-bearing land is purchased overseas by a British company the cost of the land can be offset against taxable profits. By some strange anomaly this allowance is not permitted in respect of mineral-bearing land in this country.
Why was it that the Royal Commission recommended that a depletion allowance should be granted in future to extraction industries in this country? The main reason was that the existing method of taxation was one which did not take the true profits into account. This arises because, while the cost of the land purchased for extracting minerals is essentially the cost to the operator of acquiring what is in effect his stock, no allowance is made for that stock. The Royal Commission recognised this clearly and in paragraph 432 of its report said:
"We regard this as a system which taxes the mining venture upon a figure of profit which is greater than its true profit."
It went on to say that it agreed with the first Tucker Committee which held that
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"The general principle that an allowance should be given for all expenditure on assets that are used up in the course of carrying on a business seems to us particularly applicable to the position of a concern which has to pay a capital sum for minerals, or the right to work minerals … We cannot believe that the prohibition of any allowance or relief in respect of the wastage of the capital expenditure on the purchase of the land … can be regarded as consistent with a proper ascertainment of the company's business profits."
The Royal Commission went on to say:
"It requires a strong weight of argument to maintain a position under which the tax authority is entitled to exact tax upon the basis of a profit which is obviously unreal."
In paragraph 445 of their Report the Royal Commission made its recommendation on the lines which we have followed in the new Clause and suggested a method of giving the allowance. It said that it should be granted only in respect of sums paid after the date of the new system coming into force; that the basis of relief should be the actual monetary cost less any residual value of the land; and that any residual value of the land must be set off against the value of the allowance. This new Clause follows these requirements of the Royal Commission exactly.
May I give four good reasons why we should implement these recommendations without delay? Firstly, the present practice is unfair; secondly, it is illogical; thirdly, it runs counter to the country's best economic interests, and, fourthly, if accepted it would cost the Chancellor nothing in the first twelve months and very little for a year or two after that.
The present practice is unfair because the inevitable reduction in the value of the land acquired for mineral extraction is just as much a cost of production as the raw materials used in any ordinary manufacturing process. There is no possible justification for the present discrimination. It might be thought there is a residual value in the land when the minerals have been exhausted. That is true, but it is usually very small and, in any case, the Clause as drafted would ensure that that residual value would be accounted for by a balancing charge.
The present practice is especially unfair to sand and gravel operators. I single out this industry firstly because it is one I know best, and because it operates in my County of Essex, and, secondly, because, in relation to the value of the

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minerals extracted from the land, the land itself is far more costly than in any other extractive industry. Deposits are quickly worked out and if plant is to be used economically and continuity in production ensured operators must be constantly looking for new land.
1.0 a.m.
Obviously, there are limitations to the amount of land that an operator will require, and the amount of capital which he can lock up in it. Moreover, this is an extractive industry more widely spread over the country than any other. It must continue to be widespread because wherever there is building construction, one hopes that there will be cheap and accessible sources of sand and gravel.
Why is the present practice illogical? I would suggest that there are three reasons. Firstly, mineral-bearing land can be acquired on a royalty basis, or it can be bought outright. But nowadays it is difficult to acquire land on a royalty basis, and yet, while royalty payments are allowable for offsetting against taxable profits, there is no allowance available where land is bought outright. Secondly, there is discrimination between British companies operating overseas and those which operate in this country. The Tucker Committee was of the opinion that this discrimination ought to be removed, because wherever these operations go on, the assets are of a wasting nature. Thirdly, the practice is out of line with current legislative provisions for allowances for other capital expenditures, such as for industrial buildings, dredging, and mining exploration and developments.
Why does the practice run counter to the interests of the national economy? It does so in the sense that the disallowance of the cost of mineral bearing land exercises an inflationary influence upon prices. If one breaks down any capital development programme, whether it be for the provision of schools, factories or bridges, it will be found that a very high proportion of the cost is for building materials. There is the closest possible connection between the overall capital investment programme of the country and the extractive industries.
A disallowance of the cost of land means that a producer has to sell his product at prices which will not only give
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an economic return on his capital outlay, but also sufficient profit after taxation to amortise that outlay. In this connection I would call in aid the evidence given to the Royal Commission by the Sand and Gravel Association of Great Britain.
On the assumption that an operator was allowed to charge for taxation purposes the cost of land at, say, eightpence a cubic yard, he could fix his selling price at 6s. 6d. a cubic yard, which would mean a net profit of fourpence a cubic yard. But, as he is not allowed to charge the cost of the land, the selling price would have to be fixed at 7s. 6d. in order to yield the same final net profit of four-pence per cubic yard. Thus, the Committee will see that one shilling represents the amount necessary to meet the taxation applicable to the disallowed cost of land at eightpence a cubic yard.
I appreciate that this is extremely technical, and I would, therefore, try to put it in another way. [Interruption.] I hope that my hon. Friends will regard this as a very serious matter. The present tax practice imposes a charge on the cost of sand and gravel—on the figures given to the Royal Commission—of between 12 and 15 per cent. Consider the significance of this. In relation to building costs generally. The effect is enormous. I am told, for instance, that London Airport consumed about 3 million tons of sand and gravel—enough to build a roadway from London to Birmingham. A modern power station needs 100,000 to 150,000 tons. I am told that one mile of modern highway consumes 11,000 tons. The demand for sand and gravel in this country is running at about 1¼ tons per head of the population. In the United States it is running at 3½ tons per head of the population. Demand is bound to grow in this country.
Mr. Hugh Fraser: They are burying their heads in the sand.
Mr. Braine: I realise that the hour is late. Nevertheless, I am obviously carrying the Committee with me.
I know that my right hon. Friend is not unaware of the enormous influence which the cost of these materials has on the national economy. I know that the Government regard the building industry as a major balancing factor between inflation and deflation. If that is so, is it

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not high time that the Treasury recognised the inflationary effect on building materials of this present tax practice?
I must make it plain—because some of my hon. Friends seemed in some doubt—that the Royal Commission did not recommend that a depletion allowance should be granted in respect of mineral-bearing land already held by operators. I have a great deal of sympathy with those who already hold large plots of land, but the Royal Commission rightly recognised that that land had been acquired in the knowledge that no depletion allowance obtained. The Commission decided that a line would have to be drawn somewhere.
I have said that if he concedes the new Clause my right hon. Friend will lose no revenue in the coming year because its provisions are limited to new acquisitions. The reason for this is that it will take twelve months for planning permission to be obtained, for the necessary plant to be installed on the site and for profitable production to get under way. My view is that if he accepted the new Clause it would cost the Revenue next to nothing for two or three years. It is precisely for that reason that I ask my right hon. Friend to make the concession now, and not to fob us off for another year. He can afford to make the concession now. The Institute of Chartered Accountants, when asked about this recommendation of the Royal Commission by the Board of Inland Revenue, put it among the highest priorities. If my right hon. Friend made the concession now he would have the satisfaction of knowing that he was doing the just thing, the right thing without damaging the interests of the Revenue in any way.
Mr. Cronin: I do not pretend to have an extensive knowledge of this subject, and I do not think I know very much more about it even after the rather lengthy speech of the hon. Member for Essex, South-East (Mr. Braine). I feel, however, that I have a constituency duty in the matter.
In my constituency I have a granite quarry. The Breedon and Cloud Hill Lime Works Ltd. apparently thought it important that I should see a letter which it had received from the secretary of The Limestone Federation, and I propose to confine my remarks to reading this letter,
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if I may have the patience of the Committee. It reads:
"Thank you for your letter of 18th instant and I note you have approached your Member for the Loughborough Division, Mr. John Cronin. I wonder if you could make it quite clear to him that the clause for which his support is desired is that of Mr. Geoffrey Stevens not the alternative one by Mr. Braine. The effect of the latter"——
—that is, the new Clause which we are discussing—
"will be completely useless to existing quarries and is being pressed by the gravel interests who are more concerned with short term development and will, if theirs goes through, be at a greater advantage still against long term existing stone development like your own."
It appears that the new Clause has not the unanimous support of sundry interests which are concerned, and I think the Committee should have more information before coming to a final decision.
Mr. du Cann: I rise simply to say that if all the arguments in favour of the new Clause are not put forward in view of the lateness of the hour and in deference to the obvious wishes of the Committee, I nevertheless hope that my right hon. Friend will not think that they are unimportant. I should like an undertaking that he will keep an open mind on the subject until he has heard all the evidence, because this is an extremely important subject and a matter of very great concern not only to the sand and gravel industry but to other industries as well. A good deal could be said on this, subject, but it would probably be better to leave it to another occasion. I hope my hon. and learned Friend will give the assurance for which I asked.
Mr. Stevens: I do not propose to weary the Committee by setting out at length, as I might well do, my points of agreement with my hon. Friend the Member for Essex, South-East (Mr. Braine). I have only two points of disagreement with him. I do not think that he can have been to the appropriate office recently to check up on the difficulties.
The much more important point is this. This proposed new Clause deals only with lands acquired after the passing of this Measure. My hon. Friend said that that was implementing the recommendation of the Royal Commission, and he was right in that, but he did not quote from the Royal Commission's reasons.

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In order to save the time of the Committee, which I know is so very valuable—I can see many tired faces around me—I will not quote at length from the Report, but if my hon. Friend will read the Report he will see that the recommendation that this allowance, if it is to be granted, should apply only to lands acquired after the date of the passing of the Bill was sketchy in the extreme and very debatable.
The vast majority of the extractive industries in this country are wise and prudent. They have acquired reserve lands sufficient for their needs for many years to come, and it seems to me illogical, improper and unfair that those companies which have been prudent, have looked to the future and acquired reserve lands to deal with their future requirements, should be put in a worse position than the less prudent companies which are only going to buy lands for their requirements in the months to come.
With that very important difference, I strongly support the arguments advanced by my hon. Friend, though I bear very much in mind what my hon. Friend the Member for Taunton (Mr. du Cann) has said. Perhaps this is not quite the occasion on which to debate this subject at length. I am certain that the feeling in the country as a whole is very strong on this point. I am sure that my right hon. Friend will realise how great that feeling is when he sees the number of hon. Members present who feel the same as my hon. Friend the Member for Essex. South-East and I do.
Mr. du Cann: Is my hon. Friend aware that many people believe that the recommendations of the Royal Commission do not go far enough?
Mr. Stevens: I am in entire agreement with my hon. Friend the Member for Taunton.
Mr. Norman Cole: It is a pity that an important matter of this kind, whether it be the question of the appointed day or of existing undertakings, should be debated at this time of the morning. However, I will be as brief as most of those who have preceded me.
I support the principles of the Clause which was moved by my hon. Friend the Member for Essex, South-East (Mr. Braine). I am sure that no hon. Member
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will disagree with the principles which he enunciated. By the same token, I would agree with him in the reasons that he has given why this proposal should be accepted by the Chancellor because of its comparison with other industries which do not suffer from the defection of a wasting asset. As far as I can ascertain, this matter of wasting assets is peculiar to the extractive industries.
There I must part company from my hon. Friend the Member for Essex, South-East for the same reasons as were given by my hon. Friend the Member for Langstone (Mr. Stevens). The new Clause, good as it is, is not good enough and does not go far enough.
We are dealing here with an industry which has been long established in this country. I have one concern in my constituency which, so I am told on good authority, has been in existence for two thousand years. We are, therefore, concerned not only with new undertakings after an appointed day, but with those now existing. Most of the concerns working this great industry, whatever be the minerals they are extracting from the ground, are long established, having deposits likely to keep them going for a long time. An appointed day will not be of any help to them, except in regard to new acquisitions.
Secondly, and very important, if the new Clause were accepted, any new concern starting up with the benefit of the depletion allowance for tax would have a direct advantage in competition with an existing undertaking which did not enjoy the same benefit. I hasten to say that there is no reason that we should not obtain the lesser of the two concessions if we can have nothing more, but I feel that my right hon. Friend the Chancellor might feel it right, for the reason I have given, to extend it to include those companies which now exist.
This proposal is not a new one; it has been debated in previous years. The machinery for this kind of depletion allowance exists. Both machinery and precedent exist. I am reliably informed that, when the Excess Profits Levy was in force during two or three years soon after the war, a depletion allowance for tax purposes was allowed to those companies which were taking out more than the ordinary amount of minerals from their quarries. Due allowance was made

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in that respect for the depletion. If it can be done for excess amounts taken out of a quarry, then, I suggest, there is no reason for it not being done for all normal working.
1.15 a.m.
Mr. Maudling: I shall not follow my hon. Friend the Member for Essex, South-East (Mr. Braine) in his most interesting discussion on the economics of the gravel and ballast industry, though I certainly accept his two important propositions, that it is difficult to build roads or houses without gravel and that, in so far as the industry is relieved of a tax burden, that gives it some incentive for reducing the price of its product. It is not unlikely that those considerations were in the mind of the Royal Commission when making its recommendation. Any recommendation from the Royal Commission is, of course, a very important matter for the consideration of the Committee.
I was advised, before the discussion began, that there are difficulties of both practice and principle in adopting this particular recommendation. I will give two difficulties of practice first. The Royal Commission referred to the problem of how to treat residual value and the possibility of collusive sales. I do not think that either of those problems has been satisfactorily dealt with in the new Clause. There are also differences of principle as to what a move of this nature should cover—whether it should cover past or future acquisitions. Were there any doubt as to the existence of such differences of principle, certainly the discussion tonight has made it perfectly clear that such differences exist and are quite strongly felt.
Mr. Stevens: So far as collusive sales are concerned, has my right hon. Friend borne in mind Section 468 of the Income Tax Act, 1952?
Mr. Maudling: Yes, and I think that my hon. Friend, if he examines it carefully, will find that even that provision, which deals with collusive sales in general, will not deal with this particular type of collusive sale which might arise. If he still has some doubt about that, I should be delighted later to have a talk with him about it. The real issue is one of principle. My right hon. Friend feels that this is certainly one of the recommendations of the Royal Commission
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which has a good deal to commend it, but clearly, to meet the problem satisfactorily, long and complicated legislation would be needed. It is clear that there is not sufficient agreement in the Committee on this matter to reach a decision at this stage. Therefore, the Chancellor does not feel that the case put forward tonight is of sufficient urgency and priority to justify attempting to embark on the legislation needed to give practical effect to the recommendation of the Royal Commission. The Chancellor recognises the weight of the case, but for the reasons I have given he cannot at this stage accept this new Clause. There are matters of principle and practice involved for which no solution has, in his opinion, yet been found.
Mr. du Cann: In view of the fact, as I have suggested, that there are so many arguments that might be adduced in favour of this new Clause which have not been put forward, perhaps there might be an opportunity for considering these arguments in due time before a final decision is reached. It is something one wants to work towards when there is the weight of evidence available.
Mr. Maudling: I would be glad on a subsequent occasion to hear the arguments.
Question put and negatived.

New Clause.—(AMENDMENT OF SECTION 388 OF INCOME TAX ACT, 1952.)
Section three hundred and eighty-eight of the Income Tax Act, 1952, shall be amended by the addition of a new subsection thereto, namely:—
"(3) Any sum paid by the employer pursuant to a scheme approved by the said Commissioners under subsection (1) of this section shall, in computing the profits or gains for the purpose of an assessment for income tax under Case I or Case II of Schedule D, be allowed to be deducted as an expense incurred in the year in which the said sum is paid and where the said employer is a body corporate entitled to relief in respect of expenses of management by virtue of the provisions of subsection (1) of section four hundred and twenty-five of this Act any sum paid by the said body corporate pursuant to the said scheme shall, for the purpose of subsection (1) of the said section four hundred and twenty-five be deemed to be an expense of management".—[Mr. John Rodgers.]
Brought up, and read the First time.
Mr. J. Rodgers: I beg to move, That the Clause be read a Second time.

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This Clause is concerned with the question whether contributions paid by a company under a retirement benefit scheme for its directors approved under Section 388 of the Income Tax Act, 1952, should be allowed as an expense in the computation of the tax liability of the company which pays the contributions.
About a year ago there was a decision in the High Court in the case of Samuel Dracup and Sons and Dakin which changed the law as practised before that case. I understand that the Inland Revenue authorities, while giving their approval to a scheme under Section 388 of the Income Tax Act, 1952, have resisted deduction of the pension distribution paid by the company under this scheme in computation of tax liability under Case I of Schedule D.
I understand that the Inland Revenue resist this deduction in cases where one or more directors may have together a de facto control of the business, although such a director is not a controlling director within the meaning of Section 390 (1) of the Income Tax Act, 1952, for the purpose of these pension schemes.
The argument adduced by the Inland Revenue authorities is that, first, there is no inducement to directors to work harder. A director is morally and, they maintain, legally bound to work as hard, as a director, in the interests of the firm, and, therefore, pension arrangements do not make him work harder.
Secondly, they maintain that he would not leave the firm if there were no pension provision, and, therefore, payment of premiums is not an expenditure wholly and exclusively laid out for the purpose of the trade of the company. Refusal by the Inland Revenue to allow the premiums paid out in these circumstances seems to be arbitrarily to nullify the fact of the pension scheme for family businesses, and discriminates unfairly against some of the working directors of such companies who may not be members of the family.
Under the practice adopted since last year's High Court decision a deduction may be obtained only for full-time executives, who are less likely to be concerned with the continued prosperity of the employing firm. Those most closely connected with the success of firms are clearly penalised.
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The new Clause proposes to make provision for the automatic deduction as a trading expense in the computation of tax liability of the premiums paid by that company under a retirement benefit scheme approved by the Commissioners of Inland Revenue under Section 388 of the Income Tax Act, 1952.
Until the decision in the Dracup case, it was always understood that this was the corollary to approval being given under Section 388. The new Clause removes any doubt and reverts to what, I understand, was always the position until last year and what, I am sure, was the intention of Parliament when introducing the pension scheme legislation in the Finance Act, 1947. Furthermore, the terms of Section 388 of the Income Tax Act, 1952, fully support my contention that premiums paid under an approved scheme for directors other than controlling directors shall be allowed as a trading expense, as Section 371 clearly shows that deduction of premiums as an allowable expense is part and parcel of any pension scheme approved under this legislation.
I hope, therefore, that my right hon. Friend will agree to accept the new Clause.
Mr. Simon: As my hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) has pointed out, the new Clause relates to the contributions paid by a company towards the pensions of its employees. Those contributions can rank for deduction for tax purposes in computing profits in the case of a company carrying on a trade, but subject to conditions. One of the conditions that must be satisfied before a scheme can be approved is that the service as a controlling director is not taken into account. The reason for that was perfectly plain: that if contributions in respect of controlling directors were allowed to be taken into account, there was ample scope for tax evasion.
Arrangements were designed to defeat what was the perfectly clear intention of Parliament in that respect. They took the form that directors, while they retained de facto control of a company, would divest themselves of most of their shareholdings to members of their families or to family trusts—in other words, a colourable arrangement. They were no longer controlling directors as defined for the purpose of the retirement

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benefit legislation and, therefore, the Inland Revenue up to that point could have no right to withhold approval of the scheme.
The Inland Revenue did, however, contend that in that type of case, the company's contribution to the retirement benefits was not incurred wholly and exclusively for the purpose of the company's trade and was, therefore, inadmissible as a deduction in computing the company's profit. Those contentions were upheld by the court in the Dracup case.
What my hon. Friend wants to do is to nullify the Dracup decision and to leave the way open for what, I submit, is the plain intention of Parliament to be again set at nought. There would be no safeguard against the kind of arrangement that was adopted in that case, and directors who are virtual proprietors of a company operating through shares held by members of their family would be free to arrange retirement benefit schemes for themselves.
My hon. Friend said that that amounts to discrimination unfairly against the working directors of a family business. In fact, it is the reverse. It is to prevent the directors of family businesses securing an advantage which is not open to controlling directors generally and, therefore, throwing a tax burden on the rest of the community and controlling directors. It does not mean that the gentlemen in question cannot obtain any tax relief for sums set aside to provide retirement benefits. They are eligible as self-employed under the scheme introduced by my right hon. Friend the Prime Minister in his Budget. Since the new Clause would permit a limited class of directors who are in de facto control of a company to bring themselves colourably within a Section 388 scheme and to obtain part of their retirement benefits in lump sum form, I cannot, on behalf of my right hon. Friend, agree to accept the Amendment.
1.30 a.m.
Mr. Mitchison: Would the hon. and learned Gentleman tell us about how many people got away with this before the case was taken to court?
Mr. Simon: I cannot without notice.
Mr. J. Rodgers: I am very sorry to hear the reply given by my hon. and learned Friend, because while it may be true that certain controlling directors may have divested themselves of a controlling interest and become de facto directors in control of a company, and I dare say that there has been some proceeding along that line, the line which my hon. and learned Friend has taken penalises a good many ordinary working directors who have no intention whatever of defeating the purpose of the Finance Act in providing for benefits for directors. I hope that he will look at this matter again before Report. If he can give me that promise, I will ask leave to withdraw the new Clause.
Mr. E. Fletcher: Before the Financial Secretary gives that promise, let me say that I hope he will not give that promise because it seems to me, having heard the terms in which the proposal was put, and having heard the conclusive reply by the Financial Secretary that on control of the kind the hon. Member for Seven-oaks (Mr. J. Rodgers) suggested the decision of the court in the Dracup case gave effect to the intentions of Parliament when it passed that Section of the Finance Act, 1947, which is now represented by Section 388 of the Income Tax Act, 1952.
It seems to me that it would be going contrary to the expressed intention of Parliament if we were to enact a new Clause to reverse the decision in the Dracup case. Therefore, for my part—and I think I am speaking for my hon. Friends—I welcome the vigour with which the Financial Secretary has resisted the new Clause, and I hope that he will not give any further thought to it at all.
Mr. Diamond: I share that hope, but I would ask the Financial Secretary a further question relating to this case. I see some slight danger in the development of the argument. The Financial Secretary said, quite rightly, that the Inland Revenue chose this rather roundabout method of securing that the will of Parliament should prevail, instead of attacking the matter under the relevant Section by saying that they were not expenses wholly and exclusively incurred. Would it not, therefore, be much simpler to reconsider the conditions under which

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a controlling director ceases to be a controlling director to prevent abuse in that respect, rather than having to get at the matter by this roundabout method? Once the Inland Revenue starts to attack it on the basis that it is not expenditure wholly, necessarily and exclusively incurred, we do not know how far it will go and how far the will of Parliament, which permitted an allowance in appropriate cases, will prevail.
Mr. Simon: I do not think that there is any danger. Parliament said that controlling directors should not be eligible. I think that if one tried to enact various schemes to control the de facto control by a director when he transferred his shares to his family one would find oneself in very great difficulties of definition. It seems to me that the Inland Revenue has taken the right course in relying on the fundamental principle of our tax law, namely, that the expenditure must be necessarily incurred to rank as a deduction against tax.
The Chairman: Does the hon. Member wish to withdraw the Motion?
Mr. J. Rodgers: I beg to ask leave to withdraw the Motion.
Motion, and Clause, by leave, withdrawn.
The Chairman: Seventh Schedule. Sir Toby Low.
Mr. Niall MacDermot: On a point of Order, Sir Charles. I understand that the new Clause in my name "Right to obtain decision of Commissioners of Inland Revenue on gifts inter vivos" would be called.
The Chairman: It was originally selected, but I understood the right hon. Member for Huyton (Mr. H. Wilson) to say that no more new Clauses would be moved from his side of the Committee.
Mr. MacDermot: I think my right hon. Friend said that no more new Clauses which were official Opposition new Clauses would be moved from this side of the Committee. My new Clause is an inter-party Clause, and I understood my right hon. Friend expressly to say that that new Clause was not covered by his undertaking. The matter may be
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dealt with very shortly and I hope, Sir Charles, that you will be able to call it as was the intention.
The Chairman: I am in some difficulty. I do not want to go back on what the right hon. Gentleman the Member for Huyton said. He made it plain that he was hoping to have the Clause called on Report. This has nothing to do with me, but it might prejudice the right hon. Gentleman's opportunity if we went back on what he said.
Mr. Mitchison: I spoke to my right hon. Friend the Member for Huyton about this. However, he expressed his intention, I know that he did not intend to refer to this Clause, which is in the names of hon. Members on both sides of the Committee. I think that I can guarantee that my right hon. Friend would welcome the Clause being discussed shortly even now.
The Chairman: That does not bear out the conversation which I had with the right hon. Member for Huyton, but I will call the Clause if hon. Members wish it. They have to take the responsibility. It is not mine.

New Clause.—(RIGHT TO OBTAIN DECISION OF COMMISSIONERS OF INLAND REVENUE ON GIFTS INTER VIVOS.)
(1) The Commissioners of Inland Revenue shall on a request in writing made by any person or body give a decision in writing on the question whether any gift either which it is proposed shall be made inter vivos or which has in fact been made inter vivos will, it effected, be made or (as the case may be) has been made for public or charitable purposes within the meaning of the proviso to subsection (1) of section fifty-nine of the Finance (1909–10) Act, 1910.
(2) The Commissioners of Inland Revenue may before giving a decision under this section require the person or body making the request to give to them such information and to produce to them such documents in his or its possession or power as the Commissioners may reasonably consider necessary for the purpose of ascertaining all the facts relating to the proposed gift.
(3) Any decision of the Commissioners of Inland Revenue made under this section shall bind the Crown and all parties to the gift inter vivos (whether or not affected) and any persons claiming through under or in trust for such parties.
(4) Any person aggrieved by a decision of the Commissioners of Inland Revenue given under this section may without paying or giving security for any duty appeal to the High Court in accordance with the provisions of section ten of the Finance Act, 1894 and the rules

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made thereunder and the provisions of the said section ten, except subsection (2) thereof, shall apply to any appeal brought under this section. The Commissioners of Inland Revenue shall be respondents to any such appeal.
(5) A decision of the High Court made on appeal, or of any court on appeal therefrom, shall have the same force and effect as if it were a decision of the Commissioners of Inland Revenue given under this section, and it is hereby expressly declared that the High Court and any court hearing an appeal therefrom, may decide any question arising under this section, although the matter or matters raised are wholly or partly hypothetical.—[Mr. MacDermot.]
Brought up, and read the First time.
Mr. MacDermot: I beg to move, That the Clause be read a Second time.
The object of the Clause is to clear away an anomaly in the administration of our tax laws which is causing a considerable amount of annoyance and difficulty. The point arises in this way. If a trust or other body which is being formed for charitable purposes is in receipt of income under a seven-year covenant and it wishes to reclaim tax which is being paid on that income it can go to the chief inspector and obtain from him a ruling. He will examine the trust deed or constitution of the body and say whether or not he is prepared to accept it as a charity. That has been a matter of practice, not covered by legislation. The practice is very convenient. It enables the charity in question to go to its prospective benefactors and tell them that it has been accepted as a charity. That is an added inducement to those benefactors to make covenants.
If a similar body receives a lump sum gift and then approaches the Estate Duty Office of the Inland Revenue to find out whether the body would be accepted for Estate Duty purposes as being one which has received a gift for charitable or public purposes, the Estate Duty Office show themselves unable to express an opinion on the matter. As the Committee will be aware, if gifts are made inter vivos for charitable or other public purposes, they are exempt from Estate Duty if a period of a year or more elapses between the making of the gift and the death of the donor.
The reason which the Estate Duty Office give for refusal to co-operate on the matter and give an opinion is the decision of the Court of Appeal re Barnato
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deceased, in which the Court held that it could not entertain proceedings to decide a matter of this character as it raised a purely hypothetical question that might never arise. I should have thought that was an insufficient reason to debar the Estate Duty offices from co-operating in the same way as does the chief inspector.
The present practice, or lack of practice, in this respect hits charitable bodies in two ways. They are, first, unable to give that added encouragement to prospective benefactors of telling them that they have been accepted by the Estate Duty Office and, secondly, if they receive substantial donations and cannot get any co-operation in this form, a very large part of the money has to remain frozen for the full five-year period before they are able to use it.
The new Clause proposes that the Inland Revenue Commissioners should be under a duty to give a decision in writing on request that there should be a right of appeal against their decision at the High Court and, subject to that right of appeal, the decision should be binding on all parties concerned. It also gives power to the Inland Revenue Commissioners to call for documents and information they require before giving a decision.
It may be that the Government may feel this is a matter which can be dealt with administratively without legislation. If that is so, I should be very glad to hear it and I would be happy to ask leave to withdraw the new Clause on such an assurance. I would only point out that the advantage which would result from dealing with the matter legislatively would be that it would be possible to bring an element of finality into it by virtue of the appeal to the courts. I can foresee that there may be difficulties, and there may be difficulties about drafting.
I conclude by saying that this matter, which has received very widespread support not only from both sides of the Committee, has, I understand, been considered and supported officially by the Law Society. I very much hope that the Government will be able to give the new Clause favourable consideration.
Mr. E. Fletcher: I wish to support briefly what my hon. Friend the Member for Lewisham, North (Mr. MacDermot) has said. I very much hope the Financial Secretary will be able to accept this

1535
new Clause and give us an assurance that the present anomaly, either in the law or the administration of the law, will be removed. The present position is quite anomalous. Whereas inspectors of taxes in the Income Tax Department are quite ready to express an opinion about hypothetical cases, the reverse is not the case with the Estate Duty Office.
I will give an illustration of a resultant absurdity which has arisen in a specific case quite recently. A certain gentleman, whose name I will not mention, desired to give a sum of £30,000 for research into human fertility. A trust deed of the trust was executed and the chief inspector of taxes passed the deed as constituting a good charitable trust, but, th donor being an elderly person, the question of estate duty became of importance.
If Estate Duty were to be chargeable upon this gift of £30,000 for research into human fertility he would withdraw, with the result that the trustees were hampered in dealing with the trust funds. The chief inspector of taxes having given his blessing to the donation, the Estate Duty Office was approached and asked if it also would take the view that this was a valid gift for charitable purposes which would be exempt from Estate Duty, provided the donor survived the period of one year after the date of the gift. Surprising though it may seem, the Estate Duty Office felt prohibited by reason of the decision in the case of Barnato deceased, to which my hon. Friend referred, from giving the information.
It seems ridiculous that one department of the Revenue should be prepared to pronounce very sensibly on a hypothetical question, but another department should feel inhibited from doing so. Therefore, I was glad to find that my hon. Friend and Members on both sides had put down this new Clause, and I hope that the Financial Secretary will either be prepared to accept it, or will be able to assure us categorically that all the necessary administrative arrangements will be made to enable the same result to take place as if the new Clause were embodied in our legislation.
1.45 a.m.
Mr. Page: I rise only to express support from this side of the Committee for this new Clause. It is an extremely anomalous
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position at present and if something could be done along the lines suggested it would be of great benefit.
Mr. Simon: The purpose behind this Clause has obviously gained the adherence of experienced hon. Members on both sides of the Committee, and I thought that a convincing case was made out for action. I cannot accept the Clause as it is, because the question whether a gift is given for a public and charitable purpose is not peculiarly an Estate Duty matter. It is a question of general law, and a pronouncement on it will affect the rights of citizens generally. Therefore, if only for that reason, the Commissioners of Inland Revenue are not proper persons to pronounce on such matters.
However, I think that a conclusive case was made out for taking administrative action to do what the hon. Gentleman and my hon. Friend wish to see. So far as I know, the refusal of the Estate Duty Office to give a ruling in the case which the hon. Member for Islington, East (Mr. E. Fletcher) mentioned, was an isolated case. I am prepared to regard it as an error and to give a categorical undertaking that the practice of the Estate Duty Office will be the same as the practice of the inspector of taxes and that an opinion will be given to the best of the ability of the Estate Duty Office in the sort of case he has in mind.
Mr. MacDermot: I thank the Financial Secretary for that categorical undertaking, and I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

Seventh Schedule.—(PROFITS TAX (TRANSITIONAL PROVISIONS).)
Mr. Stevens: I beg to move, in page 48, line 37, leave out from "dividend" to second "at" in line 38.
As I understand, the Amendment in page 49, line 8, to leave out "three-fifths" and to insert "two-fifths", is entirely consequential on the other one, and I suggest that it would be convenient to discuss them together.
The Deputy-Chairman (Sir Gordon Touche): Yes, and I think it would be for the convenience of the Committee also to discuss with them the two Amendments to line 15, and the Amendments to lines 20, 22, 27, 29, 31 and 46.
Mr. Stevens: The other Amendments could well be taken together, but touch on a rather different point from the two to which I have just referred. I will try to work my way through this jungle of Amendments, however, as best I can.
Coming back now to Profits Tax at a fairly late hour, I am wondering whether it would not have been for the convenience of the Committee if the Seventh Schedule, which deals with the transitional provisions concerning the change from the two rates to the one rate of tax, could have been considered shortly after Clause 20. We have got a little rusty on Profits Tax.
The main object of the transitional provisions of the Seventh Schedule is to prevent a company from escaping a certain liability to Profits Tax in cases where the dividend decision is taken after 15th April, 1958, when this change was known, where a company might consider artificially reducing the rate of dividend in respect of profits made before the Budget date and then, in the subsequent year, stepping up the dividend rate again so that the average would come out very nicely, and it would in that way escape a certain amount of Profits Tax.
I think that hon. Members on both sides of the Committee would agree that those transitional provisions are necessary, but I suggest that they go rather too far. Here again, I would be inclined to confine myself to the Amendments in page 48, line 37 and page 49, line 8, because the Amendments beginning at page 49, line 15 and ending at line 46 touch on another point.
The Deputy-Chairman: The Consequential Amendments to page 48, line 37, can be discussed, but they have not been selected to be called.
Mr. Stevens: Paragraph 3 of the Schedule gives a certain emergency exit—a way out—provided that not less than three-fifths of the profits of the company are distributed. Having regard to the incidence of Income Tax, and the 10 per cent. Profits Tax rate, three-fifths is a wholly unrealistic rate; it is very nearly the maximum amount of available profits which any company can distribute by way of dividend. For that reason my right hon. Friend, my hon. Friend and myself have tabled the Amendments. The
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Seventh Schedule as at present drawn applies the test of whether or not a reasonable dividend has been declared—a dividend in the next period after 15th April, 1958, compared with the standard period before 15th April, 1958—by relating the dividend to the capital of the company.
All sorts of things may have happened in the interim period to the capital of the company—bonus shares may have been issued—and so the percentage dividend declared in relation to the capital——
Notice taken that 40 Members were not present;
House counted, and, 40 Members being present—
Mr. Stevens: I was trying to deal with a rather complicated series of Amendments when that rather unfriendly intervention was made. It seems to my hon. Friends and myself that the much fairer basis would be to take the relationship of the dividend to the profits which have been earned than the relationship of the dividend to the capital, whatever the capital of the company might be.
Mr. Maudling: As my hon. Friend the Member for Langstone (Mr. Stevens) pointed out, it is important in these transitional provisions to ensure that dividends are not attributed to a year otherwise than that to which they would otherwise be attributed for the purposes of taking improper benefit from the reduction of the distributive profits tax. It is accepted that transitional requirements of this kind are required. I must admit that they are not perfectly tailored to every particular case. In making transitional provisions of this kind it is probably impossible to do more than what is generally right. I do not think that the proposals put forward in the Amendments are an improvement.
The general principle of the Schedule is to adjust the actual dividend paid by reference to a standard dividend in a standard period. There are two precautions against hardship arising. The first is that the deemed dividend will not be more than 60 per cent. of the profits. That is a high figure, but it is deliberately high because there is beyond that the second provision whereby if the fall in the company's profits continue they can, at a period of two years, claim an adjustment. I think that the main point

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is that the comparison shall not be with the standard dividend but based upon the percentage of profits distributed.
The form in which the Amendment has been put down would lead to a substantial increase in the total amount of Profits Tax payable. This, no doubt, was not the intention and hon. Gentlemen were doubtless thinking of cases in which company profits have been declining. I am advised that in these cases, if this were accepted, it could lead to a serious loss to the Revenue which, I am told, might be in the neighbourhood of £20 million.
To adopt the Amendment as it stands would not, I think, carry out the intentions of its supporters, and if the intention was to concentrate on cases where profits have fallen, would run the risk of a loss of revenue which is too great for the Chancellor to accept. While recognising that the transitional provisions are not perfect in every particular, the Chancellor does not feel this Amendment would improve them.
Mr. Stevens: I am not clear whether we have, in fact, discussed the Amendment to Schedule 7, page 49, line 10, at end to insert:
(4) Where a body or society proves to the satisfaction of the Commissioners that the dividend for the standard period is abnormally high, for a specific cause other than fluctuation in profits, so as to make it inequitable as a standard for the chargeable accounting period, the Commissioners shall make such reduction of the additional distribution as is just.
The Deputy-Chairman: That, as I understand, is a separate Amendment.
Mr. Stevens: I did not realise that this proposal would involve such a very large figure. Because of that, and in view of what my right hon. Friend has said, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
2.0 a.m.
Mr. Stevens: I beg to move, in page 49, line 10, at the end to insert:
(4) Where a body or society proves to the satisfaction of the Commissioners that the dividend for the standard period is abnormally high, for a specific cause other than fluctuation in profits, so as to make it inequitable as a standard for the chargeable accounting
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period, the Commissioners shall make such reduction of the additional distribution as is just.
This Amendment attacks the same problem from a rather different angle. It envisages the case where, for an exceptional reason, there has been a sharp fall in profits so that the provisions of the Seventh Schedule would lead to an unrealistic state of affairs.
It provides that the taxpayer could appeal, in these circumstances, to the Commissioners, and that the Commissioners should have the power to make such reduction of the additional distribution as in their opinion should be deemed to be just and reasonable. If my right hon. Friend cannot accept the batch of Amendments which we have just discussed, then I suggest that he should make what I might term an emergency exit for those special cases. I hope that he will say that he will be able to accept it.
Mr. Maudling: My right hon. Friend the Chancellor considers that this proposal is eminently reasonable, and he will table an Amendment himself, covering this principle, on the Report stage.
Mr. Stevens: I am very grateful to my right hon. Friend. In view of his promise, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Mr. Arbuthnot: I beg to move, in page 49, line 49, after "dividend" to insert:
"or in consequence of the application by the body or society to that purpose of any sums, whether distributable or not".
As my hon. Friend the Member for Langstone (Mr. Stevens) has pointed out, the Seventh Schedule contains transitional provisions designed to prevent companies avoiding the 30 per cent. rate of tax on distributions made out of the profits of periods up to 31st March, 1958, by artificially allocating to later periods dividends which, in fact, come out of those profits; or by unduly reducing the size of the dividends.
This is done in the Schedule by fixing a standard period and then providing, broadly speaking, that if the rate of dividend in the period between the end of the standard period and 1st April, 1958, is less than the rate for that

1541
standard period, the company shall be deemed to have paid an additional dividend; that is, a dividend to bring the rate up to that for the standard period, and to pay tax accordingly.
The Schedule provides for an adjustment if there is a change in the paid-up share capital of the company, but for this purpose bonus issues—and in my view, rightly—are disregarded since they do not involve the introduction of any new money. The purpose of this Amendment is to provide that increases in share capital due to the capitalisation of share premium accounts, or capital reserves, should also be ignored since they, too, do not involve the introduction of any new money.
Mr. Maudling: This Amendment, as I understand it, is designed to meet the point raised by the Institute of Chartered Accountants. My right hon. Friend the Chancellor is also prepared to accept the argument put forward and to agree to the Amendment.
Amendment agreed to.
Mr. Maudling: I beg to move, in page 50, line 20, to leave out, "before the passing of this Act".
There are three Government Amendments to the Seventh Schedule. They are designed to deal with the comparatively small point concerned with the revocation of grouping notices. They meet a point originally raised by the hon. Member for Southampton, Test (Mr. J. Howard). Under the Schedule, as drafted, the grouping notices can only be revoked if they were given before the passing of the Act. If, however, the principal company acquires a subsidiary shortly before 1st April it has until August or September to give a grouping notice and it may not be in a position to decide, before the end of July, whether or not it would be to its advantage to give a grouping notice in respect of the period up to 31st March, 1958.
There is no reason why the principal company should not be given the normal time within which to give a grouping notice for the period up to 31st March, still being able to revoke it for subsequent periods if it wishes to do so, but under the paragraph as drafted it would not be able to revoke the grouping notice
1542
for periods after 31st March unless it gives the notice before the passing of the Act.
This Amendment meets this point by deleting the words "before the passing of this Act", in paragraph 2 (1).
Amendment agreed to.
Further Amendments made: In page 50, line 33, leave out "before the passing of this Act".
In page 50, line 37, at the end add:
(4) This paragraph shall not authorise the revocation of any notice given after the passing of this Act, unless the notice has effect for a period beginning before the end of March, nineteen hundred and fifty-eight.—[Mr. Maudling.]
Schedule, as amended, agreed to.

Eighth Schedule.—(ESTATE DUTY (QUICK SUCCESSIONS).)
Mr. Simon: I beg to move, in page 51, line 45, at the end to insert:
(3) References in the foregoing sub-paragraphs to a sum of money or other property being received by the deceased on the earlier death include its being received by him under a gift inter vivos in respect of which estate duty was chargeable on the earlier death and to its being received by him on the distribution under a settlement of property in respect of which duty was so chargeable.
This is an Amendment to paragraph 2 of the Eighth Schedule, which deals with quick succession relief. The paragraph as it stands does not cover the case where the second deceased receives the money not on the death of the first person, when duty was paid in respect of it, but as a gift inter vivos or on the ending of a settlement. The Amendment rectifies this.
Amendment agreed to.
Mr. Simon: I beg to move, in page 52, line 15, to leave out from beginning to "and" in line 31 and to insert:
(3) Where there has been a purchase for a consideration in money or money's worth of an interest under the settlement, relief shall not be allowed on the death of a person who acquired his title to the property chargeable (or his interest therein) by or under that purchase, except by reference to the death of another such person, nor be allowed by reference to the death of such a person, except on the death of another such person.
(4) Where on the later death the settled property is chargeable with duty by virtue of section forty-three of the Finance Act, 1940.
The Amendment replaces paragraphs 3 and 4 by new paragraph 3 which is designed to achieve the same object but

1543
more effectively. The paragraph as drawn has a technical defect which I am prepared to explain to the Committee if hon. Members wish, but unless they so wish I do not propose to do so.
Amendment agreed to.
Schedule, as amended, agreed to.

Ninth Schedule.—(ENACTMENTS REPEALED.)
Mr. Simon: I beg to move, in page 55, line 49, column 3, after "given", to insert "on or".
This is a drafting Amendment to provide that the repeal of certain existing machinery provisions for the collection of Entertainment Duty shall have effect at the same time as the new machinery provisions in Clause 3.
Amendment agreed to.
Further Amendments made: In page 56, line 17, at the end, to insert:
"except in so far as it amends Part II of the Eighth Schedule to the Finance Act, 1948".—[Mr. Simon.]
Mr. Diamond: On a point of order. Was that Amendment moved by anybody, Sir Gordon? I did not hear it moved and I was trying to follow the debate very carefully. I agree that we are going very quickly, but I did not hear it moved.
The Deputy-Chairman: It was moved by a nod of the head.
Schedule, as amended, agreed to.
Bill reported, with Amendments: as amended, to be considered upon Monday next, and to be printed. [Bill 142.]

LONDON AND GATWICK AIRPORTS (PASSENGER TRANSPORT)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Legit.]
2.11 a.m.
Mr. William Teeing: The development of London Airport so very rapidly over the last few months, as well as the opening of Gatwick Airport, have made many Members want to ask Questions in the House about the Government's intention in relation to the transport of traffic to London Airport and Gatwick, from London Airport to Gatwick, and, of course, in the reverse direction.
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It has been found on more than one occasion that Questions could not be put down which would completely cover the subject on which information was required, or else that the Questions had to be altered to conform with the Standing Orders of the House. It was, therefore, suggested by the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation my hon. Friend the Member for Abingdon (Mr. Neave), that I should try to raise this subject on the Adjournment so that we might be able to get from the Government a little more clearly what are their intentions in the future.
Then again, we had the bus strike which made it necessary for people to alter their means of getting to London Airport. Those of us who travelled found that it was easier to go by train than by bus. Not so long ago when, instead of starting at Waterloo, the buses started at Gloucester Road, many people were dissatisfied with this change because at least at Waterloo one was near to a large railway station and to the Underground. From Gloucester Road one had to walk a considerable distance from the Underground and there was no big railway station nearby. For those of us who did not live in that area it was not a satisfactory state of affairs.
Perhaps the change from Waterloo to Gloucester Road was made because Gloucester Road was nearer to London Airport. But still, people had to get to Gloucester Road, and it cost them a considerable stun of money. The 5s. which was charged, and which annoys so many people, to travel from Waterloo still remains at that figure to travel from Gloucester Road, but it costs at least another 5s. to get that far by taxi. Then when the strike occurred passengers were told to go from Waterloo Station to Feltham by train. This cost only 2s. 6d. The ordinary train to Feltham took only 26 minutes to get there. Of course, if we were to improve on this and travel by trains which did not stop anywhere between Waterloo and Feltham, the time could be reduced considerably, possibly to 15 minutes.
Apart from the fact that the cost of travelling by train is only 2s. 6d. instead of 5s., there are buses running from Feltham railway station to the airport. Admittedly, that was not ideal because it had to be improvised during the strike

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period. But it can be done, and, indeed, it could be improved considerably and made much easier. I should like my hon. Friend the Parliamentary Secretary to look into that point.
Another matter which should be dealt with by the Ministry is the question of transport by taxi from the airport back to London. Mr. Alistair Cooke, in his broadcasts from America, has told us that that has caused immense irritation to Americans visiting this country because in America there is a regular fee for travelling by taxi from airports to the main centres of the towns; whereas there is no sign of any sort at London Airport to let foreigners know that a taxi, though it has a perfectly good meter, is not using it because it is outside a certain area in London and the driver can, therefore, charge practically anything he likes on the way back into London.
I ask my hon. Friend to consider this matter more seriously than the Ministry has done so far. He should arrange to put up notices at the airports so that foreigners visiting this country who cannot always be expected to know where to go or what to do, shall have more information. They expect the cost of a taxi to London to be a fixed cost.
One can travel by bus, now that the buses are back on the roads, but I have often found foreigners sitting in the buses being asked to pay the 5s. without having any English money with them. They have not had opportunity to change their money or seen where they could change it. I know that there are several banks at London Airport, but there has not, until recently, been anything whatever to show where one can change one's money on coming out at the Customs part of the building. The banks are a little further away and not always easy to find. In most other countries, there is just a bureau de change near the arrival point, and the changing of money is quite a simple matter. That is not so here.
I have asked more than once for something to be done, and, on the last occasion, I was assured that something had been done and there were notices now displayed. A week after that date, I was returning from Ireland, and, on arriving at London Airport, I looked everywhere where such notices could pos-
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sibly be and I found none. Admittedly, these are small points, but they mean something to visitors coming to this country from abroad, and they could be cleared up. There are much more serious matters, and I will come to them now.
First, there is the closing of Croydon. The practice which has developed in America of executives of big businesses having their own aircraft which they use for their own purposes, flying across the Continent, is beginning to grow here, and businessmen in this country similarly are beginning to maintain their own aircraft for use in flying to the Continent, for example.
They have been using Croydon, and now Croydon is to be closed. They have been told that they can go to Biggin Hill, or that there is the possibility of part of Gatwick being put at their disposal. I should like to know what the latest information about that is. Many of them would find Gatwick rather far away, and they want to know something more definite about it.
Again, those sort of people sometimes find it very important to send messages down from aircraft to people in London, to make arrangements to be met, or generally to make appointments. We have been told that it is very difficult to have this form of telecommunication between aircraft and land, but I have been informed by at least one hon. Member of this House, who is a director of a private air line, that it is quite possible to do it and his company always does it, communicating with Newcastle or wherever the aircraft is to land. I feel that this is something which the Ministry should try to develop.
There is talk of possible monorail connection between London and London Airport. What can my hon. Friend tell us about that? All that I have been able to ascertain is that there is in this country a company called International Monorail, which has a branch in London called Railplanes Limited and another in France called the Société Lyonnaise des Eaux et de L'Eclairage. The French company, which is closely linked with the London one, has already started an experiment for a monorail at Chateauneuf sur Loire which is to be ready by 1st July, 1959. The French Government have given £100,000 towards the £200,000 which will be required to try this out.

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If it is successful, the company is ready, I understand, then to work on a monorail here to London Airport. It has, I understand, discussed this on more than one occasion with the Ministry of Transport and, Civil Aviation. I should like to know the Minister's feelings about this matter. I gather that it would go from Paddington, would take about 15 minutes to get to London Airport, and would cost about £15 million. I presume that it would take a little time before that was done. I believe that the Government have plans for road development, which would mean that within half an hour one could get there by road.
Equally important is the question how to get to London Airport from Gatwick. There will be tremendous developments at these airports and people landing at one may well wish to get to the other as quickly as possible. The Government have not yet asked this monorail company to give any figures for getting from London Airport to Gatwick. It may well be that that would be a quick method of getting there. Another method would be by helicopter. I would like to know what the Government have in mind.
How is Gatwick to develop? At the moment, I understand, traffic is mostly to the Channel Islands, with a little trickle of air traffic to France. One hears rumours, or almost promises, that B.E.A. intends to use it as the main airport for the Continent. If that is the case, I would be grateful if my hon. Friend the Parliamentary Secretary could tell us how soon this is likely to happen. It means a great deal to people on the South Coast, and especially in my constituency, which could fairly be called the next biggest town to London in this particular area.
It takes about 25 minutes to go by train from Brighton to Gatwick, and about 35 minutes from Gatwick to London. If, as will surely happen, we find ourselves fog-bound during the winter, with a clamp-down on London Airport, people may have to land at Gatwick. It may well be that hundreds of people will be left stranded, overnight, unable to get to London and uncertain of hotel accommodation, whereas, at Brighton, 25 minutes away, there is accommodation all ready. But we want to know something about the likelihood of future developments, to be prepared
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to meet a possible influx of visitors, even if they come only for one night.
People who live on the South Coast—and there is a gradual move from London in that direction—would find it ten times easier and more pleasant to go via Gatwick than having to get to London and London Airport. It takes not much short of three hours to get from Brighton to London Airport. We are, therefore, most anxious in my constituency to know something of these possible developments.
With so many people travelling up to London from the South, people in the Redhill area, on the Southern Region, find that it is almost impossible to get a seat on a train, because they have been taken by travellers from Worthing, Littlehampton, Hove, Brighton and Eastbourne. If it could be arranged to have fast trains stopping only at Gatwick and then going straight through to London, people in the Redhill and Three Bridges areas feel that this would help their chances of getting seats on trains in the mornings and evenings.
These points, large in number, are of vital interest to people at present, especially in my part of the country. I am most anxious that we should know what is in the mind of the Government about these matters.
2.25 a.m.
The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): I congratulate my hon. Friend the Member for Brighton, Pavilion (Mr. Teeling) on his good fortune in having this opportunity to raise this interesting topic, even if it is at a somewhat inconvenient hour of the morning. I would like to say a word about our general policy concerning provision for the surface links between London Airport and Gatwick and Central London and then to deal with the detailed points raised by my hon. Friend.
First, let me make it quite clear that our policy is to provide the best possible surface links between London Airport and Gatwick and Central London. We are in no doubt that London Airport in particular and, progressively, Gatwick are to this country ports, in the best sense of the word, of major importance and that the final link with Central London is just as important as the air service itself.

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I will deal, first, with the London Airport link to Central London by road. The Cromwell Road extension has been in course of building for the last few years and the greater part of the work on the present phase has already been done and is in use. It should be finished towards the end of next year, in about eighteen months' time. The total cost of that work will be about £4½ million.
At present, the time for a coach running from the Cromwell Road air terminal to London Airport is about 40 minutes. When the rest of the work on the Cromwell Road extension is completed, it will be down to under 35 minutes. That is not bad if it can be achieved with reasonable certainty and I think that with the big improvements now taking place on that road, which will make for easy traffic flow throughout, those times are conservative.
The next phase on that road is to build a flyover at Hammersmith in place of the circulatory system which is, incidentally, just coming into operation. That preparatory work is now in hand and the scheme will take three or four years to complete. The problem of acquisition of property, and so on, in Hammersmith is considerable, but the work is going ahead. It is authorised and it will make another substantial improvement.
The final section is the beginning of the South Wales Radial from the end of the Cromwell Road extension at the Chiswick flyover, where what will be in effect a new motorway will be starting, running out to the West and linked up with the Slough and Maidenhead bypasses. The first stretch of that road will be a double-decker effect over the existing Great West Road. That will run for a mile or two on the double-decker principle. It will then swing off to the North and fly over the factory area, coming down in the open countryside to the North, and then pass on out to the West with a spur off to London Airport. The draft scheme for this will be published on Monday next.
When these two projects are completed, it is estimated that the travelling time from Central London to London Airport will be down to 23 minutes, which is rather better than the half-hour predicted by my hon. Friend. No one will deny that that will be a first-class road link which could not be bettered. It will be
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completed to that standard within the next few years.
One question of a rail link between London Airport and Central London, the British Transport Commission has worked out an outline scheme for a conventional rail link from Victoria to London Airport via Clapham and Feltham. It would, of course, be an express service and it would involve the building of a good deal of extra line. The cost, including underground work at London Airport, is estimated to be between £16½ million and £18 million—in other words, a costly scheme. This scheme is not included in the Commission's modernisation programme, and its construction would depend on its being an economic proposition on its own account. We could not visualise any element of loan or subsidy in it. The journey time would be 22 minutes. It would be an express service.
Turning to the monorail, to which my hon. Friend referred, there are now three groups interested in promoting the monorail link between Central London and London Airport. They have all been invited by us to submit detailed schemes showing methods of construction and operation, costs of construction and operation, sources of finance, methods of meeting safety standards, etc. We are now awaiting their response submitting their schemes in considerable detail. When we have received these schemes we shall compare them, and compare them with the picture of the conventional railway. In the event of approval in principle, at this stage of the monorail link, this new form of transport, it will, of course, be necessary to have extended field testing, which would be needed to establish the safety factors involved in monorail travel.
The three groups are, first, the one headed by my hon. Friend the Member for Maidstone (Sir A. Bossom), the group combined with the German interests. The principle of their scheme is a coach which travels on a smooth topped reinforced concrete rail and it has the special virtue that the coach is interchangeable, to travel either on the rail top or to run on the ground surface as well.
Secondly, there is the International Monorail, Ltd., system, to which my hon. Friend referred. Their coach, I understand, is suspended from an overhead rail. I was interested to hear my hon. Friend

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say that the figure of £15 million was put on that scheme.
Then there is Mr. Wolstenholme's scheme for a lightweight railway running in a geodetic tube framework.
The journey time by the monorail system is estimated to be from 15 to 20 minutes.
As to the prospect, it is most difficult to say. I had the interesting experience of paying a visit to Cologne to see the full-scale working model they have there. It runs for about a couple of kilometres on a rail. My personal impression was that that was an idea of great interest and promise. It certainly works. There is no question about that, but what has not yet been done is to develop this monorail scheme as a full-scale commercial operation, and there are obviously huge difficulties in doing that.
Nevertheless, here are these enterprising men who are prepared to finance and try out an enterprise, and I think that they are to be congratulated on their courage and enterprise. There is, of course, the attraction to us in the Government that, apart from providing a rapid and comfortable link between London Airport and Central London, this project would be financed by private money and would be no burden upon public funds. But it is still in the future. We shall know shortly what they can put up, and then my right hon. Friend will decide whether we can entertain one of them or more in principle.
The Gatwick rail link utilises the main Brighton line. It has two stops on the 26½ miles to London and covers the journey in 40 minutes. The fast service runs half-hourly. There are also two further slow trains per hour which stop at Gatwick Airport. It is apparently just not possible to run an express train from Gatwick to London in anything like economic circumstances. The volume of traffic using it simply would not justify an express train, and at present, with that very active line, it is necessary to have these two stops to discharge the passengers using it.
The new station which adjoins the airport has been generally approved by all who have seen it, and the new airport straddles the main road. At present, passenger traffic from the airport is light,
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but the British Transport Commission and B.E.A. will watch closely the future development of passenger traffic there to ensure that there are adequate services to meet passenger needs as they develop. I have no doubt that the offer that my hon. Friend made that visitors who arrive at Gatwick might stay the night in Brighton will be an additional attraction to go to Gatwick rather than to London Airport.
As to the future of Gatwick, B.E.A. have transferred to Gatwick at present only their Channel Islands services. Further transfers will depend on their experience on these Channel Islands routes and on the pressure of increasing traffic at London Airport. In winter months Gatwick will also be brought into operation for bad weather diversion from London Airport.
On my hon. Friend's point about taxicabs at London Airport, I agree that there have been unfortunate experiences on the part of visitors who do not understand the arrangements here. I am glad to be able to tell my hon. Friend that byelaws are about to be promulgated governing taxi-cabs standing on ranks at London Airport so that they will be under the same regulations as those in the Metropolitan area, as made by the Metropolitan police. The effect will be that fares must be accepted and the driver will be bound by the meter tariff up to six miles. If the journey is over six miles it will be open to the driver to make a special bargain. He must tell the passengers before the journey starts that the journey is greater than the distance over which he is bound to go by the meter and that he wishes to make an individual bargain.
Mr. Teeling: Does that apply vice versa, in taking a taxi out of London?
Mr. Nugent: Yes, it does now. The taxi driver is bound, by Metropolitan regulations, to do that now.
The link between Waterloo and London Airport going by Feltham was entirely an emergency arrangement during the bus strike. The service would use the existing suburban rail service, which, of course, is a stopping service, and I am sorry to tell my hon. Friend that there is no room on that heavily occupied line to run an express service without building

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an additional rail, and it would be impossible to envisage the amount of service involved. The time taken on the rail-bus link is 56 minutes and the cost is 2s. 4d. for the rail journey.
The bus fare was not charged during the period of the emergency, but if it were the total cost would be rather more than 5s. The disadvantage is that the time is longer than 40 minutes from the Cromwell Road, and it is impossible to run the service to tie in with the plane services, whereas the coach services from the Cromwell Road run on air schedules and each coach takes a load of passengers and is run in this convenient fashion.
A helicopter service was tried out as an experimental service from the South Bank to London Airport from 1955 to 1956. Useful lessons were learned, but at present B.E.A. has no plans for an airport-to-city-centre service by helicopter. As for a helicopter service to Gatwick, the present demand for travel
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between London Airport and Gatwick is so light that it would probably not justify an organised service like that, which would be expensive in any event. But both B.E.A. and ourselves will watch the possibility of a link there to see whether it is necessary. If there is a real demand in future which would justify an organised service we shall certainly see that in one way or another it is brought about.
My hon. Friend mentioned the signs for the bureau de change. I understand that there are printed notices mounted on the railings at the exit to each arrival channel.
The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. SPEAKER adjourned the debate without Question put, pursuant to the Standing Order.
Adjourned at nineteen minutes to Three o'clock.

  KOREA (CHINESE NOTE)
  KOREA (CHINESE NOTE)
ROYAL NAVY
  Fishery Limits, Iceland (Extension)
  Fishery Limits, Iceland (Extension)
  Oil in Navigable Waters Act, 1955
  Oil in Navigable Waters Act, 1955
  Merchant Shipping (New Launchings)
  Merchant Shipping (New Launchings)
BRITISH ARMY
  Unexploded Shells, Pateley Bridge
  Unexploded Shells, Pateley Bridge
  Bomb Explosions, Canford Heath
  Bomb Explosions, Canford Heath
  Wallington Hill, Fareham (Road)
  Wallington Hill, Fareham (Road)
TELEPHONE SERVICE
  Accounts (Payment)
  Accounts (Payment)
  Trunk Calls, Taunton (Automatic Dialling)
  Trunk Calls, Taunton (Automatic Dialling)
POST OFFICE
  Telex (Delivery of Overseas Telegrams)
  Telex (Delivery of Overseas Telegrams)
ROYAL AIR FORCE
  Oil in Navigable Waters Act, 1955
  Oil in Navigable Waters Act, 1955
MINISTRY OF DEFENCE
  North Atlantic Treaty Organisation
  North Atlantic Treaty Organisation
SCOTLAND
  Road Schemes
  Road Schemes
TRANSPORT
  Transport Users' Consultative Committee (Report)
  Transport Users' Consultative Committee (Report)
SHIPPING
  Oil Pollution, Cornwall
  Oil Pollution, Cornwall
  Wrecks, The Wash (Removal)
  Wrecks, The Wash (Removal)
RAILWAYS
  Electrification Projects
  Electrification Projects
  Unremunerative Services (Withdrawal)
  Unremunerative Services (Withdrawal)
  Passenger Fares
  Passenger Fares
ROADS
  Improvement Schemes, Somerset
  Improvement Schemes, Somerset
  Parked Vehicles (Removal by Police)
  Parked Vehicles (Removal by Police)
CIVIL AVIATION
  Collision Risk
  Collision Risk
COMMONWEALTH RELATIONS
  The Lebanon (Consultations)
  The Lebanon (Consultations)
BOARD OF TRADE
  Industrial Building
  Industrial Building
  Agricultural Machinery Industry, Aberdeen (Exports to South America)
  Agricultural Machinery Industry, Aberdeen (Exports to South America)
EDUCATION
  New Primary Schools, Wednesbury
  New Primary Schools, Wednesbury
HOME DEPARTMENT
  Parkhurst Prison (Letter to Member)
  Parkhurst Prison (Letter to Member)
  Eastern European Nationals (Visas)
  Eastern European Nationals (Visas)
PENSIONS AND NATIONAL INSURANCE
  Retirement Pensioners, Abertillery (Supplementary Allowances)
  Retirement Pensioners, Abertillery (Supplementary Allowances)
SCIENTIFIC AND INDUSTRIAL RESEARCH
  Fuel Abstracts
  Fuel Abstracts

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

THE DIOCESE OF ROCHESTER
2.35 p.m.
EARL STANHOPE: 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 what steps are necessary to apply the principles laid down by the Church Commissioners as requisite for the creation of a Suffragan Bishopric to the Diocese of Rochester, and whether they will do everything in their power to hasten the provision of this assistance to the overburdened Bishop of this See.]
THE LORD CHANCELLOR: My Lords, the Church Commissioners are not empowered to lay down principles for the creation of new Suffragan Sees. Their responsibility in relation to Suffragans is limited to the payment of stipends. The question of the creation of a new Suffragan Bishopric for the diocese of Rochester (which would require an Order in Council under the Suffragans Nomination Act, 1888) is under consideration by Her Majesty's Government.

THE OXFORD WESTERN BY-PASS
LORD LUCAS OF CHILWORTH: 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 if they will now state the date upon which tenders will be invited for the work necessary to complete the Oxford Western By-pass; the date on which the work will be started and the date on which the by-pass will be finished and open to traffic.]
THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT): My Lords, tenders for the Oxford Western By-pass will be invited by the Berkshire County Council, as agents for the Minister of Transport, on the day after to-morrow, the 4th July. It is expected that Work will start on 1st November and I hope that the by-pass will be completed by April, 1961.
LORD LUCAS OF CHILWORTH: My Lords, would the noble Lord accept my grateful thanks for the helpful nature of his reply, and may I assure him of the satisfaction with which it will be received? But may I ask him why it is that if 153 miles of six-carriageway motor road from London to Birmingham. with 129 bridges, can be completed, according to the Minister of Transport and Civil Aviation, in nineteen months, the three and a half miles of the Oxford Western By-pass, having only five bridges and one viaduct is to take twenty-eight months to complete?
LORD MANCROFT: My Lords, when the noble Lord compares the Oxford-Western By-pass with the London-Birmingham motor road, he is not quite comparing like with like. The Oxford-Western By-pass is a much more complicated engineering project than the London-Birmingham road. The Oxford project involves the construction of thirteen bridges including a very complicated one of 116 feet over the Thames. It also involves the construction of the Wolvercut viaduct, which is a major engineering project, over the railway, the canal and the A.40 main London-Fishguard road, nearly 1,000 feet in length. Incidentally, I have placed in the Prince's Chamber a drawing of the viaduct, from which your Lordships will be able to see just how complicated an engineering problem it is. No such complicated engineering feats are required on the London-Birmingham motorway.
LORD LUCAS OF CHILWORTH: My Lords, would the noble Lord again accept my thanks for his helpful answer? May I ask whether it is intended to present the most delightful drawing at present in the Prince's Chamber to those who have laboured these last ten years to get this By-pass started?
LORD MANCROFT: My Lords, unfortunately, no. After the trouble I had with the models placed in your Lordships' Chamber some time ago, it was only with the greatest difficulty that I persuaded my right honourable friend the Minister of Transport and Civil Aviation to lend me that picture.
EARL HOWE: My Lords, may I ask the noble Lord whether he would say that the Oxford-Western By-pass is a more complicated engineering problem than that with which the contractors have had to deal on the London-Birmingham motorway, of erecting thirty-eight bridges in about half that time?
LORD MANCROFT: My Lords, yes, that is precisely what I was trying to convey.
LORD HAWKE: My Lords, may I assure the noble Lord, Lord Lucas of Chilworth, that he is very lucky if one compares this project with the Hand-cross By-pass on which two miles of construction have taken twenty years?

ARCHBISHOP MAKARIOS AND THE, LAMBETH CONFERENCE
EARL HOWE: 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, in view of the statement of His Grace the Most Reverend Archbishop of Canterbury about his invitation to Makarios to attend the Lambeth Conference that he sought the advice of Her Majesty's Government, it can be stated what Department or which Minister was so consulted and, if so, what was the nature of the communications which took place, and whether it is a fact that Her Majesty's
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Government never gave any indication that Makarios would be an undesirable visitor.]
THE MINISTER of STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): My Lords, early in the year the Colonial Office were informed that Makarios was among those whom the Archbishop of Canterbury proposed to invite. Shortly before the invitation was despatched, the Colonial Office and the Foreign Office were both informed. The Archbishop of Canterbury's representative was advised that in the judgment of Her Majesty's Government the matter was an ecclesiastical one.
EARL HOWE: My Lords, may I ask the noble Earl whether it is not a fact that this invitation became public just about the time when the Archbishop was reported to have said:
" Responsibility for the bestial vandalisms in Cyprus rests not only with the barbarous Turkish mob, but equally if not actually more with the British administration, with whose connivance or blessing this frightful orgy of blood, arson and spoliation is being perpetrated."?
Does the noble Earl really tell us that Her Majesty's Government blessed the invitation to this fellow?
THE EARL OF PERTH: My Lords, there was no question of Her Majesty's Government blessing or not blessing the invitation. On the question of timing, I believe I am right in saying that the invitation was issued before Archbishop Makarios made his statement.
EARL WINTERTON: My Lords, may I ask the noble Earl whether it is not abundantly clear from his Answer that Her Majesty's Government, very properly, took no responsibility for this visit, and that the responsibility was solely that of the Archbishop?
THE EARL OF PERTH: My Lords, that is correct.

THE HOSPITAL SERVICES
2.42 p.m.
LORD NATHAN LORD NATHAN rose to call attention to the hospital services; and to move for Papers. The noble Lord said: My Lords, it is very appropriate that this discussion should be held this week, because it marks the tenth anniversary of the coming into operation of the National Health Service. It is an appropriate moment at which to review certain aspects of the National Health Service. The coming into force of the National Health Service Act marked a revolution in many ways in the social life and habits of the country. It affected vast numbers of the population; it had a striking influence upon the standing and procedures of the medical and dental professions and upon the nursing profession. It was a central feature in what, from that time onwards, has been known as the "Welfare State"; if not the central feature, it was at all events a central feature.
It would be too wide a range if I were to attempt to-day to cover the whole ground of the National Health Service. I propose, therefore, to limit myself to a field which is well defined and pretty precise; that is, the hospital services. I propose, so far as I am concerned, though other speakers will no doubt touch on other aspects of that subject, to limit myself to the experience which I personally have had of an undergraduate teaching hospital here in London. I have for about a quarter of a century been actively concerned as a governor of such a hospital. After being for a time vice-chairman, I became, ten years ago, as many of your Lordships know, Chairman of Westminster Hospital—Parliament's own hospital. It is from the vantage point of that experience that I venture to address your Lordships to-day.
I have nothing to say that is, at least in a political sense, at all controversial—indeed, I have not a great deal to say that is controversial even in a nonpolitical sense. As we look back over a period of ten years of experience in the hospital world within the National Health Service, I think it can fairly be claimed that the situation has clarified and improved; and that, although there are undoubtedly matters upon which the administration can be criticised and points at which it can be improved, on
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the whole the Ministry are entitled to have our congratulations on having performed a new and a difficult task—I stress particularly a new task—with general satisfaction. It was difficult for them to come to an entirely new subject matter outside the range of previous ministerial experience, and on the whole I think that they have adapted themselves pretty well. Therefore it is within the general temper of friendly congratulation to the Ministry and to ourselves, the hospitals, that I approach this subject.
I think it will perhaps be interesting to your Lordships that I should say a word about the subject in its quantitative sense, in order to indicate the dimensions of the problem and also the changes that have taken place quantitatively during the last ten years. For instance, so far as the teaching hospitals are concerned, whether within or outside London, both post-graduate and undergraduate hospitals, there has been no increase in the number of hospitals; there has been a slight marginal increase in the number of beds. The number of beds has increased from rather over 26,000 to very nearly 28,000, an increase of 5 per cent. That is over the whole range of teaching hospitals throughout the country. In the non-teaching hospitals, including mental and mental deficiency hospitals, the beddage has increased, very slightly, from 475,000-odd to 481,000-odd, an increase of approximately 1 per cent. That increase has been almost entirely, and rightly, in the mental hospitals. As regards bed-occupancy, after all, what one wants to know is how beds are being used and whether they are being used; and for my part I find it interesting to note that the bed-occupancy in the teaching hospitals, at just over 80 per cent., is almost constant now compared with what it was in 1949; whereas in the other hospitals, the non-teaching hospitals, the bed-occupancy has increased from 79 per cent. to 83 per cent. I think that those of your Lordships who have experience within hospitals will agree that when a hospital has a bed-occupancy of 80 per cent.-plus it can be regarded as being full. Certainly with a bed-occupancy of 85 per cent. a hospital would be full.
The number of the medical and dental staffs has increased, taking the country as a whole, by about 30 per cent. It is also interesting to note that in the teaching

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hospitals the number of nurses has increased by 20 per cent., and in the non-teaching hospitals by not more than 10 per cent.
It is also interesting to observe that the total number of nurses in the various hospitals now is approximately 155,000, which is not much less than the total number of the newly streamlined Army of which we were speaking in a debate the other day. I doubt whether it is fully realised that the number of nurses in hospitals is about the same as the number of soldiers in the Army. The administrative staffs have gone up by only about 20 per cent., notwithstanding the very wide range of new responsibilities that have been placed upon hospitals, mostly in connection with demands made by the Ministry for this and that in the processes of administration.
I ought to have told your Lordships earlier the interesting figures as regards out-patients. In the teaching hospitals they have gone up since 1949, when they were about 7½ million, to, in 1956—the last figure I have—9½ million. In non-teaching hospitals, where the figures are not strictly comparable, the number of out-patients was about 18½ million in each year. I have given those figures to your Lordships partly because it seemed to me interesting, and perhaps important, to note what changes have taken place and also to know what the quantitative importance of this problem of hospitals is. At least your Lordships will agree with me that it is a matter affecting vast numbers of people and it is of the first importance that the hospital service should be in all its aspects well run and progressive. I feel, from the point from which If have been able to regard hospital service, that too much cannot be said in praise of the assiduity and devotion of the medical staffs and of the nursing staffs; and the administrative staffs of the hospitals have, of course, played their full part.
There is, however, one aspect of service to hospitals about which I have found here and there some misconception and which I for my part regard as important. In a long experience I have realised the enormous value attaching to voluntary service and, speaking from my own experience, I can certainly say—and it is curious, but very satisfactory to be able to say it; I should scarcely have expected it would be so—that the number
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of volunteers giving voluntary service in the hospital with which I am most familiar is greater than at any previous time in the 250 years' history of the Westminster Hospital. That shows that people will not consent to be deprived, whatever the change in circumstances, of the opportunity for voluntary service; and if they cannot perform it in one direction they will find another in which to do so. I regard that as one of the most satisfactory features of the hospital service as it has emerged under the new Act.
My Lords, you will say in regard to the figures I have given, "What about the total cost of it all?" I am bound to say that throughout the period every one of us responsible for administering hospitals has had to allow "I would" to wait upon "I can", for expenditure, both capital and maintenance, has gradually been becoming more and more restricted, at any rate so far as certain of the hospitals are concerned although there are indications that, taking the expenditure globally, there may be some expansion at all events in capital expenditure in certain directions. As regards capital expenditure, the Guillebaud Committee found that hospital capital expenditure in 1952–53 was only about one-third of what it had been in the pre-war year 1938–39. There has been a great reduction between the immediate pre-war and post-war years. It is true that there has been an increase since the Guillebaud Committee reported, but still only £20 million was allocated for such expenditure, which is a long way from the £30 million recommended by the Guillebaud Committee as a suitable figure.
I want to say to your Lordships that a careful eye must be kept to see that capital expenditure is not unduly restricted. There was undoubtedly a tendency in past years, before the war, when money was scarce and had to be culled from the pockets of individual well-wishers, to build hospitals as small as might be, just sufficiently large for the needs and purposes for which they were required. But experience has shown that although at the moment there has been no appreciable increase in the number of beds, the requirements for space have grown very greatly: new techniques have been developed, more laboratories are required, the coming young men of the medical profession require an opportunity for seeing what

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fresh disciplines they can create and what fresh methods they can adapt for helping the patient, who, after all, is the first concern of the profession and of all those engaged in the service of the hospital—" How can we best help the patient? "
As things are, the running costs for 1958–59 are estimated at just under £400 million; that is, at about 4 per cent. more than in 1957–58. But when the difference in the value of money is taken into account, £400 million in 1949–50 would now require some £480 million to provide the same service. When we survey the cost of the medical service as it falls upon the Exchequer I think we should, before criticising it and deploring it as so many do, try to form some idea of what in the pre-war years was spent by the nation on similar services; what proportion of the national income is now represented by the National Health Service as compared with that part of the national income expended on the same services before the new medical service came into operation. There are no scientifically accurate figures upon that subject, because this was a matter of private expenditure out of the personal pockets of the patients, but I should be very much surprised to learn that the expenditure falling on the country at this time is appreciably more than it was in the years before the war. At any rate, it is a subject which would, I think, be well worth some inquiry.
I was saying just now that new developments in surgery and treatment generally demand increased space. I have had this problem brought before me with great emphasis. I will give your Lordships a simple example of the sort of thing that arises. For instance, provision has now to be made in the anæthetic room for emergency surgery for heart massage, and also there is a requirement for such modern apparatus as the artificial heart and the artificial kidney. These take up quite a large area and it must necessarily be aseptic. In my own hospital, we have brought to this country the latest installation, called the Theratron, which deals with cancer. That has had to be installed in the hospital without any appreciable increase in the area available. It is a large installation; at is a life saver; it is a principal instrument
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in the fight against cancer. Without space we cannot have that sort of installation. It was only by a clever adaptation by the architects that we have managed to find space for it, and only then, as some of your Lordships may have seen as you have passed by, by placing one of the departments in an otherwise derelict field. I would press upon the Ministry that in building new hospitals they should have regard to the urgent necessity not for limiting their building to the space actually required at the moment but for exercising a certain imaginativeness, so that they can provide in anticipation for what is likely to be required in the future.
I am worried about whether the Ministry are really justified in pursuing the course which they have been pursuing for some time—that is, coming to hospitals who have their own endowment funds and saying to them: "We recognise that you require additional buildings: we know that Parliament has placed upon the Ministry a duty to provide proper services; but you have these private endowment funds set aside by Parliament for hospital purposes and research and we feel that we, the Ministry—or the Treasury—cannot, or should not, provide money for building unless a contribution is made out of the private endowment funds of the hospital." So far I have resisted that, although some of my colleagues in a similar situation have succumbed, it may be for greater good: but I believe that that is a procedure open to grave criticism and that it should receive reconsideration on the part of the Ministry. It means that private funds are being used to subsidise expenditure the responsibility for which Parliament has placed upon the Ministry. I cannot think that that would be in accord with what was anticipated at the time or with what Parliament would approve now.
Hospitals are a subject upon which one could speak for a great length of time. Before I sit down, I would only say to your Lordships a word upon one other aspect of the subject—that is, the extreme importance of research, and research not merely in laboratories forming an integral part of individual hospitals but also resulting from sending medical men or members of the nursing and administrative staffs to other parts of the world to find out what is happening there.

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In my own hospital in certain instances, when a new man is appointed as a consultant in a speciality, we have adopted the practice of saying, "First of all, we want you to go away for six months and see what you can learn about the latest methods elsewhere, and then come back and start here with your new appointment.'" I am bound to tell your Lordships that that has paid an admirable dividend. It was a risk, but a risk that has proved to be well worth while.
I must impress upon your Lordships the necessity for space as well as for research, because the two things are closely linked together. The fact of the matter is that, as experience shows, or seems likely to show, we cannot retain in our hospitals or in this country the right young men upon whom the future of medicine and surgery, and in fact the future of the ailing population, depends, unless we provide them with adequate remuneration and what to their minds is, and is rightly, even more important—the opportunity of developing their powers and their careers within their profession to the utmost. They feel, as I know too well, that now they are being restricted as regards space and facilities, and the temptations offered to them by higher rewards and more adequate facilities on the other side of the Atlantic are temptations which they may find—and there are indications that they are finding—increasingly difficult to resist. That is a grave matter for the future of the medical profession, for the future of the hospitals and also for those for whose service the hospitals exist.
Within a few minutes almost I have tried to present to your Lordships some of the reflections that have occurred to me as a result of a long experience in a London teaching hospital and of viewing the hospital service from that standpoint. I conclude by saying to your Lordships that I am increasingly impressed by the devotion of those in every range of the service who make it their life's task to do the best for the patient. We all receive many letters of thanks, some from those who are able to express themselves with great eloquence and some from the simple and humble. The reward for all those engaged professionally and administratively is to know that they have—as indeed they have—in the hospitals the good will of the patients for whose service the hospitals exist. My Lords, I beg to move for Papers.
3.8 p.m.
LORD AMULREE: My Lords, I think your Lordships must agree that the noble Lord, Lord Nathan, has put us into great debt by bringing before us this Motion today. I think it is appropriate, when the National Health Service has been working for about ten years, that we should have an opportunity of discussing some of the facets which present themselves. I am extremely pleased to be following the noble Lord because whereas he has been the Chairman of one of the big London teaching hospitals for many years, I am a member of the medical staff of one of the big London teaching hospitals. I am bound to say that there is nothing which the noble Lord has said with which I do not entirely agree. I think he has put forward a good case and I entirely support every word he has said—which will mean that I shall not need to address your Lordships at any great length, as I might have done if I had not been in agreement.
What I would like to do is to go a little farther afield and say a few words about the hospital position in general. I think that all who have visited hospitals around the country must agree that there has been a considerable improvement in the hospital service during the ten years during which the National Health Service has been running. There are a great many hospitals that were rather poor,
but which have now become very good. This refers largely to some of the old municipal hospitals which, really by no fault of the municipal authorities, had not been given opportunities to progress as they should have done, because of the depression of 1931 followed by the war in 1939. Nevertheless, a great amount of excellent work has been done in improving these municipal hospitals and also some of the other hospitals that were not so good. Another fact which I feel is interesting is that at the present time there has been no corresponding falling off in the work of the good hospitals. So that I think we can say that the balance is very much in favour of what the National Health Service has done for the hospital service in general.
There is one thing, however, about which I am a little frightened and worried for the future. Supposing that too rigid a ceiling (as it is called) is placed on the amount of money available for the hospital service, then I think that inevitably we are bound in time to get some

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kind of falling off. It must be realised that medicine is a very expensive work to carry out properly and well. It is something on which one can economise, but one cannot avoid spending money. I am sure that it is most important now that every attempt should be made to run the hospitals as economically as they can possibly be run, so that there will be enough money available for improvements which will inevitably be needed in the future. If such improvements are not adopted or accepted by the hospitals, then it will mean that the service will in a short time become a second-rate one. At the present time one finds many drawbacks in hospitals. One great drawback, it seems to me, is a lack of facilities available for the surgeons who carry out the innumerable operations that are now performed. In the past operations were numerous, but not so numerous as they are now; and, of course, they were far less complicated. I am sure that to-day there are a large number of hospitals in which the surgeons have to do their surgery under conditions—I will not say of great difficulty, but certainly of some discomfort. One would like to see more progress made in that respect, if possible, by sensible economies in the running of other parts of the hospital.
One point that I have never regarded as of great importance is the fact that, as one sees stated in some quarters, the hospitals in this country are not very modern buildings. I have never thought it necessary to have a brand-new building to do first-class work: so long as there are good equipment and good staff, and the building is structurally sound, I am not at all worried by the fact that new hospitals have not been put up in place of some of those which have been there for a number of years but which are working quite well. The branch of the hospital of which I have had experience was built in 1874, I think, as part of an old poor law hospital. We have done a great deal of work internally, changing it round, but the actual structure, which, as I say, was built in 1874, is as strong as ever; and I think it would be a pity to say that, merely because the building is getting on for eighty years old, it is old-fashioned and not very satisfactory.
The same thing applies to the talk about building new hospitals. I am not
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at all convinced that, except in one or two parts of the country, there is a great demand or need for more beds than exist at present. It is true that in some places the waiting lists are long, but the importance of that fact greatly depends on the amount of time a person has to spend on the waiting list. If there are a great many people on a waiting list, but they can be absorbed or got rid of in from ten to fourteen days, then that does not seem to me so serious as if the same number were on a waiting list which it would take six months to get rid of. The tendency now seems to be that the turnover in any one particular bed where good treatment is given is far more rapid than it was. I do not think one need be so worried about the large waiting lists, except in certain parts of the country, as some people seem to be. Another difficult point about waiting lists is that certain doctors on the staffs of hospitals are more popular than others. People tend to prefer to consult such a doctor and therefore the waiting list for patients who wish to come in under him will probably be longer than the waiting list for a doctor who is not quite so popular.
There is another rather curious facet of the service which I should like to mention, in passing. A large number of the big London hospitals have private patients' blocks and wings where people who are willing and able to pay the full cost of their treatment and service can be accommodated. This, so far as I can see, has become an important venture from an international point of view, because a large number of people are coming from abroad to make use of these private wings—not because they are free: the patients pay the full cost of anything from twenty-five to twenty-six guineas a week—but in order to get the benefits of the work done under the National Health Service. That, as I say, is an important factor from an international point of view.
The next point I want to mention is a subject which I have brought to your Lordships' attention several times before—namely, the shortage of accommodation for elderly persons in the country. Here again, I do not particularly want to put the blame on the National Health Service, because, broadly speaking, I think the number of hospital beds is roughly what we need. There are few people who would not say they could do

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with a few more, but I do not think there is much ground for saying that more are required. What I think is required is more accommodation under Part III of the National Assistance Act—that is, accommodation provided by the local authority for the infirm and disabled persons who come into hospital, get what treatment is possible and are rehabilitated as well they can be, yet who are not quite well enough to go back to their homes, and, therefore, according to the law, become the responsibility of the local authority. The amount of accommodation for these people is not sufficient. If you go round any hospital ward where the care of the elderly is the prime object you will find a large number of people who should be the responsibility of the local authority but who are occupying beds which could be filled by sick persons.
To come back to my own instance (my wards are part of St. Pancras Hospital), that means that we are keeping perfectly fit people, though disabled, in hospital beds at a cost of twenty-five guineas a week, which one must agree is not a very economic proposition. Therefore I would suggest that local authorities should be encouraged to provide these beds and that there should be no administrative gap over the transfer home and rehabilitation of these elderly persons who are being treated in hospital to-day. One of the few advantages of the old poor law, which none of us wants to see come back, was that both the sick and the able-bodied, as they were called, were with the same authority, so that there was no difficulty in moving people from the hospital to the house when they were well, and vice versa; whereas now, with the best will in the world, there seems great difficulty in that way.
It is possible, I think for the Regional l3oards and local authorities to do a certain amount by making a joint appointment of the doctor to take care of the so-called elderly sick and of the sick or infirm people in the "Part III" accommodation. That idea appears to me to be sound. It was done years ago in one particular ease in one of the Home Counties, and. so far as I know, is working well. An attempt was made to do something similar in another part of London, but the responsible authorities made the mistake of not having their doctor on a
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consultant basis, giving him no control of patients at all: he was merely a junior who could go round recommending people to do things, but his recommendations had no sanction. One cannot help wondering whether recommendations of that sort are of much value.
One thing that I am sure we need to do at the present time is to ensure that the hospitals are run with as much economy as possible—not with as much saving of money as possible, if your Lordships can see the difference. Attempts have been made to bring in studies of hospital work. Reports on the work of the hospital nurse have been published by the Nuffield Hospitals Provincial Trust, and one or two other bodies have taken up the same line and made detailed inquiries to ascertain whether people were doing the work for which they were paid, and whether that work was being done as economically as it could be done. One of the London hospitals is making an inquiry into the work of its X-ray department to see whether there is any preventable wastage and, if so, to try to put that right when the occasion arises. Provided that the Ministry, who have done such good work, continue to try to find every possible economy in running the hospitals, yet at the same time try not to stint them of the money they need (we are seeing signs of that to-day, although I hope it will not go too far) then I hope that if, in another ten years' time, the noble Lord, Lord Nathan, puts down another Motion, we shall be able to look back on a further ten years of progress.
3.22 p.m.
LORD EVANS: My Lords, this is the first time that I have had the honour of addressing your Lordships. I hope, and, indeed, I feel sure, that I can count upon the indulgence invariably shown to the unfortunate members of my profession who find themselves in the position in which I find myself now. Perhaps I crave your Lordships' indulgence a little more than usual—I hope this is not out of order—because I should like to recall for a moment the recent loss we have all suffered in the death of Lord Webb-Johnson, my very dear friend, counsellor and colleague, who did so much, as your Lordships know, for medicine in general and in particular, of course, for the Middlesex Hospital and the Royal College of Surgeons. He was one of my

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sponsors on my introduction into this House, which he always regarded as your Lordships' most friendly meeting place. He will be sadly missed by many.
My own interest and occupation is really with bedside medicine rather than with administrative medical affairs, and it may be that this will be reflected in my remarks which will be somewhat different from those made by my noble predecessors. But the one has now become so intimately associated with the other that I am immensely grateful for this opportunity to draw attention to a few aspects of this big and important hospital problem. I speak, of course, especially on behalf of the teaching hospitals. It has been well said, I think, that a very important part of education—academic, technical and professional—is the personal influence of the teacher upon the taught. Be the building, the laboratory, the equipment, and so on, ever so perfect, there yet must be this essential personal contact between teacher and pupil which creates an atmosphere, the atmosphere that develops and makes the teaching hospitals. One can say that this aspect goes very well in medicine in this country to-day. But there is a sad trend for these functional advances to have outgrown the structural. That great doctor and philosopher William Osier said:
" It is, I think_ safe to say that in a hospital with students in the wards the patients are more carefully looked after their diseases are more carefully studied, and fewer mistakes are made."
I am quite certain that this is so, and no one can surely doubt that the quality and standard of medicine in any country must depend upon the quality of its teaching hospitals. If this is ensured first, I think the standards of the non-teaching hospitals will surely follow. But I doubt if the converse is true.
I must remind your Lordships that the teaching hospitals train, not quite all, but certainly most of the teachers, not only in medicine but in all the ancillary services such as nursing, midwifery, physiotherapy and radiography, as well as almoners, dietitians, occupational therapists and domestic science students—all this in addition to undertaking their primary duty in the care of patients, teaching of medical students, and research. Now since the introduction of
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the National Health Service, almost exactly ten years ago, little has been done for the teaching hospitals except the provision of funds to keep the machinery going. There has been really little structural advance in building except those previously planned, and, indeed, very little of that. We have outmoded, inadequate accommodation for patients, teaching and research, as we have heard; indeed, one has sometimes felt slightly ashamed to show visitors from abroad these features of some of our great teaching hospitals in London. Remember, too, that out of the twelve teaching hospitals in London only two—the Middlesex Hospital and Lord Nathan's hospital, the Westminster Hospital—have been rebuilt. Many of the others, your Lordships will recall, were badly blitzed during the last war. There must surely be some limit to the enjoyment of such austerities.
In the past a great deal of the success of these hospitals was due to the complete freedom of management, lay and medical; and although the teaching hospital still has some freedom it is very curtailed in many ways. Now one hears, for instance, that a lay administrator cannot employ an extra kitchen maid without permission from the Ministry of Health. I agree, of course, that doctors are notoriously bad administrators, and I should consider that good lay administration is absolutely essential to the success of any hospital service. How this can be maintained with the present scale of salaries I just do not know. A catering officer, for example, who may be responsible for spending more than £160,000 in a year, is not paid as much as £1,100 per annum salary. There cannot be more than a handful of senior hospital lay administrators who earn more than £2,000 a year. Surely this seems to be a grave fault in the structure.
The very much higher costs of teaching hospitals have been referred to, and the comparative cost of the care of patients in teaching and non-teaching hospitals has been recently reviewed, as your Lordships will know. This shows, to quote one example, that in a London teaching hospital the in-patient cost per week is now about £27, compared with the in-patient cost per week in a non-teaching hospital of £18. The average cost per patient of a teaching hospital

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is £67, compared with £41 for a non-teaching hospital. To me the difference in these figures is surprisingly small when one considers all that is entailed, and I personally find it difficult to agree with the Report of the Select Committee on Estimates. Surely it must be absurd for the teaching hospitals virtually to mark time until every other hospital catches up with them. Of course, there must be no hard and fast rules for particular hospitals, teaching or non-teaching; but it is essential, in my view, to maintain the teaching hospital at the highest possible level, whatever the cost, if British medicine is to maintain its high standard.
The immediate past President of the Royal College of Surgeons of England has suggested that for their special requirements in the future the hospitals must not only be set free but must be encouraged to seek additional sources of finance outside the Government budgets of the National Health Service. For the teaching hospitals this, to the minds of many, would be a welcome return to old practices and in keeping with their long heritage. He goes on to say that in appealing to the community, to industry and to philanthropic individuals they would thus behave as do the universities at the present time. Such efforts might even enable us to see in the space of a few years several new teaching hospitals in this country.
My Lords, I believe this is the freedom we need and must: have if we are to maintain leadership in our profession. If we can achieve this and at the same time restore the general practitioner to his rightful place as the family doctor, all will go well with medicine in Britain.
3.34 p.m.
LORD MORAN: My Lords, may I, firstly, associate myself with what the noble Lord who has just spoken said about Lord Webb-Johnson, with whom I worked in close association for very many years. I am sure I am speaking for your Lordships when I say how pleased we are to have the noble Lord, Lord Evans, in this House. The ability of his speech reminds us that he has lived all his life in the critical atmosphere of a teaching hospital and also that his opinion carries great weight in the profession to-day. We are always in need in medicine of sane and able counsellors,
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and the noble Lord has those qualities to a remarkable degree. I only fear that in his busy life he may find it difficult to take as great a part in our deliberations as we should all wish.
A learned member of your Lordships' House, comparing the professions of medicine and the law, said of the law, "It is not a progressive science; it is much the same as it was fifty years ago". Coming to the revolutionary changes in medicine, he quoted the Dean of Harvard who said, "In ten years' time half of what we know will prove be wrong, and alas! we do not know which half." I am sure your Lordships will realise that if we attempt to measure the progress of a science bounding forward all the time, it is dangerous to use the foot-rule of the administrator. Nevertheless, I think in fairness we ought to congratulate the Ministry of Health on a remarkable administrative achievement. In the first place they have decentralised or redistributed the consultants in this country. Before the National Health Service they were all congregated in great centres of population. It was difficult and sometimes impossible to get a second opinion unless you were in one of those centres. In Barrow-in-Furness, to give a single example, you had to go two or three hours by train to Manchester, or, if you were too ill to do that, to pay a very large fee to a Manchester consultant to come north. This decentralisation has ended that. It was necessary for these men to live in the great centres in the past because in smaller places they could not make a livelihood. By paying men for their hospital work, that was obviated, and now there are available in almost every part of the country first-rate specialists in every branch of medicine.
It is not only that they have been redistributed; they have been greatly increased in number. In the Newcastle region in 1949 there were 164 consultants; there are now 409. Moreover, the patient can not only see a first-rate consultant at any hospital in the country but if he is too ill to go there then, without financial anxieties. he can call him to his house. In the year 1956 there were 265,000 domiciliary consultations. This decentralisation has been made possible without discontent, because wherever the consultant went, whether it was to

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Truro or Carlisle or some distant peripheral part, he knew he had the same chance of a merit award as if he stayed in London.
This decentralisation has made possible a second great reform, which is the upgrading of hospitals throughout the country. Before the Service there were, of course, first-rate hospitals, some of the best in the world, but there were other institutions which Dickens would have delighted to describe in one of his reforming moods. That has really ended. The difference between the first-rate hospital and the second-rate hospital is the quality of the staff—it is as simple as that; and by redistributing those consultants it has been possible to upgrade hospitals because it has been possible to provide all of them with first-rate staffs. Examples will occur to all your Lordships: St. Anne's, Tottenham; St. Mary's, Colchester; The General Hospital, Barnet—are all examples of first-rate hospitals which had very humble beginnings. If the Service had done nothing else than to decentralise the consultants and upgrade hospitals, that would have fully justified its existence. It has transformed things.
I agree with the noble Lord, Lord Amulree, that buildings are important, to the extent that they make it easier to get staff, and so on; but they are only of relative importance. Much has been said about the rebuilding of the mental hospitals. I would point out that in recent years the conditions in the mental hospitals have been absolutely transformed. Doors have been unlocked. The padded room is virtually a thing of the past. Eighty per cent. of the inmates are voluntary boarders and can walk out when they like, and out-patient departments have been opened. People come from America and the Commonwealth countries, from all over the world, to see how these institutions should be run, and it has been done without rebuilding. What we need more than anything else in the mental health service is not so much new buildings as more men of first-rate ability, who will add to our knowledge of the mind in health and in disease.
The third great reform in the Service is concerned with the remuneration of consultants. Before the Service came in, the consultant, broadly speaking, obtained his remuneration from private practice. Now I think it is true to say that the vast
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majority get their remuneration for hospital work. This is a very great change. The man about 40 years old will get £3,255 per annum as a maximum basic salary, and he will get no more for the rest of his working life—twenty-five years, perhaps, before he retires—unless he is given a merit award for professional efficiency. That is to say, his material prosperity now depends upon his professional efficiency. It would not be too much to say that before the Service it was dependent to a great extent on his personality—and they are very different things. That is perhaps one of the great changes that have taken place in the consultant service.
I have spoken of merit awards. Merit awards are given to one-third of the 6,902 consultants in England, Wales and Scotland. One-third of that number get awards added to their income ranging from A, B and C in sums of £2,500, £1,500 and £500. That is a substantial contribution. But we must remember that they do not really get these sums unless they do the full number of sessions; otherwise they get only a proportionate figure. Why were these awards introduced? They were introduced because the Spens Committee felt that when the incentive of private practice was removed it would be difficult to keep the consultants on their toes. The merit awards were to provide that incentive. Have they been a success? You will no doubt have seen in the Press many arguments for and against. I would remind your Lordships that when the Treasury, which is not at all in love with the principle behind these awards, gave evidence in the person of Sir Thomas Padmore before the Royal Commission, he said: "This is an odd system; it is a curious system. There is nothing like it in the public service. But it works, and we hope it may go on ". Of all the various bodies that have given evidence before the Royal Commission, with one insignificant exception, every one has spoken in favour.
Why has this system worked? I am revealing no secrets when I say that when it began practically the whole profession thought it could not work. To give one-third of the consultants remuneration denied to the other two-thirds could only, they felt, lead to ill-feeling. It has worked, first of all, because it was thought out. It was seen at once that

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the selection of the recipients of these awards must be decentralised and that it must be done by the consultants themselves all over the country. Further, instead of explaining this in one White Paper, every year for seven years thirty or forty meetings have taken place all over the country to answer criticisms, to make it clear that the scheme is fairly administered, and I think that the profession are now convinced that, difficult as the system is to administer, a great attempt is made to make it fair and to distribute the awards all over the country.
Leaving the question of merit awards, I should like to say a few words about finance. Perhaps the most anxious matter is what is going to happen to the amount expended on this Service. A short time ago it was £400 million; to-clay it is £661 million per annum. One new antibiotic may add £2 million a year. We know that in a progressive science essential expenditure must always be mounting. How are we going to check it? Certainly we cannot check it by denying the population real advances. Nor can you economise on doctors' salaries. Years ago Adam Smith in The Wealth of Nations said:
"The doctor has great power. Nobody knows whether he is abusing that power or not. We have got to trust him. Therefore he must be a man of character and substance, and therefore he must be paid accordingly by the community."
That was said by Adam Smith. It is still true to-day. These are not the fields, therefore, in which we can economise. On the other hand, I think the time may come when we may have to give a sum of money to the regions and tell them to get on with it, to restore the spirit of economy which was so prevalent in voluntary hospital circles in their clay and which is not quite so evident to-day.
Again, when committees, some of which have been mentioned to-day, begin to investigate and suggest economies, it seems to me that they go the wrong way about it. For example, take the drug bill of £74 million per annum. Recently a committee went into that matter. What did they do? They set out to find whether there was irresponsible prescribing—whether the doctor prescribes drugs in which he has no faith. Most of us know that the average doctor believes in the drugs he
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is giving. That is not the point. The point is, has he any scientific reason for his belief?
The Regius Professor of Medicine at Oxford, Sir George Pickering, said recently that in his time, as in mine, tons of iron were given to anemic patients without the slightest effect. It was proved experimentally later that we were giving much too small a dose, and that many cases of anæmia do not respond to iron. He said that this is no isolated instance in the Pharmacopoeia. Many of the drugs, he said, with a touch of levity, are given for no better reason than the reasons that govern the changes in ladies' fashions. What is quite certain is that Pickering is right when he said that every drug in the Pharmacopoeia should be experimentally investigated to see when it is necessary, and then, and only then, shall we get an economy in this drug bill, for much money is completely wasted. As we have been told before in this House, drugs in two of the countries of the world are separated into three groups. There is the first group of life savers, about a dozen in number, paid for by the State; and then the second class, where some good is done by them, paid for partly by the State and partly by the patient. Then there is the third class which includes the great number of tonics, for which the patient pays the whole amount. We may come to that here.
The second point in economy which I think is worth touching on is this. I hope that the Ministry will take its courage in both hands and bid in the open market—by which I mean the universities—for the men of promise, to compete with other professions. Has that been done? No. In 1954, £3 million was awarded to the consultants as a partial equivalent to the Danckwerts award given to general practitioners of £40 million. When that £3 million came to be distributed by the Ministry of Health it was given to the junior grades those who had A and B awards, the flower of the consultants, did not get a penny. That, of course, is a prudent political move to avert the wrath of an Opposition which does not believe in giving to him that bath. But if we really wish to compete with the other professions we must take longer views.
It is important not only that we should get the right quality of men into I medicine, but that when the man is in

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we must give him some reward if he submits to the discipline of years and years of training to become a consultant. To become a consultant he will probably have spent ten, fifteen or more years on a very small salary as a registrar, and if he gets no reward for this, if his family are no better off than if he had become a general practitioner at 26, he will not do it, and recruiting will suffer. Yet when I said this to the Royal Commission, and said in answer to a question that of course the man at the end of all these years was a better man than the man who had not taken this course, I received a spate of abuse in correspondence in the Press which must have discouraged other consultants from giving evidence in that way. It surely is all wrong.
At the risk of boring your Lordships, may I say this further about it? If we do not maintain a proper balance between the pay of the consultant and that of the general practitioner, recruiting to the consultant service will die away and wither. Confusion has arisen because when the 1954 award was given for the consultants they felt it was a very poor substitute for the Danckwerts award to general practitioners, and there was a good deal of discontent. Those then in authority naturally made the best of it and said, "This is the best we could do." Now, to be consistent, one or two felt they must say the same thing, but their position was absolutely riddled by members of the Royal Commission itself. One member of the Royal Commission said: "Do you think it is equitable that consultants should get a 30 per cent. or 40 per cent. increase and the general practitioner 100 per cent.? "He said, further," It is a mystery to me how you can think that the Spens Report in the case of consultants has been implemented." Finally the Chairman of the Commission said: "I think you would like to go away and think this over." Could there be a more definite proof that the present relationship of the remuneration between the general practitioner and the consultant is not yet finally settled?
I have been taking up a great deal of your Lordships' time on the scaffolding" erected in the last ten years. We want to know what is happening to the people who work and live within this
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scaffolding. Are they productive? Are they adding to knowledge? Is research starved in this service? When I was President of the Royal College of Physicians for some years I was chairman of their Science Committee on which was the President of the Royal Society at the time and the Secretary of the Medical Research Council; and I learned then that there is nearly always the money for research but that the difficulty is to find the man capable of it. I quite agree with what has been said about the danger of the able man going abroad, but that comes under a different heading. If what I have said is true, I believe we might say this about research: we must provide, in the Service, posts which are as attractive financially as any that can be found in other professions outside it. If we do not do so I do not know where we are going. I feel that that is essential.
That brings me to something on which in the last resort the efficiency of the Service really depends—not administration but the quality of the entry and the training of the students in the medical schools. I am not happy about the quality of the entry. I want your Lordships to realise that that is only an impression. It has no roots in statistical facts, but I have that impression. Not very long ago middle-class parents paid for the fees of all medical students. Now exactly two-thirds of the students are maintained by the State and are selected by examination without any test or regard to character. I believe that that is absolutely fallacious and can end only in disaster. There are already signs of the effects. One cannot possibly select people solely on examinations for a profession like medicine which requires the human touch more than almost any other. Money which is spent on bricks and mortar wants watching very carefully. It is, after all, a question of priorities.
I should like to say a word about the discontentment in the profession. That may seem irrelevant when we are speaking of the hospital service, for such discontent as there is is to be found among the general practitioners. I have not the slightest doubt, although we cannot measure it, that there is considerable discontent among general practitioners and I do not believe that that is based upon their remuneration. Although it is, of course, always unsatisfactory for a general

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practitioner to know that he can increase his income only by taking on a bigger list of patients, whom he feels he cannot adequately look after, the discontent has deeper roots. I believe the cause is to be found in the general decline in the status of the general practitioner, which began when people generally felt when they were seriously ill that they were well advised to go into hospital. That was extremely mortifying to the doctor. He found that the patient, in this particular crisis in his life, preferred to put himself in the hands of a complete stranger. It is hardly surprising that, as a result, the general practitioner was inclined to lose heart.
Moreover, the Service has exacerbated this because, with consultants in every branch of medicine on their very doorstep, the general practitioners are not able any longer to make those modest excursions into the consultant field which previously lent flavour and interest to their life. For these reasons I believe that there is a great deal of unhappiness in the general practioners' camp and if that is true it is most serious. What is the remedy? I have no doubt that what I am saying is highly controversial and probably many consultants will differ completely, but I believe that in time the very pick of the general practitioners must follow their patients into hospital and will become part of the staff of those hospitals. I know it will be said that the standard of those hospitals will go down, but I do not think that that should happen if we see that the general practitioners are properly integrated with the consultants already on the staff of the hospitals. It is the bond between these two which will decide the success of this experiment. I shall not myself live to see it carried out, but I believe that it is the most important administrative move in the next decade. If that is not done, with a discontented profession, efficiency must wither, whatever the remuneration.
I am sure your Lordships will agree with me that our fundamental problems in this Service are not to be settled by any committee or by any multiplication of committees. The great administrator, no matter what are the calls upon his time, will always find the opportunity to think for himself, and he already sees that in medicine, as in every other field of human, endeavour, if we are to compete in world markets we need a more sym-
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pathetic attitude on the part of high authority towards the gifted minority, who in the past have been responsible for all progress, upon whom we now depend for every advance and to whom we must look for the fulfilment of our hopes in all the time to come.
3.58 p.m.
VISCOUNT ADDISON: My Lords, this is the first time that I have had the privilege of addressing your Lordships and I am conscious of my limitations. I am encouraged, however, in the knowledge of your Lordships' accustomed kindly tolerance towards new speakers. Perhaps I should declare some interest in the matter before your Lordships, though it is not a financial interest. I am a member of the board of governors of one London teaching hospital and chairman of a group of hospitals in the country administered by one of the regional hospital boards. In the circumstances it would be appropriate for me to speak in general terms only, and I do not propose to stress any matter of particular concern to either of the two organisations with which I am associated.
I believe that the rising curve of expenditure over the first ten years' experience of the new service was to be expected. I feel that that is largely the natural result of great uses to meet the needs of people hitherto probably not fully provided for. In the light of advances in medical science the curve of expenditure may not even yet have reached the limit, though I believe that in the course of time the advances and developments which have taken place will themselves bring about economies.
Like the noble Lord, Lord Nathan, I wish to draw your Lordships' attention to the comparatively small amount of expenditure on capital development as compared with the large and increasing bill for maintenance. I feel that perhaps we should aim at a somewhat more unified and streamlined service; and I feel that economies in maintenance may be achieved (I hope that the noble Lord, Lord Amulree, who is not at the moment in his place, will not mind if I disagree with him here) by the scrapping of some unsatisfactory buildings and, in some cases, their replacement by modern units, though I think they will be fewer. I believe that an imaginative and bold programme of capital development is

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needed and that modernisation, particularly of buildings, must itself result in economy in maintenance.
I think it has become clear that advances in medical science have brought about some changes of emphasis, and I should like to illustrate this by mentioning particularly the great advance in the treatment of tuberculosis, which seems to me to indicate, for instance, that the large number of sanitoria, as a permanent feature of the organisation, may well be somewhat out-dated. The treatment and cure of various infectious diseases by modern methods have also taken some load off the shoulders of the organisation generally, and I hope we may hear that the Government will consider taking steps as a result of these changes in emphasis. Surely there must be, as a result, savings, either now or in the future, in premises, medical staff, services and so on. We may be sure that there will be other advances which will result in like savings. I should like to make the point that I think we should always endeavour to have an adaptable organisation, so that when these changes of emphasis come about they do not upset the balance of our plans.
Although the problem of the recruitment of nurses may not perhaps affect the teaching hospital groups so greatly, there have been great difficulties in some parts of the country in attracting young women into the profession. There are obvious reasons for that, and the most important is probably financial. But I am not sure that there are not a good many young people who have been frightened off by the ever-increasing academic standards seemingly required and insisted upon by such organisations as the General Nursing Council. I feel that we should aim, in the training of these young women, to get a high standard of nursing and not give the impression that we are out to produce a number of pocket-sized, female professors of medicine. Wards are largely manned by student nurses, and in my view steps should be taken to try to make life a bit easier for them. I wonder whether the Ministry would be willing to discuss the matter with the General Nursing Council and other bodies to see whether something cannot be done to attract the increasing number of women who, I understand, will be available within the next few years.
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I think that some of the burden could be removed from our hospitals by increasing facilities for home nursing; and I should like to stress what I believe to be the desirability of encouraging young doctors to enter general practice. I think that more money might well be provided for the development of district nursing. I get the impression, from my own experience, that in some cases general practitioners may be making use of hospitals unnecessarily. One of the reasons for this tendency may be a fear of litigation, which seems to have crept increasingly into the Service recently. General practitioners, it appears to me, are sometimes inclined for their own protection to send patients to hospital for X-ray and similar examinations, which they would not have thought of doing until recent years. I should like to know whether the Minister has any views on this aspect of the problem, though I admit to finding it difficult to suggest a remedy. I believe that people would always prefer to be nursed at home, under their own doctor, rather than enter hospital, and I wonder whether perhaps the Minister would devote some consideration to this point.
Medical research, as the noble Lord, Lord Nathan, has mentioned, is being financed, at any rate so far as teaching hospitals are concerned, largely from their own endowment funds and from somewhat small grants from one source or another. It is often difficult, in view of the continual economy drive on the part of the Exchequer, to hand over to the Exchequer Vote methods produced as a result of research activities, after they have taken their place as a part of normal clinical procedure. As a result of this difficulty, it is possible that a brake may be placed upon research generally within the teaching hospital groups, and I feel the Minister might well consider whether there should not be some more frequent method of assessing the stages to which various researches have developed. There is also a tendency (I think that the noble Lord, Lord Nathan made this point, with which I entirely agree) to utilise endowment and private funds for purposes which are in fact the responsibility of the Exchequer. In my view, this situation, where it exists, can be regarded only as unsatisfactory and undesirable.
I hope that noble Lords will not feel that I have had only points of criticism to offer. I feel that we have a hospital

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service which is probably the envy of the whole world, and we have reason to be very proud of the first ten years of its growth. Teething troubles have to some extent already been overcome, but I would stress the need for adaptability and for an open-minded approach to future developments. We have, as usual, been pioneers, and it is satisfying to see the interest in the service taken by other countries, which will not be slow, I think, to try to follow our example.
4.8 p.m.
LORD UVEDALE OF NORTH END: My Lords, to-day we have had maiden speeches from the noble Lord, Lord Evans, and the noble Viscount, Lord Addison: their speeches have been very helpful and they have been expressed in the most felicitous language. We are pleased that they have spoken on a subject in which they are greatly interested, and we hope that in this House we shall hear them on frequent occasions in the future. I am very grateful to the noble Lord, Lord Nathan, who introduced this Motion for the tribute that he has paid to doctors and nurses, because he recognises that the success or failure of a hospital depends not so much on the matter of administration as on the quality of the doctors and nurses who are working in that hospital.
The noble Lord, Lord Moran, has spoken very eloquently on certain aspects of the profession, and with your Lordships' permission I will take up the line that his speech has suggested. I will start with the Insurance Act of 1911. This Act was passed against the violent opposition of the profession. This opposition was overborne only by the threat of a full-time salaried medical service. The National Health Service Act of 1946 was not enthusiastically received by the profession, and did not especially commend itself to the profession; but it was accepted by the profession in that all political Parties supported it. We have to remember that both these Acts improved the financial position of the medical profession.
If your Lordships are interested in the financial position of the medical profession before 1911, I would refer you to the September numbers of the British Medical Journal about that time. Year after year, able and ambitious young men were warned not to enter the profession.
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It was pointed out that the profession at that time was semi-philanthropic; that no doctor could expect adequate remuneration for his services; that the work was exacting and exhausting, and that a doctor's prospects were particularly gloomy, unless he had private means or was backed by personal influence. The average income of general practitioners before 1911 is not known, but it was notorious that many practitioners at that time were in financial difficulties, doing their rounds on foot or on bicycles. By 1931 the average income of the general practitioner had risen to £850 per year; by 1938 to £1,111 a year; by 1948 to £2,055 a year; and by 1950 to £2,220. And by 1957 it stood at the figure of £2,333 a year.
In view of the consistent increase in the income of the general practitioner, it may be asked: what then are the objections of doctors to these Acts of Parliament? In my view they can be summarised as follows. First of all, there is loss of independence. In our legal system it is necessary to defend the patient against the doctor and also to defend the doctor against the patient, but the introduction of a State medical service has meant more supervision, more attention to records, and more reliance on methods of treatment recommended by the Ministry of Health. The general practitioner is afraid of a loss of that personal relationship which used to exist between physician and patient—the "family doctor" idea—when the family doctor was the friend and confidant of the patient. To-day, the family doctor is being replaced by the State practitioner.
Another cause of dissatisfaction among general practitioners, of course, is the overcrowded surgeries that have resulted from the passing of these Acts and also the increase in cases of imaginary illnesses that come to those surgeries. Then under the State system the general practitioner feels that he is in a groove: that X-ray examinations, laboratory methods and physiotherapy are outside his scope, and that he has no opportunity of specialising in any department of medicine.
Whatever be the disadvantages of the new system, however, the medical register shows a great increase in the number of doctors. In the last twenty years the numbers of men on the medical register have risen from 60,000 to 90,000. This increase in England is from 29,000 to

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43,000, so that there is now one doctor to each 900 of the population. If, at the present time, there is a desirable post vacant in general practice, there will be anything from 40 to 50 applications from qualified men for that post. I hold it that one of the objects of nationalisation is to see that no man works to the detriment of his health or to the disturbance of his peace of mind, and in this connection your Lordships may note that the mortality figures for doctors have diminished in recent years, so that they are now nearer to the mortality figures for solicitors and clergymen.
Now a few words with regard to the specialists. There has been a great increase in the number of specialists in the last twenty years. In 1938 there were 2,480 Fellows of the Royal College of Surgeons of England; in 1957 the number was 4,370. In 1938 there were 1,690 doctors who were members of the Royal College of Physicians of London. In 1957 there were 3,749. The specialists are happier than the general practitioners under the present system. Basic salaries, as the noble Lord, Lord Moran, has explained to us, are from £2,205 per annum rising to £3,255 per annum. In addition, they receive pay for domiciliary visits up to a limit of 800 guineas a year. Then there are the distinction awards, and these, in my view, should engage the attention of your Lordships.
There are three distinction awards: £500 per annum for 20 per cent. of the specialists; £1,500 per annum for 10 per cent. of the specialists, and £2,500 per annum for 4 per cent. of the specialists. In 1957 2,343 specialists in England and Wales were receiving these awards at a cost of £2 million to the State. It is astonishing to recall that these are secret awards, a principle that is contrary to what has always been the conception of public policy. Doctors receiving these awards are not allowed to mention them even to other members of the same medical staff. No one can find out why certain doctors are favoured and others are not. The system of these awards has been referred to in the medical profession as one of "diabolical secrecy".
A NOBLE LORD: Shame!
LORD UVEDALE OF NORTH END: Your Lordships may feel that where public money is spent the public should
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know how and why the liability is incurred.
The maximum salary under the Health Service is in the region of £6,000 per annum. General practitioners and specialists have pension rights where the contribution of the State exceeds the contribution of the individual. Before I leave this aspect of the Health Service, I must mention the plight of certain of the senior registrars in the Service. These are men who are qualified to be specialists but who are not appointed as specialists because there are no vacancies. The number of registrars is in excess of the number of vacancies available. These highly qualified men who are denied promotion to specialist rank have difficulty in getting into general practice, and many cases of hardship have occurred.
May I say a word with regard to the nursing staffs in hospitals? It is notorious that it has been difficult to obtain adequate numbers of nurses for many of our hospitals. The position is that before 1939 the salary of a ward sister was about £90 a year. By 1948, this salary had risen to £180 a year, with residential emoluments, income tax being paid on the net salary only. By 1958, salaries for ward sisters were ranged from £514 to £646 per annum. This seems a great rise of salary, but from the total amount 1173 is deducted for residential emoluments, and income tax is paid on the gross figure. The actual rise in salary, therefore, from 1948 to 1958 is about 80 per cent. The only suggestion I can make to increase the supply of nurses would be that nurses should be paid overtime. They are frequently called upon to spend extra hours in the wards, and I understand that for this overtime work there is no remuneration. I would suggest that they should be paid overtime at the rate of five shillings an hour.
Just a word about the costs of the medical services. It was stated recently in another place that hospital costs over the last ten years have risen from £110 million to £320 million per annum. In the same period the total cost of the Health Service has risen from £400 million to about £600 million. The contributions of the insured population have risen, in the case of a man, from 4s. 11d, a week to 9s, 5d, a week. When the contribution of the employer is added, the total is 17s, a week. The benefits obtained by this contribution are not only

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health benefits, of course, but also injury benefits and national insurance. In dealing with these large sums the constitution of the responsible spending committees is obviously of the greatest importance, yet when we look into this matter we find that democratic control has been abandoned and that committees are selected by nomination.
The Regional Hospital Boards are appointed by the Ministry from the universities, the medical profession, local health authorities and other organisations. The management committees are appointed by the Regional Boards from local health authorities, any executive council, hospitals and other authorities. The hoards of management of teaching hospitals are appointed by the Minister from the universities, the Regional Boards, hospital staffs (up to 20 per cent. of the committee of management), former members of the governing body and other suitable persons. The field of choice is a very wide one, and many applicants for positions on these boards are totally unsuitable. For example, I heard of one gentleman who applied for a position on the managing board of a hospital on the ground that he wished to avoid washing up at home. A lady who made a similar application said that she wished to serve on the board because she liked to visit the sick on visiting days. The composition of these boards is of the greatest importance.
The general conclusion from these facts and figures is that, by comparison with other professions, the medical and nursing professions have had generous treatment from the State. But in dealing with these figures we must remember that the man who had £700 a year in 1938 now requires £2,500 a year to maintain the same standard of life; and a man who in 1938 had
1,200 a year now requires £5,200 a year to maintain his standard. We may also note that medical salaries have not kept pace with rising costs, so that members of the medical and nursing professions are sharing in the hardships of our times, though, I venture to say, not to the same extent as other members of the community. Any further improvement in standards for doctors or nurses is bound up with the problems of inflation and high taxation.
I should say, as a final word, my Lords, that the conditions of the Service at the present time are such as to attract men of
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the right type into the professions. I should say that if it is a matter of research and discovery, there is no connection between remuneration and the results of research. The advances come in most unexpected ways. I am all in favour, however, of facilities being provided for research, and of a man being encouraged to take up research, even though there are many lines of research that in the end prove to be unfruitful. I can only say that the conditions of the Service at the present time are good; there seem to be plenty of able and energetic people entering the Service, and the outlook for the future should be excellent.
4.32 p.m.
THE EARL OF LUCAN: My Lords, I should explain that my noble friend Lord Crook, who had intended to speak now in the debate, has been unable to get back to London in time; but he hopes to come in before the end of the debate and I have taken his place. This debate has attracted the usual galaxy of experience and talent. In particular, we are glad that the noble Lord, Lord Evans, was able to make his maiden speech on this occasion. If he at times verged rather near the controversial (I am sorry he is not now in his place) he did not actually overstep the boundary. My noble friend Lord Addison, whom we have at last persuaded to make a contribution in this house has come here with great experience of the hospital world. We have heard a most thoughtful speech from him, and we hope that we shall often hear him again. And although it was not a maiden speech, I think I should mention my noble friend Lord Uvedale of North End, who all too rarely comes to give us the benefit of his experience. I could have wished that while he was speaking the noble Lord, Lord Moran, had still been in the Chamber, because it seemed to me that there was some conflict between the evidence given by those two noble Lords, both speaking from such long experience in the profession.
I speak as a comparatively new recruit to the hospital world, in that I have been connected with a board of governors since the appointed day and on a hospital management committee in more recent years. My noble friend Lord Nathan and the majority of noble Lords who have spoken up to now have dealt mainly with the problem of the teaching hospitals. I

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should like to say a few words dealing mainly with the non-teaching hospitals, those under the regional boards. The first thing I would say is that one of the criticisms made of the whole Service is that between the teaching and the non-teaching hospitals there is a great gulf fixed; indeed, more than that: there is competition and rivalry and, some say, even jealousy.
In my short experience I have seen the working of a system on a small scale which, to my mind, ought to be greatly extended; that is, the use of non-teaching hospitals as well as the teaching hospitals for clinical teaching of students. Certain teaching hospitals have for some years been working on these lines and have established excellent relations with non-teaching hospitals. The way the system works is that those members of the consultant staffs who are employed both by the teaching hospital and the non-teaching hospital take their students for teaching in the wards of the non-teaching hospital; other teaching is done by the consultant staff of the non-teaching hospital. So you get a merging of the teaching in the two spheres, a softening of the boundaries that have too often become hard and fast, and an improvement in relations. It is, I believe, to the benefit of the students that they should see the work in a general hospital, and it is of advantage to the general hospital to have this link. Naturally such teaching is merely complementary to that which is carried on in the teaching hospital.
In what has been said and written about the Health Service, particularly in recent days owing to the anniversary, some attention has been attracted to another gulf—namely, that between the hospitals and the general practitioners. This was referred to by the noble Lord, Lord Moran, and other noble Lords, and undoubtedly there is a good deal of truth in what has been said about the lower status (in his own eyes or in the eyes of the profession) of the general practitioner as compared with the practitioner in the hospital and specialist services. There again, I have seen the beginnings of a breaking down of this gulf and a bringing in of the general practitioner into the hospital service and its work. In a big London general hospital that I know there are monthly meetings
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of general practitioners living in the neighbourhood. The occasion is not quite clinical teaching, but a kind of clinical seminar or discussion day. The doctors come in and see the patients in the wards, and discuss the cases, many of which they have themselves sent in to the hospital, with the consultant staff in the hospital. There you get complete cooperation and the beginnings of complete confidence between those in the hospital and those outside.
It seems to me that an extension of a system such as that would go a long way to remove many of the disadvantages from which we hear the general practitioners are suffering. Moreover, in this same hospital the local general practitioners can get the full facilities of the ancillary services of the hospital; they can, as a right, call on all the diagnostic facilities. This local arrangement in West London seems to me to be the key to the mitigation of the disadvantages from which we hear the Service is suffering.
There are only two other small matters that I should like to mention, because to deal comprehensively with the hospital services would need far more time and far more ability than I have. I think that a few points are worth mentioning, and I have already dealt with two. The question of administrative staff has not been touched upon much so far. We have heard about the medical staffing of the service, and on that subject I certainly should not attempt to dogmatise. So far as the administrative service is concerned we have just had the valuable report of Sir Noel Hall on the grading and structure of the service.
We hope that that report will produce a satisfactory reorganisation of the service.
The point that Sir Noel Hall's investigation brought out was that the service is not offering a sufficiently attractive career to get the best type of administrator. When we are talking in terms of several hundred million pounds of public money, those who have responsibility for it must be of the highest quality obtainable. We take enormous trouble to select the best people for the other branches of the public service, but so far, I am told, there is no sign of the hospital service becoming popular as a career among young people just leaving school. That matter seems to me to need urgent attention. We have to offer conditions sufficiently good to attract them

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from the more glittering paths of private industry, and there must be proper prospects of promotion and training. After all, the public service competes against industry only by the conditions of promotion that it offers. It cannot compete in terms of cash—none of the public services ever has done—but by offering a career that anybody might be proud to take up, that of administering the Health Service, and reasonable prospects of promotion (which in itself is a big subject) the Service should, to my mind, be able to attract a number of the best type of young men.
On the training side, there seems to be a serious gap. There is a national scheme for training which started a year or two ago, but on a ridiculously small scale. I believe that the number of students is something like twenty-four, and that the course is of three years duration. If it is to staff a Service with over 400 boards of governors, hospital management committees, and Regional Boards, that scheme represents an infinitesimal contribution to the training problem. The result is that all the training these young men receive is by being attached for periods to different departments in their hospital, or other hospitals, and by learning as they go. It seems to me that something much more systematic and positive is needed on the training side.
Finally, there is the question of economies. We are agreed that the Health Service must not be allowed to deteriorate. We know that costs everywhere are rising. Economies, therefore, can be found only by a greater efficiency both of methods and of buildings. I notice from the report of the Ministry of Health for 1956 that quite a promising beginning has been made with the use of work study. The "O. and M." Service—the Hospital Organisation and Methods Service—has been brought in in a number of cases. I think that they had eighty cases under investigation during the year 1956, and it seems to me there must be a great deal of scope for investigation, because traditional methods die hard, and it needs a scientific investigation to point out where effort is wasted, where staff and labour can be saved, and how hospitals can be made more efficient. I hope that the Minister may put in a word about the prospects of that—as to whether that tendency is developing, as I think it should. There
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is another direction in which economies can be looked for, and that is by replacing out-of-date buildings and equipment by modern ones. There is no end to the field in which a moderate capital expenditure could produce really important economies.
So we come back to the old question of capital investment. My noble friend Lord Nathan spoke about that, as have other noble Lords, but the deplorably low level of investment in our hospitals is something which I am surprised Her Majesty's Government can tolerate. I believe that not a single new hospital has been built since the war. The number of beds has hardly increased and century-old buildings are almost, I should say, in the majority, causing great inefficiency. The Chancellor of the Exchequer tells us, of course, that there is no money for hospital building. But when we walk round the West End of London or the City, and see the millions of pounds that are being spent on office buildings, put up, so far as I can see, mainly for prestige purposes or to produce profits, I feel that we have much to be ashamed of. I think that historians in 100 years time will look back, unable to believe that we could get our priorities so wrong.
4.50 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, I certainly would not disagree with my noble friend, Lord Lucan, that there is a field for investigation with regard to administration in the hospitals. I am told that a great many wasteful and bureaucratic methods have crept into some of them. For example, when a doctor has a cup of tea in a hospital, apparently it is impossible for him to pay cash for it upon the spot; he is sent an invoice at the end of the month for a few pence, or somebody waylays him upon the stairs and collects it. If the cost of that procedure were analysed, it would be found to be a great deal more than the amount of the debt which is collected. That is one small illustration of the necessity for hospital administration to be examined in a businesslike and scientific manner.
However, I do not wish to pursue that side of the discussion. We have had a debate which has ranged over a very wide field, as it inevitably must do, because the hospital service is only a part of the National Health Service and is, of necessity, very closely linked with the rest of it, or perhaps should be very closely

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linked with the rest of it. Unfortunately, the aim and purpose of the National Health Service has from the beginning been in the direction simply of treating disease, with little or no attempt towards preventing it. I made that criticism some twelve years or more ago in another place and I think it is still justified to-day. The lessons which were learned by the Peckham Health Centre, for example, have not been put into practice, with the result that instead of preventing disease or detecting it at its earliest onset the Service waits until the symptoms become obvious or acute, with the result that the expense of the Health Service, both on the general practitioners' side and on the hospital side, is increased beyond what it need be. If there is going to be a search for justified economies in the National Hearth Service, I think it ought to go in that direction of trying to establish a genuine preventive service which will prevent people from getting into those bad habits and conditions which result either in acute or, in many cases, in chronic diseases which become quite incapable of cure and can be the subject only of mitigation.
I entirely agree with those who have said that splendid work is being done in the hospitals under the National Health Service, and it is being done, in certain cases at any rate, under conditions which seem to me to be unfair to the medical practitioners who are concerned in providing that service. The noble Lord, Lord Moran, said that general medical practitioners were dissatisfied, but the hospital staffs are also, in many cases, extremely dissatisfied. When the National Health Service was established they were promised by the Government that the conditions of employment would be based upon the Report of the Spans Committee, but in fact the salaries which are being paid to medical staffs in hospitals are far below that level. There are the junior registrars, the senior registrars, the junior hospital medical officers and the senior hospital medical officers. There is not a single one of those whose salary in any way compares with that which was proposed by the Spens Committee, and in many cases the salaries are such as the Spans Committee considered to be appropriate to the conditions as they existed before the war, without taking any account of the lower
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purchasing power of money, or paying very little attention to it.
It can be said, I suppose, in the case of the junior registrars and the junior hospital medical officers, that they have some hope of being promoted into the senior grades, and that may be some consolation for the salaries which they are paid and some encouragement to them to continue. But when it comes to the senior registrars, and still more to the senior hospital medical officers, the position is very different. It has been said to-day that there are not sufficient consultant posts available to provide openings for the senior registrars, and emphasis has been laid upon that fact here and elsewhere but still more is that the case with regard to the senior hospital medical officers, who in fact are doing specialists' work and have specialists' qualifications equal to those held by specialists or by senior hospital registrars, and their grade has virtually become impassable, so that they do not get any promotion at all.
It was in fact intended originally, when it was created, to serve a totally different purpose: to be the means of absorbing a number of general practitioners who, had been doing a limited amount of consultant work, and therefore was a grade which was intended to die out. Instead, it has become a grade of recruitment, and it has become a blind alley because the prospect of promotion from it to be consultant has become increasingly remote—that, apart from the fact that the salary does not conform to that of consultant, as it ought to conform to what is now approved for a consultant, let alone conform to the principles of the Spens Report which were accepted by the Government. That is extremely unfair, and the position has become doubly unfair because the appointment of consultants in practice is made by committees upon which the teaching hospitals are strongly represented. I impute no unfair motives, but it is quite a natural result. The result is that the appointments of consultants are given to senior registrars who come to the teaching hospitals, instead of being distributed among the senior hospital medical officers who have equal qualifications and a great deal more experience in the work which requires to be done. That, I think, is something which ought to be remedied.

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I dare say that the noble Lord who is going to reply on behalf of the Gov-eminent will say that this is one of the matters which is before the Royal Corn-mission. If the Royal Commission is fully seized of it and is empowered to deal with it in all its aspects, I shall certainly be delighted; but I am not quite certain that that is so, either from the terms of reference or from the kind of evidence which has been given. I think that a great injustice has been created here, and a breach of faith which the Government ought to remedy.
5.2 p.m.
LORD CLITHEROE: My Lords, I am sure that the House is very grateful to the noble Lord, Lord Nathan, for giving us the opportunity of this discussion to-day. I was glad that he postponed the debate on the previous occasion when it was set clown, because it would certainly have been most unsatisfactory to start so late in the day. We all know how devoted the noble Lord is to the service of the hospitals, and I propose to take the opportunity of reverting to the topic which he raised in the speech with which he opened this debate to-day. I have only one theme, and I shall not be too long about it—that is, to emphasise that it is not possible to overestimate the importance of the teaching hospitals and the need to make sure that they are properly equipped for their work and always in the forefront.
These teaching hospitals are responsible for the training of the doctors who will work in the National Health Service. The standard of British medicine and, if I may say so, the efficiency of the Service depend largely upon what these students learn there and upon the influences under which they come when they are in the teaching hospitals, and the atmosphere they absorb there. To a large extent, this also applies to the nurses; because, although we know that nurses are trained in hospitals which are not associated with medical schools, it is often rather difficult to got recruits for those hospitals, whereas there is no lack of applicants for nursing in teaching hospitals. So it is vital to maintain, and to improve, the standards and facilities of the teaching hospitals. They should be improved in line with the great advances which are, and have been, taking place during the last ten years. There are many new
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techniques of investigation and treatment Which have been evolved in recent years and which add to the accuracy of diagnosis and provide treatment for diseases that have hitherto proved incurable. One could give many examples of these specialist activities. Let us take, for example, the artificial kidney. All these specialist activities, which save young lives, need for their application, I am told, an experienced and skilled team of medical workers. So, for reasons both of economy and of medical skill, these facilities should be available in special centres such as the teaching hospitals.
I do not for one moment deny that the standards in non-teaching hospitals must be raised, but medical standards and treatment throughout the country will inevitably deteriorate unless the standards in teaching hospitals are allowed to rise too. As the noble Lord, Lord Evans, whom we were so delighted to hear make his maiden speech to-day, said, it is absurd for teaching hospitals to mark time whilst others are brought up. I entirely agree with that. Not only must the staffing at a teaching hospital be on a generous scale, but there is need for the housing of special apparatus; and this requires space so that it can be kept in readiness for immediate use. I have been told that lack of space often hampers scientific development just as much as lack of money, if not more so. Many advances which would benefit the whole community, and not merely the patients of the teaching hospital, are being made too slowly through lack of facilities for them.
At the present moment our doctors are equal to any in the world; and that applies equally to our nurses. But, unless we are to lose this great heritage, we must maintain and improve the standards in our teaching hospitals. It seems to me that it is so important that, the standards in those centres should be something above the average; that they should have also something above the average in quality to offer. A wide area from which to draw case material is a very important asset, and patients will not be sent by their local practitioners, nor will they themselves want to go a long way from home, unless this is so. I think that similar arguments could easily be made to apply to the care of the more difficult and rare cases.

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Then again, in order to attract the best minds to compete for the posts there must be above-average doctors and above-average equipment for research. I am sure that research is inseparable from first-class treatment, and all of us who are in business know that unless money is continually and constantly spent in research, you are not going to get ahead. So may I conclude by saying that the teaching hospitals do not seek preferential treatment because they consider themselves superior to the excellent hospitals that exist in the periphery; they seek it because their responsibilities are so much greater, and because we want to continue to lead the world in reputation, in service and, above all, in quality.
5.9 p.m.
LORD HADEN-GUEST: My Lords, we are debating to-day an important Motion on the subject of hospital organisation and nursing. I think it is necessary that we should get our heads clear on the subject. I doubt very much whether everyone who is in this audience really has his head quite clear on what the subject is. The real point is: are we able to get the right kind of nurses to do the work in our hospitals, and are we pursuing the right course with regard to their training and the programme of work which is laid before them? It is absolutely essential to have well-trained nurses, not only in time of war and in time of political disturbance, but for the everyday work of the community as it stands now. I say this because I have had a great deal of experience myself, both abroad, in a world war—a most extensive experience indeed—and afterwards at home in time of peace. I have had experience on the Continent of Europe also in time of peace, and have investigated and written upon the subject of what kind of organisation we require—to an extent which, I am afraid has bored some of those to whom my words were addressed.
The plain fact is that, beginning at an early date in the First World War and going on to the Second World War, we have gone on without making any fundamental organisation and without using the powers of organisation which we have, and with which I have to a large extent been concerned in organising medical services. I am thinking espe-
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cially of the nursing service, for unless we have more nurses in our hospitals, civil and military, we shall not get a good nursing service. I hope that the noble Lord who is to reply to this debate will be able to give us a clear explanation of what is to be the future of the medical service.
I should like to know particularly what is to be the future of the nursing services, as well as the purely medical services. I have seen failure come on the battlefield as well as in civilian life, and I believe that unless we have a clear-cut statement on what is to be the function of the medical services, in war and in peace, we are going to fail when a big strain comes. Everybody who studies politics at the present time and takes an interest in public affairs knows that the world at present is not a safe one. It is far from being a safe world and it seems very unfortunate that we have no clear-cut ideas on the future of the nursing service and other medical services. I very much hope that the noble Lord who is to reply will let us know how far we are able to proceed in making a really adequate medical service sufficiently well organised, sufficiently strong and well-staffed and with sufficient well-trained people, in the circumstances as we now know them.
5.13 p.m.
VISCOUNT ASTOR: My Lords, I wish to say only a few words as a humble member of a hospital committee for the last ten years and to plead that the time has come for another inquiry into the administrative systems of our hospitals. an inquiry more searching, deeper and going down more to the grass roots than that of the Guillebaud Committee which, I felt at the time, was rather a defensive Committee which had the feeling that they had to protect the hospital service against the potential "Geddes Axe" of a wicked Conservative Government. That Committee never really got down to the fundamentals of administration.
First, I feel that most hospital committees are far too big and that the work could be done by half the number of people in half the time. We go into far too great detail on many minor matters which in ordinary administration should be done by a staff; and at the same time the ordinary house committee has practically no responsibility for the hospital

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which it is supposed to know intimately. Then we move up to the hospital management committee, and again there is the trouble of excessive size and a proliferation of sub-committees to such an extent that it is extraordinarily difficult for any busy man engaged on active administration to be a conscientious member of a hospital management committee; yet those are the kind of people whom we most want. I believe we need small committees, meeting perhaps half as often, with chairmen and officials having (greater responsibility for many minor decisions. We should try to recruit our hospital officials from a rather wider circle and be prepared to bring in some of those of great administrative ability who are being "axed" from the Services but yet have leadership and knowledge of organisation of people.
Another point is that we get almost complete separation of the medical and the lay side. We have some doctors on the management committee but no layman knows anything of what goes on at the doctors' committees. So we have these two parallel chains of committee both looking after the same hospital; but if one suggests that even the chairman of the hospital committee should go to the doctors' committee—well, my word! I was invited once but I was shown out very quickly as soon as a particular item on the agenda was finished. I believe we should have far greater confidence and mutual knowledge than exists at present in what each side is trying to do.
I believe that Parkinson's Law is in full operation regarding secretarial staff as compared with pre-war numbers, and yet there is less liaison between general practitioners and the hospital. Often when a discharged patient goes back to the general practitioner the general practitioner has literally to wait for weeks before he can learn what the hospital has found out, because of the clog of sheer paper work in administration. I feel that the Organisation and Methods Branch is a promising development, but far too small; and at the moment when they arrive they are resented as if it were the appearance of the Spanish Inquisition, If we are to have the disadvantages of nationalisation, let us have the advantages, too, and proper administration and inspectorate going down.
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We all want to help at local level and to get the advantages of other people's improvements and administrative methods; and we want a more responsible feeling about finance. Once at a committee the chairman said, "Ladies and gentlemen I have desperate bad news to tell you." We all blanched, and he added." I have underspent by £16,000." That is the spirit in which finance is sometimes tackled. We also want a careful and searching appraisal as to how much money is being spent in patching up old hospitals as opposed to making a clean break and starting on a new one. The noble Earl, Lord Lucan, made a very good point. Those of us on committees of old hospitals have a desperate time, and it would be much better if we had a programme for the future building of modern hospitals of most simple construction.
Those are some of the minor points I would make. I hope that I shall not be considered as criticising my colleagues or anybody else, for everybody tries to do his best; but I believe the time has come for a practical, down-to-earth inquiry again into our hospital system.
5.19 p.m.
THE EARL OF CRANBROOK: My Lords, all of us who have spoken or are to speak this afternoon speak with experience of the hospital services—as indeed I do, having been chairman of a hospital board since the appointed day. The majority of the previous speakers have said (and I would agree) that during that ten years we have vastly improved the hospital service. I think most of us would be ashamed to come here to-day and speak at all if we had spent ten fruitless years and could not say that. I do not think it is really to be wondered at, for we had a good administrative machine, although I agree with the noble Viscount, Lord Astor, that we want to have another look at it. During that ten years we have also seen the most remarkable advances in the art and science of medicine; so it is small wonder that we have an improved service.
On the other hand, I do not think that we should be complacent. Several noble Lords have drawn attention to the fact that some of our hospital buildings have been starved of capital development—and I suppose that I know as much about

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that aspect as anybody, having as hospitals in my own region a quite considerable number of Gilbert Act workhouses adapted as hospitals, one of which will celebrate its bicentenary in a couple of years' time. The noble Lord, Lord Nathan, drew attention to the fact that to-day we are getting about one-third of the capital spent that was spent before the war. It is a ridiculous position that the State cannot provide to-day even an equal amount to that provided by private individuals before the war for a voluntary service.
One of the results of that starvation—which I look upon as the most disastrous; it is one of the respects in which I think the hospital services fail—is to be seen on some sides of the mental health service. We still have up and down the country to-day low-grade, mentally-defective children ruining the lives of the rest of the children in their family, and ruining their parents' lives, merely because we have not accommodation in which to put them, entirely due to the fact that we have been starved of capital in the past ten years. In passing, I may say that one of the nicest things of the hospital service has been that it has always been run on entirely non-political lines: we have always, within my recollection, all been at one in being absolutely certain that the Government of the day were not providing nearly enough money for the service for which we thought they were responsible.
There has been a great advance in the treatment of mental disease. More people have been coming into hospital and going out sooner. The increase in out-patient clinics has done a great deal, and we are finding more and more that we are able to treat mental patients at home without their ever coming into hospital at all. I speak with some diffidence in front of the noble Lords here who are doctors and surgeons, but with that sort of idea in my mind I would venture to look, not back at the past ten years, which are dead and gone, but on to the years that are ahead. I am inclined to think that in the future, with the improvements in housing and living conditions which are taking place, affecting both mental and physical health, actual residence in hospital may become an increasingly smaller part of the treatment. After all, to-day 90 per cent. of
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patients are, I suppose, treated by a general practitioner, with the assistance of the home nurse, the home help, the psychiatric social worker, and the other help which he can get.
The noble Lord, Lord Moran, referred to the general practitioner coming into the hospital. That is a thing we are all trying to arrange, whether by clinical assistantships or otherwise, and one hopes that in the future the general practitioner will be brought more and more into the hospital. But my own feeling is that the hospital needs to be brought more and more outside itself and into contact with the general practitioner and those who are serving the public in the homes. I have referred to how this is happening in the sphere of mental health; it is happening also in every other branch of medicine. I remember how, when I was a young man, the old arthritic patient was put to bed in a hospital, nursed with care and with kindness, and how he rapidly stiffened up and stayed there for the rest of his natural life. To-day, with the new services that we are being enabled to provide, such patients are going into hospital for a short time and then going out again under the care of their general practitioner, the home nurse, the home help and the like. Of course, they may be returned to hospital again, but we are, so far as we can, bringing the home and the hospital together, and people go from one to the other with much greater facility than they did in the past.
The noble Viscount, Lord Astor, referred to the Guillebaud Report, and in particular to the fact that he felt there should be another investigation into the administrative side of the hospital services. I should like to see another investigation into the whole of the administrative side of the National Health Service Act. The Guillebaud Committee were appointed, if I recollect aright, entirely to investigate the cost of the National Health Service; that was the yardstick by which they had to measure the work. They were concerned not with whether the administrative side was good or bad, but only with whether they thought any alterations would lead to a saving in cost. At the moment, whether we are in hospital or out of hospital, we are still patients of a doctor, whether he happens to be the consultant under whom we are in hospital

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or our general practitioner at home. But for administrative reasons, we pass from the hospital service to the local authority service, or we pass to the service administered by the executive councils; and I do not think there is One of us concerned with the administration of any one side of the National Health Service who would say that there are not patients, and I think many patients, who fall between two of the three stools which are meant to support it.
The noble Lord, Lord Amulree, suggested as a solution to this problem joint appointments. The usual solution offered is that last resort of the incompetent administrator, the joint advisory committee. I, my Lords, do not believe that that is the answer. Successive Governments have always avoided this prickly problem. I am fairly certain that the noble Lord who is to reply to this debate for the Government will tell me that the National Health Service is only ten years old and that it is much too soon to look at it again. But in ten years a vast amount of vested interests can be built up, and it is the vested interests concerned which perpetuate incompetent administration. After all, medical work, if the noble Lords who are doctors and surgeons will forgive my saying so, is teamwork. It is the consultants, general practitioners, nurses, home-helps, psychiatric social workers, the local authorities which provide the homes for old people and the hospital service which provides the hospitals, and so on, who should all be working, together as a team to cure us when we are ill—and, indeed, as the noble Lord, Lord Douglas of Barloch, said, to try to arrange that incipient illness is found out before we are ill.
I think that the present administrative set-up makes that more difficult, and I would most urgently ask Her Majesty's Government, and most strongly support the noble Viscount, Lord Astor, in his suggestion, that another committee (much though I dislike committees being set up) should be set up to investigate not only the hospital service but the whole of the National Health Service, to find out whether the good service which we now have can, be made better, as I myself believe it could be if the administrative machine were tidied up.
5.30 p.m.
LORD PAKENHAM: My Lords, I know that everything that falls from the noble Lord who spoke last on this subject will be studied fully, and I hope and believe particular attention will be given to what he said about mental health, a subject rather neglected throughout the rest of the debate and to which I will return in a moment or two. Before coming to that, however, may I say what a privilege it is to speak last for this side in a debate where so many notable pundits have made their contribution. The noble Lord, Lord Nathan, made, I think we all agree, a most impressive, balanced survey, and, as we expected, the noble Lord, Lord Evans, excited our interest so greatly that we all felt sorry when he sat down after what seemed to be only a few moments. I hope and believe he will speak twice as long on subsequent occasions. It would have given pleasure to our dear chief and late revered Leader of the House, Viscount Addison, to hear the maiden speech of his son and to hear him speaking so well—and speaking so well on a medical subject. We hope to hear him often again.
I am glad that the noble Lord, Lord Clitheroe, paid tribute to the services rendered, not only to-day but on many other occasions, by the noble Lord, Lord Nathan, to hospitals and to health in general. I echo those tributes. I recall an occasion when I went to visit the noble Lord, Lord Nathan, then a patient in his own Westminster Hospital. I was trying to find my way to the noble Lord, when I was stopped by a charming young doctor, who asked me a question in these terms: "Which side are you on?" Not quite picking up the local jargon I replied, "I am on the Labour side." He replied in his turn, "Good show, I'm gynæ ', too!"
I hope, as a mere layman, I shall be allowed to speak from a patient's point of view, but if I concentrate on mental health I do not want the House to think I am necessarily speaking from the point of view of a mental patient. That has not been my experience of hospitals. Indeed, looking around your Lordships I should think the prognosis for most of us was fairly good. We are too old to he diagnosed as mentally deficient—I have no doubt that the doctors will tell

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me if I am wrong—and as regards mental sickness I feel the atmosphere of the House is so charming and tranquillising that we have no need of drugs and hospitals.
I echo what has been said about the great glory of our Health Service, and our hospital service is a very large part of it. I was inclined, however, to feel at certain moments in the debate, and at one moment, with great deference, when the noble Lord, Lord Moran, was speaking, that we were in danger perhaps of being almost complacent about the state of our buildings, and particularly the buildings for mental health. There I feel that if the noble Earl, Lord Cranbrook, had pursued the topic longer, it might have acted as a corrective to the noble Lord, Lord Moran. I have heard references this afternoon to the Hospital Year Book and I was trying to equip myself by studying the editorial in the current edition. The editorial in this annual survey is far more troubled about the provision which is being made for hospitals than were some of the speakers this afternoon.
I will not weary the House with many quotations but I found this sentence:
" Although especially acute in the mental health field, the need for increased capital expenditure is general to the hospital service."
The noble Lord, Lord Nathan, reminded us that the Guillebaud Committee's recommendation was for £30 million a year and that we are now spending no more than £20 million. Although the Hospital Year Book quotes this amount, the £20 million, as "some advance on past years", it says
" it remains totally inadequate for the proper maintenance of capital assets, and would be so even if there were no enormous legacy of arrears to make good."
I am still quoting the Hospital Year Book:
" In the absence of a substantial increase of capital expenditure the position is that this country is steadily falling behind other countries in its standards of hospital provision."
I feel that the noble Lord, Lord Evans, would perhaps not be altogether averse to that way of stating things. In reference to the teaching hospitals he used language not very far removed from that. At any rate that is the view of the Hospital Year Book.
I have tried to equip myself for this debate by talking to a number of doctors.
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I wonder whether the great experts present agree with what I am told. I find a strong conviction that outdated hospitals are throwing an excessive strain on junior house officers and nursing staff. I am sure we all agree that it is necessary to provide married quarters for house officers and I have had cases mentioned to me of the breaking up of marriages as the result of inadequate marriage quarters.
As I say, I should like to talk more particularly about mental health. There the noble Earl, Lord Cranbrook, began to paint the picture. We are all aware—and the noble Lord, Lord Moran, explained it to us—that we have entered a new phase in mental health, and these matters were discussed when we had a debate on the Report of the Royal Commission. But we are all aware, and the noble Lord. Lord Moran, does not want me to teach him these elementary things, that the mental hospitals were built when there was a totally different approach to mental disease and old age. They were built largely for the poor, and the least regarded of the poor. Now all elements in the population may be making use of them. We were reminded in the debate on the Report of the Royal Commission on Mental Health that 44 per cent. of the beds in the hospitals at the present time are used for mentally disordered patients—nearly half the beds— and that one boy in twenty born in this country, and rather more than that proportion of women, will spend some time in a mental hospital. The noble Earl, Lord Cranbrook, reminded us that 80 per cent. of patients who are admitted to mental hospitals are discharged within a year and that more than half stay less than three months.
These facts are rightly pointed to by experts like the noble Lord, Lord Moran, as showing how far we have advanced, and that is so. We have, I agree, advanced enormously in ideas and actual progress; but the very fact that the mental hospital to-day has a curative aim imposes a new and heavier responsibility for providing more advanced facilities than in the past, and I should think that a still heavier responsibility has been assumed by the Government through its acceptance of the progressive ideas of the Royal Commission's Report. But if we turn back to the Hospital Year Book we find this:
"The achievement of a new deal for mental health is dependent on a great deal more than

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the passing of new legislation … In the hospital field, if the belief of the Royal Commission in the voluntary treatment of mental disorder is to be justified, it will be essential for standards of accommodation, equipment, patient comfort and feeding, and of staffs in mental hospitals, to be brought up to the general run of other hospitals."
So that it seems clear that, though some leeway may have been made up, mental hospitals are still, through no fault of their own, lagging behind the rest of the medical world; that they are still the depressed classes of medicine.
We must assume that these matters are in the mind of, the Government, and no doubt the noble Lord, Lord Strathclyde, will have something to say about them. Obviously, what I am proposing involves heavy expenditure, and the noble Lord will tell us to-day that heavy expenditure is not very easy to arrange for at the present lime. I am not going to say more on that now, except that I feel that any Government, irrespective of Party, is not doing its job until it spends much more on hospitals generally and particularly on mental health. I assume, however (and I assume this only for the sake of argument), that the Government cannot be expected to spend much more at this precise moment than they are spending on mental health; but what about reforms which do not cost very much money? I would counsel noble Lords here to read once more the powerful speech made when discussime mental health specifically, by the noble Earl, Lord Feversham, who is Chairman of the National Association for Mental Health, which has done and is doing such an enormous amount in this field.
I should like to remind your Lordships of the emphasis laid by the Royal Commission on the shift from hospital to community care—that is, care of patients outside hospitals. The noble Earl, Lord Cranbrook, was beginning to labour the same point. There is increasing emphasis on forms of treatment and training and social services outside the hospitals which make it possible to discharge patients sooner than in the past. Here, again, it is no good pointing to something which ideally ought to happen. The Government in power have a heavy responsibility for action if mental hospitals and mental deficiency hospitals are to be encouraged to discharge patients who are no longer in need of specialised mental treatment. It may be asked: "What can the Govern-
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ment do about it, because in many cases is this not the responsibility of the local authority?" All I am asking for is the implementation as soon as possible of paragraph 52 of the Royal Commission's Report—in other words, that the Minister of Health should use his existing powers to make Section 28 of the National Health Service Act a duty, and no longer permissive as at present. This would force local authorities to provide a full community service. I know that a number of enlightened authorities have already done this, but others have lagged behind. The Government cannot, in honour and decency, shirk the responsibility for forcing all local authorities to do their part.
I should like to say one word—it can be but for a moment—about training. We should all agree that the quality of the service in mental health, as in other spheres, depends on the quality of the workers, and this applies not only to hospitals but also to community care, which should make it possible to reduce the number in hospitals and so make the best use of and provide better service in the hospitals. I am sure that in some hospitals we have every kind of facility, but every encouragement must be given to improving recruitment and training for both medical and nursing staffs in hospitals and for community care. It is a deplorable fact, I am assured by those who ought to know, that there is no generally recognised training for mental welfare officers and duly authorised officers, in spite of the heavy responsibilities of their work and of the fact that these servants of the public have been foremost in urging that suitable training should be provided. There is still a deplorable lack of psychiatric social workers for service in mental hospitals and in out-patient psychiatric clinics.
In the earlier debate various speakers, including myself, led by the noble Earl, Lord Feversham, insisted on the great part to be played by voluntary organisations; and our words, I am glad to think, were endorsed by the noble and learned Viscount the Lord Chancellor. I have already mentioned the most prominent of these, the National Association for Mental Health. There is also the Mental After Care Association, the National League of Hospital Friends, the

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British Red Cross, the St. John Ambulance Brigade, the W.V.S., the Women's Institutes, the Townswomen's Guilds, Toc-H, the British Legion, youth clubs and, of course, the church organisations. Though I know that the noble and learned Viscount the Lord Chancellor spoke on an earlier occasion on the importance of this work, I hope that the noble Lord, Lord Strathclyde, will reaffirm once more in this hospital debate the importance of the Government's attention to the work of these voluntary organisations, whether they are helping people who are actually patients in hospitals or helping people to find their feet outside hospital, which of course enables them to be taken back into the community much sooner and reduces the burden on the hospitals.
I should like to say a word about research. I do not know anyone who, when he is strongly armed, can provide more crushing replies, always friendly and courteous, than the Lord Chancellor. When we had our last debate I felt unhappy about the answer he gave in regard to mental health research. It was pointed out at that time that the Medical Research Council are spending only 2 per cent. of their funds on mental health. The noble and learned Viscount dealt with that point, but I hope he will not mind my saying that it was not one of the crushing replies which he has administered to me and other critics, and I trust that to-day the noble Lord, Lord Strathclyde, will indicate at least the importance that is attached to research—and to mental health research and not just to research in general.
Finally, one word about the old. The Minister of Health said in November last year that in 1954 a survey had suggested that there were 10,000 old people in mental hospitals all over the country who might be capable of being treated elsewhere. Apparently the total number of patients over 65 years of age in designated mental hospitals is about 45,000. Surely all of us agree—and I am sure that the great doctors who have spoken, such as the noble Lord, Lord Moran, would agree—that the widest possible range of residential services should be developed, so that, if patients do not in fact need the skilled treatments of a mental hospital, they will be able to leave
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hospital and not be forced to stay there just because there is nowhere else for them to go. I am assured that long-stay psychiatric annexes are a most suitable line of development, and experiments at Oxford and Worthing are proving encouraging. At Worthing, it has been found possible to keep mentally frail old people at home, with the co-operation of the family doctor and a skilled psychiatrist. I hope that that will be carried much further, with the encouragement of the Government.
I may seem to have travelled wider than the Motion, which is concerned with hospitals, but if, as I assume (if only for the sake of argument) there is not anything like as much money to spend on mental health as one could wish, the question then becomes: how can we provide better treatment for those who are in mental hospitals? To some extent that leads on to the question: how can we reduce the population in these hospitals by providing better services outside? I have tried to point to one or two things that could be done constructively. Taking the situation as a whole, no one questions the great improvements that have been made in mental hospitals, as indicated by the noble Lord, Lord Moran; and no one could question the fact that modern ideas of mental treatment are far more advanced than older operations. But I submit—and I think it will be the general opinion of all those interested in the subject—that we shall never discharge our duty to the community without spending much more money on mental health than we seem prepared to do at the moment. That is not to disparage what is being done, within the financial limits; it is excellent and in many cases magnificent. But against the standard of what our present knowledge suggests is necessary, it is only a tinkering with the problem.
I hope the House will forgive me for concentrating on that one aspect, but others vastly more experienced in this field have dealt with other topics. I think that no one who comes to the subject fairly fresh, as I do, can fail to feel that he has learned a great deal from other speakers. I know that when the noble Lord, Lord Strathclyde, replies he will realise that we are all anxious to pay tribute to the hospital service; but we think that there is far more that can

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be done. As the noble Earl, Lord Cranbrook, said, what matter more than the last ten years are the next ten years; and I hope and believe that the noble Lord will in a moment address us in that spirit.
5.52 p.m.
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE): My Lords, I should like at the outset of my remarks to associate myself with the tributes that have been paid to the noble Lord, Lord Nathan, for providing us with an opportunity to review the hospital service on what is practically the eve of its tenth anniversary; and I should also like to thank him for the helpful speech with which he introduced his Motion. I want to thank, too, all other noble Lords who have contributed to the debate, and I should like particularly to congratulate the noble Lord, Lord Evans, and the noble Viscount, Lord Addison, or their maiden speeches. I am quite sure that all of your Lordships will look forward to their taking part in our discussions frequently, for indeed we shall benefit from their advice.
I feel that we are fortunate in having in this House so many noble Lords with both knowledge and experience of one or other aspect of the subject we have been discussing. The noble Lord, Lord Nathan, himself brings to bear a great wealth of experience as chairman for many years of the board of governors of one of our great teaching hospitals. I should like to take this opportunity of saying how grateful the Government are, both to the noble Lord and to the many others in similar positions, for the untiring and devoted voluntary service they have given during these first formative years of the hospital service. I think that our debate to-day has shown a lively consciousness of the magnitude of the undertaking and also an appreciation of what has been achieved. The scale of the operation is perhaps worthy of a little thought. The noble Lord, Lord Nathan, spoke on this theme. It may be that some of the figures I shall give will differ from those given by him, and if so he will realise that I am not criticising his figures, but that I have the advantage of figures which are perhaps even more recent than those he has given.
There are in the hospital service in Great Britain some 3,700 hospitals and
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clinics employing, with their boards and committees, no fewer than 374,000 full-time and 94,000 part-time staff, handling 4¼ million in-patients and some 56 million out-patient attendances, and spending now something like £400 million in a year. It is hardly to be expected that an undertaking of this size, financed from public funds, should not have thrown up many problems during the years in which it has been taking shape; and when we address our minds to these problems, many of which have been raised by noble Lords this afternoon, I think it is right that we should do so with some appreciation of the scale of the undertaking from which they arise.
Before commenting on some of these problems, I should like to turn for a few moments to the achievements of the service, not in any spirit of self-congratulation but because, in my view, it would be grossly unfair to all the many people concerned with the running of the service to give the impression that the Government were so preoccupied with the problems that require solution and the possibilities for the future that they have no time to spare for appreciation of what has already been done. Indeed, several noble Lords have already spoken warmly of what has already been achieved, and I am sure that what they have said will be very welcome to those concerned.
Looking at the whole picture from the point of view of the central Government, I think one might point to three particular positive features as being specially notable. First there is the point that has already been made by the noble Lord, Lord Moran, when he spoke of the way in which the coming of the hospital service has resulted in specialised medical skill being much more widely available throughout the country. In terms of Great Britain one can get some idea of it by reflecting that the total number of specialists employed in the hospital service in Great Britain at the end of 1957 was not far short of 8,000, an increase of nearly 33 per cent. on the figure even at the end of 1949 when the hospital service had already begun to make its impact. I think it would be fair to say as has already been said by the noble Lord, Lord Moran, that there is no locality now in this country where specialist services are not available within a reasonable distance.

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As the noble Lord, Lord Moran, also said, mental health especially has gained from this state of affairs. It is true that we still do not have all the specialists we should like in this field, but I think we all recognise that an entirely new approach to the problems of mental illness has manifested itself in recent years, as debates in this House have shown. While I am not saying that this approach would never have come about without the National Health Service, it is, I think, true to say that the more positive and hopeful treatments and attitudes of to-day have been aided by the wider deployment of skills and accommodation.
The next feature to which I should like to draw attention is the sheer volume of the work that has been handled, compared with the very limited physical expansion that has been found possible. It has been pointed out time and again, as a matter of reproach—and it has been pointed out again today—that no new general hospital has been completed in this country for some twenty years—apart, that is, from one of 156 beds which has been built in Scotland. The noble Lord, Lord Amulree, did not think that new buildings were very important, but other noble Lords took a different view. Nevertheless, in these last eight years we have seen a rise of no less than 29 per cent. in England and Wales, and 43 per cent. in Scotland, in the number of in-patients who have been treated. I do not think I need assure the House that that increase has been achieved without any lowering in standards.
There has been some increase in the number of beds available, a large part of it achieved, not by new building but by bringing into use beds which were formerly idle. But that increase has been only to the order of 6 per cent., and much the most important contribution to the great increase in the volume of hospital work has come from the greater efficiency in management and from the improved methods of treatment. Of course it is quite obvious that statistics cannot show the quality of the treatment and, indeed, those noble Lords who are familiar with current hospital statistics will know that discharges and deaths are lumped together as an indication of the in-patient load. But I really do not think that anyone would suggest that the increase in volume has been achieved by sacrificing medical
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or nursing standards. I do not want to give the impression that the Government do not consider that new building is necessary. On the contrary, we realise, with noble Lords who have spoken this afternoon, how urgently it is needed. At the same time, I think it is fair to give credit to the doctors, nurses, administrators and all others in the hospital service who, in spite of shortages and obsolescence of much accommodation, have yet achieved so much.
The one other achievement to which I should like to call your Lordships' attention, and which seems to me to be worth recording, is the progress that has been made in the integration of the service. After all, when we think back and remember that in 1948 nearly 3,500 hospitals were taken over—a large number of them completely independent and separate, and others grouped only within a local authority area—we are surely bound to admit that the integration that has been achieved is quite remarkable. I have no doubt that there are still instances where it is far from perfect, but when we speak of the hospital service to-day we know that we are referring to a reasonably coherent entity and not just to a collection of individual hospitals.
(Much progress has been made by the Regional Hospital Boards in planning regional services and relating one part of the Service to another. Sometimes that process has been the cause of heart-burning when it has been found necessary, for instance, to change the use of a hospital to fit it into the modern picture,or even to close a hospital completely. But I do not think anyone could say that the planners have ridden roughshod over local sensitivities or interests. There is more that I could say about what has been achieved, but I still have a good deal of ground to cover in commenting on the various points which have been made by noble Lords who have spoken, and perhaps I may now turn to some of the criticisms which have been made and to the problems that have been mentioned.
Before I do that, perhaps your Lordships would not consider it out of place if I were to remind you that in the review of the hospital service on which we have been engaged to-day we are not exploring virgin territory. A thorough review was carried out three years ago by a special

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Committee appointed to review the cost of the National Health Service as a whole; and in the Report of the Guillebaud Committee your Lordships will find detailed and considered comment on many of the questions that have been raised to-day. Indeed, such comments as I have to make will often be, to a large extent, a repetition of what that Committee had to say. But in general your Lordships will recall that the Committee had no revolutionary changes to suggest in the organisation of the hospital service, and they recorded the view that the Health Service's record of performance since the appointed day constituted a very real achievement.
It has been suggested that perhaps not quite enough attention has been paid by the Government to the recommendations of the Guillebaud Committee. I think there are two answers to that. The first, I would suggest. is that to a large extent the Committee's conclusions were against any considerable changes in the existing arrangements; and, secondly, that if noble Lords will study in detail such recommendations for action as were made, they will find that in the majority of cases action has in fact been taken. Where it has not been taken, or not taken in precisely the sense recommended by the Committee, it has been for reasons the cogency of which I do not believe the Committee themselves would fail to recognise.
Several noble Lords spoke on the matter of the teaching hospitals, including the noble Lord, Lord Evans, and the noble Lord, Lord Clitheroe, who devoted almost his entire speech to that subject. It is reasonable that in this House teaching hospitals should find champions, and in view of the importance of these hospitals in the development of medicine it is right that their claims should be pressed. But I also think that we should remember that out of 482,000 beds in the service there are only some 27,000 which are in the teaching hospitals; and they started with a considerable advantage over most of the non-teaching group. The Government have to balance all the claims on the resources available, while they must take care that medical teaching is not seriously prejudiced by lack of funds for hospital development.
The Select Committee on Estimates, 1956–57, in their Sixth Report, recommended something with which the noble
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Lord, Lord Evans, is not in agreement, but perhaps I may be allowed to quote what they said—namely:
" Until the standards of non-teaching hospitals reach a significantly higher level the allocation of development and improvement money to teaching hospitals should continue to be strictly limited."
My right honourable friend the Minister of Health, commenting on that statement, said he was in general agreement with the recommendation, but that at the same time he was bound to recognise the importance to the hospital service, and indeed to the health of the community generally, of seeing that teaching hospitals took a leading part in the latest development in the treatment of patients. Surely that strikes a reasonable balance. Of the very small amount available for distribution to provide that development and improvement in the year 1958–59, teaching hospitals got nearly twice as much as they would have got if the total had been divided in relation to the number of beds. In the case of staffed beds, the figure has been 7·4 per cent. for teaching hospitals, against 7·8 per cent. for non-teaching hospitals, and that is a difference of 4 of one per cent. which I do not think could be regarded as discrimination against the teaching hospitals. In the new building programme the teaching hospitals would appear to be well represented.
What I have said about the teaching hospitals has been in reference to England and Wales, and perhaps I may, be allowed to say a word about the situation in Scotland. There, of course, both the teaching and non-teaching hospitals come under the control of the Regional Hospital Boards. There has also been criticism in recent years in the teaching hospitals that they have not been receiving adequate capital investment and allocations to enable desirable improvement to proceed. It has been the case in Scotland, in this first decade of the National Health Service, that there has been a more even spread of financial resources over all the hospitals. The result has been to secure a reasonably high standard of service in the Scottish peripheral hospitals, and it is now hoped to be able to devote an increasing share of the financial resources to major developments in the teaching hospitals, and discussion to that end is already taking place between the Regional Hospital Boards and the universities.

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My Lords, a good deal has been said also on the subject of capital expenditure. The noble Lords, Lord Nathan, Lord Addison, Lord Lucan and Lord Pakenham, all mentioned that subject. There is an undoubted need for very considerable capital expenditure on the modernisation of old and building of new hospitals. The amounts which can be made available must be considered in the light of the economy as a whole. I think reference was made this afternoon to the fact that the Guillcbaud Committee recommended that £30 million should be spent annually in Great Britain. That has not been possible to date, but I would call the attention of the House to the fact that the Government have increased the amount available in England and Wales from £13 million in 1956–57 to £18 million in 1957–58 and to £20 million in the current financial year; and £22 million is expected to be available next year. In Scotland the respective figures are £2·4 million, £2·7 million, £2·8 million and £2·9 million. The fact that the allocations have been increased is surely evidence that the Government are doing what is possible to improve the situation.
The noble Earl, Lord Cranbrook, indicated, as I understood him, that capital expenditure was only a third of the level of 1938–39. Perhaps that is a reference to the Guillebaud Report, but I would point out that the Guillebaud Report was referring to capital expenditure in 1952–53; since then the amount provided has increased very much. For instance, in 1952–53 it was £12 million, and in 1958–59, taking Great Britain as a whole, it is somewhere in the region of £23 million.
The noble Lords, Lord Lucan and Lord Evans, made references to the Noel Hall Report. That Report, noble Lords will remember, was concerned with improving the grading structure of the administrative and clerical staff of the hospital service. The various employing associations in the hospital field have been invited to submit comments on various aspects of the Report, and these have not all yet come to hand. Meantime the Administrative and Clerical Staffs Whitley Council is discussing the Report's proposals regarding the grading structure of the general grades, the appropriate pay scale and other related
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matters. Those discussions have now gone on for some months, but unfortunately it has been impossible to reach agreement. The matter has now been referred to the Industrial Court. The Whitley Council is continuing on other aspects of the Report, and the senior grades (these were the grades to which the noble Lord, Lord Evans, referred) are to be the subject of a fact-finding inquiry. I would add that I have noted Lord Lucan's comments in regard to training.
Another matter which was raised by both the noble Earl, Lord Lucan, and the noble Lord, Lord Amulree, was that of work study. Work study originated in the study of the physical movements required to produce a given product, and its application in that sense to hospitals is somewhat limited, though of course it can be used in such activities as laundries, catering and building maintenance. Work study may be used to mean study of organisation and methods, and that was what was of particular interest to noble Lords who have spoken. That is on a rather broader front. It involves a study of almost any procedure, the examination of the things which have to be achieved and the methods used in achieving them, and the organisation of the establishment in which they have to be carried out. It may use techniques developed on work study. An experimental "organisation and methods" service was started by the Ministry of Health in 1954. Up to the end of 1957 it had completed seventy-eight assignments, and it had another twenty-eight either in hand or waiting. The results of those studies have been very useful indeed, though they do not seem to offer much scope for dramatic economies. I would assure the House that the Government are fully alive to the possibilities of the method and will continue their efforts to apply these techniques as seems to be most beneficial.
Perhaps I might be allowed to say one word on acquisition of space, a matter which was referred to. I think the point made was that hospitals should be enabled to acquire space against undefined future requirements. But, of course, it is policy not to buy land or property for hospitals in advance of requirements. That, I can assure your Lordships, follows the general Government policy not to lay out capital unless there is an immediate need, since the limited amount

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of capital available must be spent to the best advantage. But that does not mean for one moment that in building new hospitals no space whatsoever is left for future expansion. The objection is to the purchase of whole new parcels of land if there is no likelihood of building on them for some time ahead. I suggest that demands for new space may be balanced by the disappearance of requirements for space for other purposes, and I would also remind the House that to protect land which may be required at a future date for hospital purposes there is the machinery of the Town and Country Planning Acts, under which, of course, as noble Lords realise, land can be defined or designated for hospital purposes in the local development plan.
My Lords, I have been speaking for a very considerable time, but there are still a great number of points to answer, if your Lordships will bear with me for a moment or two longer. I should like to say a word or two on the matter of research, which has been referred to by many noble Lords. The noble Lord, Lord Pakenham, asked me to give an assurance on the subject. Of course, the Government fully realise the importance of research, both in relation to travelling scholarships and otherwise. The Government fully accept the question of travelling scholarships—that is, provided that the purpose of these scholarships can be demonstrated to be rewarding—and hospital hoards have been given a very considerable discretion to grant study leave, whether for travel or otherwise.
With regard to the matter of clinical research, that is now under the general supervision of the special Clinical Research Board, and there is no lack of encouragement for promising projects within the limits of the resources available. Of course, research has been traditionally regarded by the teaching hospitals, as I understand it, as a proper use for their endowment funds. I think it was the noble Lord, Lord Nathan, who said that the boards ought not to use these funds for other things, such as buildings, which could be more suitably financed by the Exchequer. The answer would give him there is that the teaching hospitals get their fair share of the funds available for building. I do assure the noble Lord, Lord Pakenham, that the Government are really fully seized of the essential need for research to continue.
LORD PAKENHAM: May I interrupt the noble Lord? I am afraid that I was speaking, as usual, too fast, and I did not make my main point quite plain. I was very anxious to submit once more to the noble Lord what was submitted by various speakers in the debate on mental health; that out of the total amount going to medical research far too little is going to research into mental health. I appreciate that the noble Lord cannot give a pledge on the point tonight, but can he assure us that that aspect of the matter will be considered again?
LORD STRATHCLYDE: Certainly. What the noble Lord has said, as he well knows, will be noted and carefully and sympathetically considered.
I should like to turn now to other matters raised by the noble Lord. For instance, he spoke of the need for residential accommodation for old people outside the mental hospital service. Of course, it is a need which applies throughout our hospital service where old people not really in need of medical care and skill have to be accommodated, by reason of the lack of other suitable accommodation. There are two ways of meeting this problem of providing residential accommodation for the old people. One is, of course, by long-stay annexes attached to the hospitals—that is, for patients who are not fit to live in the community but who do not need the full range of hospital care; and the other is that homes should be provided by the local authorities for those who do not need to be in hospital.
I want to tell the House that the establishment of these annexes to hospitals has been recommended to the hospital authorities, and that, despite the limited resources available, some little progress has been made. I am told that there are now about two dozen such annexes, and that they have between them some 2,300 beds. At least this is a start. I am glad also to tell the House that steady progress has been made by local authorities in the provision of small homes for these aged and infirm people, and that since the end of the war some 996 homes have been provided, 68 during the year 1957. In addition to that, the Royal Commission on Mental Laws has recommended that local authorities should make further provision for the

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elderly mentally infirm who do not need hospital treatment and care. That recommendation is now being considered along with others in the Commission's Report.
The noble Lord, Lord Pakenham, also spoke about the training of voluntary workers. The noble Lord probably knows that a Working Party, under Dr. Eileen Younghusband, has been set up by the Minister of Health to consider the proper field of work in the recruitment and training of social workers at all levels in the local authority health and welfare service. That Working Party began work in 1955, and they have heard evidence from the representatives of mental welfare officers and other bodies interested in the Health Service. That work continues.
The noble Lord also referred to expenditure in mental and mental deficiency hospitals. Of course, it has long been recognised that much needs to be done in our mental and mental deficiency hospitals. I assure the noble Lord that progress is being made. Let me tell him what has been done on the mental side—though he probably knows the answer already. There have been substantial increases in expenditure on mental deficiency hospitals. In 1956–57 32·7 per cent. of all capital expenditure was on the mental deficiency hospitals, compared to 23·9 per cent. in 1948–56. In the period from 1948 to 1957 nearly £18 million has been spent on hospitals of this type out of a capital expenditure of £70 million. Perhaps I might here say a word about staffing, which has been alluded to. Considerable anxiety has been expressed about the intake of nurses. I am glad to say that there is a considerable improvement in that respect. Between December 31, 1956, and September 30, 1957, the number of student nurses increased by some 42 per cent. on the male side, and female student nurses increased in number by 30 per cent. To-day, the rate of recruitment over the whole field has greatly improved and the number of students now under training is a record. That is not bad going, if I may put it in that way. The actual increase in the number of nurses and nursing and midwifery staff in Great Britain between 1953 and 1956 was from 180,470 to 187,697. So we are making a little progress, and one can only hope that it may continue.
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My Lords, many other points have been raised, but as I have already spoken at such considerable length perhaps your Lordships will excuse me if I do not comment on them. I have said that every criticism and suggestion which has been offered during this debate will he most carefully considered and studied by the Government. In the answers which I have given to particular points I have tried to pick out those which have seemed to me to be of particular interest.
May I return now to a point I endeavoured to make at the outset of my remarks? As your Lordships know, I come to this Box as the spokesman for Her Majesty's Government. In seeking to draw attention to the achievements of the hospital service and to answer criticisms of it, I may have given the impression that I am concerned only with claiming credit for the Government. That is far from being the case. If I have given that impression, may I repeat that the Government realise fully where most of the credit for what has been done belongs—namely, with the thousands of people who are engaged in the day-to-day running of the service: those who give their services as chairmen and as members of boards and committees, many of whom are included among Members of your Lordships' House; the doctors, whose medical skill is the foundation of the whole edifice; the administrators, nurses and all those other members of the hospital staff who are engaged in this great service. Nor am I forgetting the many voluntary workers who give so much of their time to help the hospitals in a variety of ways, through Leagues of Friends and otherwise. I am sure that the whole House will join with me in paying the most sincere tribute to all those people for the work that they do. For my part, I can assure your Lordships that the Government will do everything they possibly can, while maintaining the health of the national economy, to enable the service to consolidate the progress that has been made in these first ten years and to make further advances in the future.
LORD CLITHEROE: My Lords, before my noble friend sits down, may I ask him if he will be so good as to make one point clear about which I was not quite sure from his reply? When he was talking about teaching hospitals he created a certain amount of alarm and

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despondency in my mind by quoting the fact that the Minister of Health had associated himself with the rather depressing and, I thought, reactionary Report of a Select Committee in another place. Could the Minister give us some assurance that he still believes that it is the policy of Her Majesty's Government that the teaching hospitals should keep in the lead?
LORD STRATHCLYDE: My Lords, I should have thought that the noble Lord could accept that in view of the fact that expenditure on the teaching hospitals has been increasing year by year.
LORD CLITHEROE: I thank my noble friend.
6.29 p.m.
LORD NATHAN: My Lords, I am not at all certain that the two statements last made by the noble Lord opposite are not the two most important of his most interesting and valuable statement—I refer to his reply to the noble Lord, Lord Clitheroe, and also the praise which he bestowed upon that vast body of persons outside your Lordships' House who are so closely concerned with the work and the service of the hospitals. I am sure they will read what the noble Lord has said with the greatest satisfaction.
I feel all your Lordships will agree that I should express to the noble Lord who has spoken for Her Majesty's Government appreciation of the charm and the fullness of the statement he has made, to which obviously he has given a great deal of trouble. If some of the promise was a little arid, that was disguised by the charm of the presentation.
This has been a memorable debate in the history of hospitals. It has been conducted at all times and in all parts of the House in an atmosphere of friendly good will and of appreciation of what has
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been done by all concerned in the Health Service, from the Ministry downwards. We are all partners in this. To-day's debate has been memorable for the fact that five of the speakers were drawn from the medical profession and distinguished in one branch of it or another. The veteran, Lord Moran, brought all his long experience and authority to bear on the discussion. We have heard the noble Lord before and have learned to assess him here. But we have not before heard the noble Lord, Lord Evans, and I am sure that everyone who heard his speech will have acclaimed him and will regard with satisfaction the fact that the first of what we hope may be numerous speeches in your Lordships' House on subjects coming so much within his province was made in this debate on ten years of the Health Service. Personally, I have an especial satisfaction in commenting on the maiden speech of my noble friend Lord Addison, for I know my honoured friend his father would have rejoiced to think he was making so successful a speech on such a subject in this debate to-day.
Your Lordships will not wish that I should in any way prolong this debate. I believe it has been useful and will bring satisfaction to those engaged in the hospital services. I took note of what was said by the noble Lord about taking into account also the various suggestions and criticisms which had been made but had not been referred to in his reply; and of course we rely upon the Ministry to give due consideration to all these matters which have been put forward in a spirit of good faith and good will and in conformity with our common purpose. Once more I thank the noble Lord, and beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

MEDICAL ACT, 1956 (AMENDMENT) BILL
6.34 p.m.
Order of the Day for the Second Reading read.
LORD COHEN OF BIRKENHEAD LORD COHEN OF BIRKENHEAD My Lords, I hope that even at this late hour your Lordships will permit me to sketch very briefly the background to this Medical Act, 1956 (Amendment) Bill which I have the privilege of commending to your Lordships and which your Lordships will know has already passed through all its stages in another place without a dissentient voice. I should remind your Lordships that the Medical Act, 1956, was a consolidating measure and therefore it could not alter in substance the provisions of the Medical Act, 1950, the anomalies and injustices of which this Amending Bill seeks to repair. The anomalies have become unmasked as a result of several years' experience of the working of the Act. They could not have been foreseen, and if they could I fear that part of the blame lies on the noble Lord. Lord Nathan, and myself, for we both represent the Crown on the General Medical Council.
Your Lordships will also know that in the British Isles for exactly 100 years there has been maintained a Medical Register. That Register was designed, not as is sometimes thought for the protection of the medical profession but for the protection of the public. It incorporates the names of all those who have been shown to possess the requisite knowledge and skill for the efficient practice of medicine, surgery and midwifery, and by the Medical Act. 1858, which gave birth to the Medical Register, there was brought into being the General Medical Council which is responsible for maintaining the Register.
The functions of the General Medical Council are primarily educational, although I know that in the minds of the laity their functions appear to be primarily disciplinary against the medical profession. In pursuance of its statutory responsibilities, the General Medical Council has appointed visitors and inpectors of examinations of our University medical schools and of the Examining Boards of the Royal Colleges, the Society of Apothecaries and Apothecaries Hall of Ireland, which are known as Licensing
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and has from time to time issued recommendations about the form and content of the medical curriculum.
In 1943, the General Medical Council decided that the time was ripe to consider the provision of additional postgraduate experience before a qualified person was registered as a medical practitioner, thus entitling him to independent medical practice. Effect was given to this proposal in the Medical Act, 1950, which introduced as part of the required medical experience before full registration a year's residence as a house surgeon or house physician, or both—it specified the requirements which must be satisfied—in an approved hospital. The Medical Act, 1950, came into being and the appointed day was January 1, 1953. That was the day which the Privy Council assigned to the incoming of the "intern year" as it was called, on the advice of the General Medical Council.
I must tell your Lordships two further historical facts. In 1886 there was passed another Medical Act which enabled the General Medical Council to recognize, for the purposes of registration in this country, Commonwealth (then Colonial) and foreign degrees and diplomas which the General Medical Council felt satisfied the criteria of proficiency demanded of those who were registered in this country. Registration here was decided on the basis of reciprocity: that is to say, if we recognised the degrees and diplomas of other countries, they should recognise our degrees and diplomas for practice in their territory. On that basis of reciprocity we have over the years recognised many other qualifications. We recognise the qualifications of four of the States of Australia and six of the Provinces of Canada; we recognise qualifications in India, where nineteen of the medical schools now grant recognised registrable qualifications, and qualifications of Ceylon, Hong Kong, Pakistan, New Zealand, Singapore, Malaya, Malta and South Africa. We recognised most recently Uganda. We now recognise the qualifications of one foreign country only, Burma, though before the war we recognised the qualifications of both Italy and Japan. The second historical fact is this. Under the Medical Act of 1950, Commonwealth and foreign practitioners who have a recognised qualification need not carry out a year's

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internship in this country, provided that they can show that they have had "not less extensive experience" than is required by the year's internship in this country.
The purposes of the present amending Bill are threefold. Two of them refer to points I have already mentioned and the third is an entirely separate point. The first is on Clause 1, which seeks to remove certain anomalies and injustices which have arisen in the case of certain doctors who are seeking full registration. The second clause seeks to simplify the procedure of what is known as provisional registration. As soon as a doctor is qualified, he can seek, under conditions of which I will speak a little later, provisional registration, which entitles him to serve in a hospital and to carry out all the activities which are necessary for work in that hospital, but does not entitle him to independent practice—medical work, that is to say, outside hospital. The third clause simply seeks to remove an unnecessary provision about certain fees, allowances and expenses which are payable to members of the General Medical Council and to its branch councils.
Under Clause 1 there is an attempt made to seek to remove the disqualification of two groups of practitioners who are now debarred from applying for full registration. The first group are those who qualified—that is to say, who received a degree or diploma—in this country before January 1, 1953, and who would, if they had then sent in an application and the requisite fee, have been registered on the medical register, but who for certain reasons failed to do so, sonic of them because they went abroad immediately in the Armed Forces or as medical missionaries. They now return to this country, but before they can be fully registered, whatever experience they may have had between the date on which they qualified and the date they return to this country and apply for full registration cannot be taken into account. In other words, they have an absolute disability, inasmuch as any experience, however extensive, however adequate, or however acceptable it might be to the General Medical Council, cannot under Section 15 of the Act be recognised.
But it is not only an absolute injustice; it is a relative injustice, because if the doctor had received his registrable quali-
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fication in the Republic of Ireland he is exempt from this provision under subsection (3) of Section 7 of the 1956 Act; and a Commonwealth or foreign practitioner who has a qualification which is non-registrable but which is recognised as providing a sufficient basis for accepting that the qualified person possesses the requisite knowledge and skill for the efficient practice of medicine, surgery, and midwifery, need not serve a year's internship if he can show that in the period between his non-registrable qualification and registrable qualification he has had an experience which is "not less extensive" than that required from those who possess British qualifications.
The amending Clause 1 (a) will enable practitioners who qualified before January 1, 1953, with a British qualification, but who failed to register, to fall into line with Irish practitioners, Commonwealth and foreign practitioners, and they will be able to be fully registered on providing evidence that they have an experience which is not less extensive than that required under Section 15 of the Medical Act, 1956. I might say that each individual case of a Commonwealth and foreign practitioner is, and, if this Bill becomes law, of those who qualified before January 1, 1953, will be, considered by a Committee of the General Medical Council which was appointed some years ago, which is maintained and which studies with great care the individual applications in relation to the experience which they certify. Clause 1 (a) will in fact ensure that those who receive British qualifications are not labouring under a disadvantage compared with their Irish, Commonwealth and foreign professional brethren. The number of doctors who will be affected by Clause 1 (a) is very small and, clearly, the number will, as time passes, decrease.
Clause 1 (b) refers to those doctors who hold qualifications granted outside the United Kingdom and the Republic of Ireland which are of acceptable standards but which are not registrable in this country. If they later acquire a registrable qualification in the British Isles no account can he taken of any experience they, might have had between the date of the non-registrable qualification and the registrable qualification. Let me give you two examples which have been brought directly to our notice. A Hungarian refugee doctor of the highest

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qualifications which the General Medical Council would be prepared to recognise, on merit as acceptable, with many years' hospital experience, comes to this country; he is allowed by temporary registration to practise in a hospital in this country. He then receives a British qualification, but any experience he has had, however extensive, does not permit him to dispense with the intern year.
In the same way, a Munich doctor who had received the degree of Doctor of Medicine came to this country and was temporarily registered and for four years held hospital posts, some senior, in this country. He received then a British qualification, but the four years' experience that he had had in hospitals was not allowed to count towards his intern year. This is, of course, the more anomalous because under the Medical Act, 1956, Section 22 (2) (b), it is possible to register Commonwealth and foreign doctors who have recognised but non-registrable qualifications on the basis of work done which is not less extensive than that which Section 15 of the Act requires. The amending Clause 1 (b) will give the person the right to full registration on obtaining his British qualification if this experience between his non-registrable and registrable qualification satisfies the General Medical Council that it has been not less extensive than that required in this country.
As I said, Clause 2 seeks to simplify the procedure for provisional registration, which at present is complicated, cumbersome and involved. The young doctor who is qualified and receives his degree or diploma must, before he is provisionally registered, apply to a hospital for employment. The hospital must be approved by the licensing body—his medical school or his examining board. He must receive a certificate of selection of employment from the hospital authority which selected him and this, together with evidence of his qualifications, is sent up to the General Medical Council.
The certificate of selection of employment of the licensing body must be signed by a fully competent and authorised person of the licensing body and this leads to some delay. Indeed, since the General Medical Council has to scrutinise some of the signatures, and has to verify some of the qualifications, there
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may in some cases be a few weeks' delay between provisional registration and the date at which application was made, which means that however keen a young doctor may be, or however keen the hospital may be to have his services, he cannot legally carry out his duties in a hospital. We know quite well that these provisions are sometimes disregarded, and the result is that young doctors in hospital may not have their provisional registration although they hold a house appointment. This procedure applies to about 2,500 qualified doctors each year, and when you consider the number of certifying authorities and individuals involved you will realise that there is considerable complication and much time is wasted. Here again, the Republic of Ireland, by their 1950 Act, introduced the direct method of application for the provisional registration which meant that as soon as a young doctor received his qualifying degree or diploma he applied to the Medical Council for registration as a provisionally registered practitioner, and it was granted. That system has been quite satisfactory; no difficulties have arisen, and the safeguard which was originally thought to be covered by our method has, in fact, been found unnecessary.
Amending Clause 2 provides that the present requirement for production of a certificate of selection of employment before provisional registration shall cease to have effect and I should like to assure your Lordships that the deletion of this requirement will be very warmly greeted by those who are charged with the task of implementing the provisions of registration.
Clause 3 refers to the fees, expenses and allowances which are paid to members of the General Medical Council and of its branch councils. These fees are determined by the General Medical Council but require Treasury approval. Treasury scrutiny might have been appropriate nearly a century ago, when the funds of the General Medical Council were not provided wholly, as they are to-day, by the registration fees of practitioners. No public money is now involved but the Medical Act, 1956, under paragraph 7 (1) of the First Schedule, perpetuates the need for Treasury approval. It is the more anomalous because the Dentists Act, a much more

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recent Act which established the General Dental Council, contains no provision for Treasury approval of fees paid to members of the General Dental Council. Moreover, the Opticians Bill, which is at present awaiting Royal Assent, has no such proviso in relation to the General Optical Council. Clause 3 provides that Treasury approval is no longer required for the payment of fees, expenses and allowances to members of the General Medical Council and its branch councils. I would assure your Lordships that all interested parties have been consulted in these matters and all concur in the provisions which the amending Bill seeks to establish. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Cohen of Birkenhead.)
6.56 p.m.
LORD NATHAN: My Lords, as I also am a member of the General Medical Council—although a lay member, in contradistinction to the noble Lord who has just spoken, with all the authority of a medical man of his standing—I feel that I must support him in what he has said and associate myself with the full and careful explanation of the Bill which he has given to your Lordships' House. I therefore, for conformity, stand before your Lordships' House in association with this amending Bill.
EARL ST. ALDWYN: My Lords, in view of the extremely detailed and careful exposition of the Bill given to us by the noble Lord, Lord Cohen of Birken-
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head, all I need do on behalf of Her Majesty's Government is to support this Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

LONDON COUNTY COUNCIL (MONEY) BILL
Reported, without amendment.
ROYAL SCHOOL FOR DEAF CHILDREN MARGATE BILL
Reported, with Amendments.
  PRISON OFFICERS' REMUNERATION AND CONDITIONS
  PRISON OFFICERS' REMUNERATION AND CONDITIONS