Sitting of 28 April 1959

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

    Requisitioned Houses
    Mr. Reynoldsasked the Minister of Housing and Local Government and Minister for Welsh Affairs in how many cases he has suggested to local authorities that they should make compulsory purchase orders on housing property at present held under requisition in order that they may continue to use it for housing purposes when requisitioning comes to an end.
    The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): None. The question whether they need to make compulsory purchase orders is entirely for local authorities to settle for themselves. I am sending the hon. Member a copy of Circular No. 18/59, dated 11th March. which is the latest to be sent to local authorities for their guidance on this matter.
    Mr. Reynolds: Is not the Minister aware that his officers are actually consulting the officers of local authorities and suggesting that one way of dealing with the problem is by making compulsory purchase orders and that Metropolitan boroughs are making large numbers of compulsory purchase orders on hundreds of properties at the moment? Whilst this is welcome from some points of view, it puts the owner of the property in the invidious position of having a right of appeal only to the Minister whose officers have suggested that his property should be compulsorily purchased.
    Mr. Brooke: No, Sir. My officers are doing nothing that goes beyond the terms of the circular of 11th March, which indicated compulsory purchase as one course of action, but only as a last resort.

    Agricultural Land, West Riding
    Sir L. Ropnerasked the Minister of Housing and Local Government and Minister for Welsh Affairs how much agricultural land has been taken over by local government authorities in the West Riding of Yorkshire for building purposes during the years 1957 and 1958.
    The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins): I regret that this information is not available. I am writing to my hon. and gallant Friend to explain why this is so.
    Sir L. Ropner: Can my hon. Friend give an assurance that close contact is maintained with my right hon. Friend the Minister of Agriculture when any proposal is made to take good agricultural land for housing purposes?
    Mr. Bevins: Yes, Sir, that is certainly so as regards cases which come to my right hon. Friend. In the case of applications to local planning authorities, it can generally be taken that they have regard to agricultural considerations.

    Improvement Grants
    Mrs. Slaterasked the Minister of Housing and Local Government and Minister for Welsh Affairs what proposals he has further to encourage landlords and owner occupiers to take advantage of improvement grants to add modern amenities to their property.
    Mr. H. Brooke: My proposals are contained in the House Purchase and Housing Bill now before Parliament. The provisions will be widely publicised as soon as the Bill becomes law.
    Mrs. Slater: Has the Minister any special way in which he is proposing to publicise this? Is it not true, if we check the figures, that of about 4 million houses in the country which are structurally sound only about 3¾ per cent. have been modernised since 1949? Would not this enable a tremendous saving to be made in house building?
    Mr. Brooke: It is certainly the object of the Government's Bill to speed up modernisation in those circumstances, and in that I thoroughly agree with the hon. Lady. As soon as the Bill becomes law, I intend to make available a free leaflet about its provisions, to publish an

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    illustrated booklet and to co-operate in several demonstrations which are being arranged by local authorities.
    Mrs. Slaterasked the Minister of Housing and Local Government and Minister for Welsh Affairs how many owner-occupiers and how many landlords in Stoke-on-Trent have taken advantage of improvements grants in 1957 and 1958 to bring their property up to modern standards.
    Mr. H. Brooke: The total numbers of houses improved with grant in Stoke-on-Trent during 1957 and 1958 were 235 and 222, respectively. The information furnished to me by the council does not distinguish between grants made to owner-occupiers and to landlords.
    Mrs. Slater: I am sorry that the Minister has not had details from the local authority. Is it not true that of all the landlord-owned houses in the city only 65 have applied for grants since 1949 and that in the case of owner-occupiers over 1,200 have done so? Does not that seem to prove that something needs to be done to get landlord-owned property brought up to modern amenities, which again would save the unnecessary building of new houses?
    Mr. Brooke: The hon. Lady appears to be asking me for information which she already has. However, I thoroughly agree with the purpose behind her question.

    West Riding
    Sir L. Ropnerasked the Minister of Housing and Local Government and Minister for Welsh Affairs how many council houses were completed in the West Riding of Yorkshire in 1951 and 1957.
    Mr. H. Brooke: Eight thousand five hundred and fifty-eight in 1951 and 11,483 houses in 1957.

    Housing Needs
    Mr. Liptonasked the Minister of Housing and Local Government and Minister for Welsh Affairs in what areas the need for new houses has been substantially met.
    Mr. H. Brooke: Local authorities do not notify me when they are satisfied that the need for new houses in their areas has been met, but the Appendix
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    to the Housing Return presented each quarter to Parliament shows the extent to which individual authorities have been continuing to build.
    Mr. Lipton: In the light of that answer, how has the Minister the temerity to come to the House, as he did on 7th April last, and say that in a considerable part of the country the need for new housing is substantially met? Will he stop being evasive about this and not make these statements which are most irritating to the many thousands of people awaiting new houses? Will he please tell us where these earthly paradises exist?
    Mr. Brooke: It is common knowledge that as a result of the building programme of the present Government the pressure for new house building, which was almost universal in 1951, has now, except in the difficult areas, substantially lessened.
    Mr. Lipton: In view of the completely unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Adjournment.

    Elderly Parents
    Mr. Sorensenasked the Minister of Housing and Local Government and Minister for Welsh Affairs, in view of the human problems arising from the removal of young married couples and their families to municipal housing estates a considerable distance away from the parents of those young married couples, whether he will recommend to local authorities sympathetic consideration of the need also to provide accommodation for elderly parents near to the new accommodation of their married children, particularly where such provision would guarantee vacation of property now occupied by the parents and thus be made available for other occupants.
    Mr. H. Brooke: The transfer of tenants, including elderly people, to houses better suited to them in size or situation has been recommended in a number of reports and circulars to local authorities, and particularly in the report, "Transfers, Exchanges and Rents, "which was commended to local authorities in 1953. Local authorities have been reminded of these recommendations in the report "Councils and their Houses", which I sent to them as recently as 23rd March last.
    Mr. Sorensen: Has the Minister any record of the response to those recommendations, particularly in view of the very urgent and human problems embodied in my Question? Has he done anything further than that which he has already stated, and will he state what response there has been?
    Mr. Brooke: I think there has been a steady response. I have communicated with the local authorities as recently as last month about it, but if there is any area or particular housing estate causing anxiety to the hon. Member, I very much hope he will communicate with me so that I can look into the matter.

    George Street Site, Newcastle-under-Lyme
    Mr. Swinglerasked the Minister of Housing and Local Government and Minister for Welsh Affairs if, in view of the shortage of housing sites in Newcastle-under-Lyme and the need to expand the municipal housing programme, he will take steps to secure the mineral valuer's report on George Street forthwith, so that the council and his Department may give immediate consideration to its suitability for rebuilding.
    Mr. H. Brooke: I understand that the mineral valuer has already advised the borough council against developing the George Street site with buildings of more than four storeys.
    Mr. Swingler: As that is not my information, will the Minister make some further inquiry? Is he aware that my information from the council is that it has been waiting since last August for a full report from the mineral valuer? The council places great importance on the possibility of being able to build on this site. Will he go into the matter because of its great importance?
    Mr. Brooke: My information is that the mineral valuer and the National Coal Board met the borough council and discussed the George Street site proposals. The mineral valuer advised the council that because of the site conditions he could not recommend in favour of blocks of flats higher than four storeys. He was not under the impression that the council was expecting any further report from him than that.

    Homeless Families (Circular)
    Mr. Swinglerasked the Minister of Housing and Local Government and Minister for Welsh Affairs what assistance his Department will give to local authorities to carry out the measures proposed in Government Circular 17/59, 18th March, to solve the problems of homeless families.
    Mr. H. Brooke: I do not think that any further assistance is necessary on my part to enable local housing authorities to act on the suggestion contained in this circular.
    Mr. Swingler: Does the Minister not find it somewhat ironical, to say the least, that he should be sending out a circular to local authorities purporting to advise them on how to prevent families from being evicted and what to do when they are evicted while his Government are responsible for extending the power of eviction and, by high interest charges, are preventing local authorities building more houses? Will he consider some action on the part of the Government to solve the problem of homeless families?
    Mr. Brooke: No, I do not accept that for one moment. Nor have I had any reaction to that effect from my issuing of the circular last month. I think it a very valuable circular and that it is appreciated by local authorities.

  LOCAL GOVERNMENT

    Porth Navas Quay, Helford River (Café)
    Mr. Haymanasked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he will make a statement on the report on the local inquiry into the proposal, approved by the Cornwall County Planning Committee, to provide a café on Porth Navas quay by the Helford river, Cornwall.
    Mr. H. Brooke: The inspector who held the inquiry reported that the café proposal was open to a series of objections which added up to a formidable case against it. I am sending the hon. Member a copy of his report. I agree with the inspector and am now consulting the Cornwall County Council about revoking

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    the permission for the café, and also about ending the use of the quay for landing scrap metal and cutting it up.
    Mr. Hayman: Is the Minister aware that during this century public footpaths have been obliterated in the Helford River area and that ugly slipways have been constructed across the beaches? Will he take into account the rights and privileges of ancient Cornish families and review his decision with a view to granting this project, which had the approval of the county planning committee?
    Mr. Brooke: No, Sir. I reached a decision, having studied the report of my inspector, and I am now consulting the county council to see whether it would be willing to make an order or whether I should do that.
    Mr. G. R. Howard: Can my right hon. Friend say whether in this case the powers were vested entirely in the local council concerned or whether these were powers upon which he could exercise broad control?
    Mr. Brooke: It is the local planning authority which has power to grant or to withhold planning permission in all cases.

    Demolition and Reconstruction Work
    Mr. Bairdasked the Minister of Housing and Local Government and Minister for Welsh Affairs if he will make it obligatory on private firms carrying out work of demolition or reconstruction to seek the advice of a qualified person employed by the local authority before carrying out such work.
    Mr. Bevins: My right hon. Friend has no power to take action on the lines suggested, but if the hon. Member will let me have details of the particular problems he has in mind I will gladly consider them.
    Mr. Baird: Is the hon. Gentleman aware that in a recent case at Wolverhampton where reconstruction has been carried out a woman shopper was killed and that if competent, qualified opinion had been taken before the reconstruction took place this would not have happened? This sort of thing is happening all over the country at the present time.
    Mr. Bevies: The fact is that my right hon. Friend has no power at present to require a demolition contractor to seek the advice of a local authority. By and large, the safety of workmen is a matter for my right hon. Friend the Minister of Labour. I am, however, quite prepared to discuss this matter with my right hon. Friend.

    War-Damaged Areas
    Mr. Brockwayasked the Minister of Housing and Local Government and Minister for Welsh Affairs what proposals are being considered for the reconstruction of war-damaged areas as a means of reducing unemployment.
    Mr. Bevins: My right hon. Friend certainly has any local unemployment problem very much in mind in considering any reconstruction scheme which local authorities may propose.
    Mr. Brockway: Is it not a fact that in London and many areas of the country there are wasted spaces which are eyesores and that this contrasts very badly with the reconstruction of war damage which has been done in many Continental countries? For the sake of our own pride and beauty, cannot we seek to remedy this position?
    Mr. Bevins: That may be true. In many of those areas there is very little unemployment at the present time. Where a local authority desires to acquire areas of war damage for comprehensive development or for the provision of their own services, we are always prepared, where there is unemployment, to look at those cases sympathetically.

    Gas Liquor (Treatment)
    Mrs. Slaterasked the Minister of Housing and Local Government and Minister for Welsh Affairs what research is being undertaken on the question of treatment of gas liquor before it is poured into rivers or sewers; and if he will make a statement.
    Mr. Bevins: Much research and experimental work is being carried out by the Gas Council and the area gas boards, in collaboration with other bodies. Progress is being made and is reported in technical journals. The problem is a complex one and quick results cannot be expected.
    Mrs. Slater: Has the Parliamentary Secretary read the Trent River Board's Report for last year, which makes special reference to the more acute position in relation to gas liquor being poured into the river in the Birmingham area, that in the Stoke area there is far too much still being poured into the river and the statement that this is having an adverse effect on the sewerage system of the local authorities? Does that not point to the fact that there is an urgent need for something to be done and for research to be stepped up so that this evil can be done away with?
    Mr. Bevins: I am aware of those statements. Since the nationalisation of the gas industry, gas production has been centralised in bigger units. This has aggravated this problem, which is a very real one in the Potteries. I assure the hon. Lady that research is going on at an increasing tempo and that we shall do all that we can.

    Dartmoor National Park (Buckland Woods)
    Mr. Haymanasked the Minister of Housing and Local Government and Minister for Welsh Affairs whether he is yet in a position to make a statement on the discussions between his Department, the National Parks Commission, and the Forestry Commission, about the proposal to clear-fell Buckland Woods in the Dartmoor National Park.
    Mr. Bevins: A meeting on the site, attended by representatives of the owner, the National Parks Commission, the Dartmoor National Park Committee and the Forestry Commission, was held on 1st April, and my right hon. Friend expects to receive the considered views of the National Parks Commission very soon.
    Mr. Hayman: Will the Parliamentary Secretary ask his right hon. Friend to take into account the possibility of entrusting the care of these beautiful woods to the Forestry Commission with a special directive to look after the amenity side of them?
    Mr. Bevins: I think that we should first wait for the views of the National Parks Commission.
    Mr. Mawby: In view of the number of Questions asked by the hon. Gentleman, may I say that my constituents
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    certainly applaud the fact that even a Cornish Member prefers the Devon scene? Would he point out to the hon. Member that such progress has been made on this issue that in fact a compromise has been reached between the bodies concerned, the National Park Committee, the owners of the woodland—
    Hon. Members: Speech.
    Mr. Speaker: Order. The hon. Member should put his question and should be allowed to put his question.
    Mr. Mawby: Is my hon. Friend aware that all the bodies concerned, the owners. the Forestry Commission and the National Park Committee, reached a compromise agreement so that the county council was prepared to withdraw its preservation order in favour of a dedication covenant?
    Mr. Bevins: My hon. Friend is perfectly right in his estimation of the position to date, and I do not think that I need point out anything further in reply to the hon. Gentleman who asked the original Question. It is a fact that at the moment we are awaiting the Report of the National Parks Commission.

    Church Notice Boards
    Mr. Sorensenasked the Minister of Housing and Local Government and Minister for Welsh Affairs what representations he has received from religious denominations to relieve ministers of religion and church officers of the legal obligation to provide notice boards for the display of public notices concerning Acts of Parliament and local government byelaws or regulations; and, in view of modern circumstances, if he will consider this matter with a view to securing a modification or the abolition of this requirement.
    Mr. Bevins: My right hon. Friend has not received any representations on this point; and on the information at present before him he knows of no grounds for thinking that any amendment of the relevant statutory provisions is called for.
    Mr. Sorensen: Would the hon. Gentleman not agree that the original arrangement that notices should be affixed to churches appertained to an age now long past? Under present circumstances, is

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    there any reason why they should be affixed to all kinds of churches and chapels?
    Mr. Bevins: It is a rather curious position in that there is no statutory provision, so far as I have been able to ascertain, that churches and chapels should provide these notice boards. On the other hand, certain Acts require local authorities, especially parish councils, to exhibit notices near the main doors of churches and chapels. I think that on the whole it is a useful practice and that we should be rather sorry to see it discouraged.

  KENYA

    Emergency Regulations
    Mr. Brockwayasked the Secretary of State for the Colonies when it is proposed to end the Emergency Regulations in Kenya.
    The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): As soon as, in the view of the Governor, the situation in Kenya permits.
    Mr. Brockway: In view of the improved political situation in Kenya, which now gives some hope of solution of the outstanding problems, is there not now an opportunity to extend the degree of good will there by ending the Emergency Regulations, most of which are now absolutely obsolete?
    Mr. Lennox-Boyd: I am afraid I cannot add to the Answer I have given. I am as anxious as everyone else to take advantage of the improved situation in Kenya, but there are considerations which must be borne in mind, and the Answer I have given is the most I can give at this stage.

    Hola Camp (Deaths)
    Mr. J. Johnsonasked the Secretary of State for the Colonies whether he will now make a statement upon the findings of the inquest into the deaths of the detainees at Hola Camp in Kenya.
    Mr. Lennox-Boyd: The magistrate's findings are not expected to be announced until 6th May.
    Mr. Johnson: Will the Secretary of State bear in mind the immense anxiety
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    felt by all communities in Kenya following upon the death of ten detainees after being beaten? Will the right hon. Gentleman give the House an assurance that proceedings will be taken against anyone in the administration found culpable of neglect and maladministration in this particularly shocking incident?
    Mr. Lennox-Boyd: In fairness to all who might be concerned, I think that we must first await the magistrate's findings.

    Achieng Oneko
    Mr. J. Johnsonasked the Secretary of State for the Colonies under what conditions Achieng Oneko is being detained in Marsabit, Kenya; whether he will consult the Governor of Kenya regarding the reasons why Mrs. Oneko has not been allowed to join her husband; and whether he will make a statement.
    Mr. Lennox-Boyd: Achieng Oneko's detention order has been suspended, and he is now living in restricted residence at Marsabit Township. He occupies a two-roomed, furnished house, and will be paid a subsistence allowance of 100 shillings a month while he is at Marsabit. He is being asked if he wishes his wife to join him and. if he does. this will be arranged.
    I will place in the Library a copy of the type of notice which authorises the suspension of his detention order and sets out the conditions of his restriction.
    Mr. Johnson: Is not the Secretary of State aware that Mr. Oneko and fifteen other detainees at Marsabit are doing no work? They wish to do some work and earn some money. Is the right hon. Gentleman also aware that, as far back as 15th March, the Governor of Kenya talked of Mrs. Oneko corning to join her husband? She has still not done so, and that was over a month ago. What is happening? Will the right hon. Gentleman please expedite the humane act of having this lady join her husband?
    Mr. Lennox-Boyd: Certainly. There is no difficulty whatever in Mr. Oneko's wife joining him, if they so wish. With regard to the first part of the hon. Member's supplementary question, I was not aware of that, but I will look into it straight away.

    Aguthi Works Camp (Death)
    Mrs. Castleasked the Secretary of State for the Colonies whether he is now in a position to make a statement on the action taken by the Kenya Government following the death of Kabugi s/o Njuma in Aguthi Works Camp.
    Mr. Lennox-Boyd: On the Attorney-General's instructions, Samuel Githu, a District Assistant at the Camp, was charged on three counts of inflicting actual bodily harm upon three detainees, including Kabugi. Githu was found guilty on 23rd April on all counts, and sentenced on each to two years' imprisonment. He has given notice that he will appeal.
    Whether further criminal proceedings will be taken against any person as a result of the trial and finding is a matter for the Attorney-General.
    The Governor and I deeply regret this deplorable incident and he is considering urgently what further steps, besides full enforcement of the law, are necessary to prevent any repetition.
    He has already issued a personal directive emphasising the need for close and effective supervision by Europeans especially over the arrival and departure of detainees and while they are at work.
    Mrs. Castle: While thanking the right hon. Gentleman for that reply, may I ask him, first, whether he will in due course make a further statement on the disciplinary action that the Governor may find it necessary to take arising out of the conduct of affairs in this camp? Secondly, will not the right hon. Gentleman agree that it is deplorable that a warder can be accused and found guilty of deliberate and calculated assault, including threats to bury a man alive in a pit, as a result of which one man died? Does not the right hon. Gentleman think also that it is strange to attribute the cause of that man's death to natural causes, in view of the treatment he received?
    Mr. Lennox-Boyd: I have never attempted to minimise the gravity of this offence or what the Governor and I—indeed, all the people in Kenya—feel about it. As to the earlier part of the hon. Lady's supplementary question, I will gladly answer any further questions on any subsequent action that may be taken.
    Mr. Remnant: Will not my right hon. Friend agree that this is a very exceptional case which should be put into its proper perspective and not taken out of it?
    Mr. Lennox-Boyd: Yes, that is indeed true. I would ask those who think that this would not have been ventilated had it not been raised in the House to read again the speech of my hon. Friend the Under-Secretary of State on 24th February.

    Detained Persons
    Mr. Brockwayasked the Secretary of State for the Colonies when it is proposed to remove restrictions upon the residence and movement of ex-Senior Chief Koinange, Achieng Oneko and others who have been detained for over six years in Kenya after acquittal in the courts, of B. M. Kamau and others who have been detained without trial for a similar period, and of Jomo Kenyatta who has concluded the term of imprisonment to which he was sentenced.
    Mr. Lennox-Boyd: The restrictions on the residence and movement of ex-Senior Chief Koinange, Achieng Oneko and B. M. Kamau will be removed when the Governor is satisfied that they are no longer necessary for the purpose of maintaining public order. The restriction of Jomo Kenyatta was specifically recommended by the Court which convicted him of managing and being a member of Mau Mau, and has no term.
    Mr. Brockway: I do not know whether I heard the right hon. Gentleman aright. Is he aware that many of us will welcome the fact that the restrictions on the first three named people have been withdrawn?
    Mr. Lennox-Boyd: No. There was a very welcome silence in the House when I gave my answer. I did not say that. I said that the restrictions on the residence and movement of ex-Senior Chief Koinange, Achieng Oneko and B. M. Kamau will be removed when the Governor is satisfied that they are no longer necessary for the purpose of maintaining public order. The restriction on Jomo Kenyatta was specifically recommended by the court which convicted him of managing and being a member of Mau Mau, and has no term.
    Mr. J. Griffiths: Does not the right hon. Gentleman think that Chief Koinange, who is a very old man, could be released from these restrictions?
    Mr. Lennox-Boyd: He is ninety years of age. The right hon. Gentleman knows the Kikuyu as well as I do, and he knows that that fact, if aything, adds to his influence among the Kikuyu. An acquittal on a specific charge of murder does not mean that his complete liberty of action can be restored without a threat to public order.
    Mr. Griffiths: I have made private representations about this matter. Surely it is now time for us to show some mercy in this case and to release this old man so as to allow him to live the last months or years of his life in quiet and peace?
    Mr. Wall: Does not my right hon. Friend agree that many Africans, including all Kikuyu loyalists, would be horrified at the idea of lifting the restrictions on Jomo Kenyatta?
    Mr. Lennox-Boyd: That consideration must be borne very carefully in mind.
    Mr. Brockway: On a point of order. It will be within your recollection Mr. Speaker, that I asked the right hon. Gentleman if I was correct in hearing what he said. He delivered his answer so rapidly that we could not hear him on these benches. In view of that fact, have I not a right to put a supplementary question?
    Mr. Speaker: I thought that the hon. Member asked a supplementary question. I will ask him to ask one. Mr. Brockway.
    Mr. Brockway: Thank you, Mr. Speaker. In view of the fact that two of those people named in the Question have been acquitted in trials and nevertheless have been detained for six years; that the third has never been brought to trail at all, and that in the fourth case there is grave doubt whether perjury was not committed at the trial, will not the right hon. Gentleman reconsider the indefinite restrictions upon these individuals?
    Mr. Lennox-Boyd: I am sorry if I went too fast. I was endeavouring to answer all the questions asked of me. I am often accused of not answering as many as I should. Acquittal on specific charges does not mean that the liberty of certain
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    people can be restored without there being a threat to public order. I have nothing to add to the answer that I have just given.
    Mr. Brockway: In view of that unsatisfactory answer, I beg to give notice that I shall raise the matter at the first opportunity on the Adjournment.

  MALTA

    Representative Government
    Mr. Awberyasked the Secretary of State for the Colonies if he is aware that a considerable part of the unrest in Malta is due to the fact that there has been no elected Government on the island for twelve months; and if he will now take steps to prepare for the restoration of a representative Parliament.
    Mr. Lennox-Boyd: Her Majesty's Government regret the circumstances which led to the breakdown of representative government last April and the failure of their efforts since then to get a sufficient measure of agreement with the political parties to enable new elections to be held. It remains their aim to restore representative government to Malta as soon as possible, but I cannot say when it will be possible to take the next steps.
    Mr. Awbery: Is it the responsibility of this Government to restore representative Government in Malta? Will the right hon. Gentleman approach the people responsible for restoring representative Government as quickly as possible?
    Mr. Lennox-Boyd: Yes, but that is not the only responsibility. Another is to see
    "a sound and expanding economy to create those institutions which will help to safeguard the independence of the judiciary, the public service and the police in the future and to encourage all genuine attempts to work out proposals for Malta's future."
    These, also, are great considerations.

  NYASALAND

    Constitution
    Mr. Stonehouseasked the Secretary of State for the Colonies when he will announce the new constitutional proposals for Nyasaland.
    Mr. Lennox-Boyd: I am not at this stage in a position to make any statement on this important matter.
    Mr. Stonehouse: Is the Colonial Secretary aware that there is the danger of a cat-and-mouse game here? Is he aware that there is some public interest in the speeches he is making on the subject? Will he tell the House what he told the Conservative conference on Saturday?
    Mr. Lennox-Boyd: Anything I said on Saturday was said at a public meeting of which reports appeared in the Press. If we all repeated in the House what we said in public, business would be impeded. As to the other remark of the hon. Member, I have no intention of playing the part either of a cat or a mouse in this business.
    Mr. J. Johnson: Is the Colonial Secretary aware that there is a complete political vacuum in Nyasaland at this moment? Will he consider suspending the present constitution, which is completely bogus and is not functioning, and having some kind of interim constitution with men who are not behind bars but who could function until he gets out a constitution for the 1960 elections?
    Mr. Lennox-Boyd: I think that a very interesting suggestion.
    Mr. Callaghan: While I am glad the right hon. Gentleman recognises that this is an important matter, may I ask him how he proposes to get some constitutional changes going? Is he debarring himself from making changes until it is decided to bring charges against Dr. Hastings Banda and other leading Africans or to release them? Is that not the first step to take before we get on to further constitutional changes?
    Mr. Lennox-Boyd: The Governor and I are not debarred from making constitutional changes or suggesting them. I cannot make any further statement at the moment.

    Civil Service (Pay)
    Mrs. Castleasked the Secretary of State for the Colonies why Africans in the Senior Executive and Accounting Division of the Nyasaland Civil Service are paid from £500 to £600 a year less than Europeans in the same grade.
    The Under-Secretary of State for the Colonies (Mr. Julian Amery): The higher rates payable to Europeans include an
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    expatriate factor which is designed to attract essential and suitable staff from overseas.
    Mrs. Castle: Is the hon. Gentleman aware that that is the opposite of what I was told by the Chief Secretary when I inquired into this matter in Nyasaland eighteen months ago, when it was agreed by the spokesman of the Nyasaland Government that the present situation was quite intolerable because this extra £500 is being paid to Europeans regardless of whether they come from outside the Federation or Protectorate or are within it? Therefore, it cannot be called an expatriate allowance. I was told then this matter was being examined. Can the Under-Secretary say when?
    Mr. Amery: I cannot help thinking that the hon. Lady may have misunderstood what was said to her. Proposals are under consideration for a locally-based Civil Service in Nyasaland. This would provide for identical salaries and conditions of service for all locally-domiciled persons irrespective of race, but where expatriate civil servants have to be introduced it is necessary, if we are to attract them, to make this payment.

    Illegal Organisations (Membership)
    Mr. Stonehouseasked the Secretary of State for the Colonies what evidence was produced in the cases brought against Africans charged with membership of an illegal organisation in Nyasaland; and, in particular, what were the relevant dates for such membership.
    Mr. Lennox-Boyd: A number of cases have arisen in different districts in which the charge of being a member of an unlawful society has been made under Section 72 of the Penal Code. The Governor is making inquiries to establish the main categories of these charges and, when the information is available, I will circulate it in the OFFICIAL REPORT.
    Mr. Stonehouse: Will the Colonial Secretary arrange to make a statement to the House on this, in view of the great public concern following the quashing of the case of Miss Kahumbe? Will the right hon. Gentleman also make clear in his statement what allegations have been made against the nearly 200 men charged with offences? Were those offences committed after the state of emergency was announced?
    Mr. Lennox-Boyd: I cannot say in what way it would be best brought to the attention of the House, but I will see that any facts I have are brought to the attention of the House.
    Sir L. Ungoed-Thomas: Will the Secretary of State say whether the relevant date for membership is before the date on which the organisation was declared illegal.
    Mr. Lennox-Boyd: Certainly. It is not an offence to belong to an organisation before it is declared illegal, only after it has been declared illegal.

    Mr. Orton Chirwa
    Mr. Callaghanasked the Secretary of State for the Colonies why permission was refused to Mr. Orton Chirwa, the Nyasaland barrister, who is in detention, to return to his office to enable him to return case papers and documents to his clients.
    Mr. Lennox-Boyd: Permission was not refused.
    On the contrary, specific instructions were given to the police officer detailed to arrest Mr. Chirwa to ask him whether he had any documents, briefs or other papers relating to his practice of which he wished to dispose. This was done and Mr. Chirwa told the police officer that he had none.
    The escorting officer who was with Mr. Chirwa from the time of his arrest to the time of his departure by air has also confirmed that at no time did Mr. Chirwa ask to return to his office for any such purpose.
    Mr. Callaghan: I am very glad to have that assurance. Is the Colonial Secretary aware that these complaints were made specifically to the new legal organisation called "Justice ", either by Mr. Chirwa himself or on his behalf, and that the organisation has asked that these inquiries should be made by the Colonial Secretary? In view of what he has said, it is clear that the matter must be pursued further.
    Mr. Lennox-Boyd: I can only infer from that that the hon. Member is suggesting that he does not think that what I said is accurate. I have given an answer with a full sense of my responsibility and that of the Governor. It is not for me
    1088
    to comment upon the accuracy or otherwise of information given to outside people. I speak for myself and for the Governor of the Territory.
    Mr. Callaghan: Is the right hon. Gentleman aware that the only inference I am drawing is that if this information is passed on by a reputable body like "Justice" and the Colonial Secretary emphatically denies it. further inquiries must be made.

    Miss Grace Kahumbe
    Mrs. Castleasked the Secretary of State for the Colonies why Miss Grace Kahumbe of Nyasaland, who was convicted of being a member of an unlawful society, has had her conviction set aside by the Governor; whether this was done whilst an appeal by her was pending; and if he will make a statement.
    Mr. Lennox-Boyd: Miss Kahumbe was charged with being a member of an unlawful society under Section 72 of the Penal Code, to which she pleaded guilty and was bound over. Subsequently her solicitors applied to the High Court to exercise its powers of revision to reconsider her plea of guilty on the grounds that she had not intended to admit membership of the society in question after it became unlawful.
    Her conviction, however, was set aside by the High Court on the grounds that the consent of the Governor to the prosecution had not been obtained as required by Section 73 of the Penal Code, and the trial was therefore null and void.
    Mrs. Castle: Is not the Colonial Secretary aware that there is a great deal of anxiety in this country about the fact that large numbers of Africans are now being arrested in Nyasaland on the ground of belonging to an unlawful organisation and are being found guilty, and in some cases imprisoned, without any more evidence being brought in support of this charge than there has been in this case? [HON. MEMBERS: "No. "] No evidence at all was brought in this case, yet this woman was dismissed from her post.
    Is it not a fact that many African civil servants, being accused in this way, may have the threat of dismissal remaining over their heads—[HoN. MEMBERS: "Speech."] I am sorry to take such a

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    long time, Mr. Speaker. Hon. Members opposite do not believe in free speech; that is their answer.
    Mr. J. Griffiths: On a point of order. Is not an hon. Member allowed to put a supplementary question without noises from other hon. Members?
    Mr. Speaker: I think that there is a little fault on both sides, to be accurate. That is how it appears to me. I dislike hon. Members trying to take the law into their own hands in these matters. At the same time, I would ask the hon. Lady to condense her question into shorter terms, and I would ask hon. Members to give her a chance to do so.
    Mr. S. Silverman: On a point of order. May I draw your attention, Mr. Speaker, to the fact that the noise which you deplore began before my hon. Friend had got out more than a word or two of her very first supplementary question? It is really a little hard to blame both sides for a situation for which one side is clearly responsible.
    Mr. Speaker: I think that there have been faults on both sides. I hope that we shall not argue the point. I know that the hon. Lady is very interested in these matters, but this is not the time to make a speech about them. If she could contrive to put her question shortly I should be obliged, and so would the House. I would ask hon. Members on the Government side to keep quiet.
    Mrs. Castle: In conclusion, is not the Colonial Secretary aware that the obvious disregard of hon. Members opposite for the maintenance of civil liberties and free speech adds to our anxiety about the way in which these helpless Africans are being treated in Nyasaland?
    Mr. Lennox-Boyd: No, Sir—that is indeed a bit of a distortion of the facts. It was open to this lady to argue, through her solicitors—as she did—that she thought she was being charged with being a member of the society before it was declared illegal. It would be equally open to anybody else to argue similarly if he thought he had been wrongly charged. The conviction was set aside not by the Governor but by the High Court, for reasons that I have explained.
    Mr. Gaitskell: Can the right hon. Gentleman give an assurance that no
    1090
    further charge will be made against this lady—[HON. MEMBERS: "Why?"]— because her conviction has been set aside on a technical point, according to the right hon. Gentleman? I am therefore asking, at any rate in respect of the information available at the moment, that no further prosecution will be laid. Would the right hon. Gentleman also care to confirm, as he has been good enough to do in a letter to me, that these ordinances are in no sense retrospective?
    Mr. Lennox-Boyd: I can confirm that the ordinances are in no sense retrospective. As to the first part of the right hon. Gentleman's supplementary question, no further charge will be preferred on the evidence which was then available, and for the particular offence with which she was charged.

  NORTHERN RHODESIA

    Zambia African Congress
    Mr. Swinglerasked the Secretary of State for the Colonies which members of the Zambia African Congress have so far been brought to trial; what legal aid they received; what were the charges; what was the nature of the trial; and if he will place a copy of the report of the proceedings in the Library.
    Mr. Lennox-Boyd: I assume the Question relates to those members restricted on 12th March or later. Three had been brought to trial by 16th April. The particulars are:
    Lawrence Chama Mulenga, acquitted on a charge of conspiracy to commit arson.
    Wilson Chakulya, convicted on a charge of sedition and sentenced to sixteen months imprisonment with hard labour. He was granted legal aid.
    Cornelius Mwanza, convicted on a charge of holding an unauthorised assembly and sentenced to four months imprisonment with hard labour. His application for legal aid was refused.
    The records of the proceedings in the last two cases will be placed in the Library of the House as soon as possible.
    Mr. Swingler: While thanking the Colonial Secretary for those particulars, may I ask why, in view of what he said

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    previously, the leaders of the banned Zambia African Congress have not been brought to trial and given an opportunity of answering the allegations and charges which were made a basis of banning the Congress—that they were concerned in organised incitement to violence and involved in conspiracy? The right hon. Gentleman has not mentioned the leaders. Why are the leaders not brought to trial?
    Mr. Lennox-Boyd: As I said, the question of bringing people to trial or not is a matter for the Attorneys-General in the Colonies concerned.

  ZANZIBAR

    Secondary School Places
    Mr. J. Johnsonasked the Secretary of State for the Colonies what steps he is taking to ensure that there will be more places for African boys in the Government secondary school in Zanzibar.
    Mr. J. Amery: There is no allocation of places by race in this school. The development of secondary education generally was one of the matters considered by the Education Committee whose report is, as I told the House on 23rd April, now being considered in Zanzibar.
    Mr. Johnson: Does not the Under-Secretary agree that the African peoples have lagged behind the two older societies of Asia and Europe, and in this case also Indians and Arabs? Will he further agree that the only way to get the Africans up to the standards of the other two older communities is by giving special concessions in secondary education? Will he consider, perhaps, the allocation of 25 per cent. of places for Africans, with the remaining places being open to competition?
    Mr. Amery: I will certainly look into what the hon. Gentleman proposes. It is true that the number of Africans coming forward for secondary education in the past has been relatively small. I hope that the balance will be gradually redressed as a result of the expansion which has taken place in recent years in primary education.

  BAHAMAS

    Constitution
    Sir L. Plummerasked the Secretary of State for the Colonies what amendments to the Constitution of the Bahamas have been effected since the recent labour troubles; and what further amendments are proposed.
    Mr. Lennox-Boyd: As I said in reply to a Question by the hon. Member for Rugby (Mr. J. Johnson) on 26th March, a Bill is now before the local Legislature embodying the changes set out in the statement made in reply to a Question by my hon. Friend the Member for Surbiton (Mr. Fisher) at the conclusion of my visit to the Bahamas last April.
    Sir L. Plummer: The Colonial Secretary said in April last year that he hoped that the necessary legislation would be through by the end of last year. What is holding it up? Is there any sabotage of the right hon. Gentleman's intentions for an amended Constitution?
    Mr. Lennox-Boyd: No. I would not use such strong language as that. I repeat that I am determined to see, in letter and in practice, the carrying out of the announcement I made.

    Progressive Liberal Party (Representations)
    Mr. Callaghanasked the Secretary of State for the Colonies what conclusions he has reached on the recent representations made to him by the Progressive Liberal Party of the Bahamas.
    Mr. Lennox-Boyd: I have made it clear in the House that I shall adhere, in the spirit and in the letter, to the statement I made when I was in the Bahamas last April. The Governor and I have in consultation decided that certain amendments are necessary to the Bill for Electoral Reform, and these will be introduced into the Legislative Council by the Attorney-General on 30th April.
    I have, of course, considered the representations made to me by the Progressive Liberal Party of the Bahamas, whose delegation I was glad to see over here, as well as other representations, but none of these representations, from whatever

    1093
    quarter, have caused me to vary from strict adherence to the statement of last April.
    Mr. Callaghan: I should like to ask the right hon. Gentleman two questions. First, are the by-elections going to take place before the boundaries are changed? There is some doubt that if the boundaries are changed the result may not be what is usually expected. Secondly, how many second votes are people likely to have? Is it true that some people, by judicious purchases of land, may be able to get up to 20 second votes?
    Mr. Lennox-Boyd: I have no intention of condoning any arrangement under which the second vote may be exercised in that way. I made the position of myself and my colleagues quite clear when I was in the Bahamas. As to the hon. Gentleman's point about the proposed by-elections, they will take place on the basis of existing constituency boundaries.
    Mr. Callaghan: Is the Minister aware that that is the most satisfactory answer he has given this afternoon?

  EAST AFRICA

    Higher Education
    Mr. Albuasked the Secretary of State for the Colonies what action is being taken to implement the Report on Higher Education in East Africa.
    Mr. J. Amery: The recommendations of the Working Party on Higher Education and the financial implications of its Report are still being studied by the East African Governments, and action upon them will be decided when that study is complete.
    Mr. Albu: Will the Under-Secretary say what progress is being made with the Technical Institute in Nairobi?
    Mr. Amery: I am afraid that that is a rather different question. Perhaps the hon. Member will table a Question.
    Mr. G. Thomas: Will the Under-Secretary say whether they have now been able to allow the same number of students to go to the University at Makerere as went last year and whether that difficulty has been solved?
    Mr. Amery: Here again, I ask the hon. Member to table a Question. His supplementary question is rather different from the Question on the Order Paper.

  ST. HELENA

    Wages
    Mr. C. Hughesasked the Secretary of State for the Colonies what steps are being taken to increase wages in St. Helena; what proposals he has received from the Governor with regard to food subsidies; and if he will make a statement.
    Mr. J. Amery: There is to be an immediate increase in wages of 5s. a week for Government manual workers and a similar increase for workers in the St. Helena hemp industry. Food subsidies are to be extended to include rice, in addition to bread, cheese and tinned meat. Import duties are to be removed on a wide range of articles, including food, and poor relief is being increased.
    Mr. Hughes: Is the Under-Secretary of State aware that these proposals will be received with very great appreciation in St. Helena, where people are living in very great poverty? Will he bear in mind also the possibility of raising the poor relief itself? Is the hon. Gentleman aware that the amount paid in poor relief is £20 a week between eighty people? Will the hon. Gentleman consider this also?
    Mr. Amery: I can tell the hon. Member at this stage that unemployment relief will be increased by 3s. a week, with corresponding increases in poor relief. The cost of this will be under £2,000 a year.

    Constitutional Reform
    Mr. C. Hughesasked the Secretary of State for the Colonies what steps for constitutional reform are being taken in St. Helena; and if he will make a statement.
    Mr. Lennox-Boyd: The Governor has anounced that an early review is intended of the Constitution of the Advisory Council and the method of selecting its members.
    Mr. Hughes: When he is considering this matter, will the Colonial Secretary bear in mind that there is a very real

    1095
    demand by the people of St. Helena for the right to vote their own representatives on to the Advisory Council of the island?
    Mr. Lennox-Boyd: Yes.
    Mr. Callaghan: In view of the great poverty in this island and the fact that it has not been in the headlines, whilst we are all willing and glad to pay tribute to those who have been associated with the reforms which have taken place, will the Colonial Secretary agree that my hon. Friend's visit has been of very great value indeed?
    Mr. Lennox-Boyd: Yes. I certainly think that it was one of the more profitable visits paid by Members of the opposite party.

  NUCLEAR FUEL ELEMENTS (MANUFACTURE)
  Mr. Masonasked the Prime Minister if, for security reasons, he will give a general direction to the Atomic Energy Authority not to allow the production of nuclear fuel rods by private firms.
  The Prime Minister (Mr. Harold Macmillan): No, Sir. I would refer the hon. Member to the reply I gave to the right hon. Member for Blyth (Mr. Robens) on 22nd April.
  Mr. Mason: Has it not always been understood since the inception of the Atomic Energy Authority that the production and processing of nuclear fuel elements should be the monopoly of the State? Why has it been necessary to farm out the production of nuclear fuel elements to private firms? Can the Prime Minister give the House an assurance that no private firm will be given the opportunity, the "know-how" or the task of processing nuclear fuel elements?
  The Prime Minister: As I said in the discussion that we had a week ago, any manufacture of nuclear fuel elements by private industry will be under licence and under proper control. The fissile material involved will have to be fully accounted for, and will remain the property of Defence Departments or the Atomic Energy Authority. Those are the cases we have in mind. No doubt, because it suits the various conditions under which the Authority has to operate, it gives out some of this work. I understand
  1096
  that the wider question is being discussed within the provisions of a Bill which is now in Committee, and I think that we had better leave it to the Committee to discuss the question.
  Mr. Robens: Is the Prime Minister aware that discussion in the Committee is difficult owing to the habit of the Parliamentary Secretary of moving the Closure every two hours?
  The Prime Minister: Like the right hon. Gentleman, I have been a Member of a number of Committees. The Closure is sometimes moved and sometimes accepted by the Chair, but it is the decision of the Chair whether the Closure is actually put.
  Mr. Gaitskell: In view of the fact that, owing to the technical complexity of this matter, it is extremely difficult to get clear exactly how far the Government are proposing to go in allowing the production or processing of nuclear elements by private firms, will the Prime Minister consider either making a statement on this matter, giving fuller details, or publishing a White Paper on the subject?
  The Prime Minister: I shall certainly try to answer any Questions which the right hon. Gentleman may put on the Order Paper, but as there is a Bill dealing with this very subject, I would have thought that its Second Reading, Committee, Report stage and Third Reading would have been appropriate times to have a discussion on the matter.
  Mr. Gaitskell: The Bill is concerned, quite properly, with introducing controls to ensure that this kind of thing takes place only under licence. We are here concerned with a matter of Government policy, and the question how the Government propose to operate the Bill. From that point of view, will the right hon. Gentleman consider making a further statement of Government policy in the matter, and make clear how far they propose to allow private firms to produce or process power elements?
  The Prime Minister: I am trying to answer the Question which was put down. I should have thought that as the matters are closely allied, one of the many stages of the Bill would be a convenient moment to discuss this question.
  Mr. R. Edwardsasked the Prime Minister whether he is aware that, apart from Rolls-Royce being permitted to produce nuclear fuel elements for atomic submarines, the firm of Marston Excelsior, Limited, Fordhouses, Staffordshire, a subsidiary of Imperial Chemical Industries, Limited, is also producing nuclear fuel elements; when permission was granted for such production; and what security and health arrangements have been provided and maintained.
  The Prime Minister: Yes, Sir. I am aware that, under a contract placed in 1955, this company assembles fuel elements from sealed nuclear components manufactured by the Atomic Energy Authority, which exercises the same sort of control and supervision as in its own establishments doing similar work.
  Mr. Edwards: Is the Prime Minister aware that the Parliamentary Secretary to the Ministry of Power refused to give information of this nature on the ground of security? Further, is he aware that it is no secret that this subsidiary of I.C.I. at Wolverhampton is producing fuel elements? Again, is he aware that, in an advertising sales promotion leaflet, the company even produced a picture of the fuel element and advertised it for sale all over the world? is not this a give-away of the people's important capital investments to a private monopoly?
  The Prime Minister: These ancillary components have been manufactured for a long time, and it has been arranged through the Atomic Energy Authority. There was a release about it as long ago, I think, as a year ago. There is no concealment of it at all. On the larger issue, I still think that it is very difficult for me to conduct a discussion by question and answer in the House when. at the same time, we have a Bill going through Committee. I really think that it would be better to try to co-ordinate these things.
  Mr. Gaitskell: Does not this confirm the need for an authoritative statement as to exactly what these private firms are doing and what controls are exercised to ensure that they are doing it only in the national interest?
  The Prime Minister: I say again that if the right hon. Gentleman will put down a Question to me, I will do my best to answer it. I do not like making these
  1098
  statements on a very complicated matter off the cuff.
  Mr. Robens: When the Prime Minister says that these matters might properly be considered and discussed in Committee, is he aware that, when we discussed the matter on the first occasion, the Parliamentary Secretary to the Ministry of Power refused information on the ground of security, and the matter then came to this House and the right hon. Gentleman cleared it up? Secondly, when this morning we discussed the whole question once again, before a number of my hon. Friends had made their speeches on this very important matter, the Parliamentary Secretary moved the Closure and prevented all further discussion. Will the Prime Minister be good enough to ask the Parliamentary Secretary to the Ministry of Power to be a little more generous in dealing with the Committee? This is a highly technical matter about which his knowledge is as limited as our own, and we are all trying to deal with the matter on safety grounds. Unless we can have the co-operation of Ministers in the Committee, we shall have constantly to come back to the Floor of the House about it.
  The Prime Minister: The last sentence is, perhaps, the key to the point. I understand that the Committee is dealing chiefly with regulations about safety and control. I do not share the views which the right hon. Member for Blyth (Mr. Robens) has expressed. The Committee has made good progress, and the Parliamentary Secretary seemed to be, or seemed to the Chairman to he, quite right in moving the Closure after a very long discussion. [HoN MEMBERS: "Two hours."] That is a reflection on the Chair which I cannot accept. It certainly would not be for me to say anything about that here.
  As regards the wider question of policy other than safety, I will repeat that, if the right hon. Gentleman would ask me a question, I will do my best to make a general statement on the matters which might not be wholly germane to the more limited problems of the Bill.

  RADIOACTIVITY
  Captain Pilkingtonasked the Prime Minister whether he will make a statement showing how the latest information

  1099
  affects the estimate, first, of natural radiation, man-made radiation and nuclear test radiation and, secondly, of strontium 90; and to what extent any of these figures approaches danger level.
  The Prime Minister: As the statement is long and complicated, I will, with permission, circulate it in the OFFICIAL REPORT.
  I will, however, say that I am advised that even if deposition of the strontium 90 that has already been injected into the stratosphere continues at the higher rate observed in the summer of 1958, the concentration of this substance in bone is unlikely to approach the level which the Medical Research Council advised in 1956 would require "immediate consideration".
  Captain Pilkington: Will my right hon. Friend at least say whether he thinks that alarmist statements to the effect that the tests already carried out would be responsible for the death of about 80 children in each of the counties of this country are very deplorable indeed?
  The Prime Minister: Yes, Sir; people would be very foolish and very wrong to make such statements.
  Mr. Gaitskell: There is, nevertheless, a very great deal of public concern on this matter. In view of the Prime Minister's reply that the amount of radiation was unlikely to reach the danger point—not, if I may say so, a very strong statement—will he agree to give a little more information even now, apart from the statement in the OFFICIAL REPORT?
  The Prime Minister: I considered that. I think it would really be easier to let the statement appear and then let Questions be based upon it, which I am ready to try to answer. It is always rather difficult to take up one point or another from a long report, and I think it would be more satisfactory to the House to follow the course I have suggested.
  Dr. Summerskill: Will the Prime Minister in his reply indicate how far there is a consensus of opinion among all the eminent scientists of the world? Although, of course, he has able advisers, the difficulty in this matter is that there are other people equally able and knowledgeable who do not agree. Also, will he put in his answer not only what is the
  1100
  danger level and what the effect of the strontium is on the bone but also information about the genetic effects?
  The Prime Minister: I have for some time promised to try to produce, or to ask my advisers to produce, a statement, not so long as to be almost unreadable for the ordinary person, not so technical as to be almost unintelligible, but sufficiently long to be an important contribution. I thought that the best thing was to publish this in the OFFICIAL REPORT and then to try on subsequent occasions to answer any questions which which be based upon it. I really think that that would be the most convenient method for the House as a whole.
  Following is the statement:

  RADIOACTIVITY

    RADIOACTIVE FALL-OUT
    1. The debris in the stratosphere resulting from test explosions of nuclear weapons contains radioactive materials, of which strontium 90 merits the most immediate attention. Their effect on the body has been discussed in authoritative reports, notably in the Medical Research Council's report entitled "The Hazards to Man of Nuclear and Allied Radiations" (Cmd. 9780, June, 1956) and in the report issued in August, 1958, by the United Nations Scientific Committee on the Effects of Atomic Radiation. The purpose of the present statement is to review the situation and to comment on inferences that have been made concerning the residence time of radioactive materials in the stratosphere.
    Rate of Deposition of Fall-out
    2. For several years, authorities in the United Kingdom and in many other countries have been making regular measurements of the rate of deposition of strontium 90 and other isotopes. Measurements since May, 1958, have indicated a general rise, involving an approximate doubling of the rate of deposition in rainfall in the United Kingdom.
    3. The estimation of the fall-out likely to occur in the future depends, amongst other factors. on an assessment of the total amount of radioactivity in the "stratospheric reservoir". Such an assessment can be attempted in a number of ways, for example by:—

    (a) direct measurement of the quantity of debris in the stratosphere. The United States Department of Defence has carried out an extensive series of investigations, using balloon-carried measuring equipment for this purpose; but the results so far obtained are difficult to interpret and the method is not yet considered to be satisfactory.

    (b) estimating the amount of fission products which have been injected into the stratosphere by nuclear explosions, and measuring the world-wide deposition which has already taken place. It is considered that knowledge of these factors is insufficiently precise to give reliable estimates.

    1101

    (c) measuring the relative proportions of shorter and longer-lived fission products in fall-out at the time of deposition, so as to give a broad indication of the average length of time of residence of fission products in the stratosphere, and measuring the fission product fall-out rate. The estimate of the size of the reservoir obtained in this way is directly proportional to the assumed length of the residence time.

    4. The Report of the United Nations Scientific Committee on the Effects of Atomic Radiation contains, in paragraph 97 of Annex D, the following observations on this subject:
    "Analysis of fall-out material has shown that strontium 90 can remain in the stratosphere for many years before being deposited on the earth. The depletion mechanism of the stratospheric reservoir is not yet adequately known. It has been estimated from measurement of fall-out rate and stratospheric content that the annual strontium 90 fall-out is about 12 per cent. of the stratospheric content. This annual fraction corresponds to a mean residence time of about 8 years which is in agreement with a value of 10 plus or minus 5 years derived from unpublished data. The concept of a constant fractional removal per year of the stratospheric content is inconsistent with meteorological principle. However, nothing better can be offered at present. If the concept is to be used, a mean residence time of about 5 years appears to be the best value and a reasonable upper limit is about 10 years. The latter value has been used in the calculations to follow, since it tends to yield results on the pessimistic side."
    5. It has recently been suggested, notably by the U.S. Department of Defence, on the basis of an interpretation of their measurements, that the residence time of radioactive materials in the stratosphere has been overestimated. If this were true, it would confirm that the estimates made by the United Nations Scientific Committee were unnecessarily pessimistic, since there would be less of this material at present in the stratosphere than they estimated. There is some evidence to suggest that debris may leave the stratosphere more quickly from explosions in high latitudes than from explosions nearer the Equator.
    6. A shorter residence time would mean that the radioactivity would have had less time to decay before the fall-out was deposited; but strontium 90 decays so slowly that the difference would be very small. There would also be an increased amount of shorter-lived fission products in the fall-out, but the increase in the close to body tissues from these would also be relatively small.
    7. Once radioactive materials have left the stratosphere and entered the troposphere the local rate of deposition depends very largely on rainfall. Heavy rain tends to produce enhanced fall-out. This is certainly one of the factors responsible for the higher recorded measurements of fall-out in the summer of 1958. However, in subsequent months in which the rainfall in the United Kingdom was more nearly normal, the data so far available indicate that the rate continued high. There is evidence from the nature of the radioactive
    1102
    material deposited that this is likely to have been due to recent tests, presumably those conducted in the Autumn by the U.S.S.R., the fall-out from which possibly occurred more rapidly because they took place in high latitudes. The so-called "Argus" experiments conducted about the same time by the United States are understood to have been three low yield nuclear explosions at great heights; they therefore resulted in only a very small addition to the radioactivity already in the stratosphere
    Monitoring of strontium 90 in diet
    8. In this country, regular measurements are made of strontium 90 in food, milk, drinking water and air, and in soil and vegetation. We thus have much information on the rate at which strontium 90 enters the diet and reaches bone. The investigations of radioactivity in food were considerably expanded in 1958. Milk receives special attention because much of the total strontium 90 in diet comes from dairy produce. Representative samples are collected regularly from over two hundred depots handling some forty per cent. of the total milk production in the United Kingdom. So far as is known, no equally comprehensive scheme is in operation in any other country. Other foods which introduce considerably less strontium 90 into the diet are also examined; for example, cereals, both imported and home-produced, and vegetables.
    9. The measurements of very low levels of strontium 90 involve lengthy and complex processes of analysis, using specialised techniques and facilities. The results of the food survey for 1958 are now being prepared for publication. They indicate that, although the extent of contamination varies between different parts of the country, the amounts of strontium 90 in food and drinking water are well below those which are likely to give rise to concentrations in human bone which, in the words of the M.R.C. report would require "immediate consideration".
    10. The quantity of strontium 90 in diet at the present time depends mainly on what has been deposited in the preceding few months, rather than on the total deposition since fallout began. Most of the strontium 90 taken up by cattle is that freshly deposited on herbage before it has had a chance to be washed into the soil, The quantity of strontium 90 in human diet in the United Kingdom rose much less in 1958 than did the rate of deposition; this may have been largely due to heavy rain washing strontium 90 from herbage into the soil. Once strontium 90 has entered the soil it may still be absorbed through the roots of grass and other crops, but the amount at present taken up in this way is relatively small.
    11. If the enhanced rate of fall-out which began in the middle of 1958 continues in 1959, an increase in the strontium 90 content of diet is to be expected. Because the contamination of food is dependent on the rate of deposition in the immediate past, no precise prediction of the future situation can be made; but the evidence now available leads to the view that the concentration in human bone of strontium 90 attributable to what has already been

    1103
    injected into the stratosphere is likely to remain below that at which immediate consideration would be necessary.
    Strontium 90 in human bone
    12. A recent United Kingdom report has given the results of further measurements of strontium 90 in samples of human (mainly children's) bones from the first few months of 1958. The measurements on bones of 59 children (stillborn or dying under the age of 5 from various causes) showed only a slight increase as compared with corresponding results for 1957. These results accord with what was to be expected, since the level of strontium 90 in the diet in the relevant period had increased very little as compared with the previous year.
    13. The irradiation of human bone and bone marrow attributable to strontium 90 is at present small in relation to that from the natural radioactivity to which they are exposed; the variation in natural radiation levels from place to place in the U.K. (and elsewhere) is far greater than the additional radiation likely to arise from tests already conducted.
    Other radioactive materials
    14. Attention is given also to other radioactive materials, for example caesium 137, plutonium and carbon 14. The extent of the effort devoted to the study of these substances is kept under regular review in the light of the changing fall-out situation.
    15. Results of measurements of caesium 137 in water, milk and the human body in the United Kingdom have been published. Caesium 137 is not readily taken up from the soil by plants and, unlike strontium 90, is not retained in the body for long periods. Its biological significance arises from genetic effects, the magnitude of which depends on the gonad dose incurred. This has been discussed in the report of the United Nations Scientific Committee on the Effects of Atomic Radiation (Chapters III, VI and VII). The dose to the gonads delivered by caesium 137 is small in relation to variations in natural radiation between different parts of this country.
    16. The incorporation into the body of plutonium from fall-out is small in importance compared with that of strontium 90, since plutonium is only very slightly absorbed from food. Both materials can be absorbed through inhalation, but this is a minor source of intake.
    17. For several years, measurements have been made of the concentration of carbon 14 in air and in biological material. Carbon 14 occurs naturally from the effects of cosmic radiation, but some also comes from weapon tests. This subject has been under consideration by the United Nations Scientific Committee (Document A/AC.82/INF.3, 23rd July, 1958). The concentration of carbon 14 is being kept under review because of its long persistence, notwithstanding the very low rate of irradiation that it causes in the human body.

  UNEMPLOYMENT, SCOTLAND
  Mr. Emrys Hughesasked the Prime Minister if, in view of the serious state of unemployment in Scotland, he will take the opportunity during his coming visit to Scotland of discussing the situation with leaders of the Scottish Trades Union Congress.
  The Prime Minister: I would always be ready to meet the leaders of the Scottish Trades Union Congress should they wish it.
  Mr. Hughes: In view of the very great anxiety about unemployment in Scotland and especially the fear of those now employed that they may be unemployed very shortly, does the Prime Minister not think that it would be a very good thing if he went personally to acquaint himself with the very serious position in the West of Scotland?
  The Prime Minister: The hon. Gentleman will, no doubt, have welcomed the recent improvements in the employment position in Scotland, and I hope that those improvements will continue. But, as I say, I shall always be ready to see a deputation from this Congress. There are methods of acquainting oneself with the figures and other facts which are open to me, and I have the advice of all my colleagues concerned, especially the Secretary of State.

  EAST KILBRIDE (PRIME MINISTER'S VISIT)
  Mr. Emrys Hughesasked the Prime Minister what is his purpose, during his visit to Scotland, in making an official visit to East Kilbride.
  The Prime Minister: I have always taken an interest in housing questions, and I shall be glad of the opportunity to see for myself how this new town is developing.
  Mr. Hughes: Is the Prime Minister aware that it was a Labour Government which started this new town and all the enterprises associated with it? Does he not think that we could do with another new town something like that?
  The Prime Minister: I do not know whether the hon. Gentleman objects to my going to the new town. I am sure

  1105
  that I shall be received with the courtesy which is always shown by Scotsmen to people of English, Scottish and, sometimes, even of Welsh descent.

  GENERAL ELECTION
  Mr. Lewisasked the Prime Minister whether he is aware that the continued uncertainty with regard to the possible date of a General Election is causing difficulties with regard to the business and trading arrangements of the country; and whether, as his predecessors have made statements giving notice of the Government's intention regarding possible dates of general elections, he will now make a statement.
  The Prime Minister: I think the position has become clearer since the hon. Gentleman put his Question on the Order Paper.
  Mr. Lewis: No, Mr. Speaker. As a matter of fact, the position has not become clearer, because, as the Prime Minister will recollect, he spoke last Thursday at a luncheon where he told one half of the House certain things, and he did not quite clear up the doubt as to whether it is to be October or next May. Perhaps he will now tell the whole House whether it is to be October or May.
  The Prime Minister: The statement I had to make I made in public on Thursday night at a public meeting reported in the full Press.

SCOTTISH AFFAIRS
The matter of the Tourist Industry in Scotland, being a matter relating exclusively to Scotland, referred to the Scottish Grand Committee for their consideration.—[Mr. R. A. Butler.]
ORDERS OF THE DAY

  FINANCE BILL
  Order for Second Reading read.
  3.34 p.m.
  The Financial Secretary to the Treasury (Mr. J. E. S. Simon): I beg to move. That the Bill be now read a Second time.
  The annual Second Reading of the Finance Bill moved by the Financial Secretary may call to the minds of hon. Members a ceremony which used to take place in ancient Greece. For a year, the chosen victim had lived comfortably at public expense, but inevitably and inexorably the day of expiation approached. When it arrived the ordeal which ensued must have been almost as painful to the onlookers as to the victim. In later centuries, as manners softened. the victim was let down more lightly—literally so, because, as hon. Members will remember, live birds were attached to him to break and ease his fall as he was flung into the sea from the Leucadian Rock, and a rowing boat waited considerately for him below. I can but ask for the same sort of indulgence from the House as, on this day of annual ordeal for mover and audience, I attempt to expound the provisions of the Finance Bill.
  Again this year these provisions fall into five main groups. First, there are the measures for reduction of taxation, which are particularly striking and widespread in the Bill: Income Tax, beer duty, Purchase Tax, bus licences and Stamp Duty all reduced, and Corporation Duty abolished. Secondly, there are the measures to encourage investment. Last year, there were initial allowances, and this year, there are the investment allowances.
  Thirdly, there is a major project of fiscal reform. In recent years, such reform has mainly been in direct taxation based on the Report of the Royal Commission on the Taxation of Profits and Income. This time, my right hon. Friend has chosen to sweep away the voluminous, costly and chaotic provisions of the beer licence duties and replace them by a code which is simple, easily understood and economical in administration. Fourthly, there are once again measures to counter the shady stratagems of the bond washers

  1107
  and the dividend strippers. Lastly, there are provisions to give relief where the tax code has been found to bear with harshness on the taxpayer.
  Clause 1 and the First Schedule, which effect the substantial reduction in the beer duty, Clauses 2, 3 and 4 together with the Second Schedule, which replace the existing liquor licence duties and the club duty by a simple registration licence, and Clause 5, which abolishes monopoly value, are closely associated. Together, they allow the retail price of beer to be reduced by 2d. a pint, equivalent to 48s. a barrel. That the duty is reduced by 43·7d. a barrel only is accounted for by the fact that the cost of the reduction in licence duty and the monopoly value reforms works out at 4s. 5d. a barrel, making 48s. in all.
  Clause 1 provides also for the minor adjustments mentioned by my right hon. Friend in his Budget speech, whereby the form of the duty on black beer, a small and specialised product of considerable gravity, has been modernised and the rate reduced correspondingly by 2d. a pint. The Clause is necessarily somewhat long, since it covers the duty on both home produced and imported beer and the drawback rates for each. I do not propose at this stage to comment on it in detail. The new rates of duty for beer and black beer are set out in full in Parts I and II of the First Schedule. I should, perhaps, remind the House that the rates of Customs duty there set out, but not those of Excise duty, are subject to an additional 10d. per 36 gallons whatever the gravity to countervail the duty on imported hops.
  I think that it is convenient to consider Clauses 2 to 5 together. They represent a substantial programme of simplification and administrative reform. Let us consider for a moment the system which is being replaced—the elaborate system of duties based on the annual value of the premises—and then contrast it with the new system of flat-rate liquor licence duties set out in Clauses 2 and 3. There are six paragraphs, covering over two pages, in the Fourth Schedule to the Customs and Excise Act, 1952, which lay down how the annual value of premises is to be ascertained. Until now, machinery was necessary to ensure that the Customs and Excise was notified of any changes
  1108
  in the Income Tax value of the premises —for example, on account of improvements—and the licence duty payable by each licensee had to be calculated individually. There were exceedingly complex provisions for relief from duty in a variety of circumstances.
  By contrast, under Clauses 2 and 3 the sole reduction from the new flat rates of duty will be in respect of licences held for only part of the year. In effect, the new licences will be registration licences, with flat rates of duty, designed to do little more than cover the cost of administration and taking no account of differences in circumstances between one set of licensed premises and another.
  I should emphasise that the changes relate only to the licence duties themselves. The scope of the various licences and the general control exercised by the licensing justices continue unchanged, so that the lower duties will not lead to any automatic increase in the number of public houses.
  The arrangements for the proposed new club licence duty are contained in Clause 4. Here again, a flat rate of duty is proposed with proportionate reductions for part year licences, and the responsibility for taking out a licence is laid on the secretary of each registered club. To preserve a fair balance of taxation between competing interests, the rate of duty is £5, the same as is proposed in respect of publicans' licences. Again, it is a more or less nominal registration licence fee which takes no account of the circumstances of individual clubs. The existing duty necessitates a return of purchases of liquor each year, and the duty is assessed at 3d. in the £. Both club secretaries and the Customs and Excise will be glad to be rid of their respective burdens of making and verifying these returns.
  Clause 5 deals with the last item of this programme of simplification and modernisation. Under the Licensing Act, 1953, the licensing justices, when they grant a new on-licence, are required to attach a condition preserving to the public the difference between the value that the premises bear when licensed and their value unlicensed. As hon. Members know, that is known as the monopoly value. The assessment of these amounts is not a simple matter. Clause 5 abolishes

  1109
  monopoly value, but preserves the principle that the public and not the individual should benefit from the monopoly constituted by the licence. It does this by converting the charge into an addition to the beer duty. I think that the House will agree that this is far simpler and more satisfactory.
  These reforms will result in an administrative saving amounting to 100,000 Civil Service man-hours a year and a reduction of 14 pages in the size of the Statute Book. The licence duties, club duty and monopoly value formerly represented more than one-third of the beer duty. Today, they come to only one-fortieth of it. I do not think that there can be any doubt of the fiscal wisdom as well as the administrative advantage of shifting the yield from them to the commodity.
  Finally, I stress the fact, because it is the heart of the matter, that the cost of all these simplifications, £5½ million a year, is not forgone by the Exchequer, but translates into the 4s. 5d. a barrel by which the beer duty reduction falls short of the reduction in the price to the public.
  The reduction in the beer duty has been generally welcomed in the House and in the country, but there has been a little misunderstanding in some of the organs of public opinion; and I may, perhaps, be allowed to emphasise why my right hon. Friend has made this proposal. He had four reasons, each of which was sufficient justification.
  First, like Sir Stafford Cripps in 1949, he wished to safeguard the long-term revenue from beer. Secondly, a reduction in duty equivalent to 2d. in the price of a pint of beer afforded an opportunity to carry through the valuable administrative reforms to which I have referred. Thirdly, to quote the words of the right hon. Member for Colne Valley (Mr. Glenvil Hall) when he was Financial Secretary in 1949, which again echo Sir Stafford Cripps in his Budget speech:
  "… the cost of beer enters into the cost of-living index figure, and is often a substantial item in the family weekly expenditure."—[OFFICIAL REPORT, 18th May, 1949; Vol. 465, c 441.]
  And on 22nd June, 1949, he said:
  "… it would help to keep the cost of living steady." —[OFFICIAL REPORT, 22nd June, 1949; Vol. 466, c. 233.]
  1110
  At that time, with the paucity and expense of other goods, beer had nearly twice as much weight in the index as it has today. On the other hand, my right hon. Friend's reduction is twice as large.
  Fourthly, it enabled my right hon. Friend to ensure that his fiscal remissions extended palpably to the productive worker—the worker in mine and mill, in factory, forge and field—and not least to those who do not pay Income Tax. As a highly regarded and deeply mourned Member of the party opposite, the late Mr. Ralph Morley, put it in 1948, when, for the second time within a year, the tax on beer was increased:
  "The incidence of that duty will fall almost exclusively on the lowest income groups." — [OFFTCIAL REPORT, 1st June, 1948; Vol. 451, c. 855.]
  It follows that my right hon. Friend's relief will inure almost exclusively to their benefit.
  As the hon. Lady the Member for Leeds, South-East (Miss Bacon) said:
  "I am certain that many miners, steel workers and agricultural labourers would consider that beer, if not an absolute necessity, was, at any rate, an aid to production." —[OFFICIAL REPORT, 8th April, 1948; Vol. 449. c. 399–400.]
  This, again, fits in with the object and pattern of my right hon. Friend's Budget. I do not think that we should minimise its effect on the happiness and contentment of many people. Half the adult population, 20 million people, drink beer and their average consumption is seven pints a week. [Interruption.] The hon. Gentleman makes disapproving noises, but, after all, it was the substitution of beer for gin which so startlingly reduced the death rate in this country.
  All over the country there are well-conducted clubs—and public houses fulfilling the same need—which constitute a very real and valuable part of the traditional fabric of British society. In them a vigorous, racy social life is pursued with that absence of friction which scientists tell us owes much to suitable lubrication. We in this House have the noble words of the Areopagitica readily on our lips, and rightly so, but it was a later poet who said:
  "Malt does more than Milton can
  To justify God's ways to man."
  I commend these Clauses wholeheartedly to the House.

  1111
  Clause 6 makes some minor changes, mostly reliefs, in the scope of the duty on heavy hydrocarbon oil used as fuel for road vehicles. These are designed to apply the duty more logically and equitably. None of the changes will have any significant effect on the revenue, although they are no doubt matters of importance to the individuals affected. A heavy oil vehicle used solely in, say, a quarry or a large factory has hitherto been included within the scope of the duty if it happens to be of a type normally used on roads, although it plays no part in road transport and may compete with other industrial equipment not so included. Engines used for purposes such as concrete mixing or refrigeration have been included merely because they happen to be mounted on a road vehicle.
  Clause 6 removes both of these anomalies, which have assumed growing importance as the number of diesel vehicles has increased. It also adds two items to the categories of vehicles which may use duty-free heavy oil on the grounds that their use on roads is strictly limited. One relates to vehicles used only for certain purposes in the construction or repair of roads and the other to vehicles which use the roads only for short distances in passing from one part of a holding to another. Finally, the Clause corrects a technical flaw which has recently been discovered in the law. It might have been possible to argue that a few specialised vehicles were entitled to use duty-free oil notwithstanding that they were used as goods carriers.
  I now come to a few Clauses dealing with certain minor fiscal matters which my right hon. Friend did not consider it necessary to mention in his Budget speech. The first of these is Clause 7, which increases from 525,000 tons to 540,000 tons the maximum annual quota of sugar imported from Colonial Territories at the special preferential rate of duty. This follows from recent arrangements made under the Commonwealth Sugar Agreement and reflects the growth in colonial sugar production.
  Clause 8 deals with herrings. Fish meal and oil, which are used extensively for animal feeding stuffs, can be imported into this country free of duty. On the other hand, if herrings are imported for the purpose of conversion into meal and oil, or if they are imported for human
  1112
  consumption but, having failed to find a market, end up in the conversion factory, they are charged import duty at 10 per cent. This puts our conversion factories at a disadvantage with their competitors abroad. The Clause will enable them to compete on equal terms and will, I trust, help to maintain and increase employment in Scotland, where most of the conversion factories are situated.
  Clause 9 deals with unlicensed motor vehicles left standing on the public roads. This practice has shown signs of becoming quite extensive. I am told that a police count made a year or so ago suggested that, in the Metropolitan Police District alone, 14,000 unlicensed cars were standing on the roads. The number has almost certainly risen since then. Doubtless the problem exists in other big cities. More than three-quarters of these vehicles are private cars. There is clearly no case for allowing people to make use of the highway for parking purposes, at least without paying the normal Excise duty.
  Clause 10 carries out my right hon. Friend's proposal to help the road passenger transport industry by substantially reducing the Excise duty payable on hackney carriages with more than eight seats: in other words, buses and coaches. The new scale will be an initial charge of £12 a year for any vehicle seating more than four passengers, with an additional charge of 10s. for each seat over twenty.
  Perhaps I may give a few examples to show how this will work, A small minibus of 12 seats will pay £12 a year instead of £20; a 20-seater bus will pay £12 instead of £36; a 35-seater, which is the average single-deck bus, will pay £19 10s. instead of £61 4s., and a 60-seater, the average size for a double decker, will pay £32 instead of £91. Therefore, as my right hon. Friend stated in his Budget speech, the new scale will reduce the annual duty on buses by about two-thirds.
  My right hon Friend was anxious that any help which he could give should take effect as quickly as possible. The Clause therefore provides that the new rate of duty should apply from the day after Budget day, and in the case of licences already taken out before Budget day, the difference between the old and the new rates of duty will be refunded for so long as the licence is valid after the end of March.

  1113
  This relief should give the bus industry considerable help in maintaining its less remunerative services. I know that the industry would have liked other forms of tax relief as well, but the House is aware of the serious objections which successive Chancellors have seen to such a claim. I do not say that the Clause will solve all the industry's problems—I do not believe that any fiscal measure could do that—but by reducing the overhead costs of the industry, at a cost to the Exchequer of over £6 million this year and over £3½million annually thereafter, we are giving immediate and practical help to this industry.
  The last of this group of Clauses dealing with vehicle Excise duties is Clause 11. This covers a point which has been brought to our attention on several occasions by hon. Members with agricultural constituents and also by the National Farmers' Union. A farm tractor enjoys a special low rate of licence duty of £2 a year and a tractor so licensed may, with certain limits, haul agricultural goods along the highway on a trailer. In recent years, however, a device has been developed of fitting tractors with a removable container, sometimes called a transport box, for carrying farm produce or implements, such as a buck rake for lifting and carrying hay and straw and suchlike goods.
  At present, the tractor which carries such goods (as opposed to towing them) is liable to tax at the considerably higher rate of duty applied to goods vehicles. My right hon. Friend accepts that this is unreasonable; but any relief must not allow vehicles that are really small vans or lorries to masquerade as tractors. For this reason, and also because the use of these vehicles as load carriers must be restricted in the interests of road safety, the Clause lays down limits both to the size of the appliance in question and the distance from its base over which it may operate.
  Sir James Duncan: Why is there a five-mile limit for a tractor with a transport box but a 15-mile limit for a tractor with a trailer? This does not seem to me to make sense.
  Mr. Simon: Perhaps that is a matter we can clear up in Committee. I will certainly take note of it.
  I now come to Part II of the Bill, on which I can be brief. Its two Clauses
  1114
  give effect to my right hon. Friend's Purchase Tax proposals. Clause 12 reduces the former 60 per cent. rate to 50 per cent., the 30 per cent. rate to 25 per cent. and the 15 per cent. rate to 12½ per cent. Clause 13 relieves replacement television tubes and goods vehicle chassis from tax entirely. Last year my right hon. Friend reformed the structure of this tax. It has stood up well to a year's practical work; and this year my right hon. Friend has been able to propose substantial changes, to the value of over £80 million in a full year, in two simple and self-explanatory Clauses.
  I turn, therefore, to the Inland Revenue Clauses in Part III of the Bill. Clause 14 deals with the reduction in the standard rate. It imposes Income Tax for the year 1959–60 at the standard rate of 7s. 9d. in the £. The Clause also imposes the charge of Surtax for 1959–60—that is, the Surtax which will be payable in respect of this year's income on 1st January, 1961—at the same rates as were in force for 1957–58 and are continued for 1958–59 by Clause 15. The object of this is to let Surtax payers know the extent to which their total tax bill will be affected, and it follows recent practice when the standard rate of Income Tax has been altered.
  The proviso enables deduction of tax under P.A.Y.E. to continue to be made on the basis of the present rates until the new tax tables can be printed and distributed. Effect will be given to the new rates on the first pay day on or after 8th June, when an adjustment will be made retrospectively to the beginning of the financial year.
  Clause 16 (2) provides for a reduction of 6d. in each of the reduced rates of Income Tax. The effect will be that the first £60 of taxable income will be charged at ls. 9d. in the £, instead of 2s. 3d., the next £150 will be charged at 4s. 3d., instead of 4s. 9d., the next £150 will be charged at 6s. 3d., instead of 6s. 9d., and thereafter the standard rate will apply. It is really quite simple.
  Mr. Gerald Nabarro: Is my hon. and learned Friend speaking on behalf of the Inland Revenue when he says that it is quite simple, or is he taking my view that hundreds of thousands of unpaid tax collectors—the employers—will find it excessively difficult?
  Mr. Simon: I am assured that they have ready computers and ready reckoners which make the task quite a simple one.
  The remaining subsections of Clause 16 will make improvements, in sympathy with the reduction in rates, in the marginal provisions associated with the age exemption, the age allowance and the small income allowance. In all three cases, the relief stops at a fixed income limit; but, to avoid the sharp jump in liability which would occur if the tax were charged in the ordinary way as soon as the total income exceeded the relevant limit, there are marginal provisions.
  These restrict the tax bill, in the case of age exemption, to a fraction of the excess over the limit; or, in the case of the other two reliefs, to what the tax would have been if the income had been equal to the limit, plus a fraction of the excess of the income over that limit. The effect of these marginal provisions as they stand is that a reduction in the standard and reduced rates would give no benefit to some taxpayers with incomes in the marginal bands. My right hon. Friend has, therefore, decided to cut each of these marginal fractions by one-twentieth; that is, by ls. in the £.
  Clause 17 gives effect to my right hon. Friend's proposal with regard to investment and initial allowances. When investment allowances ceased to be granted in 1956, what happened was that they were, with certain exceptions, statutorily suspended. Consequently, the main provision of Clause 17, which is to be found in subsection (1), is a removal of that suspension. But, since the details of the new scheme are more favourable in some respects than those of the scheme which was in force between 1954 and 1956, other provisions are needed.
  Subsections (1) and (2) of Clause 17 provide, in effect, that as regards capital expenditure becoming due and payable after Budget day, expenditure on new machinery or plant will rank for a 20 per cent. investment allowance and a 10 per cent. initial allowance; expenditure on the construction of industrial buildings will rank for an investment allowance of 10 per cent. and an initial allowance of 5 per cent; and expenditure on the construction of mining works will rank for an investment allowance of 20 per cent. and an initial allowance of 20 per cent.
  1116
  Since Clause 17 removes a suspension upon the grant of investment allowances, it brings back into operation provisions that applied to investment allowances in 1954. These include the provisions for a 10 per cent. investment allowance for new farm buildings, and for a 20 per cent. investment allowance for new plant and machinery dealt with on the renewals basis.
  As in 1954, there will be excluded from the investment allowances system expenditure on ordinary passenger motor cars and expenditure on second-hand plant and machinery. Such expenditure will continue to rank for a 30 per cent. initial allowance. The provisions of the 1954 Act designed to prevent the avoidance of tax by way of investment allowances will continue in operation, with certain necessary technical modifications which are to be found in the Fourth Schedule.
  Clauses 18 to 21 are designed to protect the Inland Revenue against the inroads of persons who practise a form of the device known as bond washing.
  Mr. John Diamond: I am sorry to interrupt the hon. and learned Gentleman, but I was hoping that he would say something on the all-important fear which so many members of the business community have about the premature withdrawal of investment allowances. Will he not say anything about that, or give some assurance to the business community that if they start schemes now which do not come to fruition for, say, a year or two, the Chancellor will not carry out the promise which he made during his Budget speech to withdraw the investment allowances unless the new expenditure is incurred immediately?
  Mr. Simon: I am sure that the hon. Gentleman will acquit me of any discourtesy if I do not answer that in my review of the provisions of the Finance Bill. I dealt with that matter myself in my speech in the Budget debate, and my right hon. Friend may be saying something, now that he has heard what the hon. Gentleman has said, when he sums up the debate.
  I was dealing with the bond washing provisions of Clauses 18 to 21. The House is, unhappily, becoming familiar with these methods of raiding the Inland Revenue, but today I ought to explain

  1117
  the latest form. This is the purchase of securities, mainly British Government securities, cum-dividend—that is, in expectation of interest or dividend shortly to be paid—and their sale soon after, exdividend—that is, without the right to the dividend or interest which has, in the meantime, been paid. The dividend, which is normally received under deduction of tax, is taken by the operator who bought and sold. Other things being equal, the price of the security cum-dividend will be higher than the price ex-dividend, by reason of the fact that the former buys the right to receive the dividend or interest.
  There are three main classes of person who can benefit from this situation. The first are financial dealing concerns. In their case, the difference between the price at which they buy cum-dividend and the lower price at which they sell ex-dividend represents in law a trading loss; and no account can be taken of the fact that the gap between the two prices may be virtually bridged by the net dividend. This purely technical loss is available for the relief by repayment of the tax deducted from the dividend or by set-off against other profits or income. Financial dealing companies have been formed deliberately to exploit this device; and I know that the House will agree that the operations of those who practice it must be stopped.
  Secondly, benefits can be obtained from the device by bodies such as charities or superannuation funds that are exempt from Income Tax, since they can obtain repayment of tax on the "washed" dividend. Thirdly, the device could be practised by ordinary trading concerns which had losses available for relief. They could obtain "washed" dividends in order to secure the repayment of the tax deducted from those dividends against their losses. The Clauses deal with these three types of case.
  Clause 18 defines the field of review as cases where there was a purchase cum-dividend and a sale ex-dividend on or after Budget day. The provisions will apply automatically if the time which elapsed between the purchase cum-dividend and the sale ex-dividend did not exceed a month. We believe that to be sufficient to deal with the ordinary type of case which we have in mind, but to guard against artificial transactions the Clauses will also apply where the time
  1118
  between the purchase cum-dividend and the sale ex-dividend exceeds a month but is not more than six months, if the purchase or sale was effected at prices different from the current market price, or if the sale was a prearranged transaction. These conditions are laid down in Clause18, which also contains some necessary technical provisions.
  Clause 19 and the Sixth Schedule provide the remedy in the case of financial dealing concerns. Shortly, it provides that, where one of the transactions I have mentioned is carried out by a dealing concern, so much of the purchase price as can be taken on the basis of day by day accrual to represent accrued dividend is to be disregarded in computing the dealer's profits or losses. Purchase cum and sale ex-dividend, as the House is well aware, can constitute legitimate business which we have no desire to harm. Clause 19 (2) therefore proposes to exclude from the legislation transactions carried out in the ordinary course of their business by bona fide dealers on stock exchanges or bona fide discount houses.
  Clause 20 provides a different remedy for bodies which are exempt from Income Tax—that is the second class I dealt with —namely, that the exemption from tax which these bodies enjoy shall not extend to that part of the dividend which had accrued when the securities in question were purchased.
  Clause 21 provides a remedy in cases where bond washing might be carried out so as to secure an unjustified tax relief in respect of a trading loss. Here again, the amount of dividend accrued at the date of purchase and the tax on it will be left out of account for tax purposes. The Clause also contains provisions similar to those in last year's Finance Bill dealing with dividend stripping, to block avoidance by bond washing transactions through intermediaries.
  Mr. Eric Fletcher: Will the hon. and learned Gentleman be good enough to say whether he thinks that the Clauses dealing with bond washing and dividend stripping will finally check bond washing, or does he anticipate that next year further Clauses will be required to stop loopholes subsequently discovered?
  Mr. Simon: I cannot say more than I said last year. namely, that we have

  1119
  blocked all the methods which we know of or can envisage. I certainly would not say that ways may not be found round this, or any conceivable, legislation.
  Mr. Harold Wilson: Before the hon. and learned Gentleman leaves bond washing, may I ask whether he would recall that we raised the question of bond washing at some length on the Second Reading of the Finance (No. 2) Bill on 9th May, 1956, and that since that time we have been told by the Government that bond washing could be dealt with, first, I think, by Section 12 of the 1957 Act, and, secondly, when new methods were worked out and further measures taken, quite helpfully, by the Stock Exchange Council, in August, 1957, I think? Can he explain to what extent those two stops are now ineffective and why they are ineffective?
  Mr. Simon: I think that they fit together. The Stock Exchange provisions were effective to stop the then existing methods of bond washing. The method I have described today is a way round those provisions contained in the Stock Exchange rules. It is for that reason that we have thought it right and necessary to bring in these provisions.
  I was about to deal with Clause 22, which gives statutory effect to an agreement we have made with the Government of the Irish Republic to stop dividend stripping of companies in either country by a concern resident in the other country.
  Part IV of the Bill deals with stamp duties. Clause 23 gives effect to my right hon. Friend's proposal to abolish the present stamp duties on sea insurance policies and to substitute a fixed duty of 6d. This, in fact, restores the duty to the level at which it stood when sea policies were first made subject to duty in 1694. It will remove an obstacle to the overseas business of the marine insurance market, and it will also give some benefit to our shipping industry and to shippers.
  Clause 24 abolishes the Corporation Duty, which is technically a Stamp Duty though, in fact, it is not collected by means of stamps. The duty was imposed in 1885 expressly to compensate the revenue for non-liability to death duty of property held by bodies corporate and
  1120
  unincorporate which was incapable of passing on death. It was not a tax on trade or business profits, but on the annual income from property.
  Because of the very wide scope of the exemptions the incidence of the duty is arbitrary and its yield has never, since the beginning, I think, come up to expectations. Even now, after seventy years, it is only about £150,000 a year, which was the figure originally estimated for 1886-87. The number of assessments made annually is about 3,500, so that the duty has a very narrow base. I am sure that the House will welcome the end of this tiresome, unremunerative tax.
  I now come to the fifth and last part of the Bill. Clause 25 provides for the increases announced by my right hon. Friend in the amounts which may be deducted for Profits Tax purposes in respect of the remuneration of the directors of director-controlled companies. Whereas the present scale starts with a minimum allowance of £2,500 a year, subsection (1) substitutes £3,000. If there are two full-time working directors, the allowable amount is at present £4,000 and the subsection substitutes £5,000. For three or four such directors the new figures are £7,000 and £9,000 respectively instead of £5,500 and £7,000.
  Clause 26 deals with Estate Duty on policies of assurance which the assured gave away during his lifetime. The House will recall the case of in re Hodge, which drew attention to the unsatisfactory state of the law on this subject. It was there held that Estate Duty was payable on a father's death on the full value of a policy which he had given to his son, although the policy had become the absolute property of the son more than ten years before and was by then fully paid up. Such, a rule could not be justified; and my right hon. Friend authorised me to announce an extra statutory concession last year. That was pending a review of the whole treatment of gifts of policies. In the result, as my right hon. Friend explained in his Budget statement, it is proposed that gifts of policies of assurance should be treated like gifts of any other property.
  Broadly speaking, the effect will be that a policy, whether it provides for payment of a lump sum or an annuity or other benefit, will not be liable for duty if it was wholly given away more than

  1121
  five years before the death of the assured, provided he paid no premiums within the five years. Subsection (2) deals with cases where premiums are paid on a policy which is the subject of a gift. In effect, it secures that if the assured paid premiums within five years of his death, then a proportionate part of the policy only will be liable to duty.
  Clause 27 relates to a matter which the House formerly delighted to debate at length in the early hours of the morning and, therefore, will, I think, require little explanation from me. It extends for a further twelve months, until 31st August, 1960, the arrangements originally introduced in the Finance Act, 1956, for financing the nationalised electricity, gas and transport undertakings by direct advances from the Exchequer. The Clause also increases by £550 million the limit of advances which can be made in that way.
  The House has given me considerable indulgence, which I asked for at the beginning, and I am very grateful. But I ought, I suppose, before I conclude, to indicate where the main contention is likely over this Finance Bill. I confess that I have some difficulty in doing so. The Opposition did not raise any voice against the Budget Resolutions and agreed to the provisional collection of taxes on the basis proposed by my right hon. Friend; and it would obviously be chaotic to make any change now. Nevertheless, there remains the little matter of how the Opposition propose to pay for the measures to which they attach priority.
  In the Budget debate I ventured to point out that the Opposition did not suggest that more should be borrowed this year. Thus, they could not have both my right hon. Friend's tax remissions and their own proposals. In particular, I challenged them to vote honestly and straight against the reduction in Income Tax, recognising that they could not have both that and the 10s. increase in National Insurance benefits financed from the Exchequer.
  At that point the right hon. Member for Huyton (Mr. H. Wilson) intervened and said that that antithesis was false. He proposed that the Income Tax reduction should not apply to companies, that there should be a real drive against tax avoidance, that the Entertainments Duty should be balanced against the profits of
  1122
  the commercial television companies and that the Purchase Tax should be recast on the lines which he had suggested. He concluded:
  "… it adds up to a perfectly feasible figure." —[OFFICIAL REPORT, 13th April, 1959; Vol. 603, c. 674.]
  I think that the right hon. Gentleman must have been rattled to have made that intervention. His proposals for Purchase Tax would, in fact, cost the Exchequer at least as much as my right hon. Friend's proposals. Again, the commercial television companies already pay Income Tax and Profits Tax, and nobody has suggested that a special tax should be put on them.
  The most astonishing proposal was the proposal that the Income Tax remissions should not extend to companies. This made complete nonsense of the contention that investment rather than consumption should be favoured in the tax remissions. I ventured to point out at the time that this would not do, and right hon. Gentlemen opposite evidently agreed with me, because when the right hon. Member for Smethwick (Mr. Gordon Walker) spoke he made quite a different set of proposals. The business about Purchase Tax was quietly and sensibly forgotten, as was the idea about a further tax on television.
  The right hon. Member for Smethwick suggested quite a different set of proposals— taking 1d. only off beer, which would yield £20 million, and taking 3d. less off the standard rate of Income Tax. which would cost another £40 million.
  Mr. Gordon Walker: I never said that.
  Mr. Simon: The right hon. Gentleman certainly said that. I have verified these references. He would still have withheld the relief from companies, but he was wrong in thinking that it would have yielded as much as £63 million. With the cut in the standard rate which he proposed, the figure would be £40 million.
  Mr. Gordon Walker: I assure the hon. and learned Member that I have never proposed that change in the standard rate of Income Tax. I said that the Income Tax concession should not be extended to companies, but I did not say that there should be a smaller reduction in the standard rate.
  Mr. Simon: I have sent for a copy of HANSARD. The figure with the cut in the standard rate, which I repeat he had proposed, was £40 million. That again indicates that right hon. Gentlemen opposite had given no thought to the problem of how the increase in pensions which they demanded was to be paid for.
  The right hon. Member for Smethwick claimed that the gap should be bridged by a capital gains tax. The gap is about £100 million. Had he and his right hon. Friends given any thought to the matter they would have realised not only that a capital gains tax would not produce regularly anything like £100 million a year, but also, and far more important, that a capital gains tax produces nothing at all—not a penny—for the first two years. Even with 1d. less off beer and 3d. less off Income Tax, and with companies still taxed at the present rate, the right hon. Gentleman has suggested where money might be found to pay for only half of the increased pensions which the right hon. Member for Blyth (Mr. Robens) specifically demanded.
  My right hon. Friend the Chancellor has been good enough to hand me the relevant passage in HANSARD. I will read what the right hon. Gentleman said.
  Mr. Gordon Walker: Which column?
  Mr. Simon: It is column 760. It reads:
  "This is a cheap attempt to set the benefits of the Chancellor's reliefs against the old-age pension. Otherwise, it has no meaning at all. I would answer them by saying that if there were the slightest will to do this, a way could be found."
  Obviously, he meant to suggest a way, and he continued:
  "Most beer drinkers, as been said on both sides of the Committee, would be willing to forgo part of their remission if they felt that the old-age pensioners would benefit."
  The right hon. Gentleman then quoted my hon. Friend the Member for Louth (Mr. Osborne) as saying that
  "he would not only have been in favour of taking only 1d. off beer but of 3d. less off the Income Tax…"
  Mr. Gordon Walker: That is what was said by the hon. Member for Louth (Mr. Osborne).
  Mr. Simon: Why should the right hon. Gentleman have quoted my hon. Friend
  1124
  the Member for Louth unless he, too, were suggesting that that was a way to bridge the gap? Even if that were not so, the right hon. Gentleman still has another £40 million to find.
  Mr. Gordon Walker: I hope that the hon. and learned Gentleman will apologise. I quoted the hon. Member for Louth, pointing out that he had gone even further than I went in these suggestions. I think that it is extremely wrong to try to twist a reference of that kind especially as, if the hon. and learned Members looks at the previous column of HANSARD, he will find set out properly and fully the suggestions which I made. There is no mention of a reduction in the concession on the standard rate of Income Tax. To attribute to me what his hon. Friend the Member for Louth said is improper. He should attack his hon. Friend, not me.
  Mr. Simon: I think that anybody who heard the right hon. Gentleman was left in no doubt at all that he was suggesting a way of bridging the gap; but, if not, it merely means that he has another £40 million to find. It is as simple as that.
  The right hon. Gentleman went on to say:
  "If only Id. were taken off beer that would yield £20 million, but even if that were not done much could be done if the Chancellor had not extended Income Tax reliefs to companies. That would have given us £63 million, and if he had imposed a capital gains tax, as he should have done, the two together would have given enough for a very favourable rise in the old-age pension."—[OFFICIAL REPORT, 13th April, 1959; Vol. 603, c. 760–1.]
  All we have, then, is £20 million off the beer tax, if the right hon. Gentleman says that he did not mean to imply anything else. The remaining £180 million has to be bridged by a capital gains tax which would produce nothing this year or next year.
  Mr. H. Wilson: The hon. and learned Gentleman has quoted my intervention. Being an intervention, there was obviously not time to develop the point in full. Will he tell us why he has missed out of his "midnight oil" calculation my reference to tax avoidance? We are becoming used to the Chancellor and the Financial Secretary telling us year by year of their failure to deal even with dividend stripping. Why did the hon. and learned Gentleman not deal with tax

  1125
  avoidance in adding up what we think should have been obtained to make the increase in pensions possible?
  Mr. Simon: The right hon. Gentleman, I am sure unintentionally, does me an injustice.
  Mr. Wilson: The hon. and learned Gentleman quoted my reference to tax avoidance and then produoed a table which he must have prepared in the long watches of the night. He found a gap in that table of £180 million. Why did he make no allowance in the table for the results of a drive against tax avoidance?
  Mr. Simon: Because I think that it is fantastic to suggest that a drive against tax avoidance could produce £180 million in this year, or in a full year, or anything like that amount. It is fantastic to suggest that it would produce £100 million. or whatever figure similar to that which the right hon. Gentleman suggests. I say that if the retirement pensioner has to rely on that sort of finance he will have a very sorry time if he ever has to rely on pledges made to him by right hon. Gentlemen opposite. The right hon. Gentleman now has a third opportunity to explain how he would finance this increase in old-age pensions.
  4.30 p.m.
  Mr. Gordon Walker: The Finance Bill was awaited with unwonted interest in quarters which are not ordinarily very closely concerned with it. This novel curiosity was caused not by concern about the contents of the Bill, but about its physical dimensions—how many inches thick, how many Clauses and how many pages it contained—because these were thought to be a pointer to the possible date of a General Election.
  This is a long and complex Bill and it has been said that it is an obstacle to an early General Election, but if the Finance Bill stands in any way in the light of an early General Election that must not be attributed to the Opposition. We certainly want to study it very closely and to improve it, but we should be ready to expedite the passage of the Bill if, thereby, we could have an early General Election. In that case, one good—the need to scrutinise and improve the Bill —would give way to a greater good, that of getting rid of the Government. I make a clear offer that we will co-operate to
  1126
  get the Bill through at any speed necessary to make an early General Election possible. If this offer is not accepted and if the Session takes its normal course, then normal considerations must apply and we shall have to give very close, careful and detailed consideration to this long and involved Bill.
  I should like to thank the Financial Secretary for the first part of his remarks and for his very patient, lucid and pertinacious exposition of the Bill. He threw light in dark corners, although I think that he will admit that some are still obscure and that he did nothing—and for this I do not blame him, because it is not his job—to remove from the Bill its bad features. His speech will help us a great deal, particularly in Committee, and we are grateful to him for it, but I am sorry that he made that tricky attempt towards the end of his speech to attribute to me something which I neither intended to say nor, in fact, said. I think that on reconsideration, when he looks it all up again, he will regret what he said, which was unworthy of the high standards which he sets himself, and that he will withdraw the charge which he made against me, or, rather, the attribution which he made to me.
  I should like to do rather better what the hon. and learned Gentleman took it upon himself to do on our behalf—to point out the matters of controversy in the Bill. I will deal broadly with the main features of the Bill. Let me start with Part II, the Purchase Tax, which the hon. and learned Member rather skipped over. He dealt with that part of the Bill rather more lightly than other parts. In our view the Chancellor has not chosen the best way to distribute the reliefs which he felt able to give in Purchase Tax. Characteristically of the Bill and the Budget, the larger benefits have gone to those who are better off.
  Despite what the Chancellor said last year, it also looks as though he is moving towards what is loosely, but, I agree, wrongly, called a sales tax, by which we mean a Purchase Tax at a low rate over a very wide range of goods in common use. We certainly oppose that, and we oppose the move towards it. We oppose that sort of tax, which we regarded as the most regressive kind of indirect tax that one can find. It violates all the good principles of taxation in that it falls most heavily on those least able to bear the

  1127
  burden. So far from moving in that direction, we should have preferred to have seen the whole 5 per cent. category swept away altogether.
  The Finance Bill and the Money Resolution are so tightly drawn that it will not be possible for details of Purchase Tax to be debated and it will be difficult, if not impossible—I think impossible—to find ways of amending the Purchase Tax in detail. I am sure, therefore, that my hon. Friends will seize every opportunity, including this debate, to raise aspects of Purchase Tax which concern their constituents.
  I should like to take this opportunity to raise an issue which concerns my own and neighbouring constituencies —the Purchase Tax on bicycles. This is an important export industry which is meeting extremely heavy competition from abroad owing to the industrialisation of previously backward countries. This competition is the worse because there is a shrinking home market which is due in considerable measure to the still high rate of Purchase Tax which bicycles have to bear. This is leading to redundancy and laying off, which is causing a great deal of human misery, certainly in the Midlands and in and around my constituency. People are being thrown out of work after they have been twenty or thirty years in the same factory and after they have acquired highly specialist skills which it is not easy for them to adapt to other uses. The 5 per cent. reduction which bicycles got is so small that it is no help to this very hard-hit industry. There is a very strong case for putting bicycles into a lower category or, better still, exempting them altogether.
  There is one thing in the field of Purchase Tax which the Chancellor should have felt morally bound to do, and that is to exempt pots and pans and household goods from tax. They were brought under charge at 30 per cent. in October, 1955. The tax was levied then to raise money because the Chancellor was hard up. Now the Chancellor has reliefs to grant, considerable reliefs in the field of Purchase Tax, and it is not good enough to reduce the rate on pots and pans and household goods to 12½ per cent., the rate they are mainly bearing now. The Chancellor should take the tax off and revert to the pre-October, 1955,
  1128
  position when practically all of them were free of tax.
  These duties were levied in his post-Election Budget by the Lord Privy Seal to finance the Income Tax reliefs given in his pre-Election Budget. That was part of a long process, which has been going on ever since the present Government have been in power, of putting charges on the people at large in order to give benefits to Income Tax payers, particularly those at the higher levels. That is carried still further in this Bill in the provisions for Income Tax in Part III. They are reactionary and unjust. The reliefs on personal Income Tax are concentrated upon a handful of people who are already rich enough. The simple and stark fact about the effect of the Clauses dealing with Income Tax is that 1 per cent. of Income Tax payers will receive 20 per cent. of the reliefs. That is what those Clauses boil down to.
  What is very extraordinary about the Income Tax provisions of the Bill—this has been pointed out previously—is that those with unearned income derive greater benefit than those with earned income and that the fewer children one has the better off one is as regards the reliefs given by the Chancellor. It is argued—I suppose that the argument will be repeated—that this is a consequence of reducing the standard rate. That is no argument at all. There is no law of nature which says that this is the only way in which one can reduce Income Tax. There is an easy remedy, and that is to put up, at the same time as the standard rate is altered, the personal and other allowances.
  It is also argued, very hard-heartedly —I am not sure that it was not argued by the Chancellor, but perhaps it was the Financial Secretary—that those with earned income and those with families did better last time and, therefore, those with unearned income and those without families must do better this time. It is an extraordinary argument. It should never be the case in any year that there is a discrimination against families and against earned income, yet the Chancellor has done those two things on this occasion.
  I want now to say a word about the anti-avoidance measures, about which the hon. and learned Gentleman rightly said we are getting sick of hearing. We welcome the two provisions, but we have

  1129
  learnt by bitter experience not to take them too much at their face value. When telling us in his Budget speech about his intentions in regard to dividend-stripping, the Chancellor used a very diffident tone, very different from the tone adopted in his Budget last year about the same subject. The Government's antics over dividend-stripping over the last few years have been so discreditable that they ought to be brought together and put on the record in one place.
  The story started in the Finance (No. 2) Bill, 1955, when the present Minister of Housing and Local Government, then Financial Secretary to the Treasury, said:
  "The Bill will catch and defeat every dividend-stripping operation…the dividendstripper will be out of business…" —[OFFICIAL REPORT, 8th November, 1955; Vol. 545, c. 1666.]
  Those were brave words. His words were even braver during the Third Reading of the Bill when the right hon. Gentleman strengthened his remarks by stating explicitly that they were uttered on the authority of the Chancellor. He said:
  "…if clever people should discover ways and means of getting round this legislation, which is squarely directed against dividend stripping, the Government will not hesitate to stop any such loophole by further legislation, and to make such legislation retrospective. "— [OFFICIAL REPORT, 13th December, 1955; Vol. 547, c. 1022.]
  That was a categorical, unequivocal pledge. It was accepted by the Chancellor as a categorical, unequivocal pledge when he opened his Budget last year. In one short and clear and, as we then thought, courageous sentence, he said:
  "Accordingly, the provisions I now propose will be retrospective to 26th October, 1955 …" —[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 61.]
  But his hon. Friends were so moved, almost to tears, at the plight of dividend strippers being themselves stripped of their ill-gotten gains that they brought pressure to bear on him and he collapsed and very humbly ate his previous brave words.
  This is a disreputable record which makes us very doubtful about how far the new measures will be effective. We think that very soon people will begin to find other ways round the law—we should not be surprised if they have not already found other ways round—and the story will go on.
  1130
  I turn now from dividend-stripping to bondwashing, an old trick which we had been told had been stopped. This is the device of buying cum-dividend and selling ex-dividend. This is possible because we allow tax-free capital profits. We put a premium upon the artificial turning of income into capital gains. This is the root of all the bondwashing devices. A whole range of these devices would be stopped simply and cleanly by a capital gains tax. These transactions would not then become illegal, but would bear their proper tax. This is the right way to deal with the problem. The hon. and learned Gentleman was right in what he said. The device is also used for proper ends. One does not want to have to stop proper, decent activities because of the tax dodgers.
  Mr. Simon: I do not understand the right hon. Gentleman when he says that this could not continue if there was a capital gains tax. The essence of these operations is an artificial capital loss, not a capital gain.
  Mr. Gordon Walker: It is an artificial income loss. It is playing about with the difference between income and a capital gain or an income loss and a capital loss. It is trying to turn what is really an income into a capital transaction from the point of view of Income Tax law. We have allowed this to happen, but if we had had a capital gains tax nobody would have started bondwashing.
  The Government are very feeble and complacent about the whole matter of tax avoidance. I thought that the hon. and learned Gentleman was rather defeatist, when one of my hon. Friends interrupted him, about the capacity of the new Clauses to prevent new tax avoidance devices. The attitude of the Government plays into the hands of the tax dodgers who will always know that the Government will not catch up with them for a year or two years. That gives them their opening; it plays into the hands of the cohorts of highly paid advisers who think up all these schemes and make a very nice income out of them.
  There is only one effective way to deal with this matter which avoids retrospection, which we do not want, and that is the way that has been suggested by my right hon. Friend the Member for Huyton (Mr. H. Wilson), myself and others. The

  1131
  method is to take powers promptly to prevent new devices of tax evasion by an Order which should be current for one year and should lapse unless embodied in a Finance Bill or other legislation by Parliament. That would enable us to stop the run that the tax dodgers get before the Government catch up with them. If the Government are always to do it afterwards in a Finance Bill, the tax dodgers will always get a run. They are getting a run now on reversionary trusts. If the Government should win the General Election, they will bring forward a provision to stop it two or three years from now in a Finance Bill after big profits will have been made at the taxpayers' expense.
  I want to say a word about things which are not in the Finance Bill, but ought to be in it. I will not talk about the old-age pensioners. The Government's sins of omission were trenchantly exposed in our debate last week.
  Mr. Nabarro: A great flop.
  Mr. Gordon Walker: Is the hon. Member for Kidderminster (Mr. Nabarro) going to speak in the debate?
  Mr. Nabarro: I hope so.
  Mr. Gordon Walker: Then his speech will no doubt be a greater flop.
  One glaring omission on the part of the Government is the failure to do anything about the cinema tax. It is a bad tax, falling on a single industry and one which is in decline. It is a curious tax which falls even when a loss is being made. It is rather as though we had not only a Profits Tax but also a losses tax on companies. We put a tax on cinemas even if they are losing. It is an extraordinarily bad tax which is now hurting the industry very unfairly.
  There is another omission of great importance. Nothing extra has been done in the Budget or in the Finance Bill to attract or direct new industries to the pockets of heavy unemployment. This is particularly startling in connection with the Government's new cotton plan, which is a plan for restriction and for causing redundancy. There is no provision at all and no supplementary provision for alternative expansion which would provide new employment. Without this the Government's scheme is a very dangerous one.
  1132
  There are in the Finance Bill what I might call unwritten clauses, clauses which are presupposed by the Bill and without which the Bill would not be possible. One is in respect of the increase in prescription charges two years ago, imposed by the Prime Minister when he was Chancellor. That was done in a period of economic stringency to raise money. Now there is money to spare, and the removal of those charges should be a first priority for all of us in all parts of the House, and it should have been taken as a first priority by the Chancellor. It is characteristic of the Chancellor that he is keeping on charges which fall with extreme severity on the poorest and on the most sick in order to distribute reliefs which go very largely to Income Tax and Surtax payers.
  Another unwritten clause relates to the increase twelve months ago in National Insurance contributions. It was a flat poll tax, raising £111 million in a year, on employees, again falling heaviest on the poorest. I have worked out the combined effect of the increase in the National Insurance contribution a year ago and of the relief in Income Tax in the Finance Bill for a couple with two children, one under 11 and one over 11. I have worked it out for three income levels. Those earning £12 a week are is. 7d. a week worse off as a result of the net effect of these two things. Those earning £15 a week are 5d. a week worse off. Those earning £40 a week are 13s. 3d. a week better off. That is the net effect of those two operations taken together.
  If we take the whole of this year together, of which the Budget and the Finance Bill are a culmination, the result of the Government's fiscal policy has been a deliberate major redistribution of income from those who can least afford it to the richest in the community. This is typical of the social injustice of the Budget embodied in this Finance Bill—social injustice which we will do our best to remedy in the Committee stage upon which we are soon to enter.
  4.50 p.m.
  Sir Alexander Spearman: The Budget proposals set out in the Finance Bill have aroused less substantial criticism than any Budget I can remember in peacetime. Even the right hon. Gentleman the Member for

  1133
  Huyton (Mr. H. Wilson) has not made use of his vivid imagination but has rather displayed his undoubted wit than his intelligence in his criticisms.
  As far as I can remember, there has been no suggestion that this Budget will lead to a disastrous inflation or to heavy unemployment. Of course, there have been some doubts expressed about the extent of the surplus that my right hon. Friend has chosen to retain, varied by some anxiety about the amount of money he has committed himself to borrow, and, of course, there have been inevitable criticisms of the direction in which the reliefs have been given. It is on these points that I will make a few comments.
  I do not believe that the extent to which the Chancellor of the Exchequer balances expenditure with revenue is very important. I can easily imagine a state of affairs where there was a substantial Budget surplus and a great measure of inflation; in fact, that happened on more than one occasion during the time of the Socialist Government. The balance which is vital is between the amount that people are likely to spend and the amount of goods available for them to buy, and if that balance is not retained then we have either inflation or mass unemployment.
  I think, therefore, that it is the prime job of the Chancellor to get that balance either by curbing expenditure—not merely Government expenditure but all our expenditure—or by releasing it. That is not an easy balance to estimate, even for my right hon. Friend with all his official advisers. For those of us who have no access to official information it is a very hazardous balance to estimate, but I have ventured to make my guess and I would say that my right hon. Friend has got it just about right. Very hesitatingly and tentatively I will give the House the figures on which I calculate that, so that hon. Members can judge whether or not there is any justice in my claim.
  I think it is reasonable to expect that industrial production this year could go up by about 5 per cent. It is reasonable to think that non-industrial production can go up by 2 per cent. Incidentally, hon. Gentlemen opposite sometimes forget what a big part of production that is. In round figures this would give £700 million more of goods. Obviously, if production goes up, wages must go up,
  1134
  and if production goes up, stocks are likely to go up, and if production goes up, it is vital that exports should go up. So allowance must be made for this, and I have estimated a round figure of £450 million, which leaves the Chancellor with £250 million available to release purchasing power to that extent. I may say that with the help of some academic friends, who know much more than I do, I made these calculations before the Budget, so I have not fudged the answer.
  On the other hand, my right hon. Friend has released purchasing power of about £366 million. Assuming that saving follows the normal pattern, I think it is fair to assume that about £107 million of that would be saved. In making this calculation I have assumed that companies continue to save about three-quarters of the relief they get, that private people save about 10 per cent. of the relief, and that about half the post-war credits are saved. That may be rather rash. On the other hand, if less than that is saved directly, probably less will be spent on hire purchase, so that it may come to about the same thing.
  If we deduct £107 million from £366 million it means that the Chancellor, in this Budget, has released purchasing power of about £259 million, which is about the amount I estimated he had available. If, however, the Chancellor had released that purchasing power in different directions, to non-savers, the position would have been very different. If, for example, my right hon. Friend had used it all for reducing Purchase Tax or had done what the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) has just suggested, had raised allowances and things of that nature, the money would not have been saved and, without danger of inflation, he could only have afforded far smaller reliefs. Indeed, the amount by which the Opposition have suggested pensions should be increased would alone take practically the whole of the amount which I think is available, leaving the Chancellor with hardly any other remissions of taxation possible.
  Now I come to the choice of what my right hon. Friend should do. The object of the Budget is not so much to help those who need it most, but to strengthen the economy. I do not think that the Chancellor should appear at Budget time

  1135
  as a kind of Father Christmas. What we want is a Dr. Amory, who will come along with a soothing syrup, if the economy is in rather a poor way, or with a stimulating tonic if the economy is strong enough to benefit from it. After nearly one and a half years of his management I have no doubt that the economy is in a state to benefit from that tonic.
  If the economy is strong then benefits to the pensioners and others will all follow—at any rate, if we have a Conservative Government. If the economy is weak, any benefits they are given will become useless, because they will be mopped up by increased prices. I think that the Chancellor put the true object very clearly in his Budget speech when he said:
  "I have no doubt whatever what the first requirement is today. It is an improvement in the competitiveness of our economy. All our hopes for the future depend on this." —[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 47.]
  I think that the hon. Gentleman the Member for Birmingham, Stechford (Mr. Roy Jenkins), who, in my opinion, always makes valuable speeches—I hope that this will not do him too much harm—agrees, because he said on 9th April, that the Budget was more important for the increases in the standard of living which, if it directed the economy properly, indirectly it could make possible than for any direct benefit which it gave away.
  I should like to say a little about investment allowances, which have been referred to this afternoon. I am very glad that the Chancellor reintroduced them, because I think that they are a very useful addition to our planning mechanism. It seems to me that when there is spare capacity, it is the Government's job to increase and accelerate their own investment—not to keep it necessarily constant —but, when there is spare capacity, to push it up and encourage others to do the same, and, when deliveries are lagging a long way behind orders, then to remove this special stimulus.
  I was very glad that my right hon. Friend said in his Budget speech that in different conditions it would be appropriate to reverse the action that he was now taking. Hon. Members opposite are apt to say that we on this side of the House do not believe in planning. That is really
  1136
  nonsense. Of course Governments must plan. That is what they are for. The difference, I think, is this. We on this side do not believe that it is practical to exactly plan what we produce, where we produce and who produces it.
  My hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), in the Budget debate, expressed some anxiety about the amount that my right hon. Friend had set himself to borrow. I hesitate to differ from my hon. Friend, who has such experience in the matter, but I do not believe that his anxiety on that score is justified. In 1958, the Treasury was able to repay the banks £250 million. It has not that to do this year. I believe that the banks today are quite confident that the Government can safely borrow from them, that is, by creating Treasury bills, £150 million, without dangerously increasing the supply of money. That would leave only about £150 million to be borrowed in the market from the public which, I think, is a very feasible proposition.
  I should like to support that by quoting an article in the Financial Times by Professor Paish, on 10th April, in which he said:
  "Whereas last year the Government reduced its debts to the banking system by about £250 million, this year it should be able to increase them by £150 million or so without causing the quantity of money to rise proportionately faster than real national income. The extra borrowing required from the public should therefore not exceed about £150 million, which should easily be made available by the reduced capital requirements of industry."
  Now, Professor Paish, as is known by all those who have studied his writings, has always been a very strenuous opponent of any inflationary measures. Those who follow his writings will also know that he has the advantage of being nearly always right in what he predicts. That cannot quite always be said of other economists, or even of politicians!
  Finally, I should like to say something about the prospects of the future. I believe that a case can be made that the fundamental economic position of the country today is stronger than it has been not only since the last war, but since the First World war. This is partly because of the fortuitous circumstance that in the last war, unlike the First World War, we tremendously developed our vital engineering industries. But we have not yet been able to take full advantage of

  1137
  that expansion. We could not do it at first because, until 1952, savings were quite inadequate. I suppose that hon. Members opposite will say that it is just a coincidence that savings started rising sharply in 1952 and have gone up regularly and substantially ever since.
  The second reason we were not able to take full advantage of that was, I think, the excess demand that existed nearly to the end of 1957. My right hon. Friend the Lord Privy Seal nearly cured that excess demand in the middle 1950s, about 1954, but he underestimated the extent of the stimulus to industrial investment that would be caused by the Conservative victory at the General Election. He therefore had to have his rather unpopular October Budget, which I believe, although unpopular, was a good Budget. The two things are not quite synonymous. I think that Budget improved the economy of the country a great deal and would have cured the situation but for the unhappy dislocation caused by Suez a year later.
  Now we have got rid of excess demand. We have a balance and if there are no international complications, which no one here can exactly foresee, and if my right hon. Friend is still handling our affairs—and I think that that will be shown to be the wish not only of everyone on this side of the House but of a very substantial majority in the country—subject to these two qualifications, the prospects for the Budget this time next year are very rosy indeed.
  5.8 p.m.
  Mr. H. Rhodes: To the extent that the hon. Member for Scarborough and Whitby (Sir A. Spearman) mentioned that the inevitability of increased production means raising wages, I shall follow him in the course of my remarks. But when shall we concentrate on production out of productivity rather than production by itself and inevitable wage increases?
  Last November, I was in Hong Kong, a place which has been very much talked about during the last two or three years. In Hong Kong there are some of the finest managers I have ever known. The best manager I met there was a gentleman who has many manufacturing interests. I asked him. "Where are you looking for machines for the present?" He said, "To Japan". I said, "And in the future?"
  1138
  He said, "To Western Germany". I said, "Where does China come in, in all this?" He replied, "Well, for a long number of years China will be able to make the machines she needs before productivity is important." It was interesting to note that that manufacturer was not thinking about this country for his machines for the future.
  I was interested at the week-end to see a picture in the Observer or the Sunday Times, of the Prime Minister looking at a modern machine in a Lancashire cotton factory. It was the showpiece of the factory and it was made in Switzerland. What a commentary! If we carry on with the same type of economy that we have had during the last few years, we are heading for trouble in terms of productivity.
  The pattern of boom and balance of payments crises, the taking off of good facilities for credit, interest rates up and the rest, seem a natural kind of sequence. Then, suddenly, there is a shriek from industries affected by competition or the difficulties arising out of Government action. So the time comes when we get a slackening of restrictions. Hire purchase is allowed on easier terms. Income Tax is reduced and we help along a consumer goods spending spree.
  Unless steadily, all the time, there is an improvement in productivity throughout all our industries manufacturers are tempted to span from boom to boom by generating political action and pressure for the Government to do something about it. We have that experience in the cotton industry at present. I shall come to that matter later. The basic truth is hidden while that process goes on. As crisis succeeds crisis, we shall have to buy ourselves out of our difficulties at too high a price. Of course, some people will not invest at all.
  I well remember, when I started my business, going to an elderly gentleman who, I suppose, was about the same age as I am now, and asking him for a bit of advice about buying a machine. "Oh" he said, "You don't want to bother about buying new machines if you can get your labour cheap enough." "But, Sir," I said, "What is all that material you have got in your warehouse?" He said, "It is red flannel." I said, "Red flannel is becoming out of date." "No," he said, "depend on it, women will come back to red flannel

  1139
  for their bloomers." So far as I know they never have done so. He is long since dead and so is the firm.
  An Hon. Member: He made a bloomer.
  Mr. Rhodes: Is the aim of the investment allowance to stimulate investment so that people buy machines for the sake of buying machines? Is the aim to help the engineering industry to get a full order book so that workers will have wages, so that they can stimulate the consumption of consumer goods? If that is so, let us start to think out this problem afresh, as any investment we stimulate should result in the installation of machines with the highest productivity. If, as many economists have stated, under-employment in many factories and industries is 15 per cent. below capacity, for what do we stimulate industry to invest in unless it is in machines of higher productivity?
  Is not the easy way out for manufacturers to go to the Government and ask them to increase purchasing power, then to swing back into production the machines which exist, and carry on for another spell? There is a reckoning coming to this because, whether we like it or not, we have problems like the Common Market coming along, which, if we are wise, we shall foster and prepare for. It can be that money has been spent on the wrong machines, anyway. Some hon. Member might say that people who are spending the money surely ought to know the best way in which to spend it, but that does not follow. Repeatedly, in the House, we have been told that many plants in Lancashire with new and up-to-date machinery have been stopped. Either the machines were wrong, or the management should not have been in management but in something else, or their judgment was wrong.
  Mr. Harold Lever: Does it not also mean that the industry in question, because of world economic circumstances, has to shrink, no matter how ably it is managed or how efficiently it is equipped?
  Mr. Rhodes: That is true, but, on the other hand, the criterion for being able to manage a business well is surely being able to acquire the machines which are to give the highest productivity for the firms
  1140
  which survive. That is precisely what has not been done in many instances in Lancashire.
  In these methods of stimulating investment there should be a productivity criterion. If we are encouraging people to buy machines which are no better, or very little better, than they were years ago, we should be thinking out ways in which we can stimulate improvement of the machines. That is why I come back to the question of a productivity criterion. I think that I have demonstrated that it is possible, by certain steps both in management and the introduction of high production machines, to take care of the increase in wages in the price of commodity. Surely, with an intelligent policy, it can be done generally.
  I am speaking from some little experience of this matter. I beg the Chancellor to look at this question. If we need a 2½ per cent. increase in productivity every year to offset inflation and the possibility of a yearly financial crisis in balance of payments, we ought to be stimulating people to produce the machines that will give us that kind of productivity. I think that it can be helped by an overhaul of the depreciation allowance generally.
  In my industry I am allowed, basically, 10 per cent. for wear and tear. If I run my machinery round the clock—which I do in the case of more than half of it—I am allowed 12½ per cent. It is wrong that the Inland Revenue should not have more resilience in assessing the depreciation allowances on factories which are working the clock round and have a high productivity into the bargain with new machines.
  Unless we are able to change this and able to decide in a business, unless we are able to acquire from anywhere in the world machines which will give us over a period of years the increased productivity which will match the risk of inflation, we are bound to lose ground all the time and in many industries we shall eventually arrive at the point where the Government have to step in in a big way to support or encourage, or to give away money to try to get them on their feet again.
  The Chancellor M the Exchequer (Mr. Derick Heathcoat Amory): I am grateful to the hon. Member for giving way, because I am very interested in what he

  1141
  has said and I agree almost entirely with it, I agree with what he has said about the need to be able to write off a machine over its life, however short that may be. The hon. Member will agree that the obsolescence allowance covers that point substantially.
  Mr. Rhodes: Yes, I am not disputing that and I am not denying that relief in the form of the investment allowance is very useful. It will he of some benefit. If it is comforting to the right hon. Gentleman, I do not think that there is any doubt that some stimulus has been given to the manufacturing of capital goods since the provisions were announced in the Budget.
  Before we reach the point where we enter the Common Market or Free Trade Area and measure our efficiency against the best countries on the Continent, I sincerely hope that we shall have an assessment of productivity in every one of our industries, that assessment to go through to the Board of Trade and be available to the Treasury when these sort of provisions are being thought of and introduced.
  I am certain that to go on as we are, with investment allowances on and investment allowances off, with the stimulus to buy on one year and off the next year, is wrong. There is nothing like constancy to bring about the introduction of better machines into a factory. If we did not have some alteration in our factory in any year the workers would think that there was something wrong with us and that we were becoming inefficient. It is easier when one introduces them steadily throughout the years. I have found that workers are as keen as anybody to adopt better methods and to adopt or accept machines which achieve higher productivity, but they cannot be expected to do it spasmodically. It has to be done steadily all the time, with the workers being kept in the picture.
  I ask the Chancellor to think out, in the months that lie ahead, this question of encouragement for investment. Investment in what? Is it to be for the same sort of productivity as before, or is it to be aimed at taking up the increase of costs in an inflationary world?
  5.15 p.m.
  Mr. Stanley McMaster: I should like, first, to crave the indulgence of the House on this, the occasion of my
  1142
  maiden speech. I have been warned that I must not be controversial. Therefore, I cannot comment on the fact that when I was being shown round and welcomed in the House—and I am very grateful for the welcome which hon. Members from both sides gave me—I found, on a shelf in the Library, books on slavery and Socialism side by side.
  I should like to follow in the footsteps of my predecessor, Colonel McKibbin, who was well known both in his constituency and in the House of Commons for his interest in the position of public service pensioners. Therefore, in speaking on the Second Reading of the Finance Bill I should like to press the Government to make, either by way of Amendment to the Finance Bill or, if this is not the appropriate occasion, by new legislation, permanent increases in public service pensions. I should widen that, perhaps, to include such deserving classes of people as school teachers, hospital staffs and others who have dedicated their lives to public service. They find it very difficult to live on their small pensions, particularly those who retired some years ago. The review of their pensions is very long overdue.
  I am glad to report to the House that the Finance Bill was very well received in Ulster. It marks, we believe, the beginning of a period of recovery and expansion from the recent trade recession and the currency crisis which accompanied it. We have had now a year of stable prices, and this is the foundation stone of expansion. The Finance Bill provides the necessary incentive. It is already leading to increased consumption, which, in turn, will lead to increased production and a better standard of living for everyone.
  I should like at this juncture to make special mention of the position of shipping companies. I was disappointed that the Bill did not contain further tax concessions to the shipping industry. There is a very real need for such investment concessions. Our shipping companies have to face fierce competition from fleets which fly flags of convenience. The House has often heard speeches on this subject, and I do not intend to go into the economics of it today. Such fleets have shown a very rapid increase over the last six years and shipping companies in the United Kingdom must build new, faster ships of larger capacity which can

  1143
  compete economically with overseas shipping companies.
  In that context, I am thinking especially of the Belfast shipbuilding yards. We have in Belfast the largest and best equipped yard for producing ships in the United Kingdom. We produce particularly passenger liners, large oil tankers and cargo ships of all types and capacity. Yet serious unemployment is threatened there. Unless there are more orders for new ships in Belfast there will be more unemployment in our shipyards. This is an excellent opportunity for the type of investment relief which I have just mentioned.
  There is a pool of skilled craftsmen in Northern Ireland. And in spite of the good news of the past few months, I regret to say that there is still very heavy unemployment in Ulster. Messrs. Short and Harland, to whom the order for the Britannic has recently been given, and who are developing the important new vertical take-off aircraft, have recently announced that they will have more redundancy.
  How better could these highly skilled men be employed than in developing new industries and expanding and modernising the traditional industries of Ulster, such as the shipbuilding, linen and rope industries, to mention only a few? Capital expenditure is a long-term project. I should like to refer to the Budget speech of my right hon. Friend the Chancellor, when he said:
  "The special stimulus to investment which these allowances will provide" —
  referring to the investment allowances set out in Clause 17 of the Bill—
  "is desirable in present economic circumstances. In different conditions such a special stimulus may be no longer justified, and then it would be equally appropriate to reverse the action I am taking now." —[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 60.]
  This statement of policy was repeated later when, on 13th April, my hon. and learned Friend the Financial Secretary to the Treasury said:
  "My right hon. Friend, therefore, preferred the method of investment allowances. He believes that they may prove a useful short-term regulator." —[OFFICIAL REPORT, 13th April, 1959; Vol. 603, c. 666.]
  In this context, I should like to press my right hon. Friend to reconsider his policy in this matter. I should like him
  1144
  to indicate to the House that the new level of investment allowances will be maintained. Nothing could be more harm than using this branch of taxation policy as a tool for economic control, to be turned on and off at a moment's notice in an attempt to meet some periodic trade fluctuation. I would direct my right hon. Friend's attention to opinions expressed, amongst others, by the editor of the Financial Times. In an article on 15th April the editor expressed the opinion that there is a three-year delay before the effect of such a change can affect any taxpayer's tax liability. Therefore, the most that such tax changes as are contained in Clause 17 of the Bill can do is to affect investment in stockbuilding, or minor investment policy.
  No major investment scheme, even if it is a marginal scheme, can be affected by such an uncertain and perhaps short-term change. Such reliefs as are contained in Clause 17 must be reasonably permament. I agree with the hon. Member for Ashton-under-Lyne (Mr. Rhodes) in this matter, for it is very important to realise that investment expenditure is the most desirable form of expenditure there is and should be given every encouragement by the Government.
  Subject to these remarks, I join with my hon. Friends in agreeing that the Bill should be read a Second time.
  5.35 p.m.
  Dr. Barnett Stross: It falls to me to congratulate the hon. Member for Belfast, East (Mr. McMaster) on passing so gracefully and easily through an ordeal which has its terrors for us all. I am especially glad to do so, because I had some knowledge of Colonel McKibbin, the hon. Member's predecessor, who graced this House and was so well thought of and popular with us all. It fell to me to advise him on the last hour that he was in this House, because of my specific medical knowledge, and I should like to say how much we all deplore the fact that he is not with us now.
  It is a much more pleasant thing for me to welcome a new Member from Northern Ireland. Obviously, he shows deep interest in the affairs of his constituency and Northern Ireland. We sincerely hope that we shall very often hear speeches of this type from him.

  1145
  Lastly, I would tell him that, as a Socialist, I am delighted to be associated with the abolition of slavery.
  The Financial Secretary told us that it was not an easy matter to introduce a Finance Bill, even though he is already experienced in it. The birds of the air which he chose to hold him up did their duty very well, except during the last few yards of his descent. If he feels a little bruised because he did not make exactly a three-point landing he must blame himself and not us on this occasion.
  The Bill contains many Clauses. and we are not all either expert in or interested in them all. I am especially interested in Part II, but I must make a passing reference to dividend stripping because, if the Chancellor listens to my pleas with regard to Part II, I hope I can persuade him that he owes me a debt, and that he will, therefore, listen carefully to me.
  We have had some discussion whether we have been losing £2 million. £10 million or £12 million each year through dividend stripping. It so happens that I was made the executor of an estate, following the death of my eldest brother. These family businesses are often hard-pressed to find the sum asked for in death duties, especially when they have ploughed back their profits instead of distributing them. As the Financial Secretary knows, if they do not distribute they do not have to pay Surtax; instead, they pay the standard rate of 8s. 6d.
  In this case, as in so many similar cases, a vast amount of money had been saved by way of undistributed profits, and it was not easy to find the very large sum required for death duties. It was put to me from a certain source that I could legally overcome this difficulty by participating in what I now know is technically called dividend stripping. This was three or four years ago. I was asked to sell the business of which I was executor to a certain organisation, who would sell it back to me later.
  I am not sure how much the organisation was to help itself too in the process; I believe that it would have got about £50,000 for the transaction. I should have been able to benefit the estate by about £300,000, tax-free. I thought that that was a shocking state of affairs, and I did not have much difficulty in resisting the
  1146
  temptation. Having listened this year and last year to discussions on this problem of dividend stripping, and having a favour to ask of the Chancellor, I said those few words to create a little good will.
  My interest in Purchase Tax is fairly narrow. Its diminution and simplification is desirable from every point of view, and we all support it. Disagreement arises when we find a number of articles lumped together in one category. We are not all in agreement as to the correct procedure. We feel that some articles should be taxed if money is required by the Chancellor—as it always is—but that other should not be taxed At any rate, we feel that in the same group there are variations of worth as between the different articles.
  The change in the rates of Purchase Tax which have benefited every one to some extent do not leave me content. For example, the tax of 15 per cent. is reduced to 12½ per cent., but it still includes pottery. It is no secret that my constituency is deeply interested in pottery; indeed, it contains the largest section of people living together anywhere in the world who make pottery. I am also interested in the category in which the rates are reduced from 60 per cent. to 50 per cent.
  Gramophone records are included with instruments and other articles, and thus they gain only the benefit of a 10 per cent. reduction. It seems a far cry from pottery to gramophone records, but they are similar in certain respects. They are part of the secondary if not the primary arts. Pottery includes pots, vases, jugs, and utensils generally. It is a great craft. Equally, the appeal to the ear caused by certain types of gramophone records brings them within the realm of the arts at least with a small "a" if not with a capital "A".
  Three or four years ago, when the present Leader of the House was Chancellor of the Exchequer, we put up as good a show as we could against the imposition of a 30 per cent. tax on pottery. So far as I know, that was the first time in history that it had happened. After he had listened to all those Members representing North Staffordshire constituencies —and I beg the Chancellor to believe that I am only firing a raking shot in this matter we shall have to discuss it again in fuller detail later—the Chancellor used

  1147
  a very strange phrase. He congratulated us on our successful speeches. When we asked what he meant, and if he meant that he would forgo the tax, he explained that he could not do that, but that he had no logical defence of what he was doing; he simply had to have the money. He required the country to have £7 million less, and he was going to take it away.
  It is reasonable for me to point out to the Chancellor today that if it was proper to deny the people £7 million by taxing pottery when he needed the money, he cannot put forward that excuse now for retaining a 12½ per cent. tax, either on pottery or on carpets.
  Mr. Nabarro: I am keenly interested in the way in which we have associated ourselves, one with the other, over the last nine years in the question of Purchase Tax on pottery arid carpets respectively. Will the hon. Member tell me why there is a case for pottery being free of Purchase Tax and not a case for carpets? Surely if one is taxed the other should be, together with pots and pans. They all have the same degree of household essentiality.
  Dr. Stross: I am a little astonished that the hon. Member should have made that mistake. To his question about carpets, my answer is "Yes", but, as regards certain other household articles, he will, if he listens to my speech, understand where they resemble the articles for which I am pleading and where there is a difference. He will have noticed that, in my opening remarks, I spoke of the arts.
  I can say the same of carpets, their design, the affect they have on people's lives and the joy they bring, apart from their utility. I do not know as much about carpets as the hon. Gentleman does, but he will, I am sure, agree with me that carpets at their very best are wonderful things in bringing consolation and pleasure to everyone who uses them. There is, therefore, a very special argument about both carpets and pottery, if the carpets are as good as the pottery.
  I have just pointed out that there can be no reason, at a time when £366 million is not taken from the public, in a good year, a year in which the Chancellor can be generous, for still fumbling at our pockets for this miserable sum of money. We have enough troubles without having the Chancellor as a person hostile to the
  1148
  industry. We face serious competition from what I call the low-cost producing countries like Japan and, to a lesser extent, Italy. China, too, is coming into the market in a big way, possibly in the near future.
  We face competition also from new materials like plastics which, at their best, are really not very bad, although no one could possibly compare them, and perhaps never will be able to compare them, in either shape or decoration with our products. None the less, they do compete.
  I hope that the Chancellor will not rely upon the fact that the industry is doing fairly well at the moment for refusing our plea that there should be a complete abolition of the tax on pottery.
  The hon. Member for Kidderminster (Mr. Nabarro) asked me a question about carpets. Pottery is an indispensible item in the household.
  Mr. Nabarro: So are carpets.
  Dr. Stross: I am glad to hear that. Pottery certainly is. We must have pottery for the purpose of eating, if not for decoration; we must have things like jugs, plates and pots. It is not, however, because of its utility that we think highly of pottery. When I say "we", I mean the world generally, not only today but through all the past in every country of the world where pottery is made.
  Human beings must have certain special needs satisfied if they are to retain a feeling of stability and comfort in their lives, and those needs are satisfied by major or minor works of art. Pottery is not to be despised for the contribution it has made in giving people pleasure. I will put it in this way. The soft, lustrous glazings which we deploy to cover pottery, the curved reflections, the smooth sleek surfaces and the light they reflect, are not unlike, for the mass of people, the characteristics of marble which gave pleasure to the few in bygone days. The use of marble in creating images and decorating temples, churches and palaces is not dissimilar in essence or quality from the use of good pottery. I hope that I am making myself understood.
  I suggest that there is a twofold need for pottery. I say this also for carpets, and I hope that the hon. Member for Kidderminster entirely agrees with me. There is a twofold need, the utilitarian

  1149
  need and another need which is equally important. We are able, with both carpets and pottery, through their iridescent colours and wide variety of remarkable designs, to add much to life, and an extremely civilised person like the Chancellor should bear things like this in mind when he thinks of taxation.
  If our civilisation were to perish, as it may, in a million or two million years. if Europe sinks beneath the sea and then ultimately rises again millions of years thereafter. archaeologists, if there be any such then, will judge our civilisation, as ali civilisations in the past have been judged, by the pottery they dig up. Apparently, pottery is virtually imperishable and lasts longer than almost anything else.
  Incidentally, I hope that, before Britain sinks beneath the sea, we shall change the pottery we use in this building. I should hate this Legislature to be judged by the rather mean, utilitarian stuff which, because of cost, we still use in here. It is time that the Chancellor gave some personal thought to this and nudged someone's elbow so that we might have some better and more delectable pottery to use. Certainly, a craftsman in my city would not look at it twice. He would understand exactly why we use it. He would say. "They cannot afford anything better, apparently" and he would think it of no value whatever.
  Technically, the industry is probably in as good fettle or better than the industry in any other part of the world. It is very highly rationalised, although the prime tool is still the hand of the potter and always will be. One cannot modernise the industry fully and no one will ever he able to do so. any more than anyone can manufacture by machine a beautiful and valuable Eastern carpet. I hope that the hon. Member for Kidderminster will agree with me when I say that his area and mine employ craftsmen and will always do so.
  We feel that our future lives lie in quality. We do not think that we shall be able to compete with the low-cost countries at all in the future, even though we are far in advance of them technically and are able to use the machine more than they can, employing semi-automatic and sometimes completely automatic processes, and techniques of firing which are much more economical than theirs.
  1150
  We are fighting a losing battle in that respect. We aim, therefore, at the highest possible quality, but we want to sell a great deal of it all over the world. A question was asked the other day about selling to the Soviet Union. The manufacturers in the City of Stoke-on-Trent, having looked at their industry, reported to me the other day that they could sell £750,000 worth to the Soviet Union this next year. We should like to do that.
  We used to sell a great deal of pottery to Russia at one time, beginning about 200 years ago when, Catherine the Great, I think it was, ordered a great service from Wedgwood. We should like to do so again. We should be well advised to offer only the best and most expensive, I think, because we cannot compete with the ordinary goods which the Russians make for themselves. Cheap pottery, second-rate pottery. anyone can obtain anywhere in the world. I feel that North Staffordshire, like Lancashire, must take good care that, in rationalising its industry, it aims at high quality and high export values.
  I am empowered to say to the Chancellor that, if I have not persuaded him of the merit of the case I am putting, we should be very happy if he and the Financial Secretary would come as guests of the Lord Mayor of the City of Stoke-on-Trent at any time. We should be delighted to entertain them in our banqueting hall in one of the town halls in my constituency, the better one, and feed them from the finest pottery there is in the world. We have a wonderful dinner service for 450 people which we regard as the finest collection of its type in the world. That invitation stands. if the right hon. Gentleman cares to accept it. I shall never have to speak to him about the Purchase Tax on pottery again.
  Gramophone records appeal not through touch or sight, but through the ear. Of course, a reduction of 10 per cent., from 60 per cent. to 50 per cent., has meant a little over £500,000 by way of benefit to the industry. If I remember aright, in the last full year, about £6 million was collected in Purchase Tax. In the year before that, it was £4·8 million. Therefore, a 10 per cent. reduction means a little more than £500,000.
  Naturally, one is glad of this. However, unlike the pottery industry which,

  1151
  at the moment, despite a depleted working force as a result of previous actions by the Government, is thriving, the gramophone industry is not. I noticed in the Press last night a short paragraph stating that, at present, taking January and February as two typical months, sales were down by 19 per cent. compared with last year.
  I gather that this means that the industry is selling about £ 1 million a month less than it was selling last year. That is a rather serious matter. Workers have been laid off in one of the great firms and in another they were being kept on three weeks ago, without work to do, in the hope that there would be some real benefit from Purchase Tax reductions which would make it possible for them to be fully employed again.
  I shall be brief in my arguments now because, as I have said, I, together with my colleagues not only on these benches, but on the benches opposite, in great force, may have to press many similar and different arguments on the right hon. Gentleman later. I will add that we probably make the best records in the world and we have, I think, the greatest share of world exports.
  We behave rather like the Soviet Union does towards gramophone records. The Russians also divide theirs into popular records and classical records and they, I believe, put a tax on the popular ones while allowing the classical ones to go free. We do something similar, but we leave it to the manufacturer himself.
  Mr. Nabarro: I take the hon. Gentleman's point and, of course, it has been advocated over and over again in trade circles, but how does he propose to differentiate between the two, classical records, on the one hand, not being subject to tax, and popular ones, on the other, being subject to tax? For instance, into which category would "My Fair Lady" fall?
  Dr. Stross: I was coming to that. I should not dream of attempting it and no Chancellor should. One must not do it. It is quite wrong. Any Chancellor who did would be bound to be blamed. It is unthinkable that a Chancellor of the Exchequer should be an arbiter of taste. Can one imagine what would happen to
  1152
  him? Of course he must not do it. I was saying that the Russians do it, but we must not.
  We do it in this way. The manufacturer makes most of his profits from the popular ones, sometimes the very popular ones—the "smash hits"—and he uses those profits to enable him to carry on with the more expensive productions of classical records, recordings by symphony orchestras, recordings of operas, and the like. An opera costs £20,000 to record. A symphony costs £7,000. There is not the profit in those that there is in the popular hits. Therefore, in effect, the trade in this country differentiates by using the profits from the one to help with the other, the prestige record, which we really must have and which the industry must make because that is what we export, particularly to the United States.
  Then it is lucrative and well worth while. I think that I have answered the hon. Member for Kidderminster in two ways: first, by saying that the trade is handling this matter very well; and, secondly, that the Chancellor should not fall into the trap of trying to distinguish between one and the other. He must do it for all or not at all.
  I suggest that instead of taxing music on the disc it might well pay us to do the exact opposite. Either there should be no tax or a subsidy for records. Here, I would differentiate. I would subsidise those which we export, particularly as three out of four records that we export are classical records. I should like briefly to give my reasons. First, I will give an example. I heard Sir Malcolm Sargent say to a group of people that he had recently received a letter from a Japanese friend in Tokio, who described an experience which he had just had when he went into a tea room in Japan. Tea rooms in Japan are like our coffee houses. Young people go into them, like our young people go into coffee houses, and sit for quite a long time drinking their cup of tea. He said in his letter that he had seen a tea room packed with people listening spellbound to a British record of the London Symphony Orchestra rendering the "Messiah," with the Huddersfield Choir singing it.
  I think that that is a very interesting example of the influence of our music

  1153
  on people abroad. The "Messiah" was being sung by the Huddersfield Choir which is a quite good choir, unfortunately not by the Hanley Ceramic Choir —[An HON. MEMBER: "How very condescending."] It is not condescending when we remember that Sir Thomas Beecham took the Hanley Ceramic Choir with him all over the world before 1914 and that we were able to beat the Welsh at choral singing, even though, in the early days, we were stoned out of Wales for winning the first prize. North Staffordshire knows how to sing, and I am prepared to prove it.
  I am advised, and I think that this is true, that so important is the gramophone record considered to be among the Negro population in places like Central Africa and South Africa that a person is not considered to have "arrived" and is "non-U" unless he has a gramophone and records. Once a person has a selection of records and a gramophone, then he is a very important person in the village or in the tribe. The Chancellor knows that our music is advancing all over the world. It is welcomed in China. I know that Chou En-lai, a very important person in China, welcomes people who are connected with the gramophone industry. If they go to Hong Kong, he invites them over the border. I am told that this is because he worked for Electrical Musical Industries, and he has never forgotten that.
  There is no antagonism towards our music anywhere in the world and it has a tremendous influence. We should encourage it in every way and ensure that nothing that we do stops it spreading throughout the world. The world is divided into two committed halves and a large group of uncommitted people. The two committed halves, East and West, have quarrels with each other and their quarrels express themselves through the expenditure of a great deal of money.
  The Chancellor of the Exchequer has to find a vast amount of money through the taxpayer for our defence. If we are looking for weapons. is not music an interesting weapon to use? It is very cheap and everyone welcomes it. We do not mind a counter-attack from the other side. There is nothing wrong if we put up Purcell, Handel, Beethoven and Bach. We do not mind being attacked by Mussourgsky and Tchaikovsky. It would he rather fun.
  1154
  Is it not possible to go so far as to say that all forms of music attempt to be universal, but our Western form is the most successful that any civilisation has known, and has become a universal language? It is not our fault that in Britain we speak it so very well. We are very good exponents of this universal language. We have great symphony orchestras, and opera singers. Should not we encourage it in every way? Should not we stop taxing it if it is a universal language? It is even possible to argue that it is a language of peace, because everyone can speak it and everyone likes it.
  The Chancellor of the Exchequer is gladly a patron of the arts. He finds money for the arts and subsidises them. I think that he probably hopes to do more for the arts in the future than he has in the past. We all hope so. If he does not do so, then another Chancellor will have to do so, because Britain is beginning to demand it. It seems absurd. however, to subsidise the arts in one way and to tax them in another. We cannot all go to the Festival Hall. or to the Albert Hall, but people can buy records and get perfect renderings of what fortunate ones are able to hear directly for themselves. Therefore, I think that I have made a reasonable plea to the Chancellor to remit taxation on the things about which I have been talking.
  6.7 p.m.
  Mr. John Arbuthnot: On behalf of my right hon. and hon. Friends and myself, I should like, first, to join with the hon. Member for Stoke-on-Trent, Central (Dr. Stross) in congratulating my hon. Friend the Member for Belfast, East (Mr. McMaster) on his maiden speech. It showed clearly that he has studied closely the problems of his constituency. and his fluency in presenting them to the House will make us listen with attention to him in future. We shall all look forward to further speeches from him about the problems of Northern Ireland, and we are glad to have had the opportunity of listening to him on this occasion.
  I should also like to take this opportunity of congratulating my hon. and learned Friend the Financial Secretary and of thanking him for the clarity with which he has explained the intricacies of the Finance Bill. It is not a long Bill this year, but it is certainly one some of whose

  1155
  Clauses would have been somewhat difficult to understand without the clear and lucid explanation of my hon. and learned Friend.
  Any Chancellor of the Exchequer would have had a difficult task in the sort of circumstances in which my right hon. Friend found himself in the preparation of the Budget which has led to this Finance Bill. His problem has been to find his way between twin rocks, each of which is equally dangerous. If he remits too little he will fail to stimulate the economy, which will result in unemployment which all of us want to see reduced to the very minimum. On the other hand, if my right hon. Friend remits too much the demand for home consumption may be such as to upset the balance of payments and cause a decline in the value of the £ and possibly, if excessive, even a flight from the £. I believe that the Chancellor has judged the position about right in the figure of £295 million which he has found himself able to remit this year, rising to about £366 million in a full year. In the words of the advertisement, it is "not too little, not too much. but just right."
  My right hon. Friend took as the theme for his Budget, and hence his theme for the Finance Bill, the improvement in the competitiveness of our economy. I should like to discuss for a moment where the reductions in taxation have been made and whether, if they had been made in other ways, further stimulus could not have been given with even better effect. In his Budget speech, my right hon. Friend himself indicated that taxation was still far too high. In that I am sure that all Members on this side and, I think, the country in general will be in full agreement with him.
  Industry finds itself still unable to give a real incentive for extra effort, particularly in the higher managerial grades. It is difficult, for example, to make it worth somebody's while to move, say, from the country to London where prices are higher except at an excessive gross cost. It is only when we can reduce taxation still further that that cost will become more reasonable.
  We are in the dilemma, however, that taxation can probably only be reduced further if we make sure that there is a corresponding increase in savings.
  1156
  Improved savings are an essential part of giving any Chancellor of the Exchequer the power to be able to reduce taxation and still to be able to meet the nation's financial commitments. It seems to me that in a year when my right hon. Friend feels able to make substantial reductions in taxation, there is a great opportunity further to stimulate personal savings.
  My hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) pointed out that three-quarters of the remissions in taxation that went to companies were saved and that only one-tenth of the personal remissions of taxation went into savings. I would not differ from that assessment. Admittedly, savings have been running at a very high level in recent years and steadily improving, but it disturbs me that these savings have been so much less by persons than by industry. We ought to do as much as we can to stimulate personal savings.
  I doubt very much whether it is a good thing in the national interest that an industry on the decline—and I was interested to hear what the hon. Member for Ashton-under-Lyme (Mr. Rhodes) had to say about the factory that made red flannel should be encouraged to save and to put further plant into a dying factory. That is what the investment allowances will encourage to happen. I would have preferred the money to be distributed to shareholders to reinvest in the way which they, as independent observers, thought best. If shareholders were re-investing in a growing industry, the money might be more usefully employed to the national advantage. Therefore, I would have liked to have seen greater measures in the Bill to encourage personal savings.
  In particular, I should like to make these suggestions. I realise that two of them are too large for this year's Bill, but I hope that my right hon. Friend will be able to consider them for possible inclusion in the next Finance Bill. My first suggestion is the removal of the 2 per cent. Stamp Duty on share transfers. There is no Stamp Duty on share transfers in the United States. My right hon. Friend may object on the ground that it would be difficult for him to remove the 2 per cent. Stamp Duty on share transfers at a time when the Stock Exchange is standing at very nearly the highest point on

  1157
  record. On the other hand, that is equally true of the production of motor cars and television sets, and yet my right hon. Friend was able to remit 10 per cent. off the Purchase Tax on these items.
  The other suggestion for a future Finance Bill is the exempting from Income Tax of the first £15 of interest from investment in industrial equities. I realise that this might be thought to conflict with the Government's natural anxiety for potential savers to put funds into Government securities, some of which already have this tax advantage. The overriding factor, however, is that today too few people are shareholders. If we are to succeed in giving a galvanic expansion to our economy, it is vitally important that we should increase the number of holders and that the "cloth cap" investor should be encouraged, so that he no longer regards the Stock Exchange as the rich man's gambling casino, which is the way he is apt to regard it at the moment.
  Mr. John Rankin: What is it?
  Mr. Arbuthnot: The hon. Member asks, "What is it?" He, too, has been mesmerised by the same idea, which needs to be dispelled from others besides himself, because it simply is not true. It is the means by which savers can be assisted to put funds into industry to enable production to expand and flourish, which is vital for the wellbeing of the country.
  Mr. Rankin: Is the hon. Member suggesting that the Stock Exchange is a sort of philanthropic institution filled with altruistic ideas?
  Mr. Arbuthnot: I am not suggesting that the Stock Exchange is a philanthropic institution. What I am suggesting is that it is vital that the savings of the people should go into helping industry to expand rather than be squandered on the dogs, the football pools and other like amusements.
  Pursuing the same line of thought, I now come to a minor suggestion which, possibly, my right hon. Friend might feel able to include in his Bill this year without much cost. We have seen a fairly considerable expansion in unit trusts, an expansion which we all welcome. One of the difficulties, I understand, under which managers of unit trusts labour is that they have to draw their remuneration
  1158
  from net profits after tax rather than being allowed to draw their remuneration from gross profits. If my right hon. Friend felt it possible to allow them to draw their remuneration from gross profits, this might well be a further stimulus to their activities, which have a marked effect on investment in industry by the smaller investor.
  Before leaving the question of encouraging the small investor, which I regard as essential if we are to hold our own in this increasingly competitive world, I would again urge upon my right hon. Friend a further step to which I drew his attention last year: the interest from saved income should be regarded as something meritorious and to be encouraged, something that should be given a savings income allowance in much the same way that an earnings income allowance is given on earned income. Unless we can increase personal savings, we cannot reduce taxation further, and the reduction of taxation is essential if we are to give production and exports the dynamic drive that is needed.
  I turn now to another field, the cinema industry. I have in my constituency some cinemas in rural districts which are finding it extremely difficult to make both ends meet. I know that my right hon. Friend did much in his last Finance Bill to encourage the cinema industry and that, in fact, he saved many cinemas from going under altogether, but competition against the cinemas is steadily increasing, in particular from television. Cinemas would appear to be the only industry now subject to Entertainments Duty. Many of them are closing down.
  Has the time not come when something further ought to be done about them? My right hon. Friend would then rely upon reaping the revenue rewards from the direct tax on profits to which most other industries are subject, rather than from this additional burden of the Entertainments Duty. If my right hon. Friend felt that complete remission of Entertainments Duty was too expensive—and I quite see that there may well be no justification for removal of Entertainments Duty in the case of some of the expensive Mayfair and West End of London cinema seats—I wonder whether he would consider adopting what I believe is the practice of the United States, where seats costing over a dollar, or 7s. 6d., are

  1159
  subject to a flat rate of Entertainments Duty. This might let out the cinemas in the rural areas and those which do not have the large revenues from their seats which some of the more prosperous cinemas have.
  I turn now to Income Tax. Had my right hon. Friend given the additional incentive to personal saving that I have suggested, it might well have been that he would have been able to reduce the standard rate of Income Tax by 1s., rather than by the 9d. which he found possible. Of course, he will come back at me and tell me that I am being illogical. He will say that I start off by saying in one breath that the total amount of the remissions which he has given are just about right and then I urge upon him further reductions in taxation in particular fields. He therefore comes back at me, not unnaturally—and I believe that I am reading his thoughts in advance—and asks me what I would trim from the remissions which he has made in order to find the extra money for which I am asking him. I am therefore going to put my neck out and make one or two suggestions.
  First, the beer duty. I am glad that my hon. and learned Friend the Financial Secretary put first the argument about the protection of the Revenue. I wonder whether we could not have done without the reduction of the beer duty for a little bit longer in order to stimulate personal savings. I myself believe that we could. Then, investment allowances, which will no doubt be helpful to industry; personally, I would rather see the initial allowances and the depreciation allowances stepped up to such a point, as I think I suggested last year, that any business was allowed to write off the cost of any new plant and machinery at any rate which it liked, provided that it did the same thing in its own accounts. I would see that pushed to 100 per cent. before embarking on investment allowances. That proposal would have meant that over the long term there would have been no cost to the Revenue.
  On Purchase Tax, I wonder whether motor cars and television sets could not have paid the additional Purchase Tax for a little bit longer in order to have allowed the money for a stimulus to personal savings this year.
  Having said all that, I should also like to say how much I congratulate my right
  1160
  hon. Friend on the total level of the remissions which he has been able to make. I think we all recognise the fact that he has only been able to take this decreased amount out of the pockets of the people because of the sound finance which he and his predecessors have pursued in the past. It is only because of restraint in the past that my right hon. Friend is now able to make these welcome reductions in taxation.
  Particularly welcome is the reduction in the duty on vehicles, which will be of special help to the bus companies, and we think of those in rural areas, which are having a specially difficult time. The removal of the Purchase Tax on the chassis of commercial vehicles was a good move. Especially welcome is the reduction in the Income Tax, which will have far wider repercussions than affecting only those who pay Income Tax. A reduction in Income Tax gives an added stimulus to industry, which affects the whole of our economic life and, in consequence, affects every member of the community, whether tax-paying or not.
  I do not believe that my right hon. Friend the Chancellor has yet been thanked from any quarter of the House for the removal of the Corporation Duty, which has been an annoying little duty, which has not brought in a very great deal of Revenue. I should like to remedy that omission and express our thanks to him for removing that duty, and also to thank him for a Clause in the Finance Bill which puts right the inequity which was disclosed in the Hodge case. That was a singularly unjust situation, which we brought to his attention last year, and which my right hon. Friend then promised he would rectify. He has put matters right in this Bill and we are grateful.
  I should like to thank my right hon. Friend for this Finance Bill, which will give an opportunity to our industries to modernise. We must be mindful, however, that though my right hon. Friend has been able to take £295 million less out of our pockets this year and £366 million in a full year, this Finance Bill is not the harbinger of a spending spree. The continued stability of the £ must be the main concern of all sections of the community, and this Finance Bill, I suggest, is sufficiently sober to do nothing to disturb the stability of the £, but is

  1161
  also sufficiently stimulating to play a vital part in discouraging continued unemployment.
  6.29 p.m.
  Mrs. Eirene White: The hon. Member for Dover (Mr. Arbuthnot) touched on so many points that he could hardly expect me to follow him on all of them. I will not linger in the financial jungle in which he himself wandered for some part of his speech, except to say that, frankly, I would not wish to see in this country the stock speculating mentality which prevails in the United States of America, with or without Stamp Duty on the transfer of shares.
  I will not venture into the more technical and financial Clauses of this Bill, and I am thinking particularly of Clauses 18 to 21, although I think that some of my hon. Friends will have something to say about them. They are the ones which deal with "washing" and "stripping". I could think of an even more indelicate metaphor, but I will not offend your ears, Mr. Deputy-Speaker. Where these practices are concerned, those of us who are lay Members of the House, and I am sure that I can speak for a great many members of the general public, are becoming tired, year after year, of having excuses made by the Chancellor of the Exchequer for not having quite caught up with the extremely ingenious and pertinacious gentlemen who find ways of diddling the Revenue.
  I should like most strongly to reinforce the plea made by my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) that we in this House of Commons should now agree that this is not the best method of dealing with this type of practice. To give credit where it is due, I believe that it was my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever), who has great knowledge of these matters, who first suggested that the only way in which the Revenue can be protected is not by Clauses in a Finance Bill but, as my right hon. Friend the Member for Smethwick reminded us today, by changing our procedure in these matters, and by making it possible to pounce at once when the Inland Revenue discovers that people have found yet another loophole. The Revenue officers, after all, are usually very close behind these gentlemen, if not ahead of them, in seeing what can happen. We owe it to the country and
  1162
  to the tax-paying public to see that we face the situation and adopt an intelligent, sensible and honourable procedure for dealing with this kind of matter.
  We were deeply disappointed when, after the suggestions which had been made several times in this House previously, this year the Chancellor once again had to bring forward Clauses in his Finance Bill which do not make precisely that kind of fundamental change in the procedure which is the only way satisfactorily to deal with his type of thoroughly unsocial activity. I hope that we shall not be disappointed again, because by next year we shall, I trust, have another occupant of the Treasury Bench who will deal with this matter.
  Had he been here, I would have congratulated the hon. Member for Belfast, East (Mr. McMaster) on his appearance. I was born in Belfast many years ago, and I take an interest in anyone coming from there—although I do not share their policy, needless to say. I withdrew early enough in life from that city not to be contaminated.
  To commit an Irishism, I am most interested in what is not in the Finance Bill, and which, most surprisingly, was not even mentioned in the speech of the Chancellor of the Exchequer when he introduced his Budget. Nor was it mentioned by the Financial Secretary today. I refer to the complete omission of any reference to Entertainments Duty.
  We have had references made in this debate already to the position of the cinema industry. Hitherto when I have spoken in this House, as I have on a number of occasions, on this industry I have always tried to preserve a reasonably objective attitude. I have not tried to make party politics out of it, because up to now, on the whole, I have seen no cause for it, although one may have disagreed with the measures or extent of the measures taken by the Chancellor of the Exchequer.
  However, this year I must say I find it very hard to control my indignation, because I think it really is something which is beyond reason, when one looks at the position of this industry, that the Chancellor has not even made any reference to it or given any explanation of his failure to remove this one remaining imposition of Entertainments Duty.

  1163
  It is the only form of entertainment which is now directly taxed in this way. We now have a great variety of entertainments which are completely tax-free. I think that the exhibitors have been reminding Members of this House that not merely are the theatres, we are happy to say, tax-free, but horse racing, dog racing, billiards halls, boxing, car racing, ice skating, tennis, cricket, and all the other sports are tax-free; but the cinema industry remains taxed, although it is quite clearly in a state of extreme difficulty in its competition with television.
  The Chancellor has said that the reason why the cinema industry is in a decline is that people's taste is changing. One does not deny that there is competition with television, but the hon. and learned Gentleman who moved the Second Reading of the Bill, in dealing with another industry, passenger transport, agreed that what is being done for it would not solve the problems of that industry but that cutting its costs and so on would be of great assistance to it. Precisely the same argument applies equally, of course, to the cinema industry.
  I am very much disturbed at the suggestion which has been made in some quarters that this omission this year is deliberate, in the sense that the Chancellor this year, whatever might have been the position in former years, was quite clearly financially in a position to do something about the industry had he so wished. For other reasons, he decided not to do so. It is suggested that he was deliberately concerned with causing a contraction of the industry as speedily as possible, which, of course, in blunt terms, means that the larger firms, the large circuits, which have the resources behind them to rationalise themselves, will do so, but that the smaller exhibitors will go to the wall.
  Mr. Arbuthnot: I wonder if the hon. Lady would tell the House what is the evidence for that rather unworthy imputation.
  Mrs. White: What I said was that it has been suggested in this House and by the trade that this is the only possible explanation why this year the Chancellor has done nothing about the industry.
  Looking at it from the fiscal point of view, it would be an occasion when tax remission clearly would be called for.
  1164
  There is, of course, another reason which one may bring to mind, which is that when it is quite clear, in the state of the industry, that tax remission for this industry could not very well be passed on, or at any rate, not to any great extent, to the public, because the industry could not afford it, there is no obvious vote-winning quality in a reduction of entertainment tax for the cinema, as, presumably, the Chancellor believes there must be in the reduction of the duty on beer.
  When these matters were being discussed in the trade some months ago I suggested then that I thought it would, perhaps, be too much to hope from the Chancellor in an election year that he would remit the tax when he would not get very much in the way of votes in return. I did not know then that he was going to be the beer drinkers' friend, but I must confess that as we came nearer to Budget time and it became obvious how much the Chancellor was going to have to give away, it seemed to me incredible that he would not do something for the cinema industry.
  What is going to happen now, of course, is that we are going to have the closing of cinemas all over the country, and they are going to close in the very places where the social amenities are probably fewest, in other words, in the smaller places, in the rural areas, in the mining villages in South Wales, County Durham and elsewhere. I have had correspondence from many of them. Those are the places where, on the whole, the circuits have not prevailed, and where the smaller cinemas will simply go out of business. What the Chancellor is doing is once again favouring the big businesses against the small. He gives to him that hath. Socially the weapons which he has employed are completely unselective.
  I will not go into detail, because I hope that we shall have opportunities to do so in Committee, but I emphatically protest at the Chancellor so completely ignoring the British cinema industry. Hitherto I have not been party political in the matter, but I remind the House that when they had an opportunity to do something for the production side of the industry, my right hon. Friends showed very keen interest in it and set up various institutions which have been of extreme service to the production side of the

  1165
  British film industry. It is clear that we cannot sustain production without a reasonable basis on the exhibition side, and the present Government have lamentably failed to take adequate action to ensure the health of the exhibition side. They could have given some leadership to the industry, as my right hon. Friends did, and they could have used the abolition of duty as a lever to secure some of the reforms on the exhibition side of the industry which are very much needed and which will now simply be left to the favourite device of the Tory Party—the free play of the market—with most unsatisfactory results.
  I turn to another aspect of the Bill in which some of the same considerations arise. I refer to the methods chosen for dealing with Purchase Tax. Here again, we feel that the Government are using a blunt and unselective instrument. We have the four categories of tax instead of the larger number which previously prevailed, and it seemed to me that in his Budget speech the Chancellor was very complacent about the present rate and structure of the tax. He congratulated himself on making the tax fairer and simpler to administer and said that it would enable any future changes to be made with the minimum disturbance to the trade.
  The Financial Secretary had nothing to say about the Purchase Tax except what is printed in the Bill. I believe that the. Treasury is complacent about it. In this search for simplicity what happens is that one makes these bulk changes of entire classes of tax at one time and, as a result, produces some very unsatisfactory results. Some of the changes made are so small on individual articles that they have no significant effect on the customer. This, again, is the effect of using a blunt instrument. The 15 per cent. rate of tax is reduced to 12½ per cent., but this has little effect on individual articles. I will not deal with individual articles in this debate.
  Mr. Nabarro: It would be out of order.
  Mrs. White: I realise that I can discuss them only within the ambit of a class.
  1166
  There are some changes which are so small in shillings and pence that they cannot be passed on to the customer. The Chancellor is therefore sacrificing revenue for very little result. On the other hand, the effect on other articles, which are included in the category which used to be taxed at 60 per cent. and is to be taxed at 50 per cent., is considerable. The tax on them is reduced by an amount which some of us believe to be over-large. This is a result of the proposed changes, which are completely undiscriminatory.
  There is a strong case, which was made eloquently and at length by my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), for reduced taxation on gramophone records. They are included in a category which also includes motor cars. I was interested to hear the hon. Member for Dover making a point which was made by some of his hon. Friends in the Budget debate and with which I agree—that this was not the time to reduce this higher bracket of Purchase Tax by as much as 10 per cent.
  In my constituency we have a very large steel-making firm, and the one section of the steel industry which, in spite of the general recession in steel, has been flourishing in the last year or two is the sheet steel section of the trade, which makes sheet steel for motor cars. Motor cars form one of our important exports and manufacturers should be encouraged to export them. Moreover, we have not room on the roads in this country for many more cars. Surely it is wrong to suggest that in this year, in which there were so many other things which the Chancellor might have done, he should have chosen this bracket for the largest reduction in tax. My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) was only too accurate when he said that this was a regressive tax.
  In a Budget which did a great deal for unmarried Income Tax payers with unearned incomes, it is particularly unfortunate that so little has been done for people who do not pay Income Tax but who pay considerable sums, in relation to their incomes, in indirect taxation on necessities. We therefore very much regret that the Purchase Tax adjustments were made so that virtually none was made to the customer buying articles in

  1167
  the lowest group, which includes a large number of household necessities. I hope that we shall have an opportunity to discuss that group when the appropriate time arrives.
  In the other groups I can think of various articles on which, for social reasons, I believe that we should be paying a much lower rate of tax. Again, presumably because of his philosophy of simplifying the tax and, as my right hon. Friend said, bringing it nearer and nearer to a sales tax, the Chancellor does not wish to discriminate. We can do nothing about it, because the Bill is too tightly drawn, I understand, for us to discuss individual items except within the compass of a whole group. We are therefore left with certain most undesirably heavy taxes on some items on which I think the tax should be reduced.
  For once, possibly for the only time in my life, I am in agreement with the hon. Member for Kidderminster (Mr. Nabarro) that carpets bear an unreasonable rate of Purchase Tax. Anyone who knows anything about young people trying to furnish their houses knows what a fantastically heavy sum they have to pay for carpets. The reduction made in the Budget in the tax on carpets is so small as hardly to be noticed. There are a number of other points of this kind which I should like to be able to discuss, but the Chancellor prefers his unselective reduction, with no social criterion as far as one can see and with the top bracket benefiting, to my mind quite mistakenly, from the largest reduction.
  Mr. Nabarro: The hon. Lady mentioned carpets. That brings me to my feet. She will in equity concede that when the Labour Party left office the Purchase Tax on carpets was 33⅓ per cent. We reduced it in 1957 to 30 per cent., then from 30 per cent. to 15 per cent., and this year from 15 per cent. to 12½ per cent. A reduction from 33⅓ per cent. to l2½ per cent. in a relatively short time is pretty good going.
  Mrs. White: I agree that it was most desirable to reduce the tax on carpets, and I would never have wished it to be as high as it was, because I think that the purchase of carpets is a particularly heavy burden for young people who are trying to furnish a house.
  1168
  There are many other points which I should like to mention but we shall have other opportunities of mentioning them. In concluding on Income Tax reductions, I repeat a statement which I know has been said many times but which, I think, bears repetition because it is a matter on which we feel very deeply. I refer to the inequity of the small remissions for those who have family responsibilities. That seems to me to be quite wrong when the Chancellor is making these considerable remissions to people with higher incomes. In speaking of this, we must also remember the considerable remissions to Surtax payers made not long ago.
  In my opinion, the Chancellor should have been very much more generous in the provision of earned income allowances and personal allowances in order to help those at the lower end of the scale. It could perfectly well have been done by a readjustment. The biggest single cut in Income Tax since the war—1s. off the standard rate—was made by a Labour Chancellor of the Exchequer, but it was accompanied by adjustments both at the Surtax end and in the earned income allowances. We believe that that method of approach is socially very much more justifiable than that which has been chosen by the Chancellor this year.
  6.55 p.m.
  Mr. Bryant Godman Irvine: There were matters in the speech made by the hon. Lady the Member for Flint, East (Mrs. White) to which I could not give my approval, but I hope she will acquit me of any discourtesy if I do not follow her arguments. I was no more persuaded on this occasion that the Chancellor should have taken some tax off the cinemas when I heard her pat the case than I was on earlier occasions when the case has been put by representatives of the industry in this House and elsewhere.
  I shall confine my remarks to cider. I regret that it has not been mentioned in the Budget. I was hoping to be able to make my observations in the presence of the Chancellor because I thought his constituents might be more interested in the subject on which I want to address him than perhaps the constituents of the Financial Secretary, who is at the moment the only representative of the Treasury on the Government Front Bench.

  1169
  The subject was raised in the Budget in 1956, when the present Prime Minister was Chancellor of the Exchequer. He altered the basis on which cider was taxed. He said that he wanted to bring into the taxation system the sophisticated products made from a wide variety of fruit and vegetables. I know nothing about beverages produced from vegetables, and anything that I have to say has no relation to them. The beverage in which I am interested is produced entirely from apples which are grown in this country.
  When the then Financial Secretary, now the Minister of Housing and Local Government, dealt with the matter on Second Reading he brought with him a specimen to show the House what it was he had in mind. He said that he brought the specimen to convince the House that there were such articles which at the time had an uncovenanted advantage, and stated that the Revenue would suffer if we were to take no action to make sure that they were for duty purposes on the same basis as other British wines. He said that he was hoping that in a full year this would produce £400,000.
  As far as I know, my hon. Friend the Member for Ashford (Mr. Deeds) is the only other hon. Member who is interested in this matter.
  Mr. Nabarro: I am interested in the matter. Is my hon. Friend so presumptuous as to suggest that apples are not grown in Worcestershire?
  Sir Archer Baldwin: Perhaps I might tell my hon. Member that I grow seventy tons of cider apples a year.
  Mr. Godman Irvine: I apologise to hon. Members who have apples grown in their constituencies. As far as I know, the only other hon. Member who has tabled Questions on the subject to the Treasury is my hon. Friend the Member for Ashford. I am well aware that apples grow in Worcestershire, Herefordshire, Gloucestershire and many other places. The fact remains that the hon. Member who has shown the greatest interest in the subject is my hon. Friend. As far as I am aware, only three people have been hit by the tax. Two of them are in my hon. Friend's constituency and one is in mine. In those circumstances, I hope that other hon. Members who have
  1170
  apples grown in their constituencies will forgive me for not including them in my remarks.
  The Questions which have been tabled have produced no answers giving satisfaction. The answers have indicated that the information is not available. The information available to me could easily be obtained by a little research, and it is not by any means beyond possibility that the Treasury could give us the information if it were so minded. I see that the Economic Secretary has now taken the place of the Financial Secretary on the Government Front Bench, and I urge him to be good enough to ask the Chancellor to ascertain whether there is any way in which it would be possible to find whether the tax has produced £400,000 in a full year, or whether the sum is nearer £4,000, which is my estimate. If the latter is the case, there is a very strong argument for a review of the matter during the proceedings on this Finance Bill. One thing which can be said without any doubt is that the product which was produced in the House was not touched in any way by the measures then taken. Therefore, I urge that the information should be made available. If my estimate of the situation is the right one, the matter should be looked at again.
  My constituent wrote a letter to the Financial Secretary on 27th February of this year setting out his company's production figures yearly from 1949. I do not think it necessary to offer the figures for consideration by the House, but I ask the Economic Secretary to turn the letter up again and he will see the steady progress made by the company, which compares very favourably with the company which produced the article exhibited in the House, until the tax was introduced in 1956. There was then a very steep decline, which shows that very real harm was caused.
  Some of my constituents have been wondering why the Chancellor has not selected diesel oil for a reduction in tax but has reduced the tax on beer. I was satisfied by the argument put forward by the Paymaster-General, that when there was a tax reduction to be made an article was sought which had no element of import in its production. Cider has no element of import in its production. The apples available in my constituency and elsewhere are put direct into the

  1171
  product. There is no possibility of any of the three firms which I and my hon. Friend represent, at any rate in the near future, using imported apples in their product.
  In 1956 when the tax was introduced the firm of which I have spoken was using 2,700 tons of apples. Its consumption of apples went down in 1958 to nil. It estimates that but for the tax it would today be using 7,800 tons of apples. I had hoped that if the Chancellor had been here the possibility of making a small contribution to solving the problems of the horticultural industry would have struck a responsive chord in his heart. I hope the Economic Secretary will bring the matter to his attention, and that if an Amendment is tabled it will receive his careful attention.
  7.3 p.m.
  Mr. John Diamond: The hon. Member for Rye (Mr. Godman Irvine) speaks with great authority on a subject about which, I regret to say, I have comparatively little knowledge. I look forward to his Amendment, and I hope it may be possible for me and many of my hon. Friends to support him in pressing what seems to be, on the case he has made out, a very good point.
  It is a good thing in a debate on a Finance Bill, if one is seeking for concessions, to try to pick out those things upon which both sides of the House agree. If we can find agreement on both sides we can hope to impress the Government Front Bench with the strength of our case. What has been mentioned particularly this afternoon, on both sides, has been the sad omission of relief to cinemas. The cinema tax should have been abolished a year ago on merit on the ground that it was no longer a profitable industry. The case against the tax was met halfway by the Chancellor when he accepted the argument, but did not have the money to go the whole way. Therefore, there was no case this year for not meeting it in full.
  If any further evidence is needed of the lack of argument left to the Government Front Bench, it is the few words used by the Financial Secretary when he said he could not understand how it could be argued that we should turn to the television industry to make good the loss of revenue from cinemas. He pointed out
  1172
  that that would be selecting one industry in particular. That is exactly what is happening to the cinemas. The Government selected one industry virtually alone to bear an entertainments tax which has gradually come off all similar entertainment industries.
  The profit from cinemas has gone into television because the habit of taking entertainment has gone from cinemas to television. There could be nothing more logical than that the tax should follow the revenue, and nothing more illogical than that an industry which is making a loss should have to bear the tax because the Treasury cannot keep up with the times, whereas the industry which is taking its place, and making enormous profits, should escape a special tax which could well be afforded on financial grounds because of the profits being made.
  It could well be afforded on other grounds. The Government Front Bench could say, on behalf of the Conservative Party, to the programme contractors, "If it had not been for us you would not have had the opportunity to make these vast profits". It would be an easy matter to agree to contribute a special tax raising £10 to £12 million a year to replace the tax on the cinema industry which is now completely out of date. There is agreement on both sides of the House that there should have been complete remission of the tax on cinemas.
  As to the second item of agreement, there is, as I was glad to hear from the hon. Member for Dover (Mr. Arbuthnot), some agreement that there should be granted to all taxpayers running businesses and owning plant the right to depreciate that plant at whatever rate seems to them best. I made this point in a Budget speech a year ago, but it does not hurt to say things twice or even three times. One has to wait a year or two before the Treasury ponders what one says and produces it out of the machine. In my 1945–1951 days I found that it took, on average, two years for a suggestion, provided that it was a good one, to mature and come to fruition. Therefore, I am patient in repeating what was mentioned only a year ago.
  It is in the Conservative philosophy to allow a businessman to run his business his own way. It is in the tax system philosophy to allow the taxpayer to run his business his own way. Depreciation of

  1173
  plant is the only area in which the Inland Revenue attempts to interfere with the businessman and says, "You shall not do what you want to do in terms of running your business as you think fit. For Income Tax purposes you will write off or depreciate your plant and other assets over the life of the plant at the rates to be agreed."
  It is within the Conservative philosophy to give complete freedom to the business owner. It is within the philosophy of the tax system to give the taxpayer the right to run his affairs his own way. It is also entirely within the economic desires of the country to give encouragement to those who want to change their plant fast and frequently and that they should be given fiscal inducement to do so by allowing them to write off their plant as fast as they wish. This is not a revolutionary experiment. It has been tried with considerable success in Sweden and perhaps elsewhere. There would have to be certain provisions to protect the Treasury in the first year or two. Once the system was under way, it should be of benefit to industry and do no harm in the long run to the Revenue.
  Mr. E. Fletcher: I am listening to my hon. Friend's argument with great interest and sympathy. Would he apply this philosophy to all capital goods bought by any industrial or commercial undertaking, or confine it to plant and machinery?
  Mr. Diamond: Instead of the present method of giving capital allowances, I would give the taxpayer freedom to depreciate at his own speed, not at a dictated speed, a condition being that his own speed was the speed at which he wrote off the assets in his balance sheet. If he chose to write them off very fast because he was in an industry where the assets ought to be renewed very frequently, good luck to him. That would be good economics, because the Revenue would gain in the long run. It would save a lot of trouble and would be consistent with the general philosophy of leaving it to the taxpayer to run his own affairs in his own way.
  Mr. H. Lever: Do I understand my hon. Friend to advocate that a businessman should be allowed to depreciate his plant and machinery 100 per cent. in the
  1174
  first year of acquisition, if he thinks fit, thereby financing it as to half from tax relief, even though he then continues to run that machinery for another thirty or forty years without a change? Is that likely to be tolerable to the Inland Revenue, or calculated to encourage prudent investment?
  Mr. Diamond: I know that my hon. Friend listened most carefully to everything I said, and, therefore, he will have heard me say that in the first year or two there should be some protection for the Revenue. It would be an unusual case for a businessman to be such a lunatic as to write off 100 per cent. in the first year in the case of plant which would last forty years.
  Mr. Lever: Why not?
  Mr. Diamond: I doubt if the plant would last for forty years. Let us suppose there is such an extreme case. It is true that it does not take us far with the general argument, but supposing this had happened, the situation would now be that the business would have considerable reserves in hand with which to expand when a period of expansion was called for.
  Mr. Lever: At cost to the Revenue.
  Mr. Diamond: It would cost the Revenue nothing in the long run. My hon. Friend has missed the point. To give allowances earlier, as we do in the case of the initial allowance, costs the Revenue nothing, except possibly interest on the money over the period in question. There is no cost to the Revenue except in the earlier years, and it has been shown to be a considerable benefit in other countries.
  I have mentioned this point because it came from the other side of the Chamber, and it does no harm to concentrate on matters on which one might reach agreement and get the Treasury to move, rather than for each one of us to air our individual views, which might not make much progress.
  There was also a powerful speech made by my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross), in which he dealt first with pottery and later with gramophone records. Everything that my hon. Friend said about gramophone records would apply a fortiori to musical instruments. I was sorry that

  1175
  there was nothing in the Bill to relieve completely the tax on musical instruments. This point was debated at length last year and, therefore, I will not delay the House on it again now.
  There are powerful arguments in support of this request. Everything that my hon. Friend said about records must apply even more to the performance of live music, even more to the difficulties put in the way of children learning to play musical instruments, and perhaps even more to executives who have to play musical instruments to earn their living. It is nothing less than a tax on culture. It brings in little and it ought to be abolished. We ought not to tax books or musical instruments.
  It is delightful to us all to hear the Financial Secretary remind us of most of the Greek we had forgotten, or the Greek references that we have mostly forgotten. It is delightful to have such a cultured man taking our money from us—in some cases, of course, doing the reverse. I cannot understand why there is not pressure from a man like the Financial Secretary, and from the Economic Secretary and others, on an occasion when it is possible at small cost to do so, to widen our horizons by abolishing the tax on musical instruments.
  Now I come to the essential policy imbedded in the Finance Bill, of which the Chancellor spoke so well, namely, the encouragement of our competitive position. The Bill seeks to give effect to that desire, one which I am sure we all accept. The right hon. Gentleman has done two things to give effect to his desire immediately to improve our competitive position. As the Chancellor pointed out, there are unused resources and assets in men and equipment and it is out of those unused resources that a great deal of additional production can be derived at no substantial cost. In short, it is out of increased productivity that we can improve our competitive position.
  Two things, therefore, the Chancellor has done. In the first place, he has turned to the nationalised industries and is pouring into them this year a sum of approximately £650 million. That ought not to be overlooked. It ought, in fact, to be underlined that a Conservative Chancellor naturally turns first to the only method open to him of encouraging production immediately, by arranging for
  1176
  £650 million to be spent through the nationalised industries, whose policy of investment he can control.
  It should be underlined that he does that, and that this Bill includes one short Clause to increase lending to certain of the nationalised industries by £650 million. It ought to be underlined that after eight years of power the Conservative Government are so satisfied with the wisdom of the principle of nationalised industries that they seek no longer to denationalise any industry and turn first, when the country is in need of increased production, to the nationalised industries, and to feed into them the substantial sum of £650 million.
  The logic of the argument of the Chancellor is impeccable. The only difficulty I find with it is understanding why the right hon. Gentleman stopped short. What was the reason why he did not suggest any more nationalisation to enable him to do exactly what he wished, to encourage the productive capacity of the country? Perhaps the Chancellor felt that the Finance Bill is not, after all, the ideal medium for such an approach and, therefore, was condemned to leave it to a later stage notwithstanding, as he has shown by his speech on the Budget, that he is wholly satisfied that the best and quickest way of encouraging the productive capacity of the country is to use the nationalised industries. And what an important sector the public sector is, when he needs to do that.
  The second thing which the Chancellor has done is to restore the investment allowances at the expense of the initial allowances. There will be an opportunity to debate this matter in detail during the Committee stage, but there are certain points which I hope will be regarded as of sufficient importance for the Economic Secretary to deal with them tonight.
  The first is the question of timing. We all accept the fact that an improvement of our competitive position is urgently required. We all accept the fact that it is necessary, therefore, to increase investment now. We all agree that investment allowances have some effect, though a limited effect, in this and that therefore there should be encouragement for schemes for additional capital to be brought in as quickly as may be. It is clear, however, that major

  1177
  schemes cannot be put forward in the twinkling of an eye.
  Indeed, the Bill does more than it need do in that respect, because if, in those schemes which have been slowly maturing over the past two years—and many schemes may take that time to mature—the final order for incurring expenditure happens to be given after 6th April, those schemes will gratuitously find themselves in receipt of an investment allowance, of a small subsidy as it were, which they were not expecting.
  I draw the attention of the House to this point, because I am seeking an extension at the other end. In short, when, as the Chancellor warned us he will do, he decides to withdraw the investment allowances, I hope very much that he will give a full warning period, or that the withdrawal will take place in such a way that any schemes which are in mind, on paper or in the course of preparation, or have finally reached the stage where expenditure has been literally incurred within the meaning of the Section, will, nevertheless, attract this small subsidy, provided that they are completed within a reasonable period having regard to the size of the scheme.
  A scheme involving a few hundred pounds presents no problem. A scheme involving tens of thousands and millions of pounds, which is one which we want to encourage and which has the greatest effect on our industrial capacity, as the Economic Secretary well knows from his engineering experience, takes time and, therefore, ought to be given time to mature.
  It would he a great pity if the present feeling were allowed to continue. I assure the Economic Secretary that many businessmen feel that the investment allowances, having been introduced, then withdrawn and introduced again, and the Chancellor having said that he will withdraw them again very quickly unless people make use of them, are no longer sufficiently attractive to make it worth while their going to the considerable trouble of considering new and vast development schemes which the economy of the country urgently requires. I hope that the Economic Secretary will have some sympathy with what I am saying and will enable us to hear something about this this evening.
  1178
  May I say, finally, on the question of investment allowances, that I hope the Economic Secretary will consider both the size of the investment allowances, the need to withdraw the initial allowances completely to the same extent, and whether or not it would be right that the investment allowances, where they are to be withdrawn, should be withdrawn completely. My view is that they should not be withdrawn completely. There should be some encouragements of this kind so that it may be known that there is, if not the fully subsidy, at least a small subsidy. We cannot go on any longer with an in-and-out investment allowance as we have done in the past and are to do again. I do not think that it is any longer sufficient encouragement especially when one bears in mind that during a period of deflation the investment allowance merely makes up for the deflation that is being suffered.
  I cannot but feel that both with regard to the lack of further investment in the nationalised industries and the overcautious approach to the investment allowance, and certainly with regard to the manner in which step by step, always late, the Chancellor has removed restrictions which were keeping our economic capacity down, the approach of the Front Bench has been over-cautious and is still erring on that side. I suppose that that is the sort of philosophy that one is bound to expect in a Chancellor who believes in the old mottto of "Derick, or Little by Little."
  Mr. Rankin: On a point of order, Mr. Speaker. In view of the number of hon. Members on both sides of the House who desire to participate in the debate, would it be possible, through the usual channels, for the time of the debate to be extended?
  Mr. Speaker: This is a Bill founded upon Resolutions in the Committee of Ways and Means and, therefore, it is exempted business. The ten o'clock rule does not apply.
  7.26 p.m.
  Sir Robert Cary: I hope that the hon. Member for Gloucester (Mr. Diamond) will not convict me of being discourteous if I do not follow up his interesting speech. I intervene only briefly in the debate because I want to raise one special matter with

  1179
  the Chancellor. May I say to the hon. Member for Gloucester that I should like to hear him at greater length and perhaps at closer quarters on the interesting matter concerning depreciation. It is not a matter that I feel able to comment on myself without consulting my auditors, but in view of what has been said by the hon. Member for Manchester, Cheetham (Mr. H. Lever), I suppose he knows that I am Chairman of the Lancashire United Transport. If I had to write off any depreciation by replacing 500 double-decker buses within twelve months it would lead to an interesting business speculation.
  May I add my congratulations to the Financial Secretary on the skilful and cogent way in which he has presented for the second time a Finance Bill to the House? May I also congratulate his Treasury draftsmen, when the Chancellor had so many benefits to confer, that whereas last year the Finance Bill was so complex that it contained 60 pages on this occasion it requires only 37 pages? I think that shows some skill in drafting for which the Treasury draftsmen deserve a meed of praise.
  I want quite briefly and quickly to say to the Financial Secretary that. in spite of what he said about licences in respect of passenger service vehicles, the Budget does not begin to, solve the problem of rural transport which affects so many constituencies of hon. Members on both sides of the House. When representations were made to the Treasury by the industry concerned with this matter, perhaps it was a mistake to make them on fuel tax and licences combined. One costs £6½ million and, as the Financial Secretary said on 13th April, the other exercise, a high rate on fuel tax would cost no less than £30 million. He said on that occasion something of which I am not aware and, so far as I know, many persons in the transport industry were unaware. He said that successive Governments, including that of the party opposite, had made it quite clear that we cannot discriminate fiscally between road users and it would be quite unfeasible to remit the duty on buses only.
  I say to my hon. and learned Friend that discrimination in a very subtantial degree exists already against buses. I will give a few examples. Fuel oil is totally free of tax when used for central heat-
  1180
  ing, making electricity, in bakeries, for the manufacture of glass and pottery goods, for agricultural tractors, for marine craft and stationary oil engines. Even the competing railways which use oil fuel in their rapidly growing diesel services obtain it tax-free. When in those circumstances those with the humble buses, be they double-decker or the modest single-decker buses of the rural services, plead with the Treasury that this penal tax of 2s. 6d. should be modified or eliminated, they are told that there cannot be discrimination between one user and another. I say that in those circumstances, if the 1d. had been withheld from the beer duty concession, a little might have been taken off the cost of petrol duty. If 50 per cent. had been withheld from that concession the benefit could have been transferred elsewhere to fuel. I believe that without some further concession being made to them, rural bus services will wither still more. This was put most cogently by a correspondent to The Times on Saturday, the Rev. A. C. Smith, rector of the South Ormsby group of parishes in Lincolnshire, who was complaining bitterly of the suppression of no fewer than nine services in his county and said:
  "The problem of rural transport is one which must affect many more areas than ours and I would have thought the test of such a service for sparsely populated areas should not be 'Does it pay?'. but 'Is it necessary?'. The greatest possible hardship and inconvenience is being felt over this cancellation of services and, if decisions such as these pass unchallenged, we shall indeed soon have a depopulated countryside, empty village schools and man-power shortage in the farming industry on which so much depends. It is certainly true that rural bus services such as ours cannot he expected to show a profit, but if there is a case for a subsidy in any undertaking, it is surely right and necessary here."
  I think my hon. and learned friend the Financial Secretary might agree that when help is being given in another direction in my county—to the cotton industry, which is to find a newer level with a subsidy to the extent of £30 million—we might find a further withering of rural bus services if there is no benefit to them in this way, The big benefactor through licences is the double-decker bus operated by London Transport, but to the rural single-decker the benefit is infinitesimal. The time must come when, if these services are not helped by a concession over fuel oils, they will have the right to come forward to claim subsidy.

  1181
  Splendid though the Budget is as a social measure, it has not begun to answer the problem of the rural bus services; but I cannot say that without at the same time offering the Chancellor some possible way by which he might proceed. As he knows, during the last twelve months, with one or two colleagues I have brought no fewer than three deputations to the Treasury on this subject. If the industry could produce a watertight formula by which he could completely separate rural bus services from urbanised services, he might be put in a stronger position to look at the problem of fuel taxation. I think it technically almost impossible for the industry to produce an exact watertight formula, but I put this to the Chancellor.
  The Financial Secretary told us on 13th April that the abolition of the duty, which is one of the priorities named by the Front Bench opposite—the abolition of duty on passenger service vehicles—would cost £30 million. Of that £30 million, perhaps, the rural bus services in terms of fuel would use something in the neighbourhood of £5, £6, or £7 million. We cannot get an exact formula to separate these vital rural services from other bus services. I am not speaking of counties like Wiltshire, where there is a high proportion of areas of great prosperity, but of other areas such as those in Lincolnshire, Cumberland, Westmorland and Northern Lancashire, which are sparsely populated and where the withering of the bus services has been great.
  If we cannot find a formula, could we use the agency of the Traffic Commissioners, of whom there are eleven, to check on these services? No one is a greater expert on the operations of public service vehicles than the Traffic Commissioners. Year by year, they have to analyse the figures of many companies such as mine. I ask the Chancellor to give sympathetic consideration to using "X" number of millions simply for the benefit of rural transport for one year, taking the Traffic Commissioners as fair witnesses that that concession made by him and costing £4 million, £5 million or £6 million for rural services, shall be applied strictly to those services for which the Chancellor intended it.
  I have taken the trouble to discuss this matter in other quarters. I suggest that at the end of twelve months the Traffic
  1182
  Commissioners would be in a position to praise the scheme in its operation, or to denounce it if there were any abuse by those who ought to pay in full because they run urbanised or semi-urbanised services. If it is not possible to produce a technical formula on paper, I ask the Chancellor to take this step of risk by saying that he would give a taxed fuel benefit to strictly rural bus services if his eleven Traffic Commissioners would act as fair witnesses in the application of the sums and claims of the companies involved.
  7.38 p.m.
  Mr. Harold Lever): The hon. Member for Manchester, Withington (Sir R. Cary), who has spoken on a strictly non-party issue, has the support of all of us, and we would all grant him a figure of "X" millions of pounds at the earliest possible moment, but I am afraid that he will have great difficulty in finding a formula which is at all workable, even with the best will in the world, in order to encourage and preserve rural bus services.
  The Chancellor has been congratulated so often on his modesty that I am sure that by now he is getting rather vain on the subject. Although I would readily attribute to him that virtue, especially intellectual modesty, I would rather congratulate him on his courage as an expansionist in a den of restrictionist Tories in producing the most imaginative economic policy ever produced by any Tory Government in a conscious attempt to use the money apparatus to meet the industrial and production means of our economy.
  The right hon. Gentleman's only difficulty is that, being surrounded by restrictionists, he has to take every step with the utmost caution, and hence a little late. He has to make all the concessions irresistibly attractive to the restrictionists who surround him. He cannot make the tax concessions and reliefs where his own good sense of values and fair play would indicate that he is bound to make them, but where they will appease the natural deflationists on his own side of the House.
  On the other hand, the Chancellor has shown great courage in producing a Budget which is imaginatively expansionist in its general tone, even though we on this side of the House cannot

  1183
  approve the particular directions which the Chancellor has chosen for tax relief and even though it is necessary for him to cover up with a barrage of restrictionist and deflationist platitudes the policy which he adopts.
  Since the Chancellor has been in office, he has steadily undermined and sabotaged—it is all to his credit—the work of his predecessor. I think that his predecessor, the right hon. Member for Monmouth (Mr. P. Thorneycroft) was very popular as a person on this side of the House, but I am sure that we are increasingly reconciled to his departure from the Chancellorship by every speech he makes in the House. His speech in the Budget debate was no exception. He wagged a warning finger at the Chancellor, who has had the spirit to expand all forms of currency, front line or secondary. He warned the Chancellor that he would, as a result of the concessions he has made, have to go to the public and borrow more money. He warned the Chancellor that even Governments have to pay back the money they borrow.
  If the right hon. Member for Monmouth really believes that in this day and age, I am bound to say that his concepts well fit him to be in charge of the funds of a Boy Scout troop and amount to a serious disqualification when it comes to managing the more complex finances of such a great industrial country as ours. If he honestly went into the Chancellorship and had sleepless nights because he could not immediately envisage, or even envisage in the distant future, the repayment of our National Debt, I am bound to say that he has serious disqualifications for ever returning to that office.
  This country can never pay off its National Debt. The National Debt of a modern society and modern economy is, as it were, a second-line currency no more redeemable than the £ note. The £ note is a promise to pay by the Governor of the Bank of England or someone on his behalf. If one goes to the Bank of England for it to honour that promise to pay, it promptly proceeds to give one another promise to pay in its place. The same applies to Government borrowing in all forms.
  There is no office where intellectual modesty in these days is more apt and
  1184
  more calculated to produce some success than the one which the Chancellor has the honour to occupy, because he is attempting to deal with so many unpredictables from all parts of the world which impinge upon his plans. He is attempting to forecast the tendencies to save of people at home, productive tendencies abroad and the imponderable ebb and flow of economic tides in the world, which no one has begun to understand.
  I am very much afraid that, owing to the lack of support which the Chancellor has from the benches behind him, at the first difficulty he meets he is liable to have to be as good as his words and retreat into conventionally wise restrictionism—the "boy on the burning deck" restrictionism of the right hon. Member for Monmouth.
  I think that the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) most picturesquely expressed the general sentiment held on the other side of the House when he said that he was afraid that the Chancellor's shot in the arm might produce an inflationary spiral. Without attributing too much to the mixed metaphor, the hon. and gallant Member very aptly described the sentiment on the other side of the House. The thinly veiled hostility of the Chancellor's predecessor and assistants at the Treasury make me alarmed that, should he bump into trouble with an exchange crisis, a price rise or anything of that kind, he will be pressed with the policies of restrictionism.
  The Chancellor will not meet with any special difficulties in implementing the economic policy which he has undertaken, not only in the Budget but in the previous financial Measures, which form a coherent pattern.
  I ought to venture, with all modesty, to give a warning to the Chancellor. It is easy to overestimate the impact of these financial Measures. I often think that King Canute and his advisers would have gone down in the history books with a very different reputation if the courtiers had timed the king's arrival at the beach as the tide was going out. I am bound to say that some of the triumphant financial measures which Chancellors have taken have succeeded only because, even if the Chancellors had not ventured in

  1185
  that direction, the economic tide was moving that way and things would have happened in that way in any event.
  I warn the Chancellor that by his economic and financial policy he has, in effect, told the tide to come in rather more rapidly. I think that it will, because there is a great deal of evidence that the tide was on the turn, quite apart from the Chancellor's measures. That does not make me welcome any less the fact that the Chancellor has abandoned the restrictionist approach of the right hon. Member for Monmouth and has given a much needed, and even belated, stimulus to our economy.
  However, I wish to give the Chancellor a little aid and comfort from this side of the House. Though we deplore the fact that he has not made the concessions in the way we would have done, we unhesitatingly back him in his expansionist policy, because, after all, the central economic problem of the Western world since 1919 has been that there has been a departure of interest between the industrial productive power and the money mechanisms. The key problem ever since 1919 has been how to bring together again the needs of the productive industrial machine, on the one hand, and the money mechanisms, on the other.
  The attitude hitherto has been that one can allow one's productive apparatus to work provided only that it is without prejudice to the money mechanisms, whereas the Chancellor, for the first time on the Tory side of thinking, has adopted what is fundamentally, we believe, the Labour Party view that the money mechanisms must be adapted to meet the needs of production. If the Chancellor has the courage to carry on in that line, he will undoubtedly have a good deal of success.
  The only point I must warn him against is this. The right hon. Member for Monmouth and his followers, who believe that production must be made to conform to the needs of the money mechanisms, are by no means permanently routed. They will urge upon the Chancellor that he should budget for an overall surplus and that he should cover in his Budget not merely the current spending but his capital account spending.
  I do not understand why this should have some magic. I do not know what
  1186
  law of logic says that we should pay out of current taxation for capital formation. But this is much favoured by the right hon. Member for Monmouth, who we know has this nightmare that he will have to pay back what the Government has borrowed, by the Governor of the Bank of England and by many other persons of great influence on the Chancellor's side. The Chancellor has defied them for a moment, but at the least sign of trouble he will have them on his trail again.
  Another threat they will hold over him is this. The arch-deflationists who believe that we should adapt production to the needs of a somewhat fossilised money mechanism have always threatened us that our currency at home and abroad will be in danger once the money mechanism is forced to change in order to meet the needs of current productive inventiveness.
  Let us deal with this briefly. First, the deflationists have always warned us that the devaluation of the unit of currency at any time and in any amount is necessarily, and in itself, evil. That is not true, although I am bound to say that every Chancellor of the Exchequer we have had since the war has pledged himself to do his best to maintain the value of the unit of currency. Luckily for the country, none of them has succeeded, because of the devaluation of the unit of currency. When as a result of six years of war we have had to bring into being a vast stack of paper money, unrepresented by any real wealth because it had been destroyed in the war, we have set up a defence mechanism in the economy, bringing into some sort of relationship with production the burden of a fixed interest debt.
  If the Chancellor's predecessors had obeyed the nostrums preached by the so-called sound financiers and had successfully preserved the pre-war value of the £, the economy would now be at a virtual standstill, because the burden of debt arising from the war would have been beyond the power of industry to sustain. Germany is always held up to us as a prime example of a virile and flexible economy. The German economic recovery owed no small part of its impetus to the fact that this process of relieving the economy from the burden of a paper debt unrepresented by real values, which inevitably follows a war, was carried out

  1187
  in Germany more thoroughly, drastically, surgically and deliberately than in any other country. They proceeded to devalue their currency by 80 per cent. or 90 per cent. in one operation.
  When the right hon. Gentleman is pestered at any stage by his reactionary colleagues—as he will be—he should remind them that if their obstinacy in these matters had been successful we should have been in a very bad way indeed. The reactionaries opposite also tell us that it is all very well having all this production, but we dare not bring it to a point where it threatens our balance of payments position. Even the Chancellor pays lip-service to that proposition. I admit that it is only lip-service, but it is lip-service to the ideals of the right hon. Member for Monmouth even when engaged on the steady and systematic sabotage of the former Chancellors policy. I am frightened that he may have his words quoted back at him.
  I hope the Chancellor realises where that philosophy gets us. If the solution to our balance of payments difficulties is to sabotage production, whether it is done in a scientific and surgical manner by the Treasury, by way of credit restrictions and the withdrawal of capital, or what you will, it means that the Chancellor is on the side of the unofficial strikers. If the object is to slow down production, and if the country is to be asked not to go all out because it will unbalance our balance of payments abroad, why should the right hon. Gentleman and his able assistants be troubled to think up schemes of economic and financial restriction?
  Let them encourage the unofficial strikers. Let them encourage all those who have a vested interest in restrictive practices which everybody normally preaches against. They are splendid things for slowing down production and not putting a burden upon the balance of payments position. The Chancellor must know that the doctrine which he preaches makes him a sort of Luddite of the Right. He is saying that because of the need to balance payments abroad we must restrict production at home.
  If that sort of problem arises the right way to solve it is not to have Luddism at home but to sell some of our foreign securities which were built up for a rainy
  1188
  day. It would have been far better if, in 1957, we had sold two hundred million £s worth of dollar securities than to have had a permanent setback in the road and rail efficiency programme, or put it out of alignment. It would have been far better if we had sold a couple of hundred million £s worth of those securities and devoted them to urgently required re-equipment at home, or temporarily suspended the liberalisation of trade abroad. If the Chancellor meets an exchange crisis in the course of his expansionism—and the signs are hopeful that he will not—I hope that he will look for a solution in this direction.
  His best course is to make international arrangements in good time to protect us from again being placed into the imbecile situation of 1957 when, with a first-class export surplus, we found ourselves running an exchange crisis caused by people hedging on sterling which caused us to make a drastic readjustment of our financial policy. His best course would be to make international arrangements to underpin sterling. I know that something has been done in that direction, but I hope that more will be done. That would be a tremendous defence, which would prevent us finding it necessary to do injury to our economy when temporary runs on the reserves occur.
  Deflationists are very keen upon statistical exercises whereby they create a sum of money on paper which will involve tremendous investment or tremendous savings, and the like. Many of their theories have no evidence to support them. I hope the Chancellor will continue to resist the notion that it is his duty to budget for a surplus in times such as these. In fact, the Chancellor's boldness is boldness only by contrast with the attitude of his predecessor, because he is budgeting for a current surplus. I wonder when we must budget to balance our account on current account. Why should the nation pay currently more tax than is required for current expenditure, when it is quite plain that there is no sort of inflationary pressure in this country, and no sort of failure on the part of the country to export what is required to pay for its imports?
  As I have said, since 1919 the great threat has been that we have had two interests pulling against each other—the industrial interest on the one hand, and the purely financial interest on the other.

  1189
  There have been some very interesting moves. The exchange of the present Chancellor for the right hon. Member for Monmouth has been paralleled, oddly enough, in the economic scene outside. The purely financial interests that used to be powerful advocates of the policies pursued by the right hon. Member for Monmouth have realised that they are not applicable in these days, and we have seen all the classic financial institutions—the banks, the insurance companies and the pension funds—acquiring interests in industrial assets and ceasing to be pure money financiers; that is to say, they are becoming part businessmen and part financiers. This is the first external sign that we have had of the resolving of the conflict between pure financial capital and industrial capital, and it is a very wholesome sign, which bodes well. It means that the Chancellor will not be quite so subject to pressure from the right as he otherwise would be.
  We must examine the consequences of this movement. If we are really to draw together the purely money power and the productive interests, and if the needs of production are to predominate over the needs of the money mechanism, we must also see that something is done about the traditional approach to savings generally. Is it not the Chancellor's duty, as the most modern-minded of all Tory Chancellors so far, to review in his modern-minded way the whole approach to the savings of working people?
  The Chancellor keeps advertising, "Your savings are safe and always increasing." I am not blaming him; it was his predecessors who were responsible for this slogan, but it would be truer if they had said, "Your savings are safe and always decreasing in their real buying power." I am not going to venture to put forward a snap solution to the savings problem in this debate, because it would not be proper for me to do so, but the Chancellor must review the whole question of working-class savings. He must find some way in which they can be geared to the increasing real wealth of the community. We are now moving into an area of general agreement that the increase in the real wealth of the community is the prime object of both parties. It is therefore necessary to ensure that the workers' savings should be safe in terms not only of monetary units but of real wealth, by ensuring that they increase
  1190
  yearly in the same manner as does the wealth of the community.
  It is remarkable that the most Marxist and materialist of the trade union pension funds have not been so quick off the mark as have the princes of the Church in appreciating the facts of the modern world in which we live. It is a healthy sign that there should be this drawing together of the money power and the industrial and productive interests, but it is important that when we see it happening we should realise all the consequences, one of which is the need to protect the real value of the workers' savings.
  Although I am on the side of expansion, like the Chancellor, and although I am insistent on the money mechanisms being made to serve the needs of production, and that production must not be strangled to suit the needs of outmoded money mechanisms, I would point out that nobody on this side of the House is prepared to suggest wild, speculative or unstable movements of currency. We say that we must face the world in which we live and be ready to accept certain tendencies in the value of currency at certain times, especially after a war.
  It may be that we are not in for quite such an amount of depreciation in our currency in the future as was inevitable after the war, with the vast amounts of paper money that we created. I congratulate the Chancellor on having the courage to produce an expansionist financial policy, perched precariously as he is in a nest of deflationists and archrestrictionists, and those who have acquired a regular habit of financial sadism in taking the maximum amount of tax from people in all sections of the community—a habit in which they have been able to indulge too liberally in the years since the war.
  Nothing that I have said by way of congratulating the Chancellor must be taken as any diminution of the criticism freely made by my hon. Friends of certain aspects of the implementation of his policy. The great moral outrage of our society has not been that economic movements have produced discrepancies of wealth between different classes. Deplorable as that may be, the fundamental economic and moral outrage of our economy has been the failure to permit the advantages accruing from all kinds of inventiveness to be available to every-

  1191
  body by full use of our productive power. The way in which they are shared becomes increasingly less relevant the more production we can amass. It is in that spirit that I approach the Chancellor's Budget, and I support what has been said by the Opposition Front Bench, namely, that we shall assess his policies more for their overall economic effect than for any particular sin he may have committed in the distribution of his tax reliefs.
  8.5 p.m.
  Mr. Gerald Nabarro: The only effective rejoinder to the speech by the hon. Member for Manchester, Cheetham (Mr. H. Lever), who continued to aver, throughout his speech, that there was some fundamental difference of policy and approach as between my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) and my right hon. Friend the present Chancellor of the Exchequer, is to be found in c. 764 of the OFFICIAL REPORT of our proceedings on 13th April, where my right hon. Friend is reported as having said:
  "… the preservation of expansion and employment, themselves basically depend upon internal and external stability. It was because of those considerations that the Government adopted the measures which my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) so courageously initiated in 1957, and the improvement in our affairs which has resulted since then is the clearest demonstration of their rightness."—[OFFIcIAL REPORT, 13th April, 1959; Vol. 603, c. 764.]
  I claim that there is complete identity of view between the present Chancellor and the previous Chancellor and, for myself, there is absolute support for the measures which have been taken to restore that internal and external stability.
  At the outset, I wish to congratulate my hon. and learned Friend the Financial Secretary upon the cogent fashion in which he led the House through the complexities of the Bill, notably the fashion in which he explained parts of it which I readily confess are almost totally foreign to me, namely, those dealing with the beer and licence duties in Clauses 1 to 5. We are all indebted to him for that.
  I wish to address my remarks hereafter to four main considerations: first, Clause 27 of the Bill, the method of financing the nationalised industries; secondly, Income Tax; thirdly, Purchase Tax; fourthly, the beer duty.
  1192
  It was my right hon. Friend the Prime Minister who, when Chancellor of the Exchequer in 1956, initiated the method of financing nationalised industries other than the National Coal Board by direct Exchequer grants, and it was during the debates in the early hours of the morning at that time to which my hon. and learned Friend referred, that my hon. Friend the then Member for Ealing, South, Mr. Angus Maude, by noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) and I were somewhat critical of this procedure. We were critical because the huge sums of money envisaged for financing the nationalised industries appeared to us to be pushed farther and farther away from parliamentary accountability. Nothing that has happened in the last three years has changed my opinion.
  Once this Clause of the Finance Bill this year, which extends for another year, this method of financing certain nationalised industries and increases the limit of Exchequer grant from £1,070 million to £1,620 million—an increase of £550 million—is passed through the House and is part of the Finance Act, then, during the following twelve months, the House will have little or no opportunity of controlling the extent and the manner in which these huge sums of money are expended.
  I shall, of course, receive from my right hon. Friend the Chancellor the stock and stereotype reply. Every Chancellor for the last three years has used it. It is that members of the Government authorise the capital expenditure programmes of nationalised industries year by year. It is true that they authorise them, but we in the House of Commons do not authorise them and we have no opportunity of scrutinising and voting upon them. We are involved here with huge sums of money, an increased limit of £550 million in a single year.
  I ask my right hon. Friend whether he will, without referring to my fundamental criticism of this method of financing, tell the House whether the contents of Clause 27 are merely an interim measure to extend existing procedure for a further year until alternative methods for financing the nationalised industries are adopted, or whether Clause 27 is to be a permanent feature of future Finance Bills and, as in the case of the Income

  1193
  Tax Clause, amounts merely to an annual sanction and annual approval by the House of Commons.
  It is important to my hon. Friends and me. for many of us are interested in this, to know whether the policy in this respect is now decided, based on the contents of Clause 27, and whether it is to be merely an annual renewal or whether the Chancellor has merely extended it for a period of one year pending the adoption of an alternative policy for financing these very large investment sums.
  I come now to the sinews necessary to support Clause 27. All new capital formation and fixed investment should be based upon the aggregation of real net savings. My right hon. Friend and his Conservative predecessors have a magnificent record in that respect. It is only necessary for me to quote two figures in comparison with one another to bring out why the record is so magnificent. In 1949, the total of savings was no more than £224 million. In 1957, the total of savings was £1,484 million, a figure approximately six and a half times as great.
  That, I think, is a testimony to the mounting strength of our economy and, what is much more important to me philosophically and, I am sure, to hon. Members in all parts of the House, it is a testimony to returning habits of thrift in the British people and their confidence in the value of their money in the future.
  Mr. H. Lever: The hon. Gentleman says that it is due to confidence in the maintained value of the £ sterling and its internal buying power. There is no ground for that confidence in the record of the present Government.
  Mr. Nabarro: I think that there is a good deal of ground for confidence. Since the autumn of 1957, prices have remained relatively stable, within two points in the cost-of-living index, and in the last twelve months there has been practically no variation at all. This is a much better record of price stability than the record at any other time since the war.
  In my opinion, this has been buttressed in the last year or two very largely by the level of savings. I appeal to my right hon. Friend this evening to re-examine the whole structure of personal savings in this country, for I feel that to
  1194
  finance the huge sums required for below-the-line expenditure—over £720 million in the current financial year—the present level of savings, even the record level of savings of the last two years, will not be sufficient.
  I want my right hon. Friend to do three things in support of Clause 27 and of the expanded rate of investment, in order to stimulate personal savings. First, I want him to examine the present issue of National Savings Certificates which, surely, has practically run its course. It has been issued now for three years, the tenth issue on exceptionably favourable interest terms, and I suggest to my right hon. Friend that, within the next few weeks, there should be either a new issue of National Savings Certificates, an eleventh issue, to supplant the present issue, to attract to the national savings fold those persons who already hold the maximum or, alternatively, there should be an increase in the maximum which, at present, is 1,000 units worth £750. That is my first savings proposition.
  My second savings proposition relates to Premium Savings Bonds. They have done very well since they were introduced by my right hon. Friend the Prime Minister in his Budget in 1956. In my view, they could be extended a great deal more. I would far sooner people bought Premium Bonds than invested in the football pools. I am sure that most of us would feel that it is much more to the national advantage and interest that people should be encouraged to buy Premium Bonds rather than invest in football pools, greyhound races, or things of that kind, although I myself have no objection to their doing the latter if they wish. Further to encourage the sale of Premium Bonds, the waiting period should be reduced from six months to three months, and the maximum holding should be increased from £500 to £1,000.
  My third savings proposition relates to a matter which has not been explored for very many years. A valuable form of personal savings and family security is enshrined in the life endowment insurance policy. Premiums are relieved of Income Tax as to 3s. 6d. in the £, and a maximum of one quarter of income is set in respect of that relief. Those figures were settled very many years ago.
  In the light of modern conditions, I consider that my right hon. Friend might

  1195
  well re-examine the matter with a view to doing the following things: first, increasing the Income Tax relief from 3s. 6d. in the £ to 5s. in £ the; secondly, increasing the maximum in respect of which relief is granted from one quarter to one third of personal income. I am convinced that if the Chancellor would follow those three lines in regard to National Savings, Premium Bonds and tax relief on premiums for life endowment policies, he would stimulate the level of personal savings by a margin sufficient to support the very large level of below the line expenditure amounting to approximately £720 million in the current year to which he referred in his Budget.
  I come now to Income Tax. This is, I think, the eighth successive year in which I have been privileged to speak on the Finance Bill. I deliberately refrain from endeavouring to speak in the Budget debate, because there are points that I consider may more directly be made against the background of taxation generally, during this debate. Almost every year I have said to the Chancellor of the Exchequer that the capital allowances for industry are no real substitute for a reduction in the level of direct taxation, or the reduction of the standard rate of Income Tax.
  Last year, the Chancellor went on record as agreeing with me. This year, he has done both. He has reduced the standard rate of Income Tax by 9d. and he has restored investment allowances. I feel confident that those two measures in concert one with the other will result, first, in a substantial expansion of investment in private industry, and, secondly, in an additional contribution to savings. I support entirely what he has done in regard to investment allowances.
  I must deprecate the suggestion made from the benches opposite about increased depreciation allowances. I did not wish to interrupt the hon. Member for Gloucester (Mr. Diamond), but I think that somebody might have told him one of the fundamental facts of industrial taxation, particularly in regard to depreciation and obsolescence. It is simply expressed in this way. The aggregation of annual depreciation allowances, plus the obsolescence allowance, equals the historical cost of the plant. This means
  1196
  that an investor in industry always recovers 100 per cent. of the historical cost when the item of plant or equipment finally is scrapped. That is a system which I do not wish to see altered. An investment allowance, on the other hand, is a bonus on top of the historical cost of the plant. It is, therefore, a very real incentive.
  I wish to make two comments about the Income Tax provision in the Bill, and I hope that my right hon. Friend will not regard me in any way as being ungrateful for what he has done. My comments are simply these. He proposes to reduce the standard rate from 8s. 6d. to 7s. 9d. in the £, and to reduce the three lower bands from 6s. 9d. to 6s. 3d., from 4s. 9d. to 4s. 3d., and from 2s. 3d. to 1s. 9d. Thus, we are now to have a pattern of Income Tax comprising rates at 1s. 9d., 4s. 3d., 6s. 3d. and 7s. 9d.
  Among other attributes, I have been blessed with a meticulously tidy mind. [Laughter.] I am sorry that that confession evokes hilarity. I believe in simplicity in all arithmetical, financial and fiscal matters. It is very easy for the Inland Revenue to get out its P.A.Y.E. tables. It is very easy for a firm possessing automatic computing office machinery to calculate the liability to Income Tax of wage and salary earners based on this 1s. 9d., 4s. 3d., 6s. 3d., and 7s. 9d. series.
  I endeavoured to show, in an intervention in a speech by my hon. and learned Friend, that the Treasury conveniently forgets that an integral part of the P.A.Y.E. system is the use of hundreds of thousands of unpaid tax collectors, namely, the employers, many of whom have no office machinery to help them. Of course, in my businesses I employ office machinery and clerks who can work P.A.Y.E. tables at speed, but in computing the P.A.Y.E. of my gardener at home I find it very difficult to operate a system, without office machinery based on the 1s. 9d., 4s. 3d., 6s. 3d. and 7s. 9d. series.
  I have, as I say, a meticulously tidy mind. The Chancellor of the Exchequer would have been better advised, at almost equal cost—and I hope that he will not come back and argue about marginal differences—to reduce the standard rate from 8s. 6d. to 8s. and the lower bands from 6s. 9d. to 6s., from 4s. 9d., to 4s.

  1197
  and from 2s. 3d. to 2s. The effect would then have been to create the two-four-six-eight stairway of Income Tax.
  Mr. Gordon Walker: Quite right.
  Mr. Nabarro: I am glad that I evoke a note of sympathy from the Front Bench opposite. I am sure that I am right in this matter and so are the overwhelming majority of business people.
  I have the greatest gratitude for what my right hon. Friend has done in reducing Income Tax, but I hope that he will not say that his officers at the Inland Revenue approve of what he has done. Bureaucracy has a vested interest in building empires and believes in complexity and more, fatter and better jobs for the boys. I am a private enterpriser working out my own tax, and I believe in simplicity, as a simple-minded soul.
  My second comment on Income Tax matters is longer term. For far too long company Income Tax has been obliged by Statute to move and to vacillate, in consonance with individual and personal Income Tax, up and down. I thoroughly object to that. I am not speaking of the kind of corporation tax which my right hon. Friend abolishes in the Finance Bill, but corporation tax in the sense of company taxation. I object to company taxation always being tied to personal taxation, because in a modern society economic and financial consideration require that from time to time the levels of those different forms of taxation should be operated separate and distinct from one another.
  Mr. H. Lever: They are now.
  Mr. Nabarro: They may be to a degree.
  Mr. Lever: To a very great degree.
  Mr. Nabarro: To a degree. However, the standard rate of Income Tax is not, and that is what I am directing my comments to.
  Mr. Lever rose—
  Mr. Nabarro: If the hon. Gentleman will allow me to complete my argument, I think that, as a businessman, he will agree with me.
  Today, the standard rate of Income Tax applicable to companies is 7s. 9d. in the £. In addition, there is a 10 per cent.
  1198
  Profits Tax, my right hon. Friend having amalgamated distributed Profits Tax and retained Profits Tax in the Finance Act last year. That means that the total level of company taxation is 9s. 9d. in the £, or 48¾ per cent. In the case of individual taxation, it is 7s. 9d., 6s. 3d., 4s. 3d. and 1s. 9d. I hope that next year, whichever party is in power—I feel confident that it will be my party, and that is why I am making these comments—company or corporation taxation will be separated from personal taxation within the field of Income Tax and that we will have a straight percentum tax for companies and the present arrangements for Income Tax applicable to individuals. if my right hon. Friend has not time this evening to respond to this point, will he tell me at some time the disadvantages of doing what I propose, evidently with substantial support from all parts of the House.
  I now wish to say a word about Purchase Tax. No speech from me on fiscal matters could possibly be complete without a reference to Purchase Tax. My right hon. Friend is moving slowly and inexorably in my direction. [Laughter.] I am sorry that my right hon. Friend laughs at what I have said; it was not meant to be funny.
  Mr. Ede: The hon. Member does not know how funny he is.
  Mr. Nabarro: That may be so, but there is more than one way of earning a living, whether as comedian or politician. They are not very far removed from one another, on occasion.
  I have advocated during the last two years that the whole ramshackle structure of Purchase Tax should be drastically reformed so that a relatively low rate on goods for general consumption might be spread over as wide a field as is practicable. I have advocated a single, flat, non-discriminatory rate of tax. I said last year and the year before during our Finance Bill debates that the reason I advocated this was largely because, in peace-time, and with an expanding economy, there cannot be any such a thing as a luxury.
  It is manifest nonsense for the hon. Lady the Member for Flint, East (Mrs. White) to advocate the abolition of the 5 per cent. rate of Purchase Tax because it includes clothing. If that rate were abolished, the tax on a Christian Dior

  1199
  model gown at 200 guineas would be removed. It is not merely working-class clothing which is taxed at 5 per cent. It is impossible to distinguish within the Purchase Tax schedules—and I purposely put this as a lurid example—the working woman's woollen dress priced at 30s. and the Christian Dior gown at 200 guineas. They are both articles of feminine apparel. Equally, it is impossible to distinguish in the Purchase Tax schedules on fur coats, between relatively a cheap beaver coat and a mink coat. All are taxed at 25 per cent. My point is that in peace-time, with an expanding economy, there is no such thing as a luxury article.
  My right hon. Friend the Chancellor of the Exchequer moves slowly and inexorably towards the Nabarro formula enunciated over the last two years.
  Mr. Gordon Walker: Shame.
  Mr. Nabarro: The right hon. Gentleman says "Shame". Listen to my right hon. Friend's words on 13th April. I might have written them myself last year. What I said last year, the Chancellor does this year. I am not in any doubt about his sympathetic movements. My right hon. Friend said:
  "I, on the other hand, think it should be a tax at relatively low rates spread over as wide a field as practicable on goods for general consumption. What an impossible task it is anyhow to draw a line where luxuries start and non-luxuries end. I decided on a fairly general reduction in rates and in doing so provided substantial and welcome relief for consumers over a wide range of household and personal articles whilst avoiding any weakening of the foundations of this important tax."—[OFFICIAL REPORT. 13th April, 1959; Vol. 603, c. 770.]
  I am grateful to my right hon. Friend. He has brought down Purchase Tax this year by £81 million in a full year. Any Chancellor of the Exchequer who takes the huge sum of £81 million off Purchase Tax in a single year is a good friend of mine, whether he likes my being a friend of his or not. My right hon. Friend has brought the rates down to 50 per cent., 25 per cent., 12½ per cent. and 5 per cent. It should be borne in mind that only a matter of fifteen months ago, these rates were 90, 60, 50, 30 and 15 per cent., with two lower rates as well.
  The measure of the reduction, scorned by hon. Members opposite in earlier
  1200
  speeohes, has not yet been brought out in these debates. For example, cosmetics have been reduced from 90 to 50 per cent. in fourteen months or less. For example, a refrigerator or a washing machine or domestic electrical equipment of a wide variety has been reduced from 60 to 25 per cent. in less than fourteen months. For example, in three short years carpets have been reduced from 30 per cent. to 12½ per cent.
  All these articles are essential to every section of society, and they include motor cars. It was the Leader of the Opposition who exclaimed at the Labour Party Conference last year that there is one motor car in every four families today and that the Labour Party's objective is that every family should have a car.
  Mr. Gordon Walker: Of course.
  Mr. Nabarro: "Of course", says the right hon. Gentleman. That is exactly my case. Why, therefore, should these essentials of life be put farther and farther out of the reach of the working population by maintaining an exhorbitant and discriminatory rate of Purchase Tax upon them? There should be a single, flat-rate, non-discriminatory form of indirect taxation. It could be a Purchase Tax at the wholesale level, as at present, but a single flat-rate and non-discriminatory. It may be a retail sales tax, if it was desired to collect it over the counter—personally, I do not favour that—or it may be, as in Germany, a turnover tax at source. I do not mind which of those three alternatives is ultimately adopted so long as it conforms to the Nabarro desiderata, which are that it shall be at a single, flat and non-discriminatory rate.
  Sir A. Spearman: Nabarro is not always wrong.
  Mr. Nabarro: My hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) observes that Nabarro is not always wrong. I accept his advice with gratitude.
  The fourth heading of my speech is the question of beer duty, which is enshrined in Clause 1 of the Bill and consequential and associated provisions in Clauses 2 to 5. Mine is a large hop-growing constituency. Therefore, my constituents are grateful to the Chancellor of the Exchequer for securing the future of their industry. I hope that my right hon.

  1201
  Friend will tell me, when he winds up the debate, that it is his intention to continue the import duty on hops, which assures that the British hop grower has 99·5 per cent. of the British market within the aegis of the best of all our marketing boards, the Hops Marketing Board.
  I feel that the Chancellor has done a very risky thing in reducing the beer duty. Between now and next year, he will have to withstand very powerful pressure groups from the whisky industry and the tobacco industry, both of which are huge revenue raisers. I, for my part, was content to pay the beer duty at the level which existed before the 2d. per pint came off, for the rest of my life. I was also prepared to pay the present level of the duty on whisky and the present level of the duty on tobacco. They are all vices of mine. I am a substantial consumer of beer, and a less substantial consumer of whisky.
  The overwhelming majority of the British people were prepared to pay these levels of tax and duty, because they felt that they were providing the means of financing the Welfare State. It is a mistake to take 2d. off a pint of ale. The pattern of revenue cannot remain static, decade by decade. If beer consumption drops off, something else will go up. If television goes up, the cinema drops off. I think that it is a mistake to tamper with the beer duty, for the £40 million could have been so much better spent and with much better value to the economy, elsewhere.
  I am not alone in this. As to the cost-of-living index argument, as an amateur statistician, I reject it absolutely. I am glad that my right hon. Friend is writing down those important words. As an amateur statistician, I reject it absolutely, but I am not alone. The Chancellor might turn up—his advisers would quickly furnish it for him—the leading article in the Economist of 14th April. These are its words:
  "The other major, and intended to be popular, reduction of indirect taxation—the 2d. off the pint of beer—was excused by the Chancellor on the ground that it should have an especially marked effect in reducing the cost-of-living index. This is a nonsense argument; £36 m Ilion of reliefs to consumers, however distributed, must always mean £36 million of reliefs to consumers, no more and no less; and the extent that it may look like more than £36 million in the index that
  1202
  must be mainly because the weighting given to beer in the index is bogus. But there is some excuse for the reduction in this duty because the consumption of beer has recently been falling and may respond to price cuts; moreover, the tax is still very high. At worst, the 2d. off the pint is a piece of pre-Election vote-fishing that need not be regarded with specific gravity."
  So says the Economist.
  I believe that if it is a piece of electioneering it is rather old-fashioned in concept. Had I been Chancellor—a position which I hope to occupy one day —[Laughter.] I never advocate anything in fiscal matters without saying to myself what I would do if I were Chancellor. [An HON. MEMBER: "Prime Minister.] An hon. Gentleman says that I will be Prime Minister. The office of Chancellor of the Exchequer is always a stepping-stone in that important direction.
  I say to my right hon. Friend that the cost of his concessions in Clauses 1 to 5—the beer duty and associated ventures—is £40 million in a full year. The 2d. off the pint costs roughly £34½ million and the licence duty alterations cost £5½ million. On grounds of administrative simplication and of economy in administrative costs, I would most certainly have reformed the licence duty arrangements at a £5½ million loss to the Revenue, but the other £34½ million equals almost precisely the net cost of abolishing Schedule A tax for 7 million home owners. I would have done that outright, and for this very good reason. For every £1 million of tax collection in the administrative cost of assessment and collection of Schedule A, with the multitudinous maintenance claims made against it, it is today the most costly, administratively, of any form of taxation.
  Does my right hon. Friend know, as a bachelor—I do not hold that against him—the huge amount of work which is involved between the local tax offices and taxpayers, in respect of maintenance claims against Schedule A tax every year? I am typical of millions of home owners, arguing with the local inspector about the cost of installing a new fire grate, or a washer far the kitchen tap, and in respect of each item, with supporting bills produced, discussing what part of the cost would be in respect of some element of improvement, and therefore, disallowable, and what is genuinely a repair and maintenance item.
  Mr. H. Lever: One way out of the difficulty would be to withdraw the allowance and not the Schedule.
  Mr. Nabarro: That is a theory, but I did listen to the hon. Member for 35 minutes without interrupting him once.
  Mr. Lever: I was not interrupting.
  Mr. Nabarro: I will give way to the hon. Member if he wants me to.
  There is a suggestion for dealing with it, by increasing the statutory allowances. My right hon. Friend the Member for Blackpool, North (Sir T. Low), in his speech on the Budget this year, mentioned it. But that does not meet the administrative difficulty. At a cost of £34½ million, the whole of this wretched abracadabra of maintenance claims and Schedule A tax could be swept away.
  My right hon. Friend will not like what I am going to say, for he rarely likes what I say to him on these matters. Abolition of Schedule A tax would have been exactly in consonance with the Tory philosophy of a property-owning democracy, and it would have been far more valuable than the alleviation of Stamp Duty. He alleviated Stamp Duty on conveyance on houses up to £3,500 in last year's Finance Act, and he should have dotted the "i's" and crossed the "t's" by scrapping Schedule A this year, instead of employing that old-fashioned electioneering gambit of 2d. off beer.
  I shall not vote against the Government on it. I shall not vote against them on any Clause of this Finance Bill in Committee, or against any of those limited Purchase Tax matters, which we may be able to discuss against the background of the ingeniously drawn Treasury arrangements which will preclude any detailed discussion. I applaud their ingenuity, for if there ever was an odious feature of Purchase Tax it was the marathon debates we have had in the last few years with every hon. Member of the Committee on both sides hunting his own hare.
  I will support the Chancellor in every stage of the Bill on its way to the Statute Book even if, in some respects, I have been a trifle critical in what I have said tonight. I will support him for this fundamental reason; that he sits on the Treasury Bench there, a bosom friend of mine, his name engraven permanently upon my heart as the only Chancellor of
  1204
  the Exchequer in British history who has refunded to the taxpayers £366 million in a single year, £295 million of tax reliefs in this Bill in a full year, and £71 million in post-war credits repayments in the parallel Bill which is being discussed in another place tonight.
  My right hon. Friend merits our support. He has my warmest congratulations. I shall assist him, as far as I am able, during the remaining stages of the Bill.
  8.44 p.m.
  Mr. Donald Wade: In his penultimate remarks, the hon. Member for Kidderminster (Mr. Nabarro) raised the subject of beer, and I shall therefore say a few words about the same subject. I thought that the Financial Secretary opened the debate with his customary clarity, but I must say that it seemed to me that the earlier part of his speech could have been summarised in that one well known line, "Beer, beer, glorious beer." If I may say so, it was not quite in keeping with the moderation of the remainder of his speech.
  After the Chancellor's Budget speech I did not attempt any personal public opinion poll but, as is usual on these occasions, I heard the views of many different people, constituents and others. I came across two points of view which were directly opposite on this subject of beer and which I think are fairly representative. One was the view of a man and the other the view of a young lady. They live in the same city and they work in the same office.
  On the morning after the Budget the man said, "It seems to be a jolly good Budget. This 2d. off beer is a good idea. All the chaps going home in my bus seemed to think so, too." The young lady also offered her views quite spontaneously and she said, "I do not think much of this 2d. off beer. It is all very well for people who like drinking beer but what about those who do not like beer? It will not help their cost of living." I have some sympathy with the young lady, but of course both those commentators were very much oversimplifying the issue.
  This is largely a question of priorities, and I think that the Chancellor has some of his priorities wrong. I am aware of the argument about the law of diminishing

  1205
  returns which might apply to the beer duty. It may well be that television is keeping people at home and that not so many are going to public houses, which reduces the consumption of beer, but it seems to me that precisely the same kind of argument could be used on behalf of the cinemas. For the time being, television is keeping people at home and away from the cinemas, but I have been very impressed by the figures given to me which seem to indicate that the Entertainments Duty on cinemas just makes the difference for many of the small cinemas between running at a small profit or running at a loss and having to close down. If a cinema has to close down the Chancellor loses the Entertainments Duty from it and any possible tax on the profits which might otherwise have been made. There seems to me to be a very strong case for abolishing the Entertainments Duty on cinemas. Certainly in arranging my priorities I should have endeavoured to bring the abolition of that duty within this year's finance Bill.
  I realise that the Chancellor cannot please everyone, but in considering to what extent he can try to do so it is fair to take into account the total level of Government expenditure. If there had been some reduction in that total level it would have been possible to increase the number and the amount of tax reductions, and it is with that in mind that I look at the question of Purchase Tax. I should have preferred to see the 5 per cent. rate abolished altogether. If the Chancellor could not afford to do that in one year, he could have pruned some of the items in the category of goods subject to the 5 per cent. tax. I should have thought that in a number of cases the tax was scarcely worth the cost of collection. In addition, one has to consider the trouble and expense to which retailers and manufacturers are put. I certainly think that there are many items subject to Purchase Tax which are of greater importance and usefulness than alcohol. In saying that I do not wish to show a bias against those who drink beer, but I feel that the Chancellor has some of his priorities wrong.
  Turning to Clause 25, which deals with Profits Tax, I approve of the changes which the Bill introduces but, in dealing with Profits Tax, I think that it would have been as well to introduce a tidying up operation. The introduction of the
  1206
  flat rate last year brought to light a number of anomalies. For example, there are certain clubs and societies which, for administrative reasons, function as limited liability companies but their main purpose is to raise funds for charitable objects, and the effect of the 10 per cent. tax is merely to reduce by 10 per cent. the amount of money available to charity.
  There is also the case of the building societies, which seems to have become a hardy annual, at any rate for me. The effect of a 10 per cent. Profits Tax on surpluses is to reduce the margin available for reserves. It has the effect of making it more difficult for building societies to build up reserves and to maintain an adequate reserve ratio. In the Housing and Housing Purchase Bill the Government have recognised the importance of a reasonable reserve ratio for building societies, and it seems illogical to lay down a rule recognising the need for an adequate reserve ratio and at the same time to impose a 10 per cent. tax on surpluses which makes it more difficult for the building societies to maintain their proper margin of reserve. As the Financial Secretary knows, representations have been made to him on this subject, and I should like to know whether there is to be any promising outcome of those representations.
  Another item on my list which I think is relevant to home ownership is the Stamp Duty on mortgages. Part IV of the Bill deals with the Stamp Duty, but there is no reference to the Stamp Duty on mortgages, and I should like to know what is the prospect of that duty being abolished.
  Returning to Part III, which deals with Income Tax. I welcome the Income Tax reduction. I will reserve my comments until the Committee stage, but I want to say a word about investment allowances. I take the view that they are not suited as a measure to be used as a short-term device in budgetary policy. I find myself in agreement with the statement in the Economist on 11th April:
  "… to suppose that it is prudent policy to switch investment subsidies on and off like a tap is to suppose that private industrialists can do what the Chancellor himself said the nationalised industries and Government Departments cannot be expected to—that is, to vary their investment programmes 'rapidly up and down in accordance with the state of trade' and still carry through 'sensible plans'."

  1207
  I find myself in agreement with that view and in disagreement with the hon. Member for Scarborough and Whitby (Sir A. Spearman), but very careful consideration should be given to the measures which are appropriate to deal at short notice with the dangers of inflation and reflation. Neither investment allowances for the private sector of industry nor investment programmes for the nationalised industries should be included in the list of short-term policies which can be switched on and off. We have had too much chopping and changing about.
  This leads me to a more fundamental question. Is this Finance Bill one stage in a series of relaxations which will not be interrupted by another crisis, or is this just a lucky year? Is this a gleam of sunshine before another storm? That seems to me the great point. If the first, more hopeful, view is correct, then those claimants who have been missed out this year may not have to wait very long, but if the other view is correct they have missed the bus. I am sorry to mix my metaphors. It is a very different matter if in a short while there is another crisis and new restrictions are applied and additional taxes are imposed. That is the 64,000-dollar question.
  It is not enough to say that it all depends on the amount of restraint exercised by wage and salary earners. It is not enough to state the problem. Referring to the steadying of the cost of living, the Chancellor said in his Budget speeech:
  "But if this progress is to continue, almost everything depends on the degree of restraint shown in wage negotiations this year."—[OFFICIAL REPORT, 7th April, 1959; Vol 603, c. 46.]
  The Chancellor posed the problem, but it seems to me that it has not been adequately answered and that our task is to find the answer.
  Last year, when the flat-rate Profits Tax was being discussed, I suggested that some of the criticisms which were put forward against the unevenness in the distribution of dividend income were misplaced, that it was maldistribution of ownership about which we ought to be more concerned. That is very true. All the evidence available indicates that the distribution of ownership of industry is very uneven. The majority of people are dependent upon salaries and wages
  1208
  and have no direct share in the ownership of industry. They may have a nominal share in the nationalised industries but that is far too remote to have any real meaning. Therefore, if they want a higher standard of living or wish to offset the high cost of living, their only way is to ask for more wages and salaries, and that seems to be a perfectly natural thing to do. I think that will continue so long as the gulf remains between capital and labour—although I prefer to use the more up-to-date phrase "between owners and non-owners".
  It may be that the Chancellor agrees with this but considers that he can do nothing about it in the Finance Bill or that it is no concern of the Treasury. I do not agree with that view. I think it is very much the concern of the Treasury and that there is much that can be done. I should like to see a whole section of a Finance Bill devoted to this subject of the wider distribution of individually-owned capital wealth.
  I will give one or two precise examples of what I would include in such a section. First, it is still easier and more advantageous from a tax point of view for a firm to make a cash bonus rather than introduce an employee shareholding scheme. Secondly, it seems to have been the policy, certainly ever since the war, for every Government to encourage those who save to lend their money to the Government rather than put it directly into industry. This policy should be questioned. For political and economic reasons, there is much to be said for bringing about a very much more widespread distribution of ownership. By "ownership" I include the ownership of equities.
  I know that it has been argued in the past that there is a risk in ordinary people putting their money into industry and that they should lend it to the Government, but in recent years a great deal of thought has been given to risk spreading. After all, there is a good deal of risk in gilt edged securities; they have been some of the riskiest of investments since the war.
  Therefore, it seems unreasonable that the Treasury should penalise those who invest directly in industry by the Stamp Duty on transfers. I support the suggestion already made by an hon. Member opposite that the Stamp Duty

  1209
  on transfers should be abolished or that the exemptions should be brought into line with the Stamp Duty on conveyances on property. That should, of course, be only a part of a very much more comprehensive policy for dealing with distribution of ownership. I do not support the view of giving any special favours to unit trusts. I do not think one should pick out one particular kind of investment.
  I would much rather see something of a more revolutionary nature on the lines of proposals put forward by my colleagues and myself last year on the Finance Bill, which were a development of proposals for extending co-ownership and saving generally, which we put forward year after year. I think the Chancellor may recollect a debate on 2nd July last year to which he replied. The plan we put forward incorporated the idea of the deferred tax liability for a certain portion of earnings which could be put into a special savings account and invested. In this way there would be widespread encouragement of saving. The Chancellor had certain objections, but I do not think any of them are insuperable.
  Since then there has been much discussion on this subject and various proposals have been put forward. There have been inspired statements in the Press which have given the impression that the Government were really going to do something about it. I understand that some Members of the party opposite have supported the general idea, but it all seems to have come to naught. The striving seems to have been in vain. I am sorry that is so, because I am always glad to see Liberal clothes stolen so long as the Government that steals them puts them to good use. But there it is, so far the efforts seem to have been in vain.
  I sum up by saying that there is much in this Bill which commends it, but there are many omissions which I regret. The best case which can be made for the Bill is that it will be part of a process for general relaxation of taxation and expansion of industry. I hope it will work out that way. For the sake of the country I hope it will work out that way, but unfortunately it may not do so. It may well be that we shall have another balance of payments crisis or another upsurge of
  1210
  inflation. In other words, there may be another storm after the sunshine.
  I think it will depend partly on the extent to which three conditions are satisfied. One is that there is great restraint by the Government in holding down the total and level of Government expenditure; secondly, that a considerable part of the additional spending money put into people's pockets will be saved; thirdly, that this gulf between owners and non-owners will be bridged, thereby making possible a change in the climate of opinion from which most important results might follow.
  This is all relevant to a Finance Bill. I think something could be done in the Finance Bill, there is a real need that it should be done, and I hope that before we conclude our deliberations the Chancellor will be able to show in some positive way that he recognises the need.
  Mr. Rankin: On a point of order, Mr. Deputy-Speaker. I understand that the right hon. Gentleman the Chancellor of the Exchequer desires to rise at 9.30, which is compelling my hon. Friend the Member for Sowerby (Mr. Houghton) now to wind up the debate for this side of the House. When I raised this point earlier in the evening I was assured that this was exempted business which could continue to the satisfaction of both sides of the House. If the procedure which is now to be followed takes place, it is simply a method of getting round the rules of the House, because after the two Front Bench speakers have spoken there is little purpose in back benchers continuing the debate.
  Mr. Deputy-Speaker (Sir Gordon Touche): That is not a point of order. The rules about exempted business are quite well known.
  9.5 p.m.
  Mr. Douglas Houghton: I apologise to my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) and to other hon. Members who still wish to take part in the debate. The right hon. Gentleman the Chancellor of the Exchequer has expressed the desire to give his reply to the debate in about half an hour's time, so I hope that the House will forgive me if I make some remarks from this side of the House in an

  1211
  endeavour to bring together the many and varied strands in this interesting debate.
  I begin with my annual grumble that the Finance Bill is the only major Bill which is published without an Explanatory Memorandum. Several years ago I raised the question whether right hon. and hon. Members could have the benefit of an Explanatory Memorandum to the Finance Bill so that we could see a little more clearly what it was about before the Second Reading debate. The Financial Secretary said last year that this proposal had been considered and found not to be very practicable. The traditional procedure has been followed again this year, although I must say that the hon. and learned Gentleman gave an admirable reading of what would otherwise have been a very good Explanatory Memorandum.
  It still passes my understanding why we cannot have more explanation of the Bill before we debate it in order to leave the Financial Secretary more time and freedom to engage in controversial quotations, most of which are inaccurate and misleading, from the speeches of my right hon. Friend the Member for Smethwick (Mr. Gordon Walker).
  There have been several very interesting speeches. I must mention the maiden speech of the hon. Member for Belfast, East (Mr. McMaster). I am sure that we all welcome his intervention in the debate. If I may express a personal opinion, it is that he is young enough, and will probably stay long enough as a Member of this House, to contribute to debates on matters concerning the United Kingdom as a whole and not simply confine his remarks to matters solely affecting Northern Ireland.
  We also had an interesting speech from my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever), who gave us another fascinating example of his unorthodox economics. I regret that I missed the speeches of the hon. Member for Rye (Mr. Godman Irvine) and of my hon. Friend the Member for Gloucester (Mr. Diamond), but I listened to the speeoh of the hon. Member for Kidderminster (Mr. Nabarro) who appeared in a new rôle, a rather pathetic one, I thought, of wondering whether his affection for the Chancellor was unre-
  1212
  quited love. He seemed to beseech his right hon. Friend to make the slightest acknowledgement of acceptance of his doctrines on Purchase Tax and other features of our taxation system.
  What we have to do is to go back to the Chancellor's main theme of the Budget, which is embodied to a very large extent in this Bill, when he said that the House would remember that the main aim of the Budget was to make an improvement in the competitiveness of our economy. What we have to ask is whether this Bill makes the maximum contribution to that end. It seems to me that to make the economy more competitive we must get more production at stable labour costs or, better still, more production at lower labour costs. Lower labour costs must not be confused with lower wages. Wages can go up while labour costs go down. The introduction of new machinery and modern methods can make that possible.
  My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) gave a most interesting example of that from his own business experience, to which the House always listens with great attention and respect. I thought, incidentally, that he gave an admirable introduction to the cotton contraction and compensation Bill when we get that Measure. We shall look forward to his comments on investment in declining industries and other unrewarding forms of investment in private enterprise in our changing industrial pattern.
  The Chancellor offered a warning about wages more than once. He said, on 7th April:
  "The main factor making for stable prices in 1958 was the fall in import prices. It is true that the wage increase last year at an average of 3½ per cent. were distinctly smaller than in recent years. And this undoubtedly helped towards steadying the cost of living. But if this process is to continue, almost everything"—
  I emphasise those words—
  "depends on the degree of restraint shown in wage negotiations this year."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 46.]
  If "almost everything" depends upon the
  "restraint shown in wage negotiations this year"
  one would have thought the Chancellor would have regarded it as a fundamental condition of his proposals for tax relief that they should make for contentment

  1213
  and a sense of justice among the mass of the wage earners whose desires and strength in their unions are obviously the impetus behind demands for higher wages.
  We must remember, also, that tax reliefs are, after all, a tax-free rise in income for those who pay tax. It is important, therefore, to look at the distribution as well as at the amount of tax reliefs that the Chancellor is to make. What do we find when we look at the question whether the distribution of reliefs by this Bill makes for a sense of social contentment and a sense of justice? We find that the major relief is in the standard rate of Income Tax in direct taxation and in the top and middle rates of Purchase Tax in indirect taxation. The hon. Member for Scarborough and Whitby (Sir A. Spearman), in one of his usually thoughtful speeches, said the task of the Budget is, not to help those who need it but to strengthen the economy. That, taken literally, is harsh doctrine.
  I think that the hon. Member would not dissent from my view that we have to be satisfied that these two factors are brought as closely together in designing the strategy of the Budget and of the Finance Bill as we can get them. We ask the question: does the chief tax relief, a reduction of 9d. in the standard rate of Income Tax, strengthen the economy more than more discerning reliefs in taxation would have done? Here I may say that I am quite sure there has never been any vested interest in the Inland Revenue Department in a standard rate of tax of 7s. 9d. or a lowest rate of tax of 1s. 9d.
  These are odd and inconvenient rates even for Income Tax people to use. I dissent from the comment of the hon. Member for Kidderminster, who rather suggested that these queer rates of tax must have been foisted on the Chancellor by the "backroom boys" who really liked the look of them. I cannot believe that.
  Does the reduction in beer duty strengthen the economy or fortify the Revenue through an expectation of increased consumption? There have been several criticisms of the reduction in the beer duty—from the hon. Member for Dover (Mr. Arbuthnot) and also from the hon. Member for Kidderminster. I saw a comment on the reduction in beer duty
  1214
  in the correspondence columns of the Spectator the other day which goes much further than ever I would dare in suggesting a possible explanation of the reduction in beer duty. The correspondent said:
  "I may after all be wrong in seeing the reduction in the beer duty as a coherent part of Government policy. It may just have been the price demanded by the Colonial Secretary for postponing his resignation".
  That goes much further than I would go.
  The Solicitor-General (Sir Harry Hylton-Foster): I am sure that the hon. Member for Sowerby (Mr. Houghton) will give the paper an opportunity to publish an apology. Before reciting the letter here, perhaps the hon. Member would prefer to wait to see what the Spectator has to say about it.
  Mr. Houghton: I do not think that the right hon. and learned Gentleman need take this any more seriously than I think that the author intended it to be. I am sure that no hon. Member of this House would accept any serious implication in a letter of this kind.
  Mr. Arbuthnot: Why repeat it?
  Mr. Houghton: We seem to have become astonishingly touchy and sensitive about these things. Many hard things are said in the House, and very often imputations are flying across the Floor of the House and hon. Members take them calmly. Nothing in this letter in the Spectator throws up any suggestion in my mind that the comment which I have read should be taken as other than an amusing comment on one of the important proposals in the Budget.
  One aspect of the reduction in beer duty has important social implications. The Chancellor, when referring to the reduction in the beer duty, said:
  "I depend on this duty for a large contribution towards the revenue and I must do what I can to safeguard the foundations of this contribution for the future."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 56.]
  That seems to me to raise an important question whether the vested interest of the State in taxation on liquor and tobacco endangers steps which, on social and health grounds, should be taken to curtail consumption. I think that that has an especial relevance to the tobacco duty. A Chancellor may be confronted with a serious fiscal dilemma in the

  1215
  future. Tobacco is already under the strongest suspicion as one of the causes of lung cancer, and in the last 48 hours we have had renewed warning on that score. The tobacco duty, as the hon Member for Kidderminster said, is a very important. revenue producer. I think that we should take note of the possibility that fiscal interests and social and health interests may conflict before very long in that field.
  The Chancellor has done nothing about the cinema tax. This is another aspect of tax relief which would probably have made for more contentment over a wider field than some of the reliefs which the Chancellor has given. This tax seems to be falling, and it bears hardly on an industry which is now suffering from bad times. I think that there is general regret that the Chancellor has not felt able to abolish this tax altogether, at a cost of about £9¼ million.
  The Purchase Tax reductions, as many hon. Members have mentioned in the course of the Budget debate and of this debate, benefit those who have expenditure in the top brackets of Purchase Tax rather than in the lower brackets. We ask whether there are any grounds for encouraging people to buy more television sets and spend no more money on pots and pans.
  I submit that the Chancellor could have done many very good things had he been more modest in his reduction of the standard rate of Income Tax. He could have increased the amount upon which the lowest rate of tax is charged. That is the first reduced rate band, which at the moment is £60 and, under the new proposals, is taxed at 1s. 9d. That £60 was reduced from £100 in 1955, and there is no reason why it should not go back again. The top rate of tax used not to be levied until £400 was reached, and now it is £40 less than that.
  The Chancellor could have considered both the single person's and the married person's allowances. He could have increased child allowances by £25 at each level. He could have extended the income limit for age exemption and the ceiling for age relief. He could have increased the ceiling for small income rates. All those he could have done for a more modest reduction in the standard rata of tax. He might have considered
  1216
  implementing the recommendation of the Royal Commission to grant special relief to those who are 100 per cent. disabled and the registered blind. He could have extended child relief for incapacitated children over the age of 16, and the dependent relative allowance could have been extended to a deserted mother on the same conditions as to a widowed mother, indeed, he could have increased the allowance itself.
  The right hon. Gentleman could have extended the housekeeper relief, which remained at £50 from 1931 to 1953 and was then increased only by £10. He could have granted a higher income relief than two-ninths for incomes not going beyond £1,000 a year. There is a discriminatory relief for the benefit of small incomes which the Chancellor might have considered.
  Finally, he could have considered raising the limit of savings bank and other interest which is exempt from Income Tax. The present limit of £15 could have been raised, and he could have extended the scope of relief given beyond the Post Office Savings Bank to certain trustee savings banks. All those would have been very desirable reforms and reliefs to give at a time when the Chancellor was able to make very substantial tax concessions.
  It may be argued that the reduction in the standard rate took precedence over all else, but I would remind the House that when the Lord Privy Seal introduced a reduction in the standard rate of tax on 19th April, 1955, he said:
  "This reduction in the rates of tax will bring relief to the individual taxpayer at all levels of income. But it will do nothing, of itself, to improve the points at which tax starts to be payable."—[OFFICIAL REPORT, 19th April. 1955; Vol. 540, c. 59.]
  The right hon. Gentleman therefore supplemented the reduction in the standard rate by additional reliefs, particularly in personal allowances, in order to spread the benefit lower down in the income range than he could by the simple act of reducing the standard rate and the reduced rates to match. He sought to avoid the kind of distortion which occurs in the present Bill, where £50 million in tax reliefs goes to over 12 million taxpayers; £59 million in tax reliefs goes to 5,800,000 taxpayers; and £57 million in relief goes to 800,000 taxpayer.

  1217
  The Chancellor has repeatedly said that this is an inevitable consequence of reducing the standard rate, and other hon. Members opposite have said that the more tax a person pays the more relief he is bound to get, as though there were some kind of arithmetical inevitability about doing things that way. I am reminding the Committee of the combination of methods adopted by the Lord Privy Seal in the 1955 Budget.
  It may also be suggested that many taxpayers lower down the scale have already had reliefs in different Finance Bills in recent years. I must remind the Committee again that even the reliefs in direct taxation given in the Finance (No. 1) Act, 1955, were clawed back the following autumn by way of Purchase Tax on goods which had never been previously within the scope of Purchase Tax. Taxes on household goods and domestic appliances of various kinds were made subject to Purchase Tax, and the additions in indirect taxation in the autumn of 1955 were almost equivalent to the reliefs in direct taxation given earlier in the same year.
  But that is not the whole story. In recent years there has been a steady and quite substantial transfer of budgetary liabilities from the taxpayer to the contributor under our various social benefit schemes. The contributions to the National Insurance and National Health Service Schemes have doubled since 1948. The transfer from the taxpayer to the contributor has wiped out, in many cases, the tax reliefs for many of the lower paid workers. Since 1951, tax savings have been nullified by increased National Insurance and National Health contributions for a single man earning up to £5 a week, a married man earning up to £7 a week, and a married man with one child earning up to £9 a week.
  Furthermore, some taxpayers are now paying more in contributions than they are paying in tax as a direct result of this transfer from taxation to contribution. That is so in the case of a single man earning up to about £8 a week, a married man up to about £10 a week, a married man with one child under 11 up to about £13 a week, and a married man with two children under 11 up to about £15 a week. If Income Tax is levied according to assumed ability to pay, on what principle are these contributions levied which
  1218
  exceed the amount of tax that people are called upon to pay? That is a very important aspect of the changes in the incidence of direct taxation which hon. Members are so loudly proclaiming.
  I come now to a feature of taxation about which, much to my regret, there has been little comment during the debate. I wish to say a few words about the humiliating and rather disgraceful experience we have year by year of trying to stop the ingenious devices of tax avoidance, the "shady strategems" of the bond washer and the dividend stripper. There are, of course, many other "shady strategems" besides those. There is plenty of evidence for all to see that taxation is not achieving the purpose which it is popularly supposed to achieve.
  There are obvious signs of the existence of what Dr. Zhivago called the "crude insolence of money". They are to be found in extravagance commercially and industrially, and they are to be found also in the improved standard of life which many taxpayers have achieved for themselves by arranging their affairs in such a way as to pay the least amount of tax on the largest possible amount of income.
  We have in our taxation system a curious twist of social values. A High Court judge or eminent public servant seems to have a smaller social value than a stockbroker or a bookmaker for the simple reason that they stand in entirely different relationships with the taxation systems. There is the inequity of existing taxable capacity as between those with capital and those without, the existence of the stringent rule under Schedule E and the lax one under Schedule D, and much else besides.
  We hear the cry time and again that taxation is too high, and it usually comes from those who are doing their best to lower it for themselves in a most antisocial way. If taxation is too high, it seems to me that expenditure must be too high or the national wealth not high enough. Expenditure is mainly the realisation of the social and political aims of the people expressed through Parliament. If expenditure is too high, this is because the social demands of the people are making more and more calls upon our revenue and national resources.
  We hear very little indeed in any specific form from the benches opposite

  1219
  about a reduction in expenditure. We hear little from them to make taxation as popular as expenditure. Expenditure is popular. There is no doubt about that. It makes itself felt in many diverse ways, in social benefits, in moral obligations by the State discharged on behalf of its weakest citizens, in a Health Service to succour the sick and helpless. We hear very little about these things when debates take place on taxation. Hon. Members opposite say that taxation is a very bad thing and say it so often that a great many people are coming to believe them, without realising that taxation is only the other side of the account of national expenditure for essential social purposes.
  I trust that the right hon. Gentleman the Chancellor of the Exchequer will pay further attention to this growing scandal of tax avoidance and benefits in kind which are definitely intended to lower the tax burden and put into disequilibrium the taxable capacity of many people in different forms of employment today. Until we have more health in the taxation system, we shall not have a proper appreciation among workers and others, I think, of the purpose of taxation and the desire of many people to have a reasonably high level of taxation if that is the price to be paid for an increasingly high level of social benefits. Hon. Gentlemen opposite are smiling at all this, but will they go to their constituents and put the equation to them in terms of benefits on the one side and taxation on the other? Will they justify to their constituents the devices and avoidances which are used by so many to shirk the burden which Parliament has put upon them and which they should accept in the national interest?
  9.33 p.m.
  The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I am always glad to follow the hon. Member for Sowerby (Mr. Houghton), for whom I have a very great respect. I do so with some trepidation, because I know of his impressive expertise in the matters we are discussing. I am reminded of those lines of Goldsmith—if I may alter them a little—
  "And still he spake, and still the wonder grew,
  That one small head could carry all he knew."
  1220
  I support what the hon. Member for Stoke-on-Trent, Central (Dr. Stross) and the hon. Member for Sowerby said about the maiden speech of my hon. Friend the Member for Belfast, East (Mr. McMaster). I was very glad that my hon. Friend mentioned the unemployment problem in Northern Ireland, of which the Government are very conscious and in which we are anxious to help in every way we can. I also agree with him entirely about the importance of a high rate of investment. As regards what he said about his anxiety to do something for service pensioners and ex-Government employees, I know that he will be interested in the Bill dealing with the pension increases which we will bring forward in a few weeks' time. I should like to join in the congratulations to him and to say how much we look forward to future speeches from him.
  Before I reply briefly to the points raised in the debate, I should like to remind the House of the main aims of the proposals embodied in the Finance Bill. The Bill is designed, first and foremost and throughout, to invigorate and improve the strength and competitiveness of our national economy. I agree entirely with what my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) had to say on that point, and I agreed very largely, too, with the computations which he gave of the sum that he considered we could safely release in additional purchasing power.
  Mr. H. Wilson: We all obviously agree with the desire of the Chancellor to increase the competitiveness of the economy, but does he agree with and approve of the statement attributed to the President of the Board of Trade in Germany that he does not care about this country having been surpassed by Germany in the matter of exports?
  Mr. Amory: I shall not follow the right hon. Gentleman. That is nothing whatever to do with the debate in which we are engaged at present.
  The objects which I have mentioned must be our overriding objective, and that has been the test of everything which I have proposed in the Finance Bill. The question which I asked myself of each proposal was: will this proposal strengthen or weaken our power to produce efficiently and to export competitively? I

  1221
  do not think any hon. Member can dispute that that was the right question to ask and that no other consideration is anything like as important. It is on our success as exporters over the next few years that the fulfilment of all our national economic aims and aspirations depends.
  If we accept that, then I think two things follow. First, now that we have attained a welcome measure of price stability, we must do all that we possibly can to preserve it, because it is an essential element in achieving the main aim which I have mentioned. Secondly, we must do everything we can to encourage industry to operate at the highest level of efficiency and to continue a high rate of investment. We must see to it that industry is not denied the resources to do that.
  It is against that background that I should like to comment on the Bill. I look forward this year to a prospective Budget surplus which was larger than at one time the circumstances of the year ahead seemed to demand, and that has made possible some substantial reductions in taxation. My objectives were to see that these reductions should be, first, as effective as possible and, secondly, as fairly distributed as possible, bearing in mind their purposes.
  I am satisfied that the Bill achieves both those objectives. It provides a stimulus which should be felt throughout the economy, while it gives particular encouragement to investment for the future. It will bring some relief in direct and indirect taxation to every taxpayer. Indirectly its benefits will be even more widely spread. It should have a significant effect in promoting stability of prices and it will thus help all, particularly those with the smallest incomes who are most vulnerable to price increases and who, because they pay least in taxes, cannot easily be directly helped to any great extent by budgetary action. I was glad to observe that in a recent opinion poll the majority of people appeared to think that the Budget is fair and that it is to the economic benefit of the country.
  Coming now to the proposals, I should like to say first a word about direct taxation. After very careful consideration of the various changes that have been made by my predecessors over recent years, I decided to concentrate my proposals this
  1222
  year on the standard and lower rates of Income Tax. That stems from my desire to do something really effective to strengthen the incentive both to earn and to save in the interests of a strong, highly competitive economy.
  Our rates of direct taxation since the war have been too high at all levels. The encouragement of incentive is important in the case of the wage earner. It is equally important the whole way up the scale of earnings. The reduction which I have proposed in the standard rate and reduced rates will bring some relief to about 21 million people who have taxable incomes.
  Some play has been made with the fact that the better-off get the bigger relief, but the gain is still proportionately bigger for the less well off. To take, first, the £700–£1,000-a-year range of taxpayers, for example, under my proposals the total relief will be £40 million. Out of the £379 million that this group would have paid, this is a reduction of about 10½ per cent. The £2,000–£3,000 group will show a reduction of about 8½ per cent., and for those earning over £3,000 the reduction of the group works out at a little over 6 per cent.
  Alternatively, let us take the examples given by the right hon. Member for Huyton (Mr. H. Wilson) on the second day of the Budget debate, or, rather, the correct version of them provided by my hon. and learned Friend the Financial Secretary to the Treasury later in the debate. The married man with two children under the age of 11 and who earns £700 a year gets a 15 per cent. reduction of what he pays—not a big sum, because he does not pay much. At £1,000 a year he gets 10 per cent., and at £5,000 a year he would get a proportionate drop of only 6¾ per cent.
  It has been suggested that I should have given relief by increasing allowances rather than by reducing the standard rate. I have said before, and I make no apology for repeating, that to get matters in perspective one must not look at the changes made in any one Budget in isolation. It is never possible to do everyhing that seems desirable in any one year, and the effort of a Chancellor of the Exchequer must be to see that over a series of Budgets a just balance is maintained between various claimants for relief.

  1223
  We have done a good deal for the personal allowances since 1951. The age relief was raised three times, in 1953, 1957 and 1958. Exemption from tax for those over the age of 65 with modest incomes was introduced in 1957 and the limit raised in 1958. The earned income allowance was increased in 1952 and again in 1957. The single and married personal allowances and the child allowances were increased in 1952 and 1955, and the allowances for children over the age of 11 were further increased in 1957. The single and married allowances have been raised by over 25 per cent. compared with 1951. The child allowance is 40 per higher for children aged 11 and under, it has increased by 80 per cent. for children between the ages of 11 and 16 and has been doubled for children over 16. Although this is not a matter of taxation, family allowances were increased in 1956.
  Mr. H. Wilson: What about National Insurance stamps?
  Mr. Amory: I will come to that.
  Mr. Douglas Jay: In this catalogue, should not the right hon. Gentleman mention that Surtax was reduced in 1957? [HON. MEMBERS: "Why not?"] I was asking whether it would not put the matter into perspective if the Chancellor also mentioned that fact and that the Profits Tax on distributed profits was also reduced last year.
  Mr. Amory: As I thought the right hon. Gentleman would have realised, I was speaking about personal allowances.
  I would, of course, have liked to be able again this year to improve the range of personal allowances still further, but if I had done so I would not have been able this year to make a real impact on the standard rate. One would almost think from the way hon. Members opposite have spoken that this year's reduction in the standard rate was of no use to the family man. In fact, the family man who was already paying tax benefits like other taxpayers from my proposals. What I have not done this year is to improve the relative position further compared with that of the single man or woman. I decided that in the light of the changes made in successive Budgets this year it was the turn of the standard rate, and
  1224
  after listening to the arguments put forward on both sides in the course of this debate I remain convinced that I was right this year.
  I would ask hon. and right hon. Gentlemen opposite this question. If they would not have reduced the standard rate and the reduced rates this year when a measure of reflation was required, when would they have done so? Would they ever? One suspects not. Hon. Gentlemen opposite, I know always delight in pressing for penal discrimination against unearned income, much of which is income from savings. They exhort people to save and then look askance at any income that arises on the capital saved. We all agree that there should be proper differentiation in favour of earned income because of its very nature, and, as I have said, we have twice improved the earned income allowance since 1951.
  The acceptance of this principle must not carry us to the other extreme of victimising investment income. If we want to encourage a high and persistent level of saving at all levels, we shall fail in our objective entirely if by our fiscal action we regard the receipt of income from such sources as anti-social and to be discriminated against.
  The right hon. Member for Huyton complained that too much relief is being given to industry, and, in particular as if that were a most shocking situation, that the level of taxation on industry will be slightly lower than in many other countries. So far as that may be true, is it really a bad thing? If we want our industry to be on its toes, alert and flexible, and equipped with the most modern plant, I would not have thought that it was an unhealthy thing, at any rate, not to put it at a taxation disadvantage with its competitors. An excessive rate of taxation on industry inevitably leads to wasteful expenditure.
  Coming more particularly to the investment aspects, right hon. Gentlemen opposite have approved my investment allowance proposal as a practical incentive to a high rate of industrial investment. Do not they think that by leaving a little more of its earnings in its own hands I shall also be helping to ensure to industry the resources to finance its investment expenditure without excessive recourse to the market for new capital? My proposal here seems to fit very well into the

  1225
  pattern of my aim to encourage the highest possible level of efficiency in industry.
  Finally, on Income Tax, I must protest once more, if hon. Gentlemen opposite will forgive me for doing so, at their habit of talking about my giving this sum or that to the taxpayers. As several of my hon. Friends have pointed out, what I am proposing is not to give anything but to leave the taxpayers with a little more of their own money. The necessary consequence of reducing the standard rate of tax is that those who pay the most tax get the largest total reduction, though, with my proposal, it is proportionately the smallest benefit that they get. There is nothing unfair about that. I am convinced that the proposed reduction in the standard rate and the reduced rates of Income Tax will have beneficial effects throughout our national economy.
  Turning now to the Purchase Tax, I think everyone has welcomed my choice of this tax for relief. I am going to use as few statistics as possible now because I have subjected the House to a number already. I must tell the House of a good definition of Government statistics which I heard at the Commonwealth Economic Conference last summer, when a Commonwealth official described a Government statistic as the shortest line between an unwarranted assumption and a foregone conclusion.
  The criticism by hon. Gentlemen opposite has been that I have made the wrong kind of reduction. They would have preferred that I should have been more selective and relieved a number of items from tax altogether. This arises, as I said in the Budget debate, from the different conception of this tax which hon. Gentlemen opposite and I have, and holding those different views we are bound to differ as to the best way of giving relief. I gather that they want to make it, if they can, a tax on luxuries, or at any rate on what they consider non-necessities, with very high rates on articles which they in their judgment would decide to be luxuries. If that were done the general rates would indeed have to be high ones, and higher than the present ones. I should not regard that as a sound basis for a tax to bring in anything like the sum we depend on in present circumstances.
  Were Purchase Tax to be carried to the lengths hon. Gentlemen opposite
  1226
  would like, it would imply a far too sharp an interference with the judgment of individuals as to how they prefer to spend their money. I and my hon. Friend the Member for Kidderminster (Mr. Nabarro), I think, broadly want this tax at moderate and not too disparate rates over a wide range of goods in every day consumption. My hon. Friend is moving slowly and inexorably in my direction. I took an important step in this direction, and this year I am proposing another. The moderate reduction I propose in all but the lowest rate has not involved any serious losses of stocks to the traders concerned, and they seem to have appreciated that.
  It is said that I ought to have abolished the 5 per cent. rate altogether. I would offer this reminder, that the 5 per cent. rate of tax applies, as my hon. Friend the Member for Kidderminster said, I think, to the most frivolous Easter bonnet as well as to the cloth cap, to the Dior or Hartnell gown and the simple cotton frock, as much to the Savile Row suit as to the inexpensive ready to wear one. Similarly, the 12½ per cent. rate covers the finest Persian carpet as much as the humble linoleum square.
  Nor is it true that the goods at the highest rate of tax are confined to luxuries. They are taxed at that rate for Revenue purposes, not because expenditure on them is thought to be on luxuries. A motor car is no luxury to a doctor, a midwife, a practising architect, or a country clergyman, and I am advised that few women would regard at least some expenditure on cosmetics as being a necessity. Nearly every household in the country has a wireless set now and almost two-thirds of the households have a TV set, and about one in three have a motor car or a motor bike. Over half the homes have vacuum cleaners, and 500,000 washing machines were sold last year. These things are not regarded as extravagant luxuries to millions of householders today.
  Mr. Nabarro: Good sound stuff.
  Mr. Amory: I would say a word about investment allowances, because some of my hon. Friends, I know, are not quite convinced about the advantages of introducing investment allowances. I can understand their views, and, indeed, I did give this matter a good deal of consideration before reaching a decision.

  1227
  Last year, wishing to give the maintenance of a high rate of industrial investment some encouragement, I chose to increase to 50 per cent. the initial allowances. It is too soon yet to be sure how much effect that has had, but this year I wished to reinforce that encouragement and in a way which would have the effect of prompt execution of such capital expenditure, including expenditure on designs for higher efficiency, as might be under consideration.
  As has been pointed out, and as I myself have mentioned in relation to public investment schemes, not all capital expenditure can be efficiently phased in this way to suit the convenience of the economy. Some can, however, and that marginal amount can exert an important effect. My hon. Friend the Member for Dover (Mr. Arbuthnot) said that he would have preferred a general increase in the depreciation allowance rate. I considered that and decided against it this year, because the effects, though no doubt in the right direction, would, in relation to the extremely high cost, not have been sharp enough to achieve my object.
  The hon. Member for Gloucester (Mr. Diamond) asked about what he called the premature withdrawal of investment allowances. I hope that there will not be a premature withdrawal of investment allowances, but there may well be circumstances in the future—I do not know—in which no special encouragement will be justified, and then I expect that the Government of the day would do as they did in 1956, which was to provide that all outstanding contracts should be safeguarded.
  A number of hon. Members have said that they wished I had been able to propose the abolition of the Entertainments Duty this year. I would ask them to remember that we have reduced this duty three times in the last few years and that I reduced it last year by more than half. I ask them also to remember what I said in my Budget speech about the desirability, in view of the aims of the Budget, of not dissipating the relief in too many different directions without real effect. My hon. Friend the Member for Dover raised this point, and I took note of what he said. I will not say more about it, as I have little doubt that we shall have an opportunity of discussing the matter later.
  1228
  My hon. Friend the Member for Manchester, Withington (Sir R. Cary) made a strong plea for further help, in addition to the reduction in vehicle Excise duty which I am proposing, for rural transport. I wish that I could have found some practical way. I considered this very carefully with my right hon. Friend the Minister of Transport, and he, I understand, consulted some of the Traffic Commissioners, but we could not find a workable formula.
  The case for the reduction in the beer duty has been referred to by my hon. and learned Friend the Financial Secretary, and I need not add much to what he said. First, the drop in revenue was becoming quite substantial. In 1945–46 the yield was £306 million. In 1949–50 it had fallen to £277 million and in 1957–58 to £261 million. The estimate for the current year on the basis of the old rate of duty was £250 million. That was a trend which no Chancellor could ignore. Unless I was prepared to see this important duty gradually eroded away, some effective action had to be taken.
  So much for the revenue aspect. As I explained to the Committee in the Budget debate, there is also the effect on the cost of living. Here I would reply to my hon. Friend the Member for Kidderminster who called himself a very simple-minded soul who, as he also said, is a very simple-minded amateur statistician. I have already explained that the correct conception of our present consumer prices index is that it is a statistical reflection of the cost of and the proportion of things which people actually buy and is related to the actual standard of living which exists among the people.
  Since the fact of the matter is that about half the adult population spend a proportion of their incomes on beer, the index must give beer a weight corresponding to the amount which they spend. The spread is wide throughout the community. Beer is not a luxury beverage available only to the wealthy but one of our traditional national beverages made from home-grown products. It has been carrying a very heavy rate of duty. It is in no sense whatever a fallacious argument that it enters, and enters properly, into the measurement of changes in the cost of living of 20 million people.

  1229
  The right hon. Member for Smethwick (Mr. Gordon Walker) raised one or two points to which I ought perhaps to refer. He mentioned bond washing. If he thinks about it he will conclude that a capital gains tax would not help in that problem. He made a strange comparison towards the end of his speech between the higher contributions for National Insurance and tax reductions, and he seemed to omit one side of the equation altogether, because he never referred to higher benefits and pensions. Are right hon. Gentlemen opposite in favour of a contributory principle in the National Insurance Scheme or are they not? Some of their utterances make one think that they are no longer in favour of the contributory principle.
  On tax avoidance, the right hon. Gentleman proposed that we should take power to alter the law by Order. I do not think that Parliament would care for that. I do not think that Parliament would like to give the Government power to alter the law on matters of taxation by Order.
  Mr. Gordon Walker: Is not the law altered in that way in the case of Purchase Tax?
  Mr. Amory: That is a very different thing, as I think the right hon. Gentleman will appreciate if he thinks it out.
  The hon. Member for Ashton-under-Lyne (Mr. Rhodes) made one of his interesting speeches. I entirely agree with him in what he said about the need for a high rate of investment. I was also interested in what he said about the gentleman who told him that women will come back to red flannel for their bloomers sooner or later. I think that that gentleman had the same misplaced confidence which hon. Members opposite have that people in the country will return one day to the red ties of Socialism.
  My hon. Friend the Member for Kidderminster asked me a question about the treatment of the advances to nationalised industry. We believe that in the present circumstances the method of advances from the Exchequer is the best way of dealing with this, but if the day comes when it is possible for these bodies to raise money on the open market on their own standing we shall be very glad. In the meantime, we think it best to give
  1230
  Parliament the chance of expressing its view on this matter a year at a time.
  I should like next to refer to the speech of the hon. Member for Stoke-on-Trent, Central. I always enjoy his speeches. My hon. and learned Friend and I will give most urgent consideration to the acceptance of the invitation which he gave us. He mentioned that a dinner service of 450 pieces was available, and perhaps that will give us a chance of including the whole of the Treasury in the invitation, too. We shall be very glad if North Staffordshire will sing to us when that occasion comes.
  Dr. Stross: It was 450 dinner services.
  Mr. Amory: We shall have an opportunity of discussing the proposals in the Bill in much greater detail no doubt during the weeks to come.
  Hon. Gentlemen opposite, I have noticed, are always ill at ease when confronted with proposals to reduce taxation. The proper question seems to them to be not "Is it possible?" but "Is it really necessary?" Let them remember the words of, I think, Emperor Tiberius:
  "The good shepherd shears but does not fleece his sheep."
  By a tremendous effort of will they have brought themselves not to oppose any of the Budget Resolutions on which the Bill is founded, not because they welcome reductions in taxation but because they know that the nation at large does. They realise clearly, too, that the injection of purchasing power and saving power so released will be to the advantage of the economy and in particular of employment, and they know that the provisions of this Bill will be effective and that, except in detail, they cannot criticise it.
  It is agreeable if one can propose Measures which are popular, but it is far more worthwhile to propose Measures which are economically right for the country too. In scope and pattern, these proposals conform, I am convinced, to the present needs of our economy, and it is because they do that and will strengthen further our national efforts that I commend the Bill to the House.
  10.5 p.m.
  Mr. Rankin: Earlier in the debate, at about seven o'clock, Mr. Speaker ruled that this was exempted business, and those who were in the House at the

  1231
  time, I am sure, concluded that the debate would take its normal course, and that those who wanted to participate would be allowed to do so and in due course we would have a reply from the Chancellor or one of the other Treasury Ministers.
  What has happened is that the Chancellor has intervened, and, of course, with the intervention of the right hon. Gentleman the debate has concluded, because there is little purpose in those of us who desire to take part now putting points to which there cannot be a Government reply. As the Chair is the guardian of the rights and privileges of Members, I think that you, Mr. Deputy-Speaker, should take note of the fact that business is exempted and yet, by the action of the Government Front Bench, the rule of the House has been disregarded and the debate has, in effect, been terminated by the intervention of the right hon. Gentleman.
  Mr. Deputy-Speaker (Sir Charles MacAndrew): The rule of the House has not been disregarded. The time is now seven minutes past ten o'clock.
  Question put and agreed to.
  Bill accordingly read a Second time, and committed to a Committee of the whole House.
  Committee Tomorrow.

  IMPORT DUTIES
  Motion made, and Question proposed.
  That the Import Duties (General) (No. 4) Order, 1959 (S.1., 1959, No. 520), dated 23rd March, 1959, a copy of which was laid before this House on 26th March, be approved.—[Mr. Amory.]
  10.8 p.m.
  Mr. Deputy-Speaker (Sir Charles MacAndrew): The Question is—
  Mr. Douglas Jay: I wonder whether the Government are to give us a brief explanation of the Order.
  The Parliamentary Secretary to the Board of Trade (Mr. John Rodgers): The Order amends some of the rates of import duty chargeable under the United Kingdom Customs Tariff which came into operation on 1st January, 1959.
  I should like to point out that the amendments have been fully discussed with the trade interests concerned. They
  1232
  arise out of the transposition of the old tariff into the Brussels Nomenclature tariff. The general objective in this transposition was to avoid substantial changes in the existing level of protection while achieving the notable simplification which the Brussels Nomenclature makes possible.
  The Brussels Nomenclature contains nearly 1,100 different headings. Since the headings of our old tariff did not correspond to these, it was necessary in most cases to raise subheading providing for different rates of duty on goods falling within a given Nomenclature heading. As a result, our new tariff contains about 3,400 different duty headings. Every attempt was made to avoid excessive complication, and a far greater number of duty headings would have been required to reproduce the charging provisions of the old tariff in every detail.
  We have, I think, achieved a valuable simplification, and there has been no significant change in the duties chargeable on the great majority of imports. But, given the complicated and sometimes overlapping provisions of the old tariff, it was inevitable that instances should arise in the early days of the new tariff where adjustments have proved necessary. Some adjustments of this kind were made by amending Orders last year, as the right hon. Member will recall, before the new tariff came into force.
  My hon. Friend the Minister of State has already warned the House that further Orders might be necessary to deal with cases brought to light by practical experience since 1st January, and the present Order is the first of these. Other cases are at present under consideration, and I should like to inform the House that it will be necessary to lay further amending Orders in due course; but, even so, the total number of cases is small in relation to the vast range and variety of our imports.
  The effects of the amendments made by the present Order are set out in the Order itself, and I do not think that I need elaborate on them. The House will see that rates of duty have been increased in some cases and decreased in others. The changes, as compared with the duties originally chargeable under the new tariff, fall under three main headings: first, for yeasts and poultry in air-tight containers the 10 per cent. ad valorem

  1233
  duty is replaced by a specific duty of generally lower incidence; secondly, for certain articles of rubber and manmade fibres and for certain electronic machines and parts the rate of duty is increased in order to restore as nearly as possible the previously existing level of the protective duty; and, thirdly, for certain photographic and cinematographic apparatus and electro-plating nickel anodes the duty is either reduced or removed.
  I should emphasise that these are not changes in the tariff in the normal sense of the word. The amended rates are in every case substantially the same as those charged before 1st January under the old tariff. As a particular example, may I refer to the amendments to headings 40.13 and 40.14. These not only increase the full rate of duty to 30 per cent. ad valorem, but also make Commonwealth goods chargeable at 25 per cent. ad valorem instead of being free of duty. This restores the relationship between the full and preferential rates which obtained under the old tariff. The amendments do not, therefore, represent a new charge on Commonwealth goods.
  1234
  I accordingly ask the House to approve this Order as a minor but necessary amendment which is in accordance with the general policy followed in preparing the new tariff, and which has the agreement of all the trades concerned.
  10.11 p.m.
  Mr. Jay: This is a complicated matter and outside the field of the Parliamentary Secretary's normal activities. May I ask a question? Am I right in supposing that none of these alterations involves a substantial change in duty? Secondly, in so far as there are any small changes, am I right in thinking that they arise out of the complicated operations of the changes in nomenclature, that, therefore, they are technical causes, and that there is no real change of tariff policy involved in any of these decisions?
  Mr. Rodgers: Yes, I can give an assurance on both points. As regards the first, the substance of the new duties is the same as under the old tariff, and, secondly, as they arise from technical changes, there is no change in tariff policy.
  Question put and agreed to.

  HONG KONG (MOUNTAIN LEAD MINES)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]
  10.12 p.m.
  Mr. Ernest Thornton: I wish to call attention tonight to the circumstances under which the Mountain Lead Mines, in Hong Kong, were closed, or the mining operations there were stopped. I hope that the Under-Secretary of State for the Colonies will not fall back on his reply of 12th February, that the mines were never opened. There are, I understand, five separate tunnels on the property which have been working five years, and ores have been extracted at various times and sold locally. I want to press tonight for the early reopening of the mines in the interests of the economy of Hong Kong, and for an independent inquiry into why the mines were closed.
  I feel sure the hon. Gentleman will agree that I have not hastily taken action to bring this case to public notice. It is now many months since I first wrote to the Colonial Secretary about it, and, as the hon. Gentleman probably knows, several letters have passed between the right hon. Gentleman, the hon. Gentleman's predecessor and myself. The replies of the Colonial Secretary to my representations have not by any means removed my misgivings, and it is because I still feel unhappy about the whole affair that I bring the matter to the notice of the House tonight.
  The history of this property goes back to January, 1952. As I think the hon. Gentleman will agree that this is a very complicated issue, I shall give a few dates and make a few references. Since January, 1952, prospecting and mining licences have been issued and cancelled in accordance with the Mining Regulations in respect of several individuals, syndicates and companies. Transfers of licences are not legally permitted. The old licence must be cancelled before a new one can be issued. According to the Commissioner of Mines for Hong Kong, during the court proceedings, to which I shall refer later, there had been no occasions, apart from the closing of
  1236
  the Mountain Lead Mines, which required him to cancel a lincence or refuse to renew one.
  In 1956, after the several transactions to which I have referred, the property was taken over by Messrs. Wheelock, Marden & Co., Ltd., which formed the Mountain Lead Mines Ltd. with an authorised capital of 1 million Hong Kong dollars, and on 17th May, 1956, Mountain Lead Mines Ltd. were issued with prospecting and mining licences. This company engaged the services of a fully-qualified British mining engineer and geologist and proceeded to prospect the area in a scientific manner, assisted by three Europeans with mining experience and about eighty Chinese workmen. Modern accommodation was built for the workers, electricity installed and generally rapid progress was being made with development work.
  On the 15th March, 1957, without prior warning, the renewal of the licence was refused. I want to pose several questions to the Under-Secretary. What was the reason for the refusal to renew? The reasons given in correspondence to me have been rather uncertain and vague. Was the Commissioner of Mines ordered to refuse the renewal and, if so, by whom? Had Mountain Lead Mines Ltd. committed any breach of the ordinary regulations? I understand not. Had the villagers objected to the mining operations? Again I understand not. The objections of the villagers came only some time after the mine had been closed. What really was the reason? This is the 64-dollar question.
  This brings me to the important and disturbing point. In September, 1956, the then Superintendent of Mines, William Murray Keay, was convicted of:
  "having corruptly received the sum of 25,000 Hong Kong dollars as a reward for showing favour or for his forbearing to show disfavour to the Bohespic Syndicate in relation to the granting of an issue to the said syndicate of certain purported licences and the subsequent transfer of the purported licences to the Mountain Lead Mines Ltd."
  Keay was found guilty and sentenced to a term of imprisonment. At the same time, Keay along with three members of the Bohespic Syndicate were charged with:
  "Conspiring on divers dates between 1st January and 5th June, 1956 to enable Keay to

  1237
  receive a bribe for his showing favour or for his forbearing to show disfavour in the discharge of his official function to the Bohespic Syndicate."
  The verdict of His Honour Judge Charles was as follows:
  "I find each of the accused not guilty"—
  Each of the accused referred to the three shareholders of the Bohespic Syndicate and Keay himself. Judge Charles said on this charge:
  "I find each of the accused not guilty. My reason for so finding is that I am not satisfied beyond doubts which I consider reasonable that any of them conspired together as alleged."
  The Colonial Secretary, in his letter to me of 8th October last, says he holds to the conclusions in the letter of the Minister of State of 5th November. 1957. which letter stated:
  "it was Burns who gave to the police the initial information regarding the proposed bribe to Keay."
  This, I submit, is a misrepresentation of the facts as established by the court's finding. It suggests that some of the shareholders conspired with Keay.
  Mr. H. Rhodes: Who said that?
  Mr. Thornton: The Minister of State, in a letter dated 5th November, 1957, stated:
  "it was Burns who gave to the police the initial information regarding the proposed bribe to Keay."
  The important words are, "the proposed bribe to Keay". This, I contend, is a misrepresentation of the facts as established by the court's findings and suggests that some of the shareholders conspired with Keay, whereas the judge in his verdict said that he was
  "not satisfied … that any of them conspired together as alleged".
  I submit that it is not even for the Minister of State to flout the decision of the court in Hongkong.
  The story that was accepted by the court was that the money was paid to Keay at his request to buy out a Chinese who already had a licence for additional land needed by the company. Therefore, I submit there was no conspiring, as established by the court, and no proposed bribe, but Burns, who was the biggest shareholder, did not
  1238
  believe Keay's story and, after warning Keay, reported the matter to the police. This is a somewhat different version and accords with the facts as established by the court far more than does the version of the Minister of State, which is in conflict entirely with the court's verdict.
  I am left with the unhappy feeling that it may be that the licences were not renewed as a means of punishing Burns for having the temerity to lay information which led to the conviction and imprisonment of a high officer of the Colonial Government. I am left with that unhappy feeling, and nothing that has been sent to me from the Colonial Secretary's Department has removed that unhappy feeling. There seems also some doubt as to the legality of the action taken by the Commissioner of Mines. He apparently tried to cover this point in his notice of 15th March, 1957, but the licences, in accordance with the Mining Regulations, are clearly marked:
  "This licence is not transferable and any rights or interests conferred by this licence are not assignable."
  The Bohespic licence was properly and legally cancelled on 17th May, 1956, and a new licence was issued to the Mountain Lead Mines on the same date. I ask the Under-Secretary to make sure of the legality of this position. I believe it calls for the closest possible legal scrutiny.
  Mr. Edward du Cann: May I ask whether there is any connection between the companies, the names of which the hon. Member mentioned, and whether he is imputing in any way—I take it he is not—improper conduct by the Wheelock, Marden Company?
  Mr. Thornton: No. I am glad that the hon. Member for Taunton has raised that point. I am not imputing any improper conduct. What I am trying to point out is that the licence of the Bohespic Syndicate was properly cancelled and its interests were taken over by the Mountain Lead Mines Limited, of whom Wheelock, Marden & Co. Ltd. were the holders. They took over control, anyhow.
  I come now to the point that, whether or not the process was legal, I think that it was morally wrong and damaging to honest behaviour in the Colony. The Chairman of the Hong Kong Reform

  1239
  Club made this declaration last year in public:
  "Corruption is bad in every big city in the world, but in Hong Kong it is the worst in the world."
  The judge in passing sentence on Keay said:
  "I have taken into account that corruption is all too prevalent in the Colony, so prevalent that there is a special branch of the police to deal with it."
  Under these circumstances, if a person reports someone whom he has good reason to believe is acting corruptly and a conviction follows, and the informer as a direct consequence is made to suffer heavy financial loss, this is not the way to reduce corruption; it is the way to make corrupt practices safe.
  I repeat that I have an unhappy feeling, after very long consideration of this case, that something was seriously wrong in the action taken by the Hong Kong authorities. I hope that as a result of the facts I have put before the House tonight and as a result of the representations I have made, the Under-Secretary of State or his right hon. Friend will take action to order an independent inquiry, because I believe that the prestige of our Colonial Government is at stake. There is very severe apprehension in many quarters in Hong Kong that this action was a punitive action against someone who had informed against a high official of the Colonial Government, and this was the punishment accorded to him by closing the mine and incurring him in very serious financial loss.
  10.27 p.m.
  The Under-Secretary of State for the Colonies (Mr. Julian Amery): I have a great regard for the hon. Member for Farnworth (Mr. Thornton), and I know that he would not have taken up this matter if he had not felt strongly about it. I must, however, ask him to bear with me if, before I answer his main point, I go over the historical background a little.
  As the hon. Member rightly says, in 1952 a Mr. O'Neill was granted a temporary mining licence to prospect over an area at Tai Mo Shan in the Leased Territories. In 1953, Mr. Burns acquired a 50 per cent. share in Mr. O'Neill's interest. In 1955, Mr. O'Neill transferred his interest to the Lam Chuen Syndicate, both for a sum of money and for a guarantee that some of the shares in any
  1240
  public company formed to operate the mine would be made over to him. Mr. Burns became a shareholder to the extent of 100,000 Hong Kong dollars in this new company.
  At the end of 1955 the Lam Chuen Syndicate was dissolved. One effect of this was that the members of the syndicate were relieved of any further obligation towards Mr. O'Neill. In its place they formed the Bohespic Syndicate, which consisted of nineteen persons and was an unincorporated group of individuals. Mr. Burns' interest was transferred to the new syndicate under a new agreement, which also gave him 25 per cent. of the voting power in the company.
  From late 1955 the Bohespic Syndicate was in negotiation with the Superintendent of Mines, Mr. Keay, to secure two things—first, licences over the area previously held by the Lam Chuen Syndicate plus a new area giving access to the main road which was important for the economic development of the property, and, secondly, the right to transfer the licences to a limited company to work the mine. The licences in question would have been valid for six months, with no guarantee of renewal. As the hon. Member has said, Mr. Keay alleged that a Mr. Tsao had already applied for the extra land, and that he would not surrender his right unless he was paid about 25,000 Hong Kong dollars. Mr. Keay purported to act as intermediary between Mr. Tsao and the syndicate. It afterwards transpired that Mr. Tsao was a fictitious person.
  On 27th February, 1956, Mr. Keay granted the Bohespic Syndicate a prospecting licence and a mining licence, valid for six months, for an area including the additional land giving access to the main road. He claimed that he had paid most of the compensation to Mr. Tsao. The syndicate was in some disagreement as to whether or not it should repay Mr. Keay for this transaction. Mr. Burns was against paying him, and on 10th April he made a report to the police about Mr. Keay, on the lines mentioned by the hon. Member.
  Meanwhile, the Bohespic Syndicate had become short of money. Its only assets were the licences it had acquired. It therefore concluded an agreement with the Mountain Lead Mines Company. Under this agreement it transferred its

  1241
  interests to the Mountain Lead Mines Company in return for 445,000 ordinary shares of one Hong Kong dollar each and 50,000 founder shares of 10 cents each. Mr. Burns received 100,000 of the one and 10,000 of the other.
  On 4th June, 1956, licences in the name of the Bohespic Syndicate were transferred to the Mountain Lead Mines Company after Bohespic had paid over 25,000 Hong Kong dollars to Mr. Keay.
  Mr. Thornton: The licences are endorsed to the effect that they are not to be transferred and that they have to be cancelled in accordance with the Mining Regulations and new licences issued.
  Mr. Amery: I think that I have the facts here. On 17th May, 1956, Mr. Keay took the original licences to the syndicate and delivered to the solicitor—a Mr. Armstrong—the new licences in the name of the Mountain Lead Mines Company, to take effect after the payment of 25,000 Hong Kong dollars. On 4th June, 1956, the licences in the name of Bohespic were transferred to the company by Mr. Keay, after Mr. Armstrong had paid a fee of 25,000 dollars on behalf of the Bohespic Syndicate. I hope that I have made the position clear.
  Mr. Thornton: The point is that if it is illegal to transfer licences, how does it come about that these have been transferred? They cannot have been.
  Mr. Amery: They were transferred in fact. Whether the matter is illegal is another question, but they were transferred.
  I come to the consequences of this. Mr. Burns thought that this was wrong, and on 5th June he visited the Anti-Corruption Branch of the Hong Kong Police, where he telephoned to Mr. Keay in the presence of the police. The conversations led the police to institute inquiries, and on 6th July Mr. Keay was arrested, with three members of the Bohespic Syndicate.
  As the hon. Gentleman said, on one charge of conspiracy Mr. Keay was acquitted along with the three members of the syndicate. On the other charge of receiving 25,000 dollars as a reward for showing favour to Bohespic, he was found guilty and convicted and sentenced to two years' imprisonment. He appealed, but the appeal was dismissed.
  1242
  Mr. Keay's conviction put the validity of the licences in question. The Attorney-General's advice was sought. He advised that the Government were entitled to repudiate all the actions of Mr. Keay in relation to the grant of the two licences to Bohespic, which would, indeed, cover any transfers. If the transfer was illegal, which is a point I am not competent to answer from the legal point of view, and there were further illegal action committed by Mr. Keay, that would only make his action the more one to be repudiated by the Hong Kong Government. On 15th March, 1957, the Government informed the Syndicate that Mr. Keay's acts were repudiated, and the licences were, therefore, null and void, together with any consequences springing out of them such as the transfer.
  At the end of the currency of the licences they were to run for only six months—on 26th August, 1956, after Mr. Keay had been arrested but before the proceedings were over, the Mountain Lead Mines Company asked for a renewal of the licences. The company was, in practice, allowed to enjoy a continuation of its existing rights, but a reply was delayed until the outcome of the legal proceedings was clear. There were the initial proceedings, there was the appeal, and the Attorney-General's advice had to be sought.
  In March, 1957, the Mountain Lead Mines Company was informed that the licences were null and void and, therefore, there could be no question of renewal. The fact that no licence any longer existed over the area was notified in a Gazette Notice. I think that this was right and proper, considering that the licences had been allowed to continue beyond the normal point of expiry because of the need to await the outcome of the legal proceedings.
  The Mountain Lead Mines Company and other persons, seeing this new situation, applied for a new prospecting licence. Since they could not have a renewal, they asked for a new licence. I can tell the hon. Gentleman that, in view of the past association of the Mountain Lead Mines Company with the area, and in the circumstances prevailing at that time, the Government of Hong Kong were of the opinion that, if a licence were to be granted at all, it should be granted to the Mountain Lead Mines Company. That was their view at the time; I have seen

  1243
  the documents which passed between them and the Colonial Office about it.
  I say "if a licence were to be granted at all" because, in the meantime, there had been a new development. The people of Tai Mo Shan had not objected to the grant of the earlier licences. They now—speaking of the period from the middle or even the earlier part of 1957 onwards, from the time the legal proceedings had come to an end—objected strongly. I find it difficult to discover exactly what their motives were. It may be that they were influenced by the publicity to which the trial had given rise. At any rate, strong representations were made by them urging their objections to any grant of mining licences in the area.
  These representations were of a character which the Government of Hong Kong really felt that they could not overlook. Therefore, after weighing the matter carefully, on 2nd February, 1959, the applications of all concerned for licences were refused.
  Mr. Burns has pressed for an inquiry on three main grounds. First of all, he has urged the important public interest that, as a result of refusing a licence, there has been loss of employment and revenue suffered by the people and the Government of Hong Kong. It is quite true that about 60 people have lost jobs which they had, and it may well be that more who might have been employed had the venture gone forward will not now obtain employment, at any rate in the short run. On the other hand, the objections of the people of Tai Mo Shan are not by any means frivolous.
  It is an agricultural community, quite distinct, as the hon. Member will know, from the town of Hong Kong. There is no doubt, though it is hard to say to what degree, that mining development would have affected both their cultivation of crops and to some extent, I think, their water supply. The unemployed in the town of Hong Kong would have gained, the country people of the Leased Territories would have lost. It is hard to strike a balance here. Whether the prospective revenue would have materialised it is hard to say. My information was that no mining in the real sense of the word was done, and that it was rather prospecting, and that such galleries as
  1244
  were sunk were of a prospecting character. Mining is a risky business and it is hard to say whether revenue would or would not have materialised. Of course, we should like to see more development in Hong Kong because of the terrible economic pressures on the Colony, but at the same time I do not think a case has been made for challenging the decision of the Hong Kong Government on this aspect of the matter, or for asking for an inquiry into it.
  I turn to the second aspect. Mr. Burns implies that the fact that he disclosed corruption has angered the Hong Kong Government, and that this is the real reason why no new licence was granted to Mountain Lead Mines Company Ltd. Having looked into the case as well as I could from this distance, I am satisfied that there is no truth in this charge. There was a serious case of corruption. Mr. Burns brought it to light. His action in so doing was a public spirited action, and we recognise, and the Hong Kong Government recognise, it as such.
  On the other hand, it has to be said that the licence which he had acquired, which the Mountain Lead Mines Company had acquired, although an illegal licence in the sense that it was wrongly granted by reason of the corruption, did run its full term, and the company did get a licence for the period for which it had contracted, that is for the full six months. No new licence was issued for reasons not connected with the affairs of Bohespic and Mountain Lead Mines, but because of the change of view of the people of Tai Mo Shan.
  Thirdly, Mr. Burns claims that he has suffered severe personal loss by reason of his action, and so has the Mountain Lead Mines Company. He argues from this that the grant of a new licence would only be fair in view of his loss incurred by his public spirited action. I accept that he has suffered loss. I accept that his conduct gives ground for giving his and the Mountain Lead Company's application very sympathetic consideration, but I do not think it would in itself justify over ruling the objection of the villagers of Tai Mo Shan.
  Question put and agreed to.
  Adjourned accordingly at eighteen minutes to Eleven o'clock.

HOUSING
  Slum Clearance
  Slum Clearance
  Sunderland
  Sunderland
LOCAL GOVERNMENT
  Smoke Control Areas (Fuel Supplies)
  Smoke Control Areas (Fuel Supplies)
  Barwick Park, Somerset
  Barwick Park, Somerset
  Planning Control (Enforcement)
  Planning Control (Enforcement)
COLONIAL TERRITORIES
  I.L.O. Convention (Forced Labour)
  I.L.O. Convention (Forced Labour)
NIGERIA
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  Administrative Officers (Meetings)
CYPRUS
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  Constitution
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  Civil Servants
CAYMAN BRAC
  Doctor
  Doctor
NYASALAND
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  Mlanje District (Collective Fine)
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  Mission School, Loudon
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BRITISH HONDURAS
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  Land Drainage and Sewage Disposal, Belize
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SCOTLAND
  Anti-Poliomyelitis Vaccine (Supplies)
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ROYAL AIR FORCE
  Stations (Closure)
  Stations (Closure)

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Exeter

BIRMINGHAM CORPORATION BILL
Read 2a, and committed to an Unopposed Bill Committee.
BRADFORD CORPORATION BILL
Read 2a, and committed to an Unopposed Bill Committee.

PRIVATE BILL PROCEDURE
2.36 p.m.
LORD SILKIN: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask the Leader of the House whether any progress has been made in the examination of Private Bill Procedure with a view to evolving a system by which notice might be given to the House, before the Second Reading, of any provisions in a Private Bill which are likely to raise controversy or are worthy of special notice.]
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS(THE EARL OF HOME): My Lords, your Lordships will remember that during the debate on the Second Reading of the South Wales Transport Bill last February I suggested, in answer to observations made by the noble Lord, Lord Silkin, that we might get together, with the Lord Chairman of Committees, to see whether our procedure in regard to Private Bills might be improved.
After collecting the views of my own and the other Parties in the House, I asked the Lord Chairman for any practical suggestions that he might make. He has now reported to me that he has
1052
examined the matter with the officials of the House and makes the two following proposals: first, that he should himself draw up a note before the Second Reading of a Private Bill of the salient points in the Bill, which he hoped would provide sufficient information for examination; and secondly, that he should submit his note to a Committee representative of the Parties for their observations. This latter proposal would be in conformity with Standing Order No. 91 which provides that:
"The Chairman of Committees may, if he thinks fit, direct the attention of the House … to any special circumstances relative to any Private Bill which may appear to him to require it".
The Lord Chairman further suggests that his proposals might be put into operation as an experiment and that, for the time being, the Committee should be formed unofficially, without a formal appointment by the House. If the scheme is found to be useful, then in future the Committee can formally be appointed at the beginning of each Session.
LORD SILKIN: My Lords, I am grateful for that Answer, which I think will meet with the approval of the whole House; and certainly I agree that the suggestions made are well worth trying. I feel that it might be worth while trying them straight away in the voluntary manner suggested by the noble Earl, although I think there will be only a few measures originating in this House which will come to be dealt with, and I take it that we should not wish to be troubled with measures that have gone through another place. I think it might be worth trying with these relatively few measures that originate in this House for the rest of the Session, and we can see how we go. The only comment I would make is that I hope that, whatever procedure we adopt, we shall have ample notice to study any Bills to which our attention is drawn as being worthy of particular consideration. It would not be any use our being notified on the day, or the day before. If we could have a week's notice, or something of that kind, that a measure is one that we ought to look at, that would be most helpful. Subject to that comment, I think the suggestions of the noble Earl are quite agreeable.
LORD REA: My Lords, I, too, am grateful to the noble Earl the Leader of

1053
the House, and I think your Lordships would probably like that gratitude extended to the Lord Chairman of Committees who, with the officials of the House, has taken a great deal of trouble over this matter and put forward a quite ingenious scheme. The position is slightly complicated, as your Lordships are aware, and there is some disquiet in some of our minds that matters are slipping through to which we have not given all the attention that might be given. This scheme will, I hope, clear up that difficulty, and as the noble Lord, Lord Silkin, said, I hope that it may be given an early trial.
VISCOUNT STANSGATE: My Lords, my experience of this is not great, but I had one sharp experience and I found that all the "right people" were against me; and if they had reported to a Committee, the Government would have come forward and said: "Here is the Secretary of State for Scotland, the Leader of the Labour Party and the Liberals who all disagree with you, and therefore you cannot proceed." Often the essence of the case of the objection to Private Bills is that they inflict injustice on some small power, like Leith, which I was then defending. Therefore, I hope that the noble Earl the Leader of the House will give us some reassurance about this Committee. I have noticed in regard to the Special Orders Committee that the Government spokesman sometimes has had the habit of saying, when an Order is introduced: "This has passed the Special Orders Committee. Why debate it here?" Nothing of that kind should, in my opinion, derogate from the rights of individual Members of this House.
LORD SALTOUN: My Lords, whilst I do not dissent from anything that noble Lords opposite have said, I should like, ha ving served on a good many Private Bill Committees upstairs, to say one thing. A Private Bill is introduced into your Lordships' House for special reasons. It is special legislation, and often there are special reasons found governing that locality for making some variation from the general procedure under Public General Acts. I should be sorry if the Committee that is to examine these Private Bills were to take a rigorous view and say that all Private Bills must conform in all particulars with the system laid down in the Public General Acts,
1054
because that would to a large extent do away with the private usefulness of these Bills.
THE EARL OF HOME: My Lords, I am glad that the noble Lord, Lord Silkin, and the noble Lord, Lord Rea, have found this suggested procedure helpful. I thought that the discussions we had between the Parties were useful, and that they might well be extended, as appropriate, to other features of our proceedings. I do not think the noble Lord, Lord Saltoun, need worry on the point that he raised, because the function of this Committee is really, as I understand it, to give a sort of warning note to the House about certain principles or matters which might be raised in a Private Bill and which otherwise the House might miss or appreciate only too late. I am sure the Lord Chairman will also take note of the question of the notice and the warning which he will be able to give on any individual Bill. The Lord Chairman informs me that, if the House wishes him to do so, he is willing to report on Bills coming up from the Commons within the next month or so to give this suggestion a trial. But it would be for him, and us perhaps, to consider together whether that is proper, although the matter cannot formally and fully come into operation until the Autumn Session.
I think the noble Viscount. Lord Stansgate, is a little modest in calling himself a small power, as I understood him. It was really because he convinced me on a previous occasion, when he raised these matters in the House, that matters of principle affecting individuals could go through where injustice might result, that we adopted this procedure of discussion between the Parties. I hope he will find, as I hope we all shall, that it is an experiment which is worth while.
VISCOUNT STANSGATE: So long as it is understood that no report from the Committee derogates from the powers of individual Members of the House.
THE EARL OF HOME: Of course not.
LORD SILKIN: My Lords, I hope it may be possible to try this experiment as quickly as possible before we do anything more formally.
THE EARL OF HOME: I think we are all agreed on that.

METROPOLITAN MAGISTRATES' COURTS BILL [H.L.]
THE LORD CHANCELLOR (VISCOUNT KILMUIR): My Lords, I beg leave to introduce a Bill to increase the maximum number of metropolitan stipendiary magistrates; to authorise the appointment of acting stipendiary magistrates for the metropolitan stipendiary court area; to enable the Receiver to provide premises required for the probation system within the said area; and to make further provision with respect to the power of the Receiver to borrow money. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la.—(The Lord Chancellor.)
On Question, Bill read la; and to be printed.

OCCUPIERS' LIABILITY (SCOTLAND) BILL [H.L.]
THE MINISTER OF STATE, SCOTTISH OFFICE (LORD FORBES): My Lords, I beg leave to introduce a Bill to amend the law of Scotland as to the liability of occupiers and others for injury or damage occasioned to persons or property on any land or other premises by reason of the state of the premises or of anything done or omitted to be done thereon; and for purposes connected with the matter aforesaid. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Forbes.)
On Question, Bill read 1a; and to be printed.

INCOME TAX (REPAYMENT OF POST-WAR CREDITS) BILL
2.46 p.m.
Order of the Day for the Second Reading read.
THE MINISTER WITHOUT PORT-FOLIO (THE EARL OF DUNDEE): My Lords, I beg to move that this Bill be now read a second time. As our programme of Business this afternoon compels me to inflict three Second Reading speeches upon your Lordships, I shall try to be as short as I possibly can. This Bill gives effect to the Chancellor of the
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Exchequer's Budget statement concerning the repayment of post-war credits which, as your Lordships know, consist of the extra revenue collected during the war due to the reduction of certain income tax allowances, and which the Government undertook to repay after the war. Since the end of the war repayment has been exceedingly slow because of our troubles in preventing inflation. In the Budget of 1947 it was provided that post-war credits should be repaid to men on reaching the age of 65 and to women on reaching the age of 60; and in the Budget of 1954 that if any person holding a post-war credit died the credit should be repaid at the time when that deceased person would have reached the age of 65 or 60 had he or she lived.
Under these provisions, £310 milion of post-war credits have so far been repaid, while another £25 million have, by agreement, been set off against tax liabilities. As the post-war credits originally amounted to £765 million, that leaves a total of £430 million still to be repaid. So your Lordships will see that in fourteen years since the war we have not yet repaid half of the post-war credits. But now my right honourable friend the Chancellor of the Exchequer and his economic advisers think that the monetary position enables us, although not to go quite as fast as we should like, to make very substantial increases in the speed with which we are refunding post-war credits. This Bill, in order to avoid the need of continual new legislation, gives general power to the Chancellor of the Exchequer to prescribe qualifications for repayments by Treasury regulation.
My right honourable friend has already stated the immediate regulations which he proposes to make if this Bill is passed. First, the age for repayment will be reduced in the case of men from 65 to 63, and in the case of women from 60 to 58. The cost of that change to the Exchequer in this financial year will be about £35 million. Next, my right honourable friend proposes that when a person who is owed a post-war credit dies, the credit shall immediately be repaid to his heirs instead of being postponed until such time as that person would have reached the age of 65 or 60. That change will cost a further £34 million in the present year.
Next, the Chancellor of the Exchequer proposes to provide for the immediate

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repayment of post-war credits in the case of certain hardships. That is much the most difficult regulation to make, because it is not possible to make any kind of definition of "hardships", which will avoid anomalies and which will be entirely fair to everybody. Whatever rules are made, there is always someone who can quite reasonably come and say, "This man has been repaid his post-war credit while I, whose hardship is even greater, have not been repaid mine." It may be impossible to dispute the justice of that. But the Chancellor considers that it is better to meet some cases of hardship and to repay some post-war credits to people who have special need of them than riot to meet any cases of hardship at all.
The regulations he proposes to make are as follows. The persons who will be repaid are, first, those who for a continuous period of twelve weeks ending after April 7, 1959, have been receiving National Assistance; second, those who after April 7, 1959, are persons named in a register of blind persons required under Statute to be kept by a local authority. This will not include persons registered as partially blind. The third category of persons to be repaid is those who after April 7, 1959, are receiving constant attendance allowance or unemployability supplement under the war pensions Instruments, the Industrial Injuries Acts or the Industrial Diseases (Benefits) Acts, or who would have been in receipt of unemployability supplement if they had not claimed an alternative benefit instead, or who would have been in receipt of constant attendance allowance but for being a hospital in-patient. The Bill also provides for crediting holders of post-war credits who are not paid with annual interest at the rate of 2½ per cent. That interest will not be subject to income tax, and as it will accumulate until the credit is finally repaid it may possibly be an inducement to the Treasury to repay credit a little more quickly, because they will thereby save the accumulating interest which they will otherwise have to pay in the long run.
The total cost of all these changes for the present financial year amounts to £71 million, and as the amount of credits which would in any case have been repaid during this year would have been about £18 million, your Lordships will see that for this year repayment will be stepped
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up to very nearly £90 million, which will be a very great advance. Whether or not this acceleration can be increased, as we should all like it to be increased, will, of course, depend on the monetary situation and the view taken of it by the present Chancellor of the Exchequer or by his successors in future years. In the meantime I would suggest to your Lordships that the regulations which my right honourable friend intends to make under this Bill represent a very substantial improvement and that we ought to make the best of it now. I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Dundee.)
2.52 p.m.
LORD PETHICK-LAWRENCE: My Lords, we on these Benches—and in this matter I speak for my Party—fully give our support to this Bill. I have no desire in any way to hinder its rapid passage into law. As the noble Earl has already stated, this Bill does not of itself. as I understand it, give any additional money or reduce the age at which money will be paid. What it does do is to empower regulations to be made for this purpose.
I should like to say just two or three words about the origin of these postwar credits. Sir Kingsley Wood, when he was Chancellor of the Exchequer, had the wisdom and good sense to give a considerable amount of latitude to Mr. Maynard Keynes (afterwards Lord Keynes) to assist him in various ways and to make certain new proposals with regard to the finance of this country. Personally I was a great admirer of Lord Keynes, and I had a great admiration for nearly all the things he did. I am bound to say, in candour, that these postwar credits were never one of the things of which I was particularly enamoured. I did not think that people would pay their tax with any greater willingness because they thought some might come back, and I also foresaw that they would not necessarily get the money as soon as they expected. Both those things have occurred. Very few people realised for a moment that the delay in paying back post-war credits would be anything like as great as it was. Nor do I think people anticipated that the fall in the value of the pound, in terms of goods to be purchased, would be so great that, when they did come to be repaid, they would get, in effect, only a fraction of the money

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which they had overpaid during the years of the war. However, there it is. For better or worse all these delays have taken place, and we are grateful to the present Chancellor of the Exchequer for coming a long way in improving the position.
The Bill itself, as I have already said, is wide in its scope and merely empowers regulations. but we are faced, as the noble Earl has pointed out, with definite regulations, and the question is whether they go too far, or just right, or whether they might not go still further. We should all like to see them going further. The fact is that this is a particularly suitable occasion to extend the operation of these post-war credits and enable people to get them earlier, because it is a period when the Chancellor of the Exchequer wants to encourage the expenditure in the country. Lord Keynes anticipated, very naturally I think, that at the end of the Second World War there would be something like the position there was at the end of the First World War. Your Lordships will remember that at the end of the First World War, owing largely to the action of the Bank of England, supported by the Government of the day, there was a tremendous deflation, and Lord Keynes thought that if something like that was going to happen at the end of the Second World War it would be a very good thing to have this large amount of money which could be poured out from the Treasury to the post-war credit holders. That would enable the Government to check any deflation and start to raise the country by the reflation of the money which these post-war credits would provide.
As it has turned out, partly owing to the different policy pursued by the immediate post-war Government, the situation was entirely different after the Second World War from what it was after the first. The difficulty was not to prevent a slump; it was to get on with the new building and new work that the new situation after the destruction of a large part of the country made necessary. Therefore the situation has been entirely different. Up till now the Chancellors of the Exchequer of both Parties have refrained from paying out these post-war credits except in limited cases of people reaching a certain age. I am glad to see that the
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Chancellor of the Exchequer has recognised that, and we on these Benches support the proposal that he has been making.
I cannot sit down without making a reference to one further point, and that is the interest that is to be paid in future to those whose credits are not entirely paid off. That seems to me only fair. It is one thing to go to a person and say, "I will pay you back the money", but it is rather like the case of Peter and Paul, I think in Alice through the Looking Glass, where he was going to pay the money but the time never came when he would pay it. If the Chancellor of the Exchequer pays interest on the amount owing from now onwards, that is at any rate some recompense for the long delay that there may still be in the future before these promises are redeemed. Therefore, without more ado, I should like to express our support for this particular Bill, which at any rate empowers the useful step to be taken to which the noble Earl has made reference.
3.0 p.m.
LORD SALTOUN: My Lords, I should like to associate myself with what the noble Lord, Lord Pethick-Lawrence, has just said, and to offer two further remarks. When this tax was first imposed I have not the smallest doubt that the people of this country would have accepted it as a totally non-repayable tax. I think the powers-that-be rather miscalculated the financial patriotism of the country. But what has aroused the public indignation is the delay in repayment after the promises that were made. Naturally I welcome this Bill as at any rate a step forward. But I would impress upon the Government that to repay a debt by instalments is not a very satisfactory method of repayment, and will not satisfy the public in the way total repayment would have done.
I should like to ask the noble Earl two questions. Many years ago in your Lordships' House I put forward the case of a man who, at the outbreak of war, lived in South Africa. He abandoned everything he had there and came to enlist in our Forces. Consequently, he suffered the deduction of this tax. After the war he wrote to me and said that had he waited and not joined our Forces, but gone out with his own South African

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forces, he would have received a rate of pay and would not have suffered this deduction; and he asked whether he could have repayment of his post-war credits now. The answer that His Majesty's Government gave at that time was: No; on no account; that he must first reach 65 years of age. I should like now to ask whether this man has any chance of repayment at the present time under the plans that Her Majesty's Government are making. Another question that I would ask is this: when these post-war credits are repaid on a death, are they put in with the estate and assessed for estate duty? If the credits are repaid merely in order to get the money back with the other hand, I think it is a very poor method of repayment. I should be most grateful if the noble Earl could answer those two questions.
THE EARL OF WOOLTON: My Lords, while welcoming the speech of the noble Earl, I should like to ask whether the interest, which I understand is being with-held and is to accumulate will be compound interest?
LORD HAWKE: My Lords, I heartily welcome this Bill, particularly as it provides for repayment at death. If your Lordships remember, some noble Lords on this side of the House some years ago regularly put down Questions to try to elicit a reason from the Government of the day, the Labour Government, as to why a post-war credit should not be paid out at death. Non-payment, of course. led to enormous inconvenience to executors and others. The noble Lord, Lord Pakenham, used to "stone-wall" to us from opposite, and we never got a reply out of him at all. I suppose there was no reason.
I, too, should like to ask a question—namely, whether, in order to claim, it is necessary for the individual to know the amount of his post-war credit? There are remarkably few people who have a complete set of post-war credit papers in their possession. Will it be sufficient for a person to write to the tax inspector and say "I wish to claim my post-war credits"? If that could be arranged. I think it would make for great convenience and would save an enormous exchange of correspondence. I am very glad that the Government have started to tackle this problem, though I recognise that, except in regard to death, it could not be done
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un cept that. I, too, was an admirer of Maynard Keynes, because I lived in the room beneath him at Cambridge. But I think we must all agree that this was one of his more unfortunate prognostications.
LORD LATHAM: My Lords, may I ask the noble Earl a further question? I understood him to say that the recipient of National Assistance will be among those who are entitled to repayment under this Bill. If that be the case—indeed, if it is not the case—will the recipient of National Assistance have his post-war credits taken into account by way of reduction of what he would otherwise get from the National Assistance authorities?
THE EARL OF DUNDEE: I think the reply to the noble Lord, Lord Latham, is that it would not be a deduction; but will make sure of that and will let the noble Lord know.
LORD LATHAM: That is to say, it would be regarded as a disregard?
THE EARL OF DUNDEE: I think so, but I should like to verify that, if the noble Lord will allow me.
The noble Lord, Lord Hawke, asked whether it is necessary to know how much one is owed before one is paid out. I think it is the intention of the Government to start paying these post-war credits on June 1. That is one reason why Parliament is being asked to pass this Bill so quickly. It is necessary that all the forms should be issued, ready in the Post Office, by May 4, so that people who know that they have some post-war credits, and who under the regulations will become entitled to repayment, will be able to send them in. I am sure that it would be a great convenience and help to the Revenue officials if people were able to say how much they were owed; it would probably save a great deal of trouble. I am equally sure that, if they have forgotten, if they make appropriate enquiries they will find that the Inland Revenue will have a record of how much they are owed and that they will be paid the right sum. I have just received an additional note on this matter, to the effect that the loss of post-war credits certificates is not fatal to a claim—I am sure your Lordships will be glad to hear that. Applicants who have lost their certificates should write to the inspector of taxes. I think that is

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more or less in accordance with what I have already tried to say. I am glad to say that I also have confirmation of my answer to Lord Latham's question. The Minister of Pensions stated recently that National Assistance post-war credits would be disregarded.
My noble friend Lord Saltoun asked two questions. The first concerned a South African. He asked whether that person had any chance of getting his postwar credits repaid. I am afraid that the answer is: Not unless he is approaching the age of 63. I am afraid that the fact of his being a South African will not make any difference to the date on which they will be repaid. On the question of estate duty, the answer is that it will not be payable on credits released on decease. It is regarded as a tax which has been already paid and is now being refunded, and it will not be assessed for the purpose of estate duty. My noble friend Lord Woolton asked whether the interest would be compound interest or simple interest. I do not know. The Chancellor has not yet made the regulations under this Act.
VISCOUNT ALEXANDER OF HILLSBOROUGH: It is in the Bill, at Clause 2.
THE EARL OF DUNDEE: I beg your Lordships' pardon.
THE EARL OF WOOLTON: I beg your Lordships' pardon, too.
THE EARL OF DUNDEE: Of course it is; it is in Clause 2. It is compound interest, free of income tax. I thought that it would be compound interest, but I was not sure. When the noble Earl asked his question I had forgotten chat it was specifically stated in the Bill that it would be compound and not simple interest. I beg your Lordships' pardon.
THE EARL OF WOOLTON: My Lords, I am sorry to have troubled the noble Earl with the point. I ought to have read the Bill.
THE EARL OF DUNDEE: My Lords, I had read the Bill but the point had slipped my memory. I think I have dealt with all the questions which were asked of me and I hope your Lordships will agree to give the Bill a Second Reading.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, before the Bill
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ts Third Reading, I would say that I am glad that the noble Lord, Lord Hawke, after his opening remarks, accepts the fact that this could not have been done before.
LORD HAWKE: My Lords, I do not accept that in the case of those who perished. They should have been paid out.
VISCOUNT ALEXANDER OF HILLS-BOROUGH: My Lords, had the noble Lord had to try to deal with them and with all the other arrangements after the war, he would not have done as much as was done. May I ask the noble Earl, Lord Dundee, in connection with his suggestion when he first spoke, that where a man's widow would be of the proper age—sixty—the heirs will now be paid out, whether we can now get this information before we go into Committee on Clause 6: Where a man has died intestate, leaving a widow and children, and the authorities, in dealing with that estate in the normal way, have allocated a given number of certificates to the widow and a given number to one, two or three children, will the children be paid out under the provision in regard to heirs, referred to by the noble Earl, at the same time as the mother will now be paid out?
LORD SALTOUN: My Lords, may I ask the noble Viscount, Lord Alexander of Hillsborough, in the case of the poor old man who was buried at public cost because he could not get his post-war credits, how the public benefited?
VISCOUNT ALEXANDER OF HILLSBOROUGH:: My Lords, in the reconstruction of the whole good at the time, without which we could not have got on at all.
THE EARL OF DUNDEE: My Lords, post-war credits owing to deceased persons will now be repaid whatever age would have been reached by deceased persons had they not died. Irrespective of how young a person is when he dies, the credit will be repaid to his heirs immediately, presumably according to the law of inheritance, whatever that may be, and whether he has assigned the credit by will or has made no will. Presumably in the latter case the sum will be divided according to the law of intestacy between his widow and children. I am not

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entitled to answer on a legal question, but I believe that is probably the right answer.
On Question, Bill read 2a; Committee negatived.
Then, Standing Order No. 41 having been dispensed with (pursuant to the Resolution of April 23, 1959), Bill read 33, and passed.

FACTORIES BILL
3.15 p.m.
Order of the Day for the Second Reading read.
THE EARL OF DUNDEE: My Lords, the purpose of this Bill is to amend and also to amplify the Factories Act, 1937, which is referred to as the principal Act. I have no doubt that a good many of your Lordships are able to remember the Parliamentary debates which took place on the Factories Act of 1937. In another place there was a two-day debate on Second Reading, the first day on a Thursday, the second on a Monday. I happened at that time to be Under-Secretary of State for Scotland, and I had the duty of winding up the first day's debate from the Government Front Bench. It has always been a happy recollection in my mind that the two Front Bench Labour speakers who came between the Home Secretary (who moved the Bill) and the end of the debate and whom I had to try to answer were Mr. J. R. Clynes, who was by that time a very elderly man, very highly respected by all Parties, and Mr. Short, who had been Under-Secretary at the Home Office in the Labour Government and who had devoted a great deal of work to the subject of factories, although he had never had an opportunity of introducing a Bill.
The 1937 Act made comprehensive provisions for the health and safety of workers in factories and for the limitation of hours, and particularly of overtime, of juveniles and women. On safety and health this Bill brings up to date most of the provisions of the 1937 Act, but one clause of this Bill, Clause 25, introduces new matter and makes a new departure in factory legislation. As your Lordships will see, that clause provides that:
"The Minister shall promote health, safety and welfare in factories and premises and
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operations to which the principal Act applies by collecting and disseminating information and by investigating or assisting in the investigation of problems of health, safety and welfare; and for the purpose of investigating such problems he may provide and maintain such laboratories and other services as appear to him requisite."
The clause goes on to provide that the Minister may appoint persons to advise him in connection with his functions under this section, paying their expenses, and that any expense incurred by the Minister shall be paid by Parliament. Hitherto, factory legislation has consisted almost wholly of regulatory measures which require occupiers and others to do certain things or prohibit them from doing other things. Now, by this new approach envisaged in Clause 25, by which the Minister will improve his advisory services, by collecting information and investigating various problems and passing on the results to industry and to other interests who may be able to make use of them, we hope to obtain fruitful results.
There is one thing which I particularly remember Mr. J. R. Clynes saying in the Second Reading debate on the principal Act, and with your Lordships' permission I should like to quote his words. He said [OFFICIAL REPORT, Commons, Vol. 320, col. 642]:
"In my boyhood, when I worked in a mill, the factory inspector was regarded as the enemy of the industry. That is not so now. I was frequently warned to get out of his way, to keep out of his sight. He was colloquially known as 'the finer', for he used to put fines on the master for breaking the law, and we were supposed to be helping the trade if we helped the employer to escape the penalty of his wrong-doing."
That was the kind of atmosphere which, not only during Mr. Clynes' boyhood but at any time, may easily arise if there is suspicion on both sides: if the inspector thinks that the people who are inspected are mainly concerned with trying to evade the law, and if the people who are inspected think that the main concern of the inspector is to catch them out and to gain credit by detecting some pettifogging little breach of the regulations. This attitude is well known to us, of course, very largely as a result of the necessity of appointing large numbers of inexperienced inspectors to carry out war-time and post-war controls. But our factory inspectorate is not a large one. We are trying to increase it.
LORD WILMOT OF SELMESTON: Hear, hear!
THE EARL OF DUNDEE: We now have 409. We aim at having 445 inspectors very soon; we do not want too many, because we think that in this matter quality and experience are more important than numbers. Our factory inspectorate, we feel, on the whole, does enjoy the confidence of the people with whom they are dealing. Our inspectors consist of people with long training and great experience, who are able to achieve our object of collaboration. What we want is neither that the law should be evaded, nor that it should be enforced in an unreasonable and pedantic way; but that all parties, the Government with their inspectors, the employers and the workpeople, should co-operate together in the most interesting as well as most important task of finding out how to reduce risks of accidents, how to increase the safety of people who are employed in our factories.
A great many of the improvements and innovations in this Bill for promoting safety are concerned with fire, with the prevention of fire and with escape from fire, as your Lordships will find in Clauses 9 to 16. Clause 9 makes certain changes in Section 34 of the principal Act which lays the responsibility for seeing that proper methods of fire escape are provided on district councils, who were in 1937 also the fire authorities who ran the local fire brigade. Since then, as your Lordships probably know, the management of fire brigades has been transferred to larger authorities; and it was a very difficult question when this Bill was introduced in the other place whether the duty of seeing that proper measures for escape from fire were taken should fall upon the authority which controlled the fire brigade, and presumably knew more about it, or on the smaller authority which made the building by-laws.
Under the Bill as it was first introduced, the responsibility was on the smaller authority, who are also responsible for building matters. By an Amendment, however, in the other place responsibility has been transferred, under Clause 9, to the county councils or county borough councils in England; but not yet in Scotland. In Scotland there appears to be much more feeling on the part of the authorities that this
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may not be the right solution. It has not yet been finally decided what changes will be necessary in the administration in Scotland of Section 34 of the principal Act. An Amendment may have to be moved when the Bill goes into Committee in your Lordships' House, but I am not yet able to say what the solution will be in regard to Scotland.
Clauses 10 and 11 also introduce innovations which were not contained in the principal Act. Under Clause 10
"The Minister may make special regulations as to the measures to he taken to reduce the risk of fire breaking out in any factory or of any such fire or smoke therefrom spreading in any factory, and such regulations may, among other things, prescribe requirements as to the internal construction of a factory and the materials used in that construction."
Special regulations may he made providing that some other person, as well as, or instead of, the occupier, shall be responsible for a contravention thereof. That is, as your Lordships will see, a very broad, general provision; but your Lordships can think of the great variety of conditions in different factories. One kind of factory may have some kind of material used in the construction which may increase the danger of fire, whereas in a different type of factory that same material may be perfectly safe. It is not possible to lay down detailed requirements in an Act of Parliament, but this Bill proposes, for the first time, that the Minister should have power to make this kind of regulation, on, for example, the use of certain building materials which might be thought to increase the danger of fire.
Clause 11 provides:
"In every factory there shall he provided and maintained appropriate means for fighting fire, which shall be so placed as to be readily available for use."
The remaining clauses regarding fire (that is, Clauses 12 to 16), as your Lordships will see, all refer to the principal Act and bring the regulations for escape provided in the 1937 Act up to date, with a number of improvements to those provisions.
LORD FARINGDON: My Lords, I wonder whether the noble Earl, as he is on the point, could give me some information. I am a little puzzled by Clause 11 (6). I do not quite see how it is intended to work or why it is in the Bill.
THE EARL OF DUNDEE: Clause 11 (6) states:
"The Minister may by order grant exemption from the requirements of subsection (1) of this section and any such order may apply to any particular factory or part of a factory or any class or description of factory."
I think that provision is obviously to give the Minister the necessary elasticity in making orders which might be burdensome and unnecessary to some particular type of factory where it was not necessary to have these installations.
My Lords, the part of the principal Act which caused the greatest amount of discussion was the part regulating hours of work and overtime of women and young persons. I think that previously the maximum amount of overtime allowed in a year was 600 hours. We reduced that to 100 hours. We provided that the number of weeks in a year during which overtime could be worked should not exceed thirty, and we made certain limits within which women and juveniles might work. We thought that the changes which we were making were fairly hold and advanced changes, very great improvements. Our critics on the other side of the House, I remember, did not think so, and we were criticised for a great many things. One was for not introducing into that Act a provision for holidays with pay—although, of course, that was introduced very soon afterwards in a separate Act. We were also criticised for not abolishing overtime altogether. I think we must remember that at that time we had 1,500,000 unemployed, so people were naturally apt to look on overtime in a slightly different light from that in which they see it now. But it was generally thought by our critics—and I remember particularly a speech by Mr. Arthur Greenwood at the start of the second clay's debate—that we had not gone far enough, and that we ought to have gone a good deal further in restricting these hours of work.
It is one of the little ironies of modern political life that these restrictions which we laid clown in the 1937 Act have since been almost continuously suspended, both by the people who introduced them and by the people who thought they did not go far enough. Defence Regulation 59 was introduced during the war in the interests of production. It suspended these restrictions, or gave the Minister power
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to grant suspensions: and since then that power has been continued by every Government since the war ended. The Minister now desires to bring all these Defence Regulations to an end, and he spent a great deal of time in consultation with the trade unions considering whether it would be possible to amend the Act of 1937. He thinks that the provisions regarding overtime in that Act are much too rigid. He did do his; best to see whether he could work out alternative regulations, but he was not able to find a solution which would be sufficiently flexible.
What the Minister has done, therefore—what is proposed in Clause 22—is to give himself power similar to that which he held under Defence Regulation 59, but with certain important differences. Under Defence Regulation 59 he could grant exemptions in respect of young persons under the age of 16: under this Bill he will not be allowed to grant exemptions to people under 16. The Defence Regulation imposed no obligation upon him to consult anybody before he granted an exemption, but Clause 22 now imposes upon him very detailed obligations to consult the various interests who may be affected. Indeed, he cannot grant an exemption unless one of those interests has applied to him in the first place. In fact, the Minister acts more or less as a kind of post-box in the matter.
The general exemptions—for example, those which are granted in respect of a whole industry—can be made only by way of special regulations, subject to the procedure laid down by the Second Schedule to the 1937 Act, which requires careful consultation with the affected interests and which says that in certain circumstances a public inquiry must be held. Then in the case of an individual exemption, while no time limit to that was provided in Defence Regulation 59, under this clause the granting of a special exemption order—that is, one extending only to particular persons—is limited to one year, subject to renewal if it can he shown that the exemption is still needed.
My right honourable friend has spent a great deal of time in considering this difficult question, my Lords, and he thinks that Clause 22 strikes a reasonable balance between the need for elasticity in this matter, the interests of production, and the need to protect certain classes of people against excessive hours.

1071
My Lords, I must apologise for taking up so much of your Lordships' time. This Bill is not quite of the same order of importance as the Factories Act of 1937, or the Act of 1901, but it does make very substantial improvements in modernising our present factory laws. One remarkable feature of this Bill, I think, is the unprecedented unanimity and agreement with which it has gone through all its stages in another place. It was originally a Bill of twenty-seven clauses and two Schedules: now it is a Bill of thirty-three clauses and three Schedules. The Amendments to every part of the Bill (with one very early exception, which did not come quite into line with the rest of the Bill) were almost entirely unanimous. The Amendments moved and accepted were never voted on on Party lines in the other place, and they came from all Parties.
My Lords, I think that a few of your Lordships have lately been a little exercised on the question of how far it is in order to quote verbatim what has been said in another place; and I am certainly not going to quote anything that has been said on this Bill. Indeed, I would not ask your Lordships' permission, even, to quote what I myself said in another place in 1937 if it were a matter of quoting my own words. But I should like, if I may, to repeat a quotation from Lord Shaftesbury which I read during the Second Reading debate on the 1937 Act. That, again, is a quotation from another place, because at that time he was Lord Ashley, and was, as a member of that other place, pleading for favourable consideration for his Factory Bill of 1844.
At that time the rapid industrialisation of Great Britain had largely destroyed the older and happier relations which used to subsist between master and man; and the harsh economic theories which were then fashionable tolerated a great deal of inhuman conditions in our factories and mines. Although Lord Shaftesbury's Act of 1844 is one of the landmarks in our industrial history, the restrictions and limitations which it imposed on conditions and hours of work in factories were, in fact, very moderate indeed. They did not go nearly far enough, and Lord Shaftesbury himself was very conscious of that: they did not go as far as he
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wanted. What he said was [OFFICIAL REPORT, Commons, Vol. 320, col. 725]:
"We ask but a slight relaxation of toil, a time to live and a time to die; a time for those comforts that sweeten life, and a time for those duties that adorn it."
Later on, he said:
"But I dare to hope for far better things —for restored affections, for renewed understanding between master and man, for combined and general efforts, for large and mutual concessions of all classes of the wealthy for the benefit of the common welfare and specially of the labouring people …".
That was Lord Shaftesbury's ideal in 1844: and in the last 115 years we have moved some way towards the goal which he had, although it has often been an uphill journey. We hope, my Lords, that this modest but not insignificant Bill will help us to move a little further on, not only in securing better safety for the factory worker but also in promoting the free and willing co-operation which we all want to see among all kinds of people who are engaged in British industry.
Moved, That the Bill be now read 2a.—(The Earl of Dundee.)
3.40 p.m.
LORD WILMOT OF SELMESTON: My Lords, in congratulating the noble Earl, Lord Dundee, on his informed and understanding speech, his second excellent star performance on this double bill, may I be allowed to congratulate also the Government, and particularly the Minister of Labour, upon this signal advance towards the goal towards which Lord Shaftesbury first set foot? We should remember, too, in appreciating what this Bill achieves, that this year is the centenary of the death of Robert Owen.
This Bill is a remarkable example of Parliament at its best in one of its phases, of the active co-operation of Government and the Opposition in making progress in a common aim. I believe that the Government themselves moved over sixty Amendments to their original Bill, all of which were carried and all but a few of which emanated from suggestions of members of the Opposition. It gave rise to seventeen sittings of the Committee on the Bill, and the Minister was good enough to say (I will not quote him) that if it had not been for the voluble thanks of members of the Opposition for concessions he had made, fifteen sittings would have been enough. So I think that this is a remarkable Parliamentary

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event, apart altogether from the excellence of the measure as it now comes to us from another place.
In your Lordships' House we are privileged to have on this side, and no doubt on the other—I see some noble Lords before me who certainly qualify—experts in this field who, I am sure, will make useful and constructive contributions to the debate and who on Committee stage may well be able to make some further improvements on the Bill. Experience drawn from a life spent in industry, as trade union officials, employers and medical advisers, enable some of my noble friends to make extremely useful contributions.
As the noble Earl said, the two most important aspects of the Bill are the fire prevention and welfare provisions. The fire prevention clauses are very important. I have always felt that the danger of fire and the regulations for dealing with it fell far short of what was required. For some years, including some of the war years, I was Chairman of the Fire Brigade Committee of the London County Council and I know the enormous amount of expert knowledge which is accumulated by fire authorities of the great county councils. In transferring responsibility for the fire safety provisions in factories to the county fire authorities and county boroughs, where appropriate, this Bill makes a revolutionary step forward. I hope that the change will do a great amount to prevent the serious number of deaths and injuries arising from factory fires and accidents. The Bill might perhaps go a little further in permitting county fire authorities to make constructive forward proposals in the construction and alteration of factories, and no doubt that point will be looked at when we get to Committee stage. The noble Earl mentioned Clause 10 with regard to the construction of factories, and I should be glad later on if he would enlighten me on a point which still seems to me obscure—namely, whether these powers operate in existing buildings as well as in buildings it is proposed to construct.
Health provisions are very important, too. For the first time, the Government accept the responsibility for the health and welfare of factory workers and set about the task of prescribing regulations to that end. Particularly, the Bill requires that in all factories employing more than fifty people there shall be a trained person
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in charge of first aid. I should like to learn a little more about how this training is to be provided, because it is important that this should be got going soon. I think that something should be done for the smaller factories where often these provisions are most needed.
I would make two points in conclusion. One is that the carrying out of all this good work depends largely on the factory inspectorate, and it is very important that not only should the quality of the inspectorate be maintained and improved but its number should be very considerably augmented. Already factory inspectors are over-worked people, quite unable within the time at their disposal adequately to do the work required of them. I hope that the numbers mentioned by the noble Earl will not be regarded as the top numbers for the factory inspection staff. The second point is that there ought to be some provision for compulsory third party insurance, as it were, to make sure that those who are entitled to compensation under the provisions of the Bill get that compensation even though the employer is insolvent or unable to pay. Perhaps when we come to the appropriate stage we may look at that.
There is one further point. The accord between the Government and the Opposition has had the effect that this remarkable Bill has been given little mention in the Press. Our newspapers thrive upon disagreement land not upon agreement. Therefore, few people know about the Bill and its contents, and if it is to work it is essential that everybody who is concerned, both employers and, even more important, the workmen themselves, should know about it. I should like to ask the noble Earl whether he could give us an undertaking at some time throughout the discussions that the. Minister will publish a booklet explaining in popular language what it is gall about and leaflets which can be distributed in the factories, so that the workers will know what their rights and, no less important, what their duties are under the factory regulations as they will now be. Publicity of that kind is absolutely essential to get the benefits of this remarkable piece of legislation.
3.50 p.m.
LORD McCORQUODALE OF NEWTON: My Lords, I should like to make one or two remarks upon this Bill. The noble Earl, Lord Dundee, has given your

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Lordships some reminiscences about the Act of 1937 in another place, and perhaps your Lordships will forgive me if I do the same. First, I would say that this is a good Bill, which I, for one, cordially welcome. I am sure that the great mass of employers welcome it, too. As the noble Earl said, factory legislation has a very special place in our Parliamentary system. I was privileged to be a member of the Standing Committee in another place on the 1937 Bill. My noble friend Lord Tenby presided over the Committee excellently in his most genial manner. The Committee sat for more than three months; we started in winter and finished in the height of summer. Party controversy was at a minimum throughout. There were a number of spirited debates, but members on each side of the Committee were found on each side of the question. Back Bench advice was accepted in a way in which it is seldom accepted in Parliament nowadays. I think that all of us look back on that summer as one of the most satisfactory experiences of our political life.
I am delighted to see, reading the Report of the Committee stage of this Bill in another place, that the same spirit prevailed and the same experience was had by those who conducted their work in this respect. After all, here we are legislating for something like 8 million to 10 million people, and with one end in view only—namely, to improve the conditions of their safety and welfare in industry. I suppose that because this Bill and the Act of 1937 passed with so little Party controversy, as the noble Lord said, it has received practically no attention in the Press. What a pity that is!
LORD WILMOT OF SELMESTON: A great pity.
LORD McCORQUODALE OF NEWTON: I think it is a grave reflection on the Press that they should pass over a measure of this sort. One of the principal deterrents to accidents is knowledge. and if people in industry knew with what care Parliament endeavoured to plan out the legislation under which factories worked they would possibly take more care to avoid many of these accidents which can only be put down to lack of thought and carelessness. I hope that the Minister will follow up the excellent suggestion of the noble Lord, Lord Wilmot of
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Selmeston, that as much publicity as possible should be given to the Bill when it becomes law.
I should like to say that those whom I represent much appreciate the close and courteous consultation that the Ministry had with both sides of industry before introducing the Bill. It is a Bill based upon, and it constantly refers to, the major Act of 1937 and the Act of 1948. I hope that as soon as Parliamentary time and duties permit, a consolidated measure will be brought forward so that those who have to conduct these matters in practice can go to one source to find out what are their obligations. I know that Consolidation Bills are a great trial to many people, but they are an advantage to those who have to work out these matters.
Perhaps I might refer to one or two small points in the clauses which I think are most satisfactory. Clause 17 consists of only two-and-a-half lines but it is of great importance. It says:
"The facilities required ߪ shall include a supply of hot and cold or of warm water."
I think it is quite time, in 1959, that those who work in factories should be able to wash their hands in warm water. It is a considerable advance, as many of us will know. The lifting of excessive weights has hitherto been an offence only with regard to young people. But lifting of excessive weights liable to damage the health of the individual lifting them is obviously a wrong thing to ask anybody to do, and I am delighted to see in Clause 19—and I think this emanated from a suggestion from the BackBenchers on the other side—that the word "young" shall be omitted.
The Minister has referred to Clause 25, which is possibly the most important clause of the Bill and one which gives an imaginative Minister of Labour in the future something concrete to work on in improving the health, safety and welfare of those who work in the factories. I am sure that in the present Minister and the present Government we have that imagination which will make a reality of the powers given under this clause; and I wish them well. There is an interesting clause, Clause 24, where railway running sheds are for the first time brought into the scope of the Factories Act. This has been a bone of contention for a long time and we have heard great debates on the Gowers Report and other matters. At

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one time theorists considered that once the railways were nationalised there would be no real need for any of these regulations and rules, because everything would be perfect. However, that has not happened, and I am glad to see that the same protection is to he given to those who work on the railway running sheds as is given to those who work in factories. I am sure we all welcome that provision.
I was glad to hear the noble Lord, Lord Wilmot of Selmeston, say a few words about the factory inspectorate. The position there is important. The present establishment is 440, although it is hoped to raise that a little. There are, I am told, 409 in posts and another 7 at this moment who have passed all their examinations and are awaiting posting. That 416 out of 440 is a much better figure than we have had for many years, and I am sure that all those who are interested in this field are glad to see that the factory inspectorate is filling up so adequately. I, for one, was glad to hear my noble friend Lord Dundee say that the quality of factory inspectors was in no way being impaired by this extra recruitment. I do not quite agree with the strictures that the noble Lord, Lord Wilmot of Selmeston, made upon the present inadequacy of the factory inspectorate. I do not believe that there is a great field which they cannot cover at the present time. Some of them may be overworked, but they are not the only people in the country who are overworked. Moreover, they do an admirable job and, so far as my friends and I know, they cover the field adequately. I hope that the remaining vacancies will be quickly filled up with men and women of the highest calibre, and I am sure we can trust that inspectorate to carry out the duties that Parliament lays upon them.
LORD WILMOT OF SELMESTON: My Lords, I should like to make it clear, if I did not do so, that there is no reflection on the quality of the inspectors now employed. I think there are not enough of them.
LORD McCORQUODALE OF NEWTON: I agree that there can be no reflection on the quality of the inspectorate. I do not think there is anything more I wish to refer to in the Bill, except to remark on the difficult clause, Clause 22, which has been brought in because the arrangements made in the 1937 Act
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with regard to overtime and shift working of young persons has been found to be faulty. More and more, with the expensive machines that it is necessary for industry to purchase if we are to keep up our efficiency, industry will have to turn to double-shift working. They are doing that in certain industries now. It has come in many of our competitor countries, and it could well come here to an increased extent. We must make arrangements for that. The Minister does this in Clause 22, but he has taken the utmost care to see that any such questions as this are brought in by general agreement between employers and workpeople and not by the regulations of the employers alone. That is the right system, and I cordially commend it. I trust that this Bill will play a part, as I am sure it will, in keeping the standard of British industry in regard to the question of the safety and welfare of those working in it in the forefront of industry throughout the world, and will maintain for us our proud record.
4.0 p.m.
LORD STONHAM: My Lords, I join with other noble Lords in congratulating the Government on this Bill, in giving it a warm welcome and in thanking all concerned in another place for the constructive work they have done on it. The noble Earl, Lord Dundee, said that this was not of the same order of importance as the Act of 1937. That may well be the case, but this is an extremely important Bill and it is going to mark a distinct step forward in factory health and factory safety. In my view it will remain almost a dead letter unless the Government get really active in harnessing the enthusiasm of all working in factories, in any capacity, in the cause of health and safety.
We have to remember that there are still some fourteen sections of the 1937 Act which, for one reason or another, have never been implemented. Therefore it is not so much our passing a Bill and putting these, as it were, good resolutions on paper; the great work will begin after we have finished with it. I think we can say that we are happy that the initiation of this work will be in the hands of the right honourable gentleman the Minister of Labour, because, in my view, no one is keener on health and safety in factories. The right honourable gentleman, whatever else he does—and his achievements are not inconsiderable—will never be able

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to look back on a better piece of work than has been done in this Bill.
Noble Lords have mentioned that it has not received any praise in the Press. That is, of course, strictly according to form. As a small boy I remember the late Sir Hiram Maxim telling the story that he was an impecunious inventor so long as he was trying to invent something to save human life, but the moment he invented the Maxim gun his fortune was made. It is precisely the same with our work here in this House. If we are not indulging in acute controversy or slanging matches, then little notice is taken of it. But the misfortune does not lie in the lack of publicity for anything we have said, but in the lack of publicity for what is in this Bill. Therefore it throws a much heavier duty on the Government to overcome that lack of publicity in the manner in which my noble friend Lord Wilmot of Selmeston has suggested. I might amplify his suggestion by putting forward the view that there should be two pamphlets: one, the larger one, which would draw to the attention of every employer—I think it should go to every factory owner—the principal provisions of the Bill, and the other a shortened version, in leaflet form, setting out the rights and responsibilities of employees; and the help of their trade unions should be enlisted in distributing it through their branches.
In my view the most important features of general application in the Bill are those dealing with fire prevention and safety and the new powers of fire officers; the fact that the Government accept responsibility for the safety and welfare of factory workers; the new responsibilities connected with the obstruction of floors and staircases, which should prevent many of the 12,000 accidents which happen from this cause every year, and, of course, the improved facilities for washing. With regard to the fire clauses, I think the most important part is that they introduce for the first time the principle of fire prevention, so that fire prevention becomes almost as, if not more important than, putting them out.
I welcome, too, the change of power from the district councils to the county and county boroughs. In doing so, I make no reflection on the district councils who have been the fire authorities in this
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matter since 1937. It is quite right, in my view, that the certification of factories in respect of fire escapes should be in the hands of fire experts. There have been tremendous developments in knowledge of this kind of fire prevention in recent years, and it is essential that this knowledge should be fully used in order to save life. It is no use pretending that the district authorities have the trained staff, and, with the best will in the world, a sanitary inspector or other local government officer, already overworked, has not been able to discharge these extra duties. Proof of this lies in the fact that the district authorities have exercised this power for twenty years, and only some 50 per cent. of our factories have so far been certified to be safe. Also, in very few cases have the district council officers been able to re-visit to see that the precautions are still being maintained. In future, because fire prevention officers know every factory in their area, it will be possible for them to re-visit, and I should not have thought it would take very long before we could be in the happier position that all factories have been examined and certified.
A great deal has already been said about the factory inspector. I think the important part of this Bill is that it will enable the fire brigade officer to become an important assistant to the factory inspector. A great deal of the success of this part of the Bill will depend upon the co-operation with which these two important officers can work together. I particularly welcome the clause in the Bill which says that fire alarms must be heard simultaneously in all parts of the building, and that they must be tested every three months. It is all too easy to feel that, when we have the alarms which go off when touched anywhere in every part of the building, we have taken out a sort of insurance policy and that nothing is going to happen.
There was a case in the Press only last week of a factory blaze when people had to jump from the first floor windows. One person died in the fire, and the firm was fined for having failed to insure that all the employees were familiar with what to do if there was a fire. It was not so much that there were not adequate escapes or fire alarms, but one of the employees who gave evidence said that she had been there twenty-four years and had never heard the fire alarm, and did not know

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there was one. That is why it is so important that these things should be tested and employees should be properly informed of these matters. We hope that the need will never arise, but it is vital for everybody concerned to know what he should do if it does. When these precautions in the Bill are properly implemented, there will be no further reason for the disastrous loss of life in factory fires, such as happened in the Keighley fire.
Another step which has been welcomed, and to which I give a restrained welcome, is the insistence that a supply of hot, cold or warm water must be available. The noble Lord, Lord McCorquodale of Newton, said how nice it was that factory workers would now have clean, warm water. But there is no insistence in the Bill that they are going to have clean water to wash in, because its provisions will be satisfied by a bucket of water, cold or hot. The first man to wash his hands in an engineering shed will wash them in the water and will get clean hands. But the twelfth man in the same bucket will get oily mud and, therefore, what the Bill should say—and what I hope it will say before it finally leaves us—is that it should be clean running water. I would remind your Lordships that the 1937 Act laid on factory owners the responsibility of providing: "adequate and suitable facilities for washing." Many factory owners have interpreted that as scarcely any water at all, or at least providing boiling hot water or absolutely cold water; therefore it was thought necessary that we should say, "warm water". This Bill should compel those people to provide decent amenities, and I hope that, before the Bill leaves us in Committee we shall introduce an Amendment which will make that improvement.
I also noted with restrained approval the fact that factories with more than fifty employees must have a properly trained person in charge of the first aid box. My enthusiasm is restrained, because I think the numbers should be much smaller than fifty employees whereby a factory should be obliged to have a suitably trained person in charge of the first aid box. I would rather see the number reduced from fifty to twenty. I am wondering whether all the training facilities are available. Some months ago the Red Cross came to see me in my area for help in inducing factory owners to send workers to classes for first-aid train-
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ing. We were very enthusiastic, and I think that in my own factories we got the right people, and they were enthusiastic, too. But that was months ago, and they are not trained because the classes have not started. I understand that it may be because of lack of money. I am wondering, therefore, whether the Government propose to make a grant to voluntary organisations to enable them to provide these badly needed facilities. I am quite sure that if they do it will be the cheapest and best, and perhaps the only way in which this training can be provided.
It would be very much better if all factories, large and small, could have access to proper facilities, doctors, nurses and all the rest. This may be no longer an idle dream, because in this Bill, for the first time ever, the Government accept responsibility for promoting the health, welfare and safety of factory workers, and the Minister has taken power to set up laboratories which will not be used simply for research. This power could, in fact, if the Minister or his successor had the courage, be used to provide an occupational health service. If it does, Clause 25 will be the most important clause of this Bill; and I believe that this Bill will be more important than the 1937 Act. I am going to leave it to my noble friend Lord Taylor to enlarge on that aspect, because that is very much his life work.
Meanwhile, there are one or two omissions (as I regard them) from the Bill, and I should be grateful if the noble Earl would make a note of them. Perhaps he will comment on them when he winds up, or we can give notice to discuss them on Committee. They all arise in my mind from the fact that neither management nor workers in factories are sufficiently safety-conscious. It seems to me that daily familiarity with machines breeds contempt. I say, quite frankly, that employees are no better in this than employers, and in many cases show greater indifference to dangers than do those who employ them. It is a very sad thing, because it makes it much more difficult to get over the importance of this matter. Guards are removed for greater speed; and, unless the boss is about, the foreman looks the other way.
What we have to do is to build up a partnership of safety, in which everyone in the factory is a working partner. I believe that for this we need to provide,

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and have written into the Bill, an insistence that factories employing over a certain number of workers should have their own safety or accident prevention officer. He need not be a full-time officer, but he must be properly trained. If we do have properly trained safety officers, there will be not nearly so much need for the first-aid box.
I hope also that in order to assist this work the Government will greatly strengthen the provisions for consultation and research into safety. I am aware, of course, that there is a sub-committee of the National Joint Advisory Council which works on health and safety, but I do not think this is nearly enough: there is great need for more co-ordination in these matters. In the smaller factories, so long as safety officer is properly trained, he need not be a full-time officer, and the work need not take up the major part of his day; but he must have full authority and enjoy the full confidence of the men. Such an officer, properly trained, can indeed be a crusader for safety. I therefore hope the Government will be prepared to write this proviso into the Bill, and will be prepared to provide the necessary training, facilities. Would they also be prepared to consider adding to Government contracts, as an addendum to the "fair wages" clause, a clause whereby a contractor would be required not only to pay fair wages but also to employ a suitably trained accident prevention officer?
Another point is that in factories I regard full information as a prerequisite of confidence. At present, in the least satisfactory firms (always, of course, those with the higher incidence of accidents) the employees never see the reports of factory inspectors or fire officers. They are withheld from them, for obvious reasons. In my view they have a right to see these reports. They have a stake in them: and that stake may be their own lives. That, again, is a matter which I think we should put right in this Bill. Then I feel that there should be much more direct contact between the factory inspector and the workmen. When the factory inspector goes to the factory, I should like to see him going round for ten or fifteen minutes with the chap whose name is on the first-aid box. In that way the first-aid man can learn far more of the snags, the chief places where accidents are likely
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to occur; he can become far more enthusiastic and make his fellow workers more enthusiastic in the cause of health and safety. Therefore, within this Bill we should provide for publication of safety reports to employees. I hope that the Government will think about this matter, because it is one that we shall raise again.
To some noble Lords who perhaps have no great experience of factories some of these precautions may seem unnecessary. But from my experience in industry, and as a Member of another place, I have learned otherwise. I have seen too many lives completely and utterly broken by avoidable factory accidents; lives not only of the people immediately concerned, who are killed or injured for life, but also those of their families—their wives and children. In an average year, there are 150,000 factory accidents, some 16,000 of them serious, and nearly 500 fatal. That means, perhaps, as many as 50,000 personal tragedies. If anybody has sat on one side of a small table and taken down the miserable unhappy position that arises when there is a serious or fatal factory accident, he would not dismiss lightly the need for provisions of this kind; and if anybody has been in a factory where there has been a bad accident it is something he will never forget. So I do not apologise for emphasising this point, or perhaps taking a little time over it. I think it is our duty to ensure, by every means in our power, that these numbers are reduced to the lowest possible level.
What of those who, despite our best endeavours, are killed or seriously injured? I say that we should make such financial provision for them and their dependants as will avoid reduction in their living standards. No one will pretend that the scale of benefits from the Industrial Injuries Acts provides that sort of cover. I know that this is not a subject to be discussed on this Bill; it cannot be altered by this Bill. But after these benefits have been received, the only hope, if negligence can be proved, is a successful Common Law claim. This Bill will greatly extend the possibilities of Common Law claims, because it extends the responsibilities of employers. It creates more opportunities for employers to neglect their duty, and therefore must mean an extension of the possibilities of Common Law claims. But

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it does not mean that, when there has been a successful claim, the injured person or his widow is going to be paid the sum awarded by the courts.
If we read of an accident case in which a motor car or motor vehicle is involved and a sum is awarded in court, we know that it will be paid because the guilty party, if I may use that term, is insured. But we do not know that in the case of an award of this kind, under a Common Law claim, particularly; because it is the fact that the smaller firms—those where, unhappily, there is the greater likelihood of accidents—are the ones who would not be insured and who would, in fact, be bankrupted by a large claim of that kind. In such a case financial hardship would be added to crippling injury. We do therefore most earnestly ask the Government to consider whether to this Bill there cannot be added a clause which would compel all employers to take out insurance similar to the compulsory third-party insurance carried by car owners, with similar penalties, including imprisonment, so that a factory worker can be fully compensated in the event of accident.
My Lords, this Bill is a very fine piece of work. I believe that it can be still further improved. I hope that we shall all work together in that improvement, and that we shall send it as speedily as possible on its way to save our factory workers from injury or death.
4.20 p.m.
LORD TAYLOR: My Lords, it is always a pleasure to follow my noble friend Lord Stonham. I must say that I agree with everything that he has said. When the noble Lord, Lord McCorquodale of Newton, and my noble friend Lord Wilmot of Selmeston were speaking about the lack of publicity which the most detailed and interesting Committee stage in another place had received—scarcely a word was mentioned in the national Press—I could not help feeling that we had a little responsibility there, and that it is our job in this House and in another place to translate the prosaic words of the Parliamentary draftsman into what the Press looks for, which is the living human story. As I was listening to my noble friend Lord Stonham, I felt that he achieved that object.
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The noble Earl, Lord Dundee, when introducing this Bill, took us back to 1844, when Lord Ashley introduced his first great Factory Act. I must say that I was thinking of that and of the great Earl of Shaftesbury, when I was thinking about this Bill and how, eighty-four years ago, in your Lordships' House—within the lifetime of a few of your Lordships—he persuaded this House to pass a Bill which finally put an end to the use of little boys as chimney sweeps. Charles Kingsley's Water Babies had been published about twelve years before, and there was some legislation immediately following it. But it was abortive legislation. It did not work; and it took twelve years for Lord Shaftesbury to get that legislation through in a working form. That was the last of his great series of legislative measures which made this House and another place really the cradles of industrial health legislation in this country and, indeed, in the world.
We take the Factories Acts for granted, but we forget the background against which they operate. The typical British factory is a small place. There are something like 233,000 factories in this country, but 195,000 of them—that is. 83 per cent.—employ 25 workers or less; and 69 per cent. of all factories have 10 workers, or less. In those 195,000 factories, which are little factories, there are working just over 1 million people. or 15 per cent. of our factory population. They are not like the big factories with which so many of your Lordships are familiar. They are mainly engaged on sub-contracting jobs for larger firms; they are mostly "scruffy" places, but they are highly efficient and highly competitive—they have to be or they would not be successful. They would go bankrupt if they could not turn out their goods. The directors are working on the benches. There are no slackers in the little factories: the directors would not let there be any slackers. They would see them. They could not afford it. The office and paper work in these little factories is usually done by the directors or by their wives in the evenings. It is not done in the factory—they have not got an office—but at home. Physically and environmentally most of these factories are a very poor sort of place, but socially as well as economically they are extremely good places to work in.

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They are the happy little ships in British industry where everybody is "Bill", "Tom", "Dick", "Gert", "Daisy" and "Maud"; it is a family party in these little factories; and splendid places they are, though they are pretty messy!
Then we might extend the picture upwards, to include factories having up to 250 workers. I choose this figure for a special reason, because it is quite uneconomical—indeed, it is unnecessary—for a factory with 250 workers, or less, to employ a whole-time factory nurse. Such a nurse costs £650 a year in salary if she is a State-registered nurse, and she will use, in stocks and materials, stores and overheads, another £350, which is a fairly heavy overhead for a factory of that size. Moreover, such a factory will not produce nearly enough real nursing work to justify having a nurse. Indeed, if she is there she will be used for other jobs—she will be used for welfare or clerical work. If that happens, she ceases to retain her nursing skill; she ceases to be a good nurse when she is wanted simply because she has not a sufficient turnover of patients.
I have been speaking about factories having up to 250 workers. This group includes 98 per cent. of all our factories in the country, and in such factories there work 52 per cent. of all our workers, or 3·7 million people. At the other extreme there are about 800 factories each employing over 1,000 people. In these factories there work 1·8 million people, or 24 per cent. of our factory population. In these large factories the health needs of the workers are, on the whole, extremely well catered for by full-time nurses, by full-time and part-time medical officers paid for by the management. Such services have a very real value to the firms, not only in humanitarian terms, in terms of raising morale, but also in terms of actual production. For as your Lordships will be well aware, absence due to illness is about 100 times as important as absence due to industrial disputes.
The Government have been most reluctant to try to make an estimate of what ill-health costs British industry. I do not blame the Government, because it is an exceedingly difficult statistical calculation; and one has to be a little foolhardy to do it. But if your Lordships will look in this week's Lancet you will observe that I have made an attempt,
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and I found the figure to be about £780 million to £1,000 million per year lost as the result of ill-health and accident in industry. The greater part of this loss is not due to serious illness but is due to minor illness and minor accident. It is an extraordinary thing. By starting an efficient medical department in a large engineering firm two colleagues of mine found that they cut absence, in terms of days lost, as certified by doctors' certificates, by up to 50 per cent.
Your Lordships may wonder how that happened. I can give you an example, as instanced by a patient I saw yesterday. This man had run a drill through the top of his finger. An X-ray established that he had put the drill through his terminal phalanx, and unless he had received penicillin he would almost certainly have developed an infection of the bone, which might have lasted for many weeks. It might even have left him with an ineffective finger. Supposing there is no industrial medical department or industrial health service to look after such a person, he goes to his general practitioner the following morning, because it is only then that his finger has begun to throb. His G.P. prescribes some penicillin and gives it to him. By that time the man has lost half a day's work; and the same thing has to happen for seven days running. Supposing, however, there is a factory medical department, the man goes to his general practitioner and collects the penicillin; and the factory medical department will inject it for him, (or, in my case, the industrial health service), with the result that the total work-time lost is perhaps ten or fifteen minutes. So, from the national point of view, apart altogether from the human point of view, an efficient industrial health service is a paying proposition.
If your Lordships will permit me—you will see why in a moment—I will now turn to the problem of industrial dermatitis. Your Lordships are aware that this is not a notifiable industrial disease but is a prescribed industrial disease. There are certain reasons why it is not notifiable. The main reason is that if it were notifiable Her Majesty's inspectors would be presented with an impossible task in trying to follow up all the cases. There are so many cases that the inspectors could not cope with them. The disease is, however, prescribed

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for the purpose of industrial injuries benefit.
Because this is not a notifiable disease we do not know exactly how many cases of industrial dermatitis there are, but the best estimate I have been able to get is about 80 cases per 10,000 workers per annum. I have a colleague and friend, Dr. Leo Bourne, who is an industrial dermatological specialist. He has analysed 300 consecutive cases of industrial dermatitis seen at a London hospital. The important point was that 75 per cent. of them came from factories employing fewer than 250 people, and 50 per cent. came from factories in which there were neither doctors, nurses nor first-aiders—which means places employing less than 50 people. The smaller the factory, the greater the risk of dermatitis; and the answer can be given in three words—inadequate washing facilities.
As my noble friend Lord Stonham has said, Clause 17 of the Bill now makes a praiseworthy attempt to specify what are adequate washing facilities. But as he also said, it does not go quite far enough. Recently two other colleagues of mine, Mrs. Margot Jefferys and Dr. Christopher Wood, made a survey of 50 small factories in a typical old industrial borough. The results will be published quite soon in the British Journal of Industrial Medicine, with pictures which show what these factories are like. Very often they have only a small sink at the corner of the stairs, without a towel, with a tray for soap which has no soap in it; and just a cold water tap. If your Lordships will permit me I will quote what they said:
"Where washing facilities were concerned, only one small firm was without so much as a tap or a basin; the rest complied with the law in varying degrees. One employer, with an eye to costs, and only as a result of a court case, has ingeniously installed a wooden trough fed by overflow hot water from a dirty tank, for his workers to wash in. Two other firms in the same building allowed their workers to share this privilege."
The effect of this, like that of the bucket mentioned by the noble Lord, Lord Stonham, is to produce by the time the twelfth person has washed, a kind of witches' couldron of chemical muck, containing swarf, oil, detergent and all kinds of things; and these are the places where workers get industrial dermatitis. If only we cart clear up this one small point—and it means only a couple of words in the clause—this matter will be put right.
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My noble friend Lord Wilmot of Selmeston has said that the number of factory inspectors is inadequate. I agree. Think of nearly 200,000 little factories to be visited! It is a terrific task. And at each place someone has to be argued with, and each has to be revisited to see that what was required has been done. It is a huge task, and we have not "thought big" enough. I do hope that the Minister will look again to see what can be done. It may be that we should have more inspectors without university degrees but with practical factory experience. I do not propose to enlarge on that aspect.
There is the other side of the picture of washing facilities. What happens if proper facilities are installed? I can tell your Lordships, from personal experience. At Harlow we have about 8,000 industrial workers in 70 factories, and we have established an industrial health service and an industrial dermatitis clinic which functions once a month. At risk in our service we have a little under 7,000 workers, and we should expect to see 60 cases of industrial dermatitis every year. In fact, we average less than 20. Quite often we have only one case, or even none, for our monthly clinic. There is no magic about it. Our smallest factory has only four workers, but, like all the rest, it is a new factory and has hot and cold running water. Barrier creams, protective clothing, exhaust ventilation and the rest are important in preventing industrial dermatitis; but the greatest need of all is adequate washing facilities.
A NOBLE LORD: Soap and water.
LORD TAYLOR: My Lords, I turn to Clause 18, dealing with first-aid. It is an extraordinary fact that employers have to provide first-aid boxes in the smallest factories, but there is no need for them to provide trained first-aid workers unless they have more than 50 workers in the factory. That is to say, 90 per cent. of our factories do not have to have a first-aid worker, which means that nearly one-quarter of our workers, have no trained first-aid cover. When, nearly four years ago, we started the Harlow industrial health service, following the advice of Dr. Austin Eager, builder of the excellent Slough industrial health service, we started to pay great attention to the training of first-aiders, to the stocking and equipping of first-aid boxes;

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and especially at small factories we made job-analyses or work-studies of what first-aiders actually do. We found that their work was very different from conventional first-aid—that is, first-aid as practised on roads or race courses, or at the back of a theatre where one normally finds a St. John man or Red Cross lady. Instead of comparatively few major casualties, such as one sees on the road, plus a few faints, there is a constant stream of minor casualties; and the first-aider in industry may see five, ten, fifteen or twenty patients daily, all with minor cuts and abrasions, most of which will never be seen by anybody else. He is giving not first-aid but last aid, definitive treatment—full treatment—for minor injuries and ailments.
As a result, we have had to work out a new way of teaching industrial first-aid. I feel a little like the celebrities on "What's My Line?" who at this point work in a reference to their forthcoming production, because we are about to produce a book entitled First-Aid in the Factory which will soon be serialised in the Medical World and later published in book form. I hope that the book will do something to raise the standards of industrial first-aid practice and teaching. We have found that the best person to teach industrial first-aid is the trained industrial nursing sister, because she really knows what goes on in factories; whereas the average doctor does not know about that, because he sees only major cases. But it is necessary to escape completely from conventional first-aid teaching with its emphasis on elementary anatomy and physiology, the treatment of fractures and the rather unrealistic atmosphere of the first-aid competition. Instead, emphasis must be placed on the proper treatment of minor cuts, usually through a skin absolutely covered with cutting oil, on chemical splashes, foreign bodies in the eye, gassing with trichlorethylene; and, of course, the first-aider must know precisely what his limits are. With proper treatment by first-aiders, sepsis of minor injuries, estimated by my honourable friend Dr. Stross in another place at one in twenty, can become virtually a thing of the past, as has very nearly been done in Harlow.
I say all that because in Clause 18 the right honourable gentleman the Minister
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takes power to lay down prescribed conditions for first-aid training. His officers have, in fact, approved our course of training, and I am glad to say that the new first-aid box regulations which will soon be introduced (I have been privileged to see the Draft Regulations) are nearly, but not quite, what we have found necessary at Harlow. When the present Minister of Labour and National Service was Minister of Health he said very nice things in another place about a book I wrote, Good General Practice; and I should like to assure him we have tried to do just the same thing for industrial first aid.
I now turn to what can be, but is not necessarily, the most important clause in the whole Bill, Clause 25. As I understand it, it was put in almost as an afterthought to a Bill primarily concerned with fire precautions and fire prevention; and it was put in to regularise something that was already being done—namely, the collection and dissemination of information by the Minister's officers. But as the Bill was going through Committee I think that the Minister and the Members in another place came to realise that this simple clause can mark the beginning of a new era in industrial health.
Under this clause it becomes the statutory duty of the Minister to promote health, safety and welfare in factories by positively investigating the problems concerned. "Problems" is a very wide word indeed, and it is as wide as the Minister likes to make it. The biggest problem is how to meet the health needs of the 3¾ million people who work in 228,000 factories employing 250 workers or less. As I said earlier, it is quite uneconomical, and indeed unnecessary, for such factories to employ their own full-time nurse, let alone a part-time doctor. It would be a gross waste of our limited supply of nurses and doctors. The answer is the co-operative industrial health service, such as we have been privileged to create at Harlow, which was itself modelled on the Slough industrial health service.
Such services can be based on an industrial health centre or on a hospital, as is the experiment at the Central Middlesex Hospital. The service must be fully mobile. The doctors and nurses must be just like the district nurse, doing her round of homes. There must be regular visits by both doctors and nurses to

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all the firms covered. We find that we can cover 5,000 workers with two full-time and three part-time sisters (so it is not a very luxurious or expensive job), plus the local general practitioners in the area working on a sessional basis. That is to say, the only extra doctor we require for running the service is five-elevenths of myself.
A NOBLE LORD: That is quite a bit.
LORD TAYLOR: I am not sure about that. The cost of the service is between 30s. and £2 per employed worker per annum. So it costs a firm employing twenty-five people £50 a year to belong to such a service. In return, the firm gets a twenty-four hour accident cover in the factory itself and in the industrial health centre; X-rays; special clinics of all sorts; it has its first-aiders trained; it has first-aid boxes supplied and stocked and regularly inspected; its hazards investigated; and a visiting doctor who will help on any health problem which may arise, however small it may be.
Groups of small firms, however, cannot possibly start these things for themselves. The Slough and Harlow services came into being because of generous grants from the Nuffield Foundation and the Nuffield Provincial Hospitals Trust. We now need many more such pilot services. Up to now the Minister of Labour has been unable to give any practical financial help towards launching such schemes. With the very slighest modification of Clause 25 I think that should be made possible. The pattern which has been worked out for Slough, Harlow and Central Middlesex area may not have general applicability. There must be many more experimental schemes if we are to find the ideal ways—and there will not be one ideal; there will be many ideals—of covering these small factories.
The only way to do it is to try it; and the only way these small factories can start is to have a little help from somebody. The kind of help we had to start our service at Harlow was £18,000, spread over a period of five years in tapering grants, plus the capital cost of the building, for which we pay an economic rent. So far, all the Government help for these services has come through the Ministry of Health and Regional Hospital Boards. We want to see the Minister of Labour able to make his duty in respect to health in factories a reality.
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Finally, my Lords, under Clause 26 the Minister takes power to provide and maintain laboratories for investigating problems of health, safety, and welfare. This may mean absolutely nothing. It may mean no more than a couple of dingy rooms in his Ministry, which is what I believe there are at present; or it may mean the beginning of an industrial hygiene laboratory service, with regional laboratories and full field staffs to which those of us who practise industrial medicine can turn whenever we need a practical problem investigated. I hope that this is what the Minister really means. If he does, we shall have taken perhaps the biggest step forward since the Factories Act of 1937 was introduced.
I began this speech with a reference to the Seventh Earl of Shaftesbury. But he was not alone in his battle to improve the conditions of the life and health of the workers of this country. There have been, and there still are, thank goodness! a large number of progressive employers, starting off with Robert Owen, Josiah Wedgwood and all the rest. There have been doctors, both inside and outside Government service—men like Charles Thackrah, of Leeds, who founded British industrial medicine, and Sir Thomas Legge, of the Factory Inspectorate, and many more. There have been Members of another place, such as Sir Michael Sadler, William Cobbett, and William Wilberforce; and working men and women like John Pounds, the crippled cobbler of Portsmouth; Francis Place, the breeches-maker of Charing Cross, and Robert Applegarth, the joiner from Hull, and many more. In the improvement of the conditions of those who work in our factories, no one group or class or Party or profession can claim a monopoly of virtue. It is in such a spirit that this Bill was examined and greatly improved in another place; and I am sure it is in such a spirit that we shall all work with the Minister to ensure that the Bill leaves this House an even more useful instrument of well-doing than it is to-day.
4.47 p.m.
LORD SHACKLETON: My Lords, after hearing the speech of my noble friend Lord Taylor, I am appalled at how little I know of the subject for which to some extent I am responsible in my industry; and I must say that I think the speech which we have just heard is

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of such great value, both as an historical subject and as practical advice to managers, that I should hope that when the Minister comes to exercise his powers under the relevant clauses for the promotion of health and welfare in industry he may make use of the speech of my noble friend, because it contained much information of great practical value. The same, I think, applies to the remarks of my noble friend Lord Stonham.
However, it highlights to some extent the difficulty in which the factory manager and the administrator are placed. The Government expect the small and the big manager to know about a very great deal. In my organisation I am able, when Parliament passes an Act like this, to send it to the legal adviser. He or she then produces an account and we are able, between us, to digest what we need to know of the Act, put it into effect and circulate the requirements to managers lower down, who simply have not the time or the training to digest complicated information of this kind.
This is not an argument against this legislation. We are all, I hope, agreed that this is a valuable step forward; and the unanimity and, indeed, the enthusiasm with which this Bill has been treated, particularly by the Opposition, show how necessary and how desirable this type of development is. But it makes it absolutely essential that the factory inspectorate is adequate for the purpose; and here again I would emphasise that this is no reflection on the factory inspectors. But the factory manager, be his factory small or large, depends, and must depend increasingly in the future, on the factory inspector to put him right; not as somebody who comes round very occasionally, or perhaps never, but as somebody who is available, as these matters become more complicated, to give that sort of helpful advice which is the true rôle of the inspector—not one who is looking primarily for breaches of the law, but one who is assisting in the carrying out, in the most convenient and useful way, of the wishes of Parliament.
My noble friend Lord Stonham referred to the fact that this Bill is likely—or it is presumed that it will be likely—to increase the number of occasions on which litigation may take place. Even if it does not actually increase that litigation, it will increase the number of oppor-
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tunities for bringing actions against employers; and my noble friend suggested that, to meet this, there ought to be some form of compulsory insurance. It is true that some of these clauses greatly increase the liability of the employer. Clause 5 extends the requirement under the old Act that there should be a safe means of access; and this is now extended to every place where work takes place. I am no expert in these matters, but this seems to me to imply that it will be easier and more promising for somebody who suffers an injury and sues his employer for a breach of statutory duty to bring such litigation.
I do not know whether there is any possibility of extending this method into the field of industry, or whether it falls within a possible extension of the factory inspectorate, but I understand that in other countries it is not necessarily left to process of law to decide liability in the first instance. It would seem to me that here there might be a case for an extension of the factory inspectorate's responsibility to establishing at least some prima facie responsibility or liability. I have recently had to deal with a case which was a very doubtful one. It was one of a possible industrial disease which might or might not have arisen from our negligence in a factory. But in this matter we, as employers, were not really free agents: we were in the hands of our insurers—and this is the difficulty in which a good employer may find himself. In the same way as we are all advised in the event of being involved in a motor car accident in no circumstances to admit liability, however much we may be to blame—and it is always the first question your insurance company asks you—the employer may well be inclined (and, even if reluctant, he may be forced) to put the responsibility for deciding whether or not to resist a claim for damages on to the insurer; and he, in effect, becomes the arbitrator of safety in these matters.
In this particular case, because the individual was not a member of a trade union, we were placed in the ridiculous position of having to hire a lawyer to advise him in his negotiations with our lawyers, who acted partly on behalf of the insurers. Of course, we did not take it so far as to get it into court, which would have been absurd; but, in effect, that provision was made which might

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have been given by a trade union if he had been a member of one—and I will not go into that question now. But the matter is not as simple as it might be; and the leaving of decisions in this matter to the process of law does not always produce the best and the most just solution, and nobody necessarily expects that it should. I think that in the future some further steps might be taken towards establishing liability by investigation on the part of Government inspectors. However, that is a long way ahead.
I should like now to refer briefly to the subject which my noble friend Lord Taylor discussed—namely, the industrial health service. I do not think it can be over-emphasised how valuable it is to an employer, and how valuable it is to the country, to have such a service. It is not only the accidents which can be treated; it is the everyday ailments which otherwise would remain untreated—the most rdiculous little things about which people are reluctant to go to their doctors. They are reluctant to take the time to go down to the surgery, and, indeed, might feel slightly ashamed because they would be afraid of wasting the doctor's time. But if there is a trained industrial sister who is available, and who can be regularly visited, those minor ailments can be treated, and a real saving to the country in terms of a saving of time off from work and a saving to the overworked health service is thereby obtained.
I urge that this is one of the next steps which some subsequent Government should introduce and do its best to develop, because it is striking how many accidents of a minor nature may occur which can be dealt with effectively without calling in a doctor. It so happens that there are many firms in this country which, for one reason or another, do not have such a service. I should have thought that it was possible to introduce it, if not on a whole-time basis for small firms, at least on a part-time basis. That is one way in which this assistance can be given. There can then be regular visits at certain stated times—preferably not just one day a week, because to some extent it loses its value, although it will still be valuable; but visits at regular times two or three days a week. This is how I believe it would be possible to extend it to these smaller firms to which, on Lord Taylor's argument, it would not
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be economic or right to extend it in the full sense.
I have only one other point that I wish to make, and that is to repeat again my regret that the admirable developments foreshadowed in this Bill are not to be extended to, or that comparable extensions are not to be made in, the field of offices. It would not be suitable once again to argue on the Gower Report, but I would draw your Lordships' attention once more to that large section of industry, both in offices and outside, where suitable provisions do not apply and where there is great loss to health through the absence not only of health regulations but of expert service. The damage that is done to the health of office workers—and I have seen this myself—by merely being put to sit at unsuitable tables, where they cannot put their knees under the table, or where they cannot pull the drawers out, is something which we have yet failed to take into account. Therefore, in welcoming this Bill and in giving to it as much an enthusiastic response as my noble friends here and my honourable friends in another place have given, I hope that the Government will not forget the possibility of doing something in a field which is not covered by the Bill.
4.59 p.m.
LORD AMULREE: My Lords, I rise to say a few words of welcome to this Bill, which I consider to be one of the most important Bills which have been before your Lordships for quite a long time. As one might expect, the clause in which I am particularly interested is Clause 25, because that shows an enormous advance in what we must agree is entirely the right kind of direction. The whole picture of industrial disease is still far too large, although one can say that in the past a good deal of work has been done on the prevention of some of the major industrial diseases. One thinks of the extremely fine work done by Dr. Henry of the Home Office, when he carried out that long investigation into the cancer of the mule spinners of Lancashire.
A large amount of work is being done to stop the use of materials causing cancer of the skin among workers, and also in regard to respiratory diseases. But, as I have said, this work touches only the fringe of the position, and I was pleased to hear the noble Lord, Lord Taylor,

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speak about what had been done by medical services in the factories. I have come across many cases myself and I agree with every word he said about the enormous amount of time which is saved if people working in a factory can go to see some qualified person here, instead of having to go to see their medical practitioner in the evening or take time off to go to see him.
Another point was interested to see is the provision under Clause 18 for first-aid instructors in every factory employing more than fifty workers. The noble Lord, Lord Taylor, has already said a great deal about this subject and now I know many things about it I did not know before; therefore what I am going to say does not follow entirely what the noble Lord said. If factories cannot get trained industrial first-aiders, it would be far better to have people who work in the factory take a course in ordinary first aid. They would be able to deal with accidents quickly and in many cases prevent permanent injury to workers. After all, if factories are to have first-aid boxes in the corner, they want people trained to know what to do with these boxes.
On my third point, again I agree with what has been said, but I should like to emphasise how important it is that workers should be able to wash. There must be running water, with proper washbasins and proper soap. I do not know whether this needs to come into the Bill—it is really a Committee point—but I should like to see the term "running water" used rather than "hot or cold or warm water". If the Bill does not insist on running water, there would be no improvement at all in many factories. I think that washing can do more to preserve the health of the working people in factories than any other one thing.
There is the curious point on Clause 19, which was mentioned by the noble Lord, Lord McCorquodale of Newton, about young people not having to lift heavy weights. I certainly do not see why heavy weights should be lifted by people at all, whether young or old. If a job is going to be an unnatural strain, then people should not be asked to do it and some kind of mechanical method should be evolved. Finally, I would join in what has been said in tribute to the factory inspectors. I have seen the excellent work that they do. Whether there are
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enough of them I am not sure, but I feel that they have a big job to do under this Bill, when it becomes an Act, and if we really want to get the work done in the factories we may need to have more inspectors.
5.4 p.m.
LORD CHORLEY: My Lords, we have listened to three speeches from these Benches from noble Lords who speak from great practical knowledge of the subject with which this Bill deals—the type of speech that is always welcome in your Lordships' House. I myself cannot speak from that point of view, and speak only because I was forcibly reminded, particularly by what my noble friend Lord Taylor said about the importance of medical arrangements in the factory, of what I saw when I visited the U.S.S.R. two or three years ago. I had the opportunity of seeing the arrangements in several Russian factories and workshops. I should not like to say that they were typical of all factories over the whole of that great country, because no doubt it is the best of them that are shown to visitors, but it was obvious that they carry arrangements for first aid and medical attendance much further than I have ever seen them carried in this country. And during the war years, when I was working on civil defence in the North West Region, I had an opportunity of seeing the medical arrangements in some of our largest factories and workshops.
In Leningrad, I recall particularly a great tool shop where some 10,000 work-people are employed, where they had a whole-time medical staff of 17 in a large clinic actually at the disposal of the work-people in that factory, together with a visiting staff of specialists who come on one day or another during the week to look at particular diseases and difficult injuries resulting from accidents which had been reported to them. I have never seen anything like that in this country. Obviously the arrangements were first-class. It was the duty of something like half the medical staff to spend their day actually in the workshop, going round watching the men and women at the bench, seeing whether the tasks they were given were within their power: seeing whether they looked fit to do the job, and whether arrangements at the bench were adequate from the health point of view. They had the right—and they told me

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that the right was used—to withdraw a man or woman from the bench when they were not satisfied that the arrangements were satisfactory. That seemed to me the sort of position for which the noble Lord, Lord Taylor, was arguing this afternoon.
LORD TAYLOR: My Lords, I was not arguing for anything of the sort. I should be filled with horror at the idea of having 17 medical officers for 10,000 workers. I think that that is gross extravagance. They would all be sitting about eating their heads off and wasting public money.
LORD CHORLEY: My Lords, obviously they were not. Without knowing a great deal about it—I am not certain that medical qualifications in the U.S.S.R. would be as high as in this country—I think that a proportion of the staff, largely women, were more in the nature of the nursing sisters to whom the noble Lord referred. At any rate, as I went round these different factories and workshops in the U.S.S.R., it was evident that a great deal of attention is paid to this work. We in this country were the pioneers in factory legislation, but to some extent we have lagged behind the health arrangements in some other countries. I hope that this Bill is going to do something to bring us back into the vanguard.
5.10 p.m.
LORD FERRIER: My Lords, I have been struck by the speech of the noble Lord, Lord Chorley, and by the intervention of the noble Lord, Lord Taylor, because throughout this debate I have been impressed by the fact that locality has a great deal to do with the emphasis that management has to place on providing the medical and first-aid facilities necessary for the proper protection of the workers. A factory right out in the blue, such as I have had to do with in India, requires everything up to an X-ray service and hospital of its own, whereas in other factories in busy cities my experience is that, except for the simplest first-aid treatment or ordinary routine preventive measures, the local ambulance and hospital service can be on the spot in a remarkably short time. That does not in any way absolve the management from exercising the greatest possible care, but it does emphasise the fact that conditions vary with the location of work, the type of work done and the number of employees who are on the job.
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While I am on my feet, I may say that I have been impressed by the suggestion from noble Lords opposite—it had not struck me—that this highly important matter to the industrial life of our country has not received the publicity that it might have done. There is one factor in regard to the health of workers, accident prevention and fire prevention and fighting which occurs to me as one of real interest and one in which all of us can take a part. I refer to the interest in these matters which can be evinced by chairmen and members of boards. It may be mischievous, but often in a well-run establishment there is little to criticise when one goes round, unless one has a very sharp eye or the undertaking is badly run. One fact sticks in my mind, however; in my experience, here and in other parts of the world, it is the most highly efficient works managers and engineers who seem to develop "blind spots". I do not know whether other noble Lords have found that to be so. Sometimes the independent bird's-eye view of the director or chairman can light on things which the executives have overlooked, even if it is merely a question of pushing at the bar of an emergency exit. I have had a good deal of fun in finding emergency exits that do not open when pushed. I remember one senior officer I used to go round with in a railway undertaking in the East who, if he could not find anything to grumble about, would say: "Let off a fire extinguisher". And it was remarkable how often it did not operate. In one case, where there was a large oil storage establishment, the watchman did not even know how to operate the fire extinguisher.
My point is that a general feeling of enthusiasm should be engendered throughout the factory—always, of course, without any sense of fussiness, or encouraging anxiety among the workpeople, or anything like that—towards a straightforward facing of the risks that are run and the duty of all concerned, from the top to the bottom, to be alert at all times to see that those risks are reduced to the absolute minimum. Why do I say that? Because, quite apart from the human angle and the question of welfare of the men and women, their families and dependants, as has been mentioned, there is the economic angle: that it simply does not pay to have people off work. If that is the only way to appeal to a

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board of directors—and it is not—that appeal can be made. It is simply poor economy to-day to permit any risk to be run; and if the slightest injury is incurred, it is poor economy not to have it treated at once. Right the way back in the beginning of the designing of a plant (I am thinking particularly of fire protection) thought applied to the design of the plant and the location of cloak-rooms may affect the ability of tile staff to get away in the event of fire. I do urge upon the authorities, so far as they can—they cannot do it in terms of an Act of Parliament, of course—to encourage the enthusiasm of all, from top to bottom, to pay attention to risks and to the fact that ready-at-hand methods of combating them are available.
5.16 p.m.
THE EARL OF DUNDEE: My Lords, I am grateful to your Lordships for the unanimous support which you have given to this Bill and I am grateful for the personal tributes which have been paid by noble friends opposite to the work of my right honourable friend the Minister of Labour who has put so much hard work into the preparation of this Bill. I am glad so many noble Lords have stressed the importance of the Bill, representing it as a measure of the first class. I did not want in my opening remarks to make exaggerated claims on its behalf, but I am delighted to find that the great advances and additions which the Bill will effect in our factory legislation are so well appreciated by your Lordships. I would also thank noble Lords for the vast range of valuable and interesting suggestions which have been made in the debate. All of these will be carefully considered by the Government, and it may well be that some of them will be further discussed in the subsequent stages of the Bill. I was especially interested in what the noble Lord, Lord Taylor, told us about the co-operative industrial health service, particularly in the new town of Harlow with which he is so intimately concerned, which seems to provide a helpful solution to the problem of making available trained assistants to the smaller type of factory.
Apart from the great number of detailed points which have arisen in the debate in connection with the administration of safety regulations in factories, I
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think the burden of your Lordships' speeches has been largely directed to the point of publicity and the dissemination of more information on the subject. Some of your Lordships complained that little attention had been paid to this Bill by the Press and that we should take what steps we can to rectify that omission. The noble Lord, Lord Wilmot of Selmeston, asked whether the Minister would send out pamphlets or printed booklets to all factories, telling them more about it; and the noble Lord, Lord Stonham, said that the great trouble about making a success of factory legislation really was that neither managers nor workers are really safety conscious. That is only too likely to be true, and it is a fault shared by us all when we are perhaps driving a motor car, walking under a ladder or even skiing or playing football. Safety consciousness is not something which ordinary human beings have to a sufficient extent in their make-up.
I think that all these matters are covered by Clause 25 of this Bill, in which it is provided not only that the Minister shall promote health, safety and welfare in factories, but also that he shall collect and disseminate information by investigating, or assisting in the investigation of, problems of health, safety and welfare. He has the duty under this clause of disseminating information, and your Lordships will see that the expenses of doing so are to be defrayed out of monies provided by Parliament.
LORD STONHAM: My Lords, may I interrupt the noble Earl? The collection and dissemination of information referred to in Clause 25 is not the point I was on. We want the dissemination of information of the essential facts of this Bill, so that people should know their new responsibilities and duties.
THE EARL OF DUNDEE: I quite agree, but I do not see why the facts relating to this Bill should not be disseminated by the Minister under Clause 25, and I do not see why he should not defray the expenses of doing so, as provided in that clause, out of monies provided by Parliament.
Most of your Lordships' points will be taken note of and possibly dealt with later. May I deal with two small points raised by the noble Lord, Lord Wilmot of Selmeston? He asked about the training

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of first-aid assistants under Clause 18. They would have to be qualified and have a certificate from either St. John's Ambulance Association, St. Andrews Ambulance Association or the British Red Cross. Of course, there are penalties in the Bill for the use of untrained people. The other question the noble Lord asked was whether the provisions of Clause 10 applied to old buildings as well as to new factories. The answer is, Yes, they do.
There is one matter upon which I do not think any of your Lordships have touched and, indeed, I do not think I touched on it myself. Although the main emphasis in this Bill is not on punishing people for contravening regulations but rather on promoting co-operation between all classes engaged in industry, it is, nevertheless, necessary to have legal penalties in reserve in order to deal with those who deliberately refuse to carry out the law or deliberately try to avoid it. That is as much in the interests of the great majority of factory owners who try to carry out the law as it is of everybody else. Your Lordships will probably have seen that in Clause 28 of this Bill, and in the Second Schedule, great increases are made in the penalties provided by the principal Act of 1937. In most cases they are doubled or trebled; but in the case of penalties concerning Section 34 of the Act—that is, concerning offences on measures for escaping from fire—they are quadrupled: they are increased from £50 to £200. The penalty for continuing offences is raised from £5 to £20 for each day, and similarly the penalty for obstructing an inspector is quadrupled from £5 to £20.
I will conclude by once more thanking your Lordships most sincerely for your support and for the valuable suggestions you have made, which will all be considered, and by expressing the hope that your Lordships' support of this Bill will be continued throughout the remaining stages.
On Question, Bill read 2a; and committed to a Committee of the Whole House.

NATIONAL ASSISTANCE (AMENDMENT) BILL
House in Committee (according to Order): Bill reported without amendment.

AGRICULTURAL IMPROVEMENT GRANTS BILL
5.27 p.m.
Order of the Day for the Second Reading read.
LORD AMHERST OF HACKNEY: My Lords, in moving the Second Reading, I am afraid I cannot claim any great credit to myself for this useful Bill. It was introduced in another place by Mr. Marcus Kimball, the Member for Gainsborough; it was supported on all sides of the House, and it also has the support outside of the National Farmers' Unions. As your Lordships know, grants of 50 per cent. are paid under the Hill Farming and Livestock Rearing Acts towards comprehensive and I emphasise that word—schemes of improvement for hill and upland farms, to make it possible for such farms to yield a reasonable return to the farmer and the landowner, and to help the farmer to farm well and to obtain a reasonable living. Farms which are too small to provide a reasonable living do not come under the Bill.
The primary object of the Acts is to encourage a sound system of farming based on the maximum production of store sheep and cattle at minimum cost. The grants are not intended, and are not available, to help farmers in the production of milk or fat stock or in the growing of cash crops. The improvements which may be included in the schemes for the rehabilitation of livestock rearing land include the erection and improvement of farm buildings and farmhouses, the making and improvement of roads, fencing and a number of other items which your Lordships will know are included in the First Schedule of the Hill Farming Act, 1946. At present, these Acts provide for the grant to be calculated against the actual vouched cost of the work to be carried out.
The object of this Bill is to provide statutory authority for the Agricultural Ministers with the consent of the Treasury to make regulations to permit—and I emphasise this—at the farmer's option the payment of grant calculated on standard costs; that is, on a fixed stated cost for

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a particular item of work instead of from actual costs. The Bill also gives authority to apply standard costs to grants under certain other legislation which your Lordships will find mentioned in Clauses 3 and 4 of the Bill. This would enable regulations to be made for standard costs to apply to grants for drainage and water supply and measures against pests. I must point out that it may be possible to apply standard costs in these cases, but this is still being examined. This Bill will, however, allow for their introduction in those cases where it is found suitable, without any further legislation.
This system of standard costs was first introduced just over two years ago in connection with the payment of silo subsidies, and it worked very satisfactorily for the limited range of work covered by that scheme. Subsequently standard costs for a wide range of work were introduced under the Farm Improvements Scheme in April, 1958. They have already proved an outstanding success and at present one third of the proposals now being approved under the scheme, and one fifth by value, are under this arrangement of standard costs. One must remember that standard costs have been in for only a comparatively short time, but £3½ million worth of improvements have been approved under that scheme to be carried through by standard costs. As your Lordships know, the Farm Improvements Schemes are a very large thing; in fact over £30 million worth of work has been approved. I think it shows, certainly in that case, that standard costs are popular and are working well.
Under the two Acts, the Hill Farming and the Livestock Rearing Acts, work to the value of more than £40 million has been approved, but less than half of this has been completed. This slow progress is thought to be partly due to the fact that in remote hill farming areas contractors are scarce and costs tend to be higher than average. The introduction of standard costs should enable farmers to save money by doing the work themselves, and this should speed up the progress of these schemes, which I am sure we all want to see.
There are several advantages of the standard cost system. It enables the applicant, first of all—and I think all your Lordships would agree with this—to dispense with a great deal of paper work,
1108
all the documents and receipts and everything he has to provide to support his application for grant under the present system. It also indirectly enables a farmer to get grants for the work that he does himself. He cannot charge the actual hours that he spends on a job and it does not enable him to claim if he is being paid on actual costs; that scheme does not enable him to get any payment for his own work. But if the job is done under the standard costs method then it does not matter who does it. Whether he does it himself or gets somebody else to do it, it comes to the same thing; he gets paid for the job. It also should speed up the payment of grant, as there will be much less paper work to do in checking all the receipts and vouchers, though it will impose a certain amount of extra work on the staff of the Agricultural Land Service who will be called upon to go in many cases to inspect these schemes and see that they have been carried out.
These standard costs are calculated on rock-bottom prices, on the cost of labour and materials alone. The prices of materials are based on new materials of the minimum standards laid down, and labour costs are based either on the agricultural workers' minimum wage plus normal allowances for holiday pay et cetera, or on the minimum trade rate for casual labour, plus again any slight additions for insurance and things of that sort. Standard costs make no allowance for overheads or profits which naturally would be implied if the scheme was carried out by a contractor, though they can allow for a certain amount of professional advice.
If your Lordships wish to see how they work in the examples under the Farm Improvements Scheme, I would refer you to the Order made under the scheme in April last year. In the Schedule there it gives in great detail exactly what can be done and the exact cost of it. For example, if you are going to put up fencing, the cost for three line wires, per yard, is 2s. 6d.; and for woven wire fence, cattle, per yard, it is 3s. 9d. It goes into great detail of the costs. Another example is a Dutch barn, for which the cost per square foot is 6s. if you are not having professional advice, and 6s. 2d. if you are. As you will see, it goes into great detail, and I think that in approving this scheme the Ministers have gone into

1109
great detail to work out the costs. In the case of schemes which are already approved under the Hill Farming and Livestock Rearing Acts, this will allow the Minister where necessary, where part of the scheme has been started, and where there are items which have not already been started, to pay standard costs. In those cases where the final actual starting date has not been approved the applicant will be able to opt whether he gets paid on the actual cost or on the standard costs. Of course, he has to opt before he starts the job and he cannot change his mind halfway through.
There is just one other item I should like to mention to your Lordships, although it does not really concern us so much in this House. It is not expected that this Bill will involve much, if any, addition to the expenditure under these Acts, because while the simpler method of these standard costs may encourage more people to carry out schemes, against that the actual schemes will cost less and therefore the subsidy will be less, and in that way there will be a saving on the cost of the schemes to set against any possible increase in the number of schemes. My Lords, I have tried to tell you what this Bill is all about. I think it is a useful Bill and I beg to move that it be read a second time.
Moved, that the Bill be now read 2a—(Lord Amherst of Hackney.)
5.40 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE): My Lords, it may be convenient if I intervene for a moment at this stage, not only to thank the noble Lord, Lord Amherst of Hackney, for the able, full and clear way in which he has introduced this measure, but to indicate that this Bill has the support of the Government and to wish it well in its passage through your Lordships' House. It has been supported by all sides of the industry. It is enabling legislation which, as your Lordships know, enables regulations to be made under the Negative Resolution procedure. The noble Lord has stated that it does not introduce a new principle because the principle of standard costs was first introduced by the Silo Subsidy Act, 1956, and was found so applicable to that kind of work that it was carried on in the 1957 Act under
1110
which the Farm Improvements Schemes are carried out. Now something like one-third of all the applications we are getting under the Farm Improvements Schemes relate to standard costs procedure.
The noble Lord has described how the primary object of this Bill is to deal with the Livestock Rearing Acts and Hill Farming Acts, and that we have taken the opportunity, in Clause 1 (4), to include these other Acts, so that if at any time it should be found desirable and feasible to introduce this standard costs procedure for water supplies, drainage and certain pest destruction work, legislation will be available in order that regulations can be introduced, and no new legislation will then be required.
I have nothing further to add. I commend this short and important Bill for the farming industry to your Lordships, and hope that it may have a fair wind through your Lordships' House.
5.42 p.m.
LORD WISE: My Lords, from this side of the House I want to say at once that with what the noble Lord. Lord Amherst of Hackney, and the Minister have said, we do not disagree in any shape or form; and it is my pleasure therefore to say a few words concerning the practical application of the Bill. I had intended to ask several questions of the noble Lord, Lord Amherst of Hackney, on various points, but he has ably covered many of those points, and for that reason my remarks will be quite brief.
It seems to me that the Bill simplifies, both for the Ministry and the farmer, the working out of the various costs of the improvements, and if it helps in that direction I believe that the Bill is well worth while. It is obvious, I think, that in the long run there may be a saving to the Treasury by adopting the standard method rather than that of actual cost; but if the farmer is satisfied that it is a simple method upon which to base his figures, then nobody else need worry about it. That is all to the good.
There is, however, one point upon which I should like to ask a question. I notice that in Statutory Order No. 627 of 1958, to which the noble Lord, Lord Amherst of Hackney, referred, certain standard costs are set out. I conclude that the new standard of costs which is to come into operation by reason of this

1111
particular Bill, will be based on current prices. These prices are now a year old—they were set out in April, 1958. I conclude that the new standard of prices will be in accordance with any rise in labour or material costs which have occurred since; and that if, in the future, the same point arises year by year, the Government will amend their Order accordingly, so that the farmer does not have to be satisfied with certain costs which at that time may not bear a true relation to the actual costs which he has incurred. I therefore commend the Bill to your Lordships, and hope that the farming industry will gain by its later application to the particular Acts which it seeks to improve.
5.46 p.m.
VISCOUNT STANSGATE: My Lords, it appears from what we have heard that this is an excellent Bill. If a Bill is praised by everybody, then it is a very good Bill, and I therefore assure the members of the Government that it has full support from this side of the House. But it is not so much in its agricultural aspect, on which I am quite incompetent to speak, as in its Parliamentary aspect that I take an interest.
We have had a debate this afternoon and a most interesting excursion into history. When I saw on the Order Paper for to-day that there were two certified Bills, I remembered that it is exactly fifty years since your Lordships rejected the Lloyd George Budget; and I thought that possibly the introduction of two certified Bills on the one day was in some sense a celebration in which I should be most interested to join. Another reason why I mention the point is because it forms a new link with my noble friend the Leader of the Liberal Party, because his father and I took part, as Whips, in the conduct of the Parliament Act which, your Lordships may remember, ensued after your Lordships had triumphantly rejected the Budget. That is a general observation, and perhaps goes rather beyond the purposes of the standard costs and different things which the noble Lord, Lord Amherst of Hackney, has explained in such an interesting way. But this Bill in fact sets an entirely new precedent. The Lloyd George Budget controversy was an enormous affair: it was the House of Lords fighting the House of Commons;
1112
and in the end the Bill for the Budget was passed, but only by the bringing into operation of the Parliament Act. The Parliament Act set out quite clearly what were the conditions in which a Bill could receive a Certificate from the Speaker.
As your Lordships will remember, Section 1 (2) defined what is a Money Bill in this particular and concrete sense. If a Bill is presented to him containing certain elements, and only certain elements, the Speaker acts in an administrative capacity and gives it a Certificate; and the Certificate is preserved by the promoters of the Bill—it is never mentioned except in the Minutes of our own proceedings. Hitherto such Bills have always been introduced under the auspices of the Government, the obvious reason being that a Bill of this kind would require a Money Resolution, and a Money Resolution can be introduced in the House of Commons only by the Government. This is the novelty, my Lords. This is not a Government Bill at all. It was introduced by a distinguished Member of the other House, Mr. Kimball, who I think took the seat that was vacated by the noble Viscount, Lord Crookshank, when he came here. I will give your Lordships the dates and the record of this Bill.
The Agricultural Improvement Grants Bill had its Second Reading in another place on March 6 and there was no debate. The Money Resolution was introduced by Mr. Godber, Parliamentary Secretary, on March 11; and again not a word was said. The Resolution was reported on March 12; and no debate. At the Committee stage, on March 20, again there was no debate. The Bill was reported for Third Reading on April 10, when there was a discussion but no Division. Now the Bill comes here, and there is nothing we can do about it. It comes with the Certificate from Mr. Speaker that it is a Money Bill. No private Member of the House of Commons has ever before achieved the distinction of asking the Clerk of the Commons to come to the Bar and hand to the Clerk of the Parliaments a Money Bill introduced by a private Member—not a Government Bill at all—certified by the Speaker.
What can your Lordships do? When the noble and learned Viscount on the Woolsack says, "As many as are of that

1113
opinion will say Content", it does not matter whether your Lordships say "Content" or "Not-Content". If your Lordships say, "Content" the Bill goes through. If you say, "Not-Content", when you go to the next Royal Commission you will hear, perhaps to your surprise, that the Bill is being passed; but there is no mention of this House. Therefore, I say that things have come to the stage when your Lordships will really have to consider whether it is consistent with the dignity of this House that you should go on having to answer six questions which are absolutely irrelevant to the making of the Statute; and whether it would not be better (although I know this is going far beyond the terms of this debate) to consider at some time whether we should have a class of Statute which is a House of Commons Statute, having the full force of law, which can be discussed but cannot be amended, and so save your Lordships the mockery of being made into puppets, just to say, "Content, Content" knowing that your word is of no avail.
Years ago Mr. Asquith was challenged about the Parliament Act. The noble Lord, Lord Rea, was in his cradle at that time but his father and I were there. Mr. Asquith was asked, "What are you going to do?" and he said, "Wait and see". Well, we have waited, and now we see.
5.54 p.m.
LORD SALTOUN: My Lords, I should like to support the noble Viscount, Lord Stansgate, in his protest, and I can give a short reason why I do so. Here is a Private Bill coming from another place and the noble Viscount has told your Lordships how much discussion it has received. This is a Bill which diminishes grants to be made to certain persons by Public General Statute, which is the law of the land—although perhaps it gives other grants to other persons. Had that Bill been introduced into another place by Her Majesty's Government, it would certainly have received some discussion at every stage and been properly considered. I believe that the people who are going to receive a diminished grant by reason of this Bill, if it passes, have some reason to complain of the manner in which it was passed, exactly as the noble Viscount says.
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I will tell the noble Viscount what I will do and what still remains open to us, because I do not agree with his final conclusions: if he will put his name down on a properly-worded protest after this House has risen, I will join my name to his.
5.56 p.m.
THE LORD CHANCELLOR: My Lords, I hope that before my noble friend, Lord Saltoun, inevitably commits himself to that conclusion he will just weigh and consider some words of mine, because I am grateful to the noble Viscount, Lord Stansgate—and that is not a mere phrase—for raising an important point in regard to the procedure of Parliament as a whole; and while I always appreciate (as he knows) his rapier thrusts, I know he is an avant-Parliamentarian of profound loyalty and will be interested in a practical point which has arisen with regard to the working of both Houses.
It was implicit in what the noble Viscount said to your Lordships that he was concerned, even if it was only in memory, with the first problem: that there should be any abrogation of a most important Parliamentary rule that any charge on the public funds should be created only with the approval, and at the request, of the Government of the day. I need not go into the necessities of that, but if the noble Viscount will forgive me for reminding him I will quote from Standing Orders in another place to make the point clear. Standing Order 78 says:
"This House will receive no petition for any sum relating to public service or proceed upon any Motion for a grant or charge upon the public revenue, whether payable out of the Consolidated Fund or out of money to be provided by Parliament, unless recommended from the Crown."
The noble Viscount drew the attention of the House to the fact that that was done by one of the Agricultural Ministers in another place, my honourable friend, Mr. Godber. That is, of course, the governing principle and that immediately leads on to the question of what course of action should be taken with regard to Private Members' Bills. My noble friend, Lord Saltoun, made a slip of words, of course, but he is entirely familiar with the distinction between Public Bills introduced by a private Member, such as this Bill, and Private Bills. I mention that only

1115
because I wanted to get the point perfectly clear. Now with regard to Private Bills, again I will merely read from the Standing Orders—
VISCOUNT STANSGATE: My Lords, is the noble and learned Viscount speaking now of Private Members' Bills?
THE LORD CHANCELLOR: Yes, my Lords, I was drawing the distinction, and with regard to Private Members' Bills may I again quote, merely historically and of course with no criticism at all. This is not my phrase but the phrase of a Select Committee in another place when I was a Member in the Session, 1945–46. The Select Committee on Procedure said these words in drawing attention to the double danger:
"either that Private Members' time is used for the discussion of Motions and Bills which have the support of the Government or the Opposition and so becomes an addition to their share of time or, on the other hand, that it may be wasted on the discussion of eccentric Bills or Motions."
As the noble Viscount will realise, I should never have dared to use the word "eccentric". It is from the Report of that Select Committee.
VISCOUNT STANSGATE: My Lords, will the noble and learned Viscount say who was the Chairman of that Committee?
THE LORD CHANCELLOR: I will not go into any names. After that, the Labour Administration reintroduced time for Private Members' Bills, and I think it is fair to describe the way in which the problem arose by saying that there were a number of Private Members' Bills, very useful Bills which dealt with the functions of local authorities and gave local authorities the power to spend money. Those Bills were generally approved and agreed by everyone. They were supported by the local authorities' associations and were a very useful form of legislation. As noble Lords will appreciate, that, in connection with, in those days, the equalisation grant—what is to-day block grant—necessitated adjustments which would come within the words of altering the charge; because they altered the incidence of public money.
Perhaps I may give your Lordships some examples—I will not detain your Lordships longer than I promised. Under the Labour Government there was the New Streets Bill, which was a very useful
1116
measure and introduced by a private Member. I may also take examples under the Conservative Administration. There was the Local Authorities (Expenses) Bill, which was desired by a large number of local authorities; there was (if I may give a Scottish example to my noble friend Lord Saltoun) the Local Government (Omnibus Shelters and Queue Barriers) (Scotland) Bill. If I may take one in which I myself was very interested, because it implemented one of the recommendations of the Royal Commission on Marriage and Divorce, there was the Matrimonial Proceedings (Children) Bill, which, if my memory is right, was introduced by a Labour Member in another place and which, again, received universal support. Then only the other day your Lordships were considering the Eisteddfod Bill, and your Lordships will remember the debate initiated by my noble friend Lord Tenby.
What I want your Lordships to appreciate is the position of the Government. These Bills had two qualities, one of which is irrelevant and the other, I think, very relevant. The first quality is that they were wanted by Parliament as a whole. That, I say, is irrelevant; because if the Government, whatever their political complexion, were to abdicate from their control over initiating finance simply because Parliament wanted it, that would be wrong. It is a matter which the Government must consider in their own discretion; and if they are wrong, they must make it a matter of confidence. But the other quality of these Bills was this: the financial part of them was secondary; the primary purpose was to carry out these useful functions. Therefore it is, I think, a difficult point, which we need to consider as Parliamentarians: whether any Government should make a hard and fast rule of never providing a financial Resolution.
I would suggest for the consideration of your Lordships—because this is a Parliamentary matter—that the test should be as follows. Where the primary purpose is financial, then the Government might say, as their working rule, "We will not give a financial Resolution"; but where the primary purpose is to do some useful non-financial work, and there is an incidental change, say from the equalisation grant to the block grant, then the Government should consider sympathetically giving a financial Resolution.
LORD SALTOUN: My Lords—
THE LORD CHANCELLOR: I wonder whether my noble friend would allow me to continue, because this is a somewhat intricate point. I promise I will give way, of course. My Lords, if you are in the situation which I have predicated, and you are considering whether you are going to give a financial Resolution, one of the difficulties is that it may be only during the debate on Second Reading that you realise that a financial Resolution is necessary. If I may come from the general to the particular, my noble friend Lord Amherst of Hackney said, quite frankly, that he could not tell your Lordships whether this Bill would cause an extra charge or would, in fact, save money. He gave us the two balancing factors; and according to how these factors work out, it may do one or the other.
I do not think I am being indiscreet in saving that when this Bill first came to my notice I thought it would not requite a financial. Resolution, because I thaught that it would not affect the charge on the public funds. When we examined it more closely we found that it might affect; and that, of course, is enough for the purpose. Of course, what this Bill does, as my noble friend Lord Amherst of Hackney has explained, and as the noble Viscount, Lord Stansgate, will appreciate, is to make a variation in the incidence of the charge, and therefore it comes within the words of Section 1 (2) of the Parliament Act, to which the noble Viscount was good enough to refer us; and of course I looked at his references and I followed them.
In the case of this Bill not only was it necessary to have a financial Resolution, but the Speaker gave his Certificate. I am, of course, only reasoning as to why he gave his Certificate—that is a matter for him—but I am telling your Lordships the way it would appear to me if I were in his position. I say it with all respect to the Speaker, and I am not trespassing on his ground. But when one comes back to the realities of the Bill, one realises that the financial side is a negligible factor. The one thing that everyone is agreed upon is that it cannot make much difference one way or the other. The Bill may even save money.
The primary purpose of the movers of the Bill has always been to improve the machinery of the grants in order to
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help the farmers and to encourage the farmers in getting the advantage. In other words, the primary purpose of this Bill is the political purpose of making the work, and especially the paper work, of the farmers easier. I am sorry that I have held up my noble friend.
LORD SALTOUN: My Lords, may I ask the noble and learned Viscount whether, in the circumstances he has depicted for us so very clearly, it would not be fair to have an ordinary uncertified Bill with privilege clauses? That seems to me very much better.
THE LORD CHANCELLOR: My Lords, the difficulty is that it is not for me. It would be most improper for me to do more than speculate, most respectfully, as to the reasons why the Speaker gave his Certificate. I cannot do more than that. The Speaker has certified this as a Money Bill coming within the provisions of the Parliament Act. Whether it could have been done the other way, I should like to think over.
May I, therefore, put this suggestion to your Lordships as the working rule: that your Lordships should take the view (and I put it simply as a working rule) that if the primary purpose of a Bill is financial, your Lordships will, as a working rule, deprecate the Government's giving it the facilities of a financial Resolution; but where the primary purpose is different (as I said, where it is a practical purpose—for example, that of helping the work of local authorities), your Lordships will, again as a working rule, not frown on it. But your Lordships are concerned with the procedure having gone so far as to produce a Money Bill, and you would like the Government (in this case it happens to be our Government, but it is a matter for any Government) to consider that matter further. I think that that is the way to approach it.
I was not in the House of Commons for the length of time of the noble Viscount, Lord Stansgate, but I was there for nearly twenty years, and I think that it is most important that Private Members' Bills should deal with practical subjects which benefit the daily round of their constituents. The noble Viscount's memory will go back, like mine, to the attack Mr. Hilaire Belloc and Mr. Chesterton made on the position of the private Member in the Party system. It is now just over

1119
ten years since Private Members' time was reinstituted by the Labour Government, and I think that Parliament can look with pride at the Bills which have been brought up as Private Members' Bills. In my own field of law reform, and the implementing of Royal Commissions such as the Morton Commission, I am intensely grateful to private Members of all Parties for the work that they have done in that way. I hope, therefore, that this House will refrain from discouraging the continuance of that activity.
My Lords, I have only one other point which I would ask the noble Viscount to consider, and that is with regard to his eloquent peroration when he came back to the attack. if he would look at Section 1 (1) of the Parliament Act, he will see that it reads as follows:
"If a Money Bill, having been passed by the House of Commons, and sent up to the House of Lords at least one month before the end of the session, is not passed by the House of Lords without amendment within one month after it is so sent up to that House, the Bill shall,"—
and I ask the noble Viscount to look at the next words—
"unless the House of Commons direct to the contrary, be presented to His Majesty and become an Act of Parliament on the Royal Assent being signified, notwithstanding that the House of Lords have not consented to the Bill."
There is always the opportunity for the House of Commons to direct to the contrary; and, of course, if they were—and why should they not be?—enamoured with any suggestions that we put forward in this House, it would be perfectly open for them to direct to the contrary, and, by an adjustment of their procedure, to include them in the Bill.
So, if I may go back to the powerful metaphors of the day of which the noble Viscount was speaking, we are not, in the liberal phrase "ploughing the sands"; we are watering a garden which might conceivably produce some fruit. I do not put it any higher than that, but I hope the noble Viscount will feel that the last desire that I have to-day is to make any debating reply to him. I have tried to put as it seems to me, as a Parliamentarian rather than as a Minister, a serious problem of Parliament, and I hope that he will take what I have said in that way.
VISCOUNT STANSGATE: Will your Lordships allow me to thank the noble and learned Viscount the Lord Chancellor in
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twenty words? I have been fifty-two years in Parliament, and I never thought I should hear a Conservative Lord Chancellor on the Woolsack make such a complete defence of the indefeasible Money rights of the House of Commons.
LORD SALTOUN: As the noble Viscount has said a few words, perhaps I may be permitted to say one further word. I think the Parliament Act contains provisions against "tacking" and I should have thought that the noble and learned Viscount's defence was a perfect description of "tacking".
LORD AMHERST OF HACKNEY: My Lords, I am very grateful to the House for the way in which it has received this Bill, and also to the noble and learned Viscount the Lord Chancellor for his exposition of the Parliament Act, on which I do not intend to follow him. The noble Lord, Lord Wise, who has had to leave, asked me one question and that was whether the standard cost would be based on current costs. I can assure him that it is intended that it will be based on current costs. If there is any great variation in costs, then it can be varied; but that is not likely to happen very frequently, because each time a new order has to be laid before Parliament.
I should like to take up one point that the noble Lord, Lord Saltoun, made. I do not intend to follow him into the question of the Parliament Act, but he made the point that this Bill was taking something away from farmers that they were otherwise going to get. I think he must have misunderstood the Bill because that is not the case. Under the Bill the farmer can, as now, get his grant on the actual cost of work. He provides the vouchers, and he gets paid the grant, as now. He has the opportunity, if he so wishes, of saying that he will take the standard cost. It is entirely up to him which way he gets paid. If he takes the standard cost, a small farmer who does a large amount of the work himself has the added advantage that he can include his work. He gets paid so much for the job, but it does not matter whether he does it himself or whether he pays somebody else to do it. Therefore, indirectly, he gets paid for his labour. If he is acting under the present scheme, he cannot charge for his own work.
LORD SALTOUN: I am much obliged to the noble Lord for his correction.
LORD AMHERST OF HACKNEY: I think that those were the only questions that I was asked. I hope, therefore, that your Lordships will give this Bill, which I think will be a useful Bill, a Second Reacting.
On Question, Bill read 2a: Committee negatived.

SMALL LOTTERIES AND GAMING ACT, 1956 (AMENDMENT) BILL
Order of the Day for the Second Reading read.
6.18 p.m.
LORD CHORLEY: My Lords, this is a small Bill to amend the Small Lotteries and Gaming Act, 1956. It went through all stages in another place without any sort of opposition. The 1956 Act of which I was in charge while it passed through your Lordships' House, had as its objectives, as your Lordships will remember, the legalisation of small lotteries held for charitable purposes and for certain other similar purposes. On the whole, it received a favourable reception from your Lordships, although I should perhaps mention that there was a certain amount of opposition, notably from the most reverend Primate the Lord Archbishop of Canterbury, who spoke against it on the ground, among others, that, in his view, the provisions in the Bill for providing control on the part of local authorities were not sufficiently stringent. Indeed, we did something in Committee towards satisfying that criticism.
I mention this particular point because although, on the whole, the Act has, I think, worked very well and has been very well received, and although numerous deserving charities have benefited substantially as a result of its working, there has been a certain amount of criticism of the same kind as that put forward by the most reverend Primate the Lord Archbishop of Canterbury on that occasion. There has been discussion in the newspapers and it has been suggested that the provisions for ensuring that all money which is collected reaches the charity are not sufficiently strong. I am net in a position to say whether these criticisms are justified or not. It may be that an inquiry into that aspect of the matter ought to be initiated at some time.
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This Bill is not really concerned with that matter. It is concerned simply with putting right—or perhaps over-riding, is a more accurate way of putting it—a decision in the High Court, which found itself constrained on the construction of this Act and of the Licensing Act, 1953, in the case of Smith v. Wyles, to hold that the conducting of a small lottery on licensed premises is an infraction of the Licensing Act, 1953. In that case, the Deerleap Bowling Club, which carries on its activities in Birmingham and has its headquarters in a public house, and which is registered under the Small Lotteries Act, being minded to conduct a small lottery under the Act, not unnaturally proceeded to sell tickets at the bar of the public house under the eyes of the landlord. The organisers and the landlord were distinctly surprised when they found themselves before the magistrates shortly afterwards, charged with an infraction of Section 141 of the Licensing Act, which makes it an offence to suffer gaming to be carried on in licensed premises. The magistrates convicted them and that conviction was upheld by the Queen's Bench Division of the High Court.
It is obvious that one of the most likely places for conducting a small lottery and selling tickets is in the bar of a public house, and the promoters of this Bill had not the remotest idea that this would be regarded as an infraction of the Licensing Act. They thought, and I am sure that Parliament thought, that small lotteries were being legalised wherever they were held, and the decision of the High Court was received with consternation, as it obviously removed much of the usefulness of the Act and meant, in effect, a return to the sort of cat-and-mouse methods which were used in some parts of the country for the suppression of small lotteries and raffles and excitements of that kind before this Act was put on the Statute Book.
This Statute has been operating now for three years and I am informed that many lotteries have been held in public houses, that thousands of tickets have been sold in the bars of public houses and that there has been no sort of complaint that this has led to any scandals or difficulties. This particular prosecution came as a complete surprise. I hope that your Lordships will agree with another place that the situation ought to be

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regularised. The Bill which is before your Lordships this afternoon regularises it, and therefore I have pleasure in moving that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Chorley.)
LORD CHESHAM: My Lords, I think that the noble Lord, Lord Chorley, has explained his Bill with admirable clarity, and I have no comment upon anything that he has said. I rise only to tell your Lordships that the Government's position in regard to the Bill is one of neutrality, although if there can be said to be degrees of neutrality, it is neutrality of a benevolent kind.
On Question, Bill read 2a.; and committed to a Committee of the Whole House.

RATING AND VALUATION BILL
6.25 p.m.
Order of the Day for the Second Reading read.
THE EARL OF DUNDEE: My Lords, I am afraid that this is the kind of Bill which cannot possibly give any sort of satisfaction to anybody, least of all to the Minister who has the duty of moving the Second Reading. Not only does it deal with a subject which is the reverse of entertaining, but its purpose is purely negative. Its main provision is to postpone from April 1, 1961, to April 1, 1963, the date on which the new valuation lists for rating will take effect.
This postponement may be vexatious to many people but the reasons for it are simple. The basis for valuing houses for the valuation lists at present in force is laid down in the 1953 Valuation For Rating Act. Under that Act the 1956 quinquennial valuation had to be based on 1939 values, but for the next quinquennial valuation in 1961, the basis had to be the current rental values. That is to be the basis for the next valuation lists. For houses, gross value has first to be ascertained, and this is legally defined in the Rating and Valuation Act. 1925, as
"the rent at which the hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant's rating and taxes and if the landlord undertook to bear the cost of the repairs and insurance and the other expenses, if any,
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necessary to maintain the hereditament in a state to command that rent."
What has to be established is the current rent at which houses might be expected to let year after year. There is no abstract way of establishing this rental value. It cannot be left to the intuition of even experienced valuers and has to be based on the rent which a willing tenant would be prepared to pay to a willing landlord if a house were available for letting.
The Government are advised by the Valuation Office that in order to get a valuation which can be undertaken with confidence that the results would be defensible, evidence of free market rents must exist for something like 10 per cent. of the houses in this country—that is, practical evidence from the actual letting of such houses. We are advised by the Valuation Office that for 1961 practical evidence will be available for not more than about 2 per cent. of houses, and that that is far too small a proportion on which to found a revaluation which could be supported before the valuation courts and the Lands Tribunal. On the other hand, we have been advised that for 1963, two years later, it is expected that about 10 per cent. of the evidence will be available, which is regarded as the necessary minimum. The Government have therefore concluded that there is no alternative to postponement.
The decision to postpone was reached with reluctance, but the Government are satisfied that this is a matter on which they must be guided by the expert advice given them. A revaluation which could be shown not to be supported by adequate evidence would seriously undermine public confidence in the whole rating system. I think that that is fairly generally agreed. What is not quite so generally agreed is subsection (3) of Clause 1 of the Bill, which prevents a local authority from making proposals for an increase in the value of a property in certain circumstances during this interim period. Under the existing law—that is, under the Local Government Act, 1948—a "person aggrieved" may move to alter a valuation list in certain particulars. Thus, not only may proposals in respect of a property be made by the owner or occupier seeking a reduction, but the owner or occupier of other property in the area may, for example, move for an increase in value.

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It is mostly the local authorities who use this power to secure increases in assessments of property which they neither own nor occupy. Experience has shown that some authorities cannot be relied on not to move for wholesale revaluation of commercial properties during the currency of a list.
Having reached the conclusion that a general revaluation must wait until 1963, the Government thought it desirable that the door should not be left open for attempts to be made to secure partial revaluations. Therefore, subsection (3) of Clause 1 makes it impossible for anyone other than the valuation officer, or the owner or occupier concerned, to make any proposal for altering the current valuation list.
The local authority associations, speaking generally, do not seem to dissent from the Government's view that during the period of postponement local action to bring the assessments of some properties or classes of property up to full current rental value, while the assessments of other properties or classes continued unaltered, would produce inequitable results as between the two groups of ratepayers. They are, however, strongly opposed to the temporary suspension of their right to make proposals to correct what seem to them to be errors in the lists, and the discussions with the associations which we have had were directed at finding a simple Amendment which would save the error-correcting powers.
Unhappily, no solution has presented itself; the problem needs long and careful review and probably much re-writing of the statutory provisions. But after consultation with the Chancellor of the Exchequer, the Minister has given an assurance in another place that valuation officers will be instructed to give full weight to local authorities' representations and to be prepared, in instances where there is a reasonable case for the local authority's views, to make proposals enabling the authority to have the issue determined, if necessary, on appeal. In the Minister's view, the legitimate interests of third parties will be safeguarded by this arrangement. For the long term, some other solution is obviously desirable, and the general problem of the proper basis for changes in assessment between general revaluations is to be included in a general review of the whole field of rating and valuation
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which will be undertaken over the course of the next two or three years by a Working Party of local government and departmental representatives, who can take outside advice as necessary.
The only other main provision in the Bill is in Clause 2. This postpones the effect of certain notices served under subsection (3) of Section 8 of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. This Section 8 was added in 1955 for this reason: before the 1956 revaluation charities had often been sympathetically under-assessed by local authorities, and anxiety had been expressed that charities and kindred bodies might suffer large and sudden increases in assessments on their revaluation at full rental values in 1956. To prevent this the new Section 8 froze the amount of rates chargeable to bodies of this kind for 1956–57 at the amount charged for the previous year; that is, the last year for which rates were levied upon values in the old valuation lists. If this resulted in a reduction of rates for 1956–57, the proportion of the reduction was to be determined and the same proportionate relief was to be allowed in each subsequent year unless the rating authority had served three clear years' notice to reduce or discontinue it.
In introducing that provision the then Minister of Housing and Local Government explained how it was intended to work. Referring to the notice to be given, he said that there would be a warning period before anything happened which might severely prejudice an organisation, so that in any event there would be plenty of time for Parliament to consider the position and decide whether to legislate. Now, in fact, because of the way in which the provision has worked, it is clear that the time for consideration provided by the section is inadequate, and the sole purpose of Clause 2 is to provide additional time. I beg to move.
Moved. That the Bill be now read 2a.—(The Earl of Dundee.)
6.25 p.m.
LORD LATHAM: My Lords, I am sure the House is indebted to the noble Earl, Lord Dundee, for the clear way in which he has explained this Bill. The subject matter of the Bill is not a very interesting one, especially following the debates we have had this afternoon on other and more attractive matters. The noble Earl

1127
said that this was a negative Bill; and indeed it is. It is a footling Bill. It arises, of course, on the circumstance that the Minister made a grave miscalculation and misjudgment when he assumed that within a short time after the operation of the Rent Act, 1957, and the Rent Act, 1958—which, of course, was designed to protect in some way tenants from the inequities which flowed from the Act of 1957—we should have a free market in rent for residential premises. Those of us who opposed the Rent Acts took the view, and stated it, that no such free market would emerge. The Minister of Housing and Local Government has been bound to admit that that is the case, because that is the only basis upon which this Bill is promoted. The valuation officials have advised the Minister, so he said in another place, that, as the noble Earl has said, having regard to the nature of the lettings of the 13½ million dwellings which have to be revalued, no more than 2 per cent. of them will provide evidence of what is a free market in rents. The valuation officers have said that no less than 10 per cent. is required to provide this evidence, and accordingly the valuation is to be adjourned for two years.
Of the 13½ million dwellings which have to be revalued, 5 million are owner-occupied and, therefore, are of no assistance whatever in establishing what is a free market in rent and what is the basis of such free market, if and when it exists. There are 3 million which are publicly owned, mostly by local authorities; most of them are subsidised and they accordingly bring no evidence as to the operation of a free market. Then there are the houses which are let furnished on special terms which give no assistance in determining the basis in conditions of a free market. As regards the balance of the normal tenancies, most of these are controlled; and as the premises become vacant, they are decontrolled. There is nothing to indicate that by 1963, let alone by 1961, which is the date when the valuation must commence if it is to be operative for 1963, the position will be very much changed from what it is now.
As we submitted when discussing the Rent Acts, there cannot be a free market in rents so long as there is a large demand for housing accommodation which is
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unsatisfied. The local authorities still have long lists of applicants and, of course, the authorities' ability to build houses is much restricted from what it was. Moreover, there is the circumstance that at any moment there may be further de-control. It is the policy of the present Government to de-control gradually. The Prime Minister, when he was Minister of Housing and Local Government, said at Llandudno that it was the policy of the Government to remove controls altogether.
In that connection, the proposal to defer the operation of the revaluation has received a rather bad Press. The Times of February 20 said:
"But, if decontrolled tenanted houses are too few to establish what real rent levels would now be if the whole market were now free, why should it be supposed that they will be numerous enough shortly after the next Election?"
The Economist was even more caustic in regard to the matter. The Economist of February 21 said:
"The Government's decision to postpone from 1961 to 1963 the next valuation of property for rating carries a definite whiff of political cowardice."
It goes on:
"The Minister has now stated that this year is too soon after the decontrol of several hundred thousand houses under the Rent Act to get a fair picture of current house rents. One trouble about this argument is that it might be extended indefinitely. More than 4 million working-class houses still remain controlled."
As I have said, there is nothing to justify the assumption that there will be the minimum of 10 per cent. of lettings under normal conditions available by 1961, when the valuation must commence. The postponement of this revaluation has some rather serious consequences for local government. For instance, it continues for an additional two years the 20 per cent. de-rating which has been conferred upon commercial properties, resulting in a reduction of some £44 million in rateable value. It also extends for a further period of two years the relief, whole or partial, which is given to charities. That is a considerable loss of rate income, estimated, according to the figures given by the Minister in another place, at no less than £2,600,000 a year covering some 53,600 properties.
The rating system at present is a maze; indeed one might almost say it is a jungle.

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You have the prosperous industry de-rated 50 per cent.; you have equally prosperous commerce de-rated 20 per cent.; agriculture, not impoverished, de-rated 100 per cent. and charities variously relieved, with the result that the residential ratepayer—and this is an important factor—who pays his rates out of taxed income, whereas the non-residential commercial and industrial ratepayer pays his rates out of untaxed income, is providing (or was in 1957) some 52 per cent. of the total rate income of the country. So while we shall not oppose this Bill if the Minister is advised by the officials that it is impossible to do a fair and proper revaluation by 1961—clearly the matter must be dealt with in the light of that advice—we have no illusions as to the reason for this postponement, nor are we entirely uninfluenced by the circumstances that before 1963 there may be some additional measure of de-control.
The noble Earl mentioned the provisions of Clause 1 (3), which was the subject, he said, of considerable consideration and debate in another place. We take the view that this power should not be taken away from the local rating authorities; that if, as may be the case, the rent of new hereditaments is higher than the rent for older hereditaments, there is no reason at all why there should not be a difference in the valuation. The result of this proposal will be to freeze valuations independent of the rent which a willing tenant is prepared to pay to a willing landlord; and accordingly at the proper time we shall put down Amendments to adjust the situation.
The noble Earl was good enough to mention that, following conversations, it had been decided that the valuation officer should be instructed in regard to this matter. That is a co-operative and helpful suggestion, but really it does not meet the point of view of the local authority
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organisations who resent very much that this power to make a proposal should be removed and that they should be prevented from in any way changing the valuation which applies to similar hereditaments, even in cases where it is proper that it should be changed. In the view of the local authorities it ought not to be made to apply to new hereditaments coming into rating. With those remarks, as I have said, we shall not oppose the Second Reading of the Bill.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

SEA FISHERIES (COMPENSATION) (SCOTLAND) BILL
6.50 p.m.
Read 3a (according to Order) and passed.

SOLICITORS (AMENDMENT) BILL [H.L.]
Read 3a (according to Order) and passed, and sent to the Commons.

EISTEDDFOD BILL
Order of the Day for Third Reading read.
VISCOUNT BRENTFORD: My Lords, on behalf of my noble friend Lord Tenby, I beg to move that this Bill be now read a third time. In so doing, may I express on his behalf and at his request his regret that he has been called away from your Lordships' House?
Moved, that the Bill be now read 3a.—(Viscount Brentford.)
On Question, Bill read 3a and passed.
House adjourned at eight minutes before seven o'clock.