Sitting of 15 June 1959

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN

  IMMUNITIES AND PRIVILEGES
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that the International Wheat Council (Immunities and Privileges) Order, 1959, be made in the form of the draft laid before Parliament.
  I will comply with your request.

PRIVATE BUSINESS

  HUMBER BRIDGE BILL (By Order)
  Queen's Consent, on behalf of the Crown, signified.
  Bill read the Third time and passed.

ORAL ANSWERS TO QUESTIONS
  AGRICULTURE, FISHERIES AND FOOD

    International Veterinary Congress, Madrid
    Sir J. Duncanasked the Minister of Agriculture, Fisheries and Food who represented the British Government at
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    the recent International Veterinary Congress in Madrid; what were the main subjects discussed; and what were the main conclusions.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): The official o British delegation consisted of seven eminent figures in the veterinary sphere, led by my Ministry's Chief Veterinary Officer, Mr. J. N. Ritchie. I am sending my hon. Friend a list of the 43 main papers discussed at the Congress, together with a copy of the resolutions.
    Sir J. Duncan: Now that we are mastering tuberculosis in cattle in this country, can my hon. Friend say what diseases were discussed at Madrid? Were, in fact, Johne's disease, staggers, fowl pest and so on discussed, and what progress has been made in tackling these diseases?
    Mr. Godber: A very comprehensive list of diseases was discussed. I would ask my hon. Friend to study the list which I am sending him, and if there are any particular ones on which he wishes further information, I shall be happy to try to supply it.

    Farmland, Wigan (Goose Green)
    Mr. Fitchasked the Minister of Agriculture, Fisheries and Food whether he is aware that land returned to farmers at Goose Green, Wigan, after opencast operations, is still unfit for use; and what further action he proposes to take in this matter.
    Mr. Godber: My right hon. Friend recognises the difficult problems which

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    the farmers of this land have to face. As he has explained in correspondence with the hon. Member, the recovery of the normal structure of the soil is a gradual process and there are no quick remedies. I am asking my advisory officers to continue to give their special attention to the problems of the farmers of this land.
    Mr. Fitch: Is the Parliamentary Secretary aware that this land could be aptly described as being in a general mess and that the drainage system has proved itself to be completely inadequate, whether due to structural faults or bad planning, I do not know? Most of the land is not yielding any produce; a little of it is. When is the Parliamentary Secretary going to take some action to sort out this matter?
    Mr. Godber: I realise that there are very definite difficulties here, and, of course, the last wet season has aggravated them. At the same time, it is not an easy matter to solve. As I say, my local officials are keeping in the closest touch with the farmers concerned, but, as I tried to indicate in my reply, this will take some time to overcome.
    Mr. T. Williams: In the meantime, as the local farmers' expenditure on cultivation and so forth shows no return, are they being adequately compensated?
    Mr. Godber: They did, of course, re-receive compensation, but I cannot add anything to the reply given on 19th February last dealing with that point.
    Mr. Fitch: On a point of order. In view of the unsatisfactory nature of the reply, I shall, with your permission, Mr. Speaker, seek leave to raise the matter on the Adjournment.

    River Severn (Nuclear Power Stations)
    Mr. Corfieldasked the Minister of Agriculture, Fisheries and Food what steps he is taking to study the probable effects of the proposed nuclear power stations on the banks of the lower reaches of the River Severn on existing fishing rights; and, in particular, whether he is satisfied that it is possible adequately to screen the cold water intake of these power stations so as to prevent the entry and destruction of immature migratory fish.
    Mr. Godber: My Department is investigating the problems associated with both intake and discharge of cooling water from nuclear power stations. Special studies of the proposed stations on the Severn estuary will be undertaken when detailed plans are available. It is expected that it will be possible adequately to screen the cold water intake to prevent the entry and destruction of fish.

    Agriculture and Food Attaché, Washington
    Sir A. Hurdasked the Minister of Agriculture, Fisheries and Food when it is proposed to fill the post of Agriculture and Food Attaché at Washington, which has been vacant since October last.
    Mr. Godber: The general duties of the attaché post are being performed by the staff of Her Majesty's Embassy in Washington for a trial period, but the technical agricultural work continues to be carried out by the assistant attaché who is an experienced officer of the National Agricultural Advisory Service.
    Sir A. Hurd: Do my hon. Friend and his Department recognise that the previous Agriculturé and Food Attaches and their assistants have performed a most useful function as a full-time job and it would be a great pity if this direct link between our agricultural interests and those of the United States were allowed to fall out?
    Mr. Godber: I agree that we must not allow the contact to fall out, but, as I have indicated, the assistant attaché, who deals with the technical side, is fully capable and the present arrangement is for a trial period.
    Mr. Snow: Did such a problem exist before the war? If not, what are the particular circumstances which necessitate such an arrangement in the post-war period?
    Mr. Godber: I should have to ask for notice as to the pre-war position.

    Foot-and-Mouth Disease (South American Meat)
    Sir A. Hurdasked the Minister of Agriculture, Fisheries and Food how many outbreaks of foot-and-mouth disease in the past year have been attributed to infection brought by chilled

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    and frozen meat from South America; and what has been the cost of compensation for the stock slaughtered.
    Mr. Godber: In the period June, 1958, to May, 1959, inclusive, there have been eight primary outbreaks of foot-and-mouth disease of which five have been attributed to the introduction of infection with meat from South America. In the same period the cost of compensation for stock slaughtered in the out-breaks both primary and secondary, that have been attributed to infection from imported meat amounted to about £34,500.
    Sir A. Hurdasked the Minister of Agriculture, Fisheries and Food if he has now considered the report of the mission sent by the Food and Agriculture Organisation to South America last year to study the foot-and-mouth disease situation there and its influence on the spread of disease in Europe through imports of meat; and what action is being taken on the mission's recommendations.
    Mr. Godber: This comprehensive report has been endorsed by the European Commission for the Control of Foot-and-Mouth Disease and will be further considered at the next conference of F.A.O. I hope that if these recommendations and any further suggestions made by the F.A.O. are adopted, the situation may improve. Her Majesty's Government are already in consultation with the Governments in South America, in particular, to see how the resources of the Pan-American Foot-and-Mouth Disease Centre can be increased as suggested in the report.
    Sir A. Hurd: In the light of the findings of this mission and the not altogether satisfactory conclusions reached about sanitary and hygienic arrangements in dealing with cattle coming here in the form of chilled meat, will the Department keep a close watch on this matter through veterinary surgeons in Buenos Aires, particularly to ensure that cattle in movement are in clean trucks and full vaccination takes place in the Argentine?
    Mr. Godber: We are well aware of the points raised by my hon. Friend and will bear them in mind.
    Mr. Champion: Are we assisting provision of supplies of vaccine to areas where there is a shortage?
    Mr. Godber: We are willing to consider suggestions about that at any time.

    Fruit, Vegetable and Salad Prices
    Miss Burtonasked the Minister of Agriculture, Fisheries and Food, (1) whether he is aware that growers and greengrocers, in addition to the shopping public, are disturbed at the fluctuating prices of vegetables and salad immediately prior to each holiday weekend; and if he will convene a conference under the auspices of his Department, at which growers, wholesalers, and greengrocers, could answer questions from representative shoppers;
    (2) whether he will consider interim measures to prevent the shopping public facing undue price rises in salad, fruit and vegetables prior to August Bank Holiday weekend; and
    (3) what measures he proposes for the prevention of price increases at weekends in so far as salad, fruit and vegetables are concerned.
    Mr. Godber: With permission, I will answer this Question and Questions Nos. 12 and 13 together.
    Miss Burton: On a point of order, Mr. Speaker. I do not wish to be troublesome, but although Questions Nos. 11 and 12 are connected, No. 13 is not. May I have that Question answered separately?
    Mr. Speaker: As I have said on other occasions, we do not yet know the Answer; it may cover them all, but if not, the hon. Lady will no doubt ask a supplementary question.
    Mr. Godber: The following is the reply:
    As the hon. Member will know from her own experience, demand for salads fluctuates very widely dependent on weather and other considerations. These wide fluctuations in demand are paralleled with equally wide and unpredictable variations in supply. And because these products are mainly highly perishable, it is impossible to even out the fluctuations.

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    In general, I could not agree that the rise in prices when demand is suddenly increased is excessive. A recent independent committee looked into the facts of this question and found that the costs of distribution were not excessive, and the profits of distributors compared with those in other trades were not high. The conference suggested by the hon. Lady is just the sort of thing that a horticultural marketing council—if set up—might well be able to consider.
    As regards August Bank Holiday, prices at that time are bound to be determined by the level of supply and demand then operating. It is impossible to estimate at this stage what these levels are likely to be.
    Miss Burton: It would have been simpler if the hon. Gentleman had said "No, Sir" to the three Questions. Is he aware that an answer like that will lose the Conservative Party any vote at any women's conference of any party anywhere? May I also ask, in regard to the increases at Whitsuntide, if he knows that the growers said the public were charged far too much in the shops and that they did not get the profits? Does he know that greengrocers have admitted that we were charged too much but they put the blame on wholesalers, and the wholesalers had nothing at all to say?
    Mr. Godber: In the first place, if I had thought that the answer "No, Sir" would have satisfied the hon. Lady, I should have been very happy to have given it. On the question of votes for the Conservative Party, I am grateful for the hon. Lady's solicitude. On matters concerned in the Questions, while I know the points she makes, they are exactly the points which have been covered in the report to which I referred, and to which I referred only last week in answer to her when I said that this matter was exhaustively discussed but there was no evidence brought forward to justify the charges of excessive profits in any of the intermediary stages of distribution.
    Mr. Willey: Why did the hon. Gentleman say "if" a horticultural marketing council is set up? Surely the Minister and everyone else has agreed that it should be set up? What we want to know is when it is to be set up. We have been put off and put off, but we want something done.
    Mr. Godber: I could not accept that hon. Members have been put off. My right hon. Friend appointed the advisory council to go into this matter fully. It has recommended setting up a marketing council and I did not wish to anticipate any decision in the form of my reply. That is the reason for my reply taking the form it did. I assure the hon. Member that I am as anxious as he is to see it set up.
    Mr. Willey: Can the hon. Gentleman tell us when the marketing council is to be set up?
    Mr. Godber: No, I could not add to what my right hon. Friend has already said in a careful statement.
    Miss Burton: May I ask whether the hon. Gentleman agrees with a greengrocer in Coventry who said that prices do not go up on Friday but they go down on Monday?
    Mr. Godber: I note the concern of the hon. Lady when prices go up, but I should welcome her concern for the growers when prices go down.

    Meat Research Centre
    Mr. Willeyasked the Minister of Agriculture, Fisheries and Food whether he will make a further statement on the proposed Meat Research Centre.
    Mr. Godber: The establishment of a meat research centre is still under active consideration by the Agricultural Research Council. The project raises a number of issues which will take some time to resolve before a firm decision is reached. Meanwhile, the Council hopes to set up a small laboratory near Cambridge where the meat research work at present being carried on at the Low Temperature Research Station can be expanded.
    Mr. Willey: Does the Joint Parliamentary Secretary appreciate that his Ministry has an enormous appetite for having things under active consideration Surely it is time something was done?
    Mr. Godber: I agree that in this case it is taking some time, but the financial and other problems are very difficult to solve I hope we shall be able to reach a decision before long.

    Beef
    Mr. Willeyasked the Minister of Agriculture, Fisheries and Food how the supplies of beef, both home-produced and imported, for this year compare with the supplies for the corresponding period last year.
    Mr. Godber: Total supplies of home-produced and imported beef and veal during January to April, 1959, amounted to 360,000 tons compared with 416,000 tons in the corresponding period last year. Of these figures home supplies amount to 252,000 tons and 291,000 tons, respectively. Supplies are expected to improve during the second half of the year.
    Mr. Willey: In view of the very serious shortfall of beef supplies, is the hon. Gentleman satisfied that every possible step is being taken to supplement those supplies and to prevent their being diverted to other countries?
    Mr. Godber: I would not say that it is such a very severe shortage, because there have been other supplies of meat available. As I have indicated, further supplies are coming forward. There was a Question only last week about supplies coming from Rhodesia, and there are increased quantities coming from Australia at present. I would remind the hon. Member that, although there was a shortfall on the position last year, it is still very much better than it was a few years ago.

    Charollais Cattle
    Mr. Willeyasked the Minister of Agriculture, Fisheries and Food when he expects to receive a report from the committee considering the question of the experimental importation of Charollais cattle.
    Mr. Godber: The committee has only just been appointed, and it is too soon yet to say when its report may be expected.
    Mr. Willey: Does the Joint Parliamentary Secretary really think this Committee can tell us anything we do not already know? Does it really help to ask a couple of retired civil servants to advise the Department which has its own officials? A decision has to be taken and, although it might be difficult, can we not have it taken?
    Mr. Godber: We wish to take the decision in the light of all possible information, but in view of the strong divergence of opinion on the matter, we should have the advice of this important committee of people in the industry.
    Mr. T. Williams: Will the hon. Gentleman circulate a list of all those things which the Ministry has under active consideration?

    Machinery and Spare Parts
    Mr. Godman Irvineasked the Minister of Agriculture, Fisheries and Food if he is aware that shortages of machinery and spare parts are causing difficulty for farmers; what reports he has received on this matter; and if he will make a statement.
    Mr. Godber: My right hon. Friend is not aware of any general shortage of agricultural machinery and spare parts. If my hon. Friend will let me have particulars of any cases of which he has heard, I will gladly look into them.

  AGRICULTURAL RESEARCH

    Dried Milk
    Mrs. Butlerasked the Minister of Agriculture, Fisheries and Food, as representing the Lord President of the Council, what arrangements are proposed for testing for radioactivity all milk intended for processing into dried milk, in view of the increase of caesium 137 found in dried milk in all areas of Great Britain in June. 1958.
    Mr. Godber: The radioactive material which merits the most immediate attention is strontium 90. The current monitoring programme covers 40 per cent. of the total milk production in the United Kingdom and includes a check to indicate the general level of contamination by caesium 137. The extent of the effort devoted to the study of radioactive elements other than strontium 90 is kept under regular review.
    Mrs. Butler: While appreciating that reply, may I ask whether the hon. Gentleman is aware that this caesium is the most strong in its genetic effects of all the elements of fall-out and, therefore, it would seem necessary to take very special precautions in the interests of future generations and also to make known as

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    quickly and as widely as possible the results of researches which have been undertaken on this subject?
    Mr. Godber: Yes, Sir, I would accept the importance of this matter. I assure the hon. Lady that we shall keep as close a watch on it as possible.

  GOVERNMENT INFORMATION SERVICES

    Printed Papers (Air Mail)
    Mr. Swinglerasked the Chancellor of the Duchy of Lancaster if, for the purpose of speeding up and spreading the dissemination of British news and views in far away parts of the world, he will take steps to improve and cheapen the air service for printed material.
    The Chancellor of the Duchy of Lancaster (Dr. Charles Hill): I understand from my right hon. Friend the Postmaster-General that only in exceptional cases do printed papers sent by air get slower treatment than first-class letters. He is constantly looking for ways to speed up air mails sent from Britain.
    For air mail the postal handling charges represent only a small proportion of the postage rate. The major portion is due to charges made by the air carriers who transport the mail. For air freight, the carriers will allow a 50 per cent. reduction in their rates for newspapers and magazines despatched in consignments of more than five kilos.
    While recognising that cheaper air mail and air freight rates would be helpful to the circulation of British newspapers, books and periodicals the Government cannot undertake to subsidise these rates.
    Mr. Swingler: Whilst thanking the right hon. Gentleman for that long reply, may I ask whether he will go into the matter very seriously with the Postmaster-General? Is he aware that it is essential to distribute bulky trade magazines and technical journals to places like South-East Asia and South America as rapidly as possible because of the spread of Communist influence but that these rates are a very serious handicap to proper distribution?
    Dr. Hill: I shall convey to my right hon. Friend the Postmaster-General what the hon. Member has said.
    Mr. Anthony Greenwood: Are we to gather from the reply of the right hon. Gentleman that the speed with which the material is carried is likely to be improved in the near future?
    Dr. Hill: The words I used were that my right hon. Friend is constantly looking for ways of speeding up air-mail from Britain.
    Mr. Greenwood: I asked what that means.
    Dr. Hill: Perhaps the hon. Member will put that question to my right hon Friend.

    Press Communications
    Mr. Shinwellasked the Chancellor of the Duchy of Lancaster (1) what recent communication he has had with the Press on official Government matters; and
    (2) to what extent he communicates to the Press proposals for legislation by the Government.
    Dr. Hill: Communication to the Press on official Government matters is the responsibility of the Minister directly concerned. My responsibility is one of co-ordination.
    Mr. Shinwell: Are we to understand that in the process of co-ordination the right hon. Gentleman makes no individual communication to the Press? If he does, occasionally, has he recently communicated with Sir William Haley of The Times?
    Dr. Hill: In answer to the second part of the question, No, Sir. Of course, I have contact with the Parliamentary Press, as do most hon. Members in this House.
    Mr. Shinwell: Why does the right hon. Gentleman appear to be so indignant when I ask if he has any communication with Sir William Haley of The Times? Is he not a respectable and reputable gentleman?
    Dr. Hill: I was not indignant, merely firm.
    Mr. Anthony greenwood: Are we to take it from the Chancellor of the Duchy that he has made no changes in this respect since he assumed his present responsibility?
    Dr. Hill: The position is still as I announced it to the House on 3rd February last year.

    British Achievements
    Mr. Swinglerasked the Chancellor of the Duchy of Lancaster if, in the dissemination of information about British technical, scientific, and artistic achievements, he will ensure that due emphasis is given to the part played by institutions which are publicly owned or wholly or partly supported by public funds.
    Dr. Hill: Yes, Sir.
    Mr. Swingler: I thank the right hon. Gentleman for that reply. Is he aware of the importance of the publication which the information services are turning out, "British Records and Achievements", and the necessity that he should make absolutely clear not only the important rôle of the nationalised industries in the economy of this country but also the extent to which the privately-owned industries depend upon Government grants and subsidies and Government-sponsored research?
    Dr. Hill: I ensure as best I can that the achievements of public authorities, as well as those of private bodies, are fully used in the overseas information service.
    Mr. Emrys Hughes: Is the right hon. Gentleman aware that in this process of co-ordination there appears to be a good deal of elimination also? Is he in any way responsible in this co-ordination business for the fact that an important speech on legislation by the Prime Minister this week has been comparatively ignored by the British Press and that only reports of a scuffle with some Empire Loyalists have been published?
    Dr. Hill: I am not responsible for what appears in the Press, but I would say in general that my task is made much easier by the excellent achievements of the Government.

  PENSIONS AND NATIONAL INSURANCE

    Confinement Grants
    Mr. Prenticeasked the Minister of Pensions and National Insurance whether he will take steps to amend the regulations relating to home confinement grants so as to make wider provision for mothers whose confinement takes place in hospital but who are discharged to their homes while still needing nursing care and attention.
    The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): I appreciate that occasional cases of difficulty can arise in such circumstances as I understand the hon. Gentleman has in mind. As he will be aware, the matter was considered by the National Insurance Advisory Committee some years ago, but I should like to consider whether any further provision under the National Insurance Scheme may be practicable.
    Mr. Prentice: I thank the Minister for that reply, but will he have particular regard to a recent decision by the National Insurance Commissioner, R(G) 1/59, which deals with the case of a woman discharged home unexpectedly because of an outbreak of infection in the hospital? Does not that decision show that there can be a case where a woman can be discharged quickly from hospital and will be in need of continued attention at home but it does not come within the Regulations as at present drafted?
    Mr. Boyd-Carpenter: I am aware of the case about which the hon. Gentleman is concerned, and it was with that in mind that I drafted the earlier words of my Answer.
    Mr. J. Griffiths: Is the right hon. Gentleman aware that there has now grown up a considerable body of National Insurance Commissioner's decisions which may, quite legitimately, now defeat some of the intentions of the Act? Is he making available to his Advisory Committee periodically full reports of the Commissioner's decisions and their implications so that the Advisory Committee may consider their implications on the whole service?
    Mr. Boyd-Carpenter: In general, the Advisory Committee is aware of the effects of the Commissioner's decisions, but before answering that question fully and categorically I should like notice of it.

    National Insurance Commissioner (Appeals)
    Mr. Prenticeasked the Minister of Pensions and National Insurance how far the number of appeals to the National Insurance Commissioner has varied since the necessity to obtain leave to appeal has been abolished.
    Mr. Boyd-Carpenter: Substantive appeals in National Insurance matters have increased by about 140 per cent. Figures are not yet available in respect of Industrial Injuries appeals.
    Mr. Prentice: Can the Minister say whether this increased number of appeals is leading to any delay in dealing with them, or is the position, as many of us hope, that the simpler procedure will lead to appeals being dealt with more quickly and that less time will elapse between the local tribunal hearing and the Minister's decision?
    Mr. Boyd-Carpenter: This increased volume of appeals, even when allowance is made for the fact that applications for leave to appeal no longer require to be made, is a heavy load on the Commissioner and on the Commissioner's Office. As the hon. Gentleman may be aware, an additional Deputy Commissioner was appointed by Her Majesty earlier this year.

    Retirement Pensioners (Earnings)
    Mr. Ridsdaleasked the Minister of Pensions and National Insurance whether, in the case of resorts and other places where seasonal work is only available for short periods, he will allow the earnings disregard for retirement pensioners to be assessed on an annual rate against annual earnings rather than on a weekly basis.
    Mr. Boyd-Carpenter: I would refer my hon. Friend to the reply which my hon. Friend the Joint Parliamentary Secretary gave on 4th June to my hon. Friend the Member for Maidstone (Sir A. Bossom).
    Mr. Ridsdale: Is my right hon. Friend aware that a retirement pensioner in London can earn up to £156 a year, bearing in mind that his work is spread over a year, without losing his pension, but that a retirement pensioner in a seasonal area where work is available for only a quarter of the year can earn only up to £39 a year without reduction of pension? Is it not high time that justice was done to retirement pensioners in seasonal areas and that this long-overdue reform was introduced?
    Mr. Boyd-Carpenter: I realise that this is a problem in certain coastal areas, but my hon. Friend will be aware that the whole matter was gone into very fully by the National Insurance Advisory Committee as recently as 1956 and that it rejected any idea of averaging-out, such as my hon. Friend suggests, on the ground, among other things, that the effect of it could well be that in a number of weeks a pensioner might be without either earnings or pension.

    War Pensioners
    Mr. H. Hyndasked the Minister of Pensions and National Insurance if he will now allow men of the 1914–18 War to have access to pensions appeal tribunals.
    Mr. Boyd-Carpenter: The rights which these men had to appeal to the tribunals expired many years ago, and I am afraid that it would not be practicable at this very late stage, some forty years after the end of that war, to introduce new legal rights for them. There are, however, well recognised procedures for dealing with new or revived claims in respect of disablement or claims for re-opening awards already made, and claimants can also discuss their cases locally with their war pensions committees.
    Mr. H. Hynd: As the Minister has shown in his Answer that there are cases arising from the First World War which require consideration now, is there any substantial reason why, more than forty years since the end of that War, when they are over 60 years of age and their numbers are rapidly retiring, these men should not have simple access to the pensions appeal tribunals like everybody else?
    Mr. Boyd-Carpenter: As my Answer also made clear, there is, in fact, machinery to deal with these cases. The House may be interested to know that last year in some 1,700 1914–18 War cases the pensions were increased. However, in reply to the second part of the hon. Gentleman's supplementary question, I am bound to say that I am sure that my predecessors, who have all taken the same view, were right in believing that the difficulties of evidence and the dangers of raising false hopes make it at this time of day quite impracticable, as I said in my Answer, to set up a new system of formal legal appeals.
    Mr. Simmonsasked the Minister of Pensions and National Insurance how many war-disabled pensioners have, during the past five years, forfeited their pensions as a result of serving a prison sentence; how many have had their pension restored on completion of prison sentence; and in how many cases dependants' allowances were also affected.
    Mr. Boyd-Carpenter: The precise numbers are not available, but it is estimated that, during the five years, nearly 3,000 war disablement pensioners forfeited their pensions whilst in prison and that about 1,600 of them were receiving allowances for dependants. It is the practice to pay these allowances to the dependants while the pensioner is in prison. Pension was fully restored on release from prison to all but 15 of the pensioners. These were persistent offenders who had previously been warned and pension was eventually restored to four of the fifteen after a period of good behaviour.
    Mr. Simmons: Am I to assume that this is a matter for the Minister's discretion, and can we take it that on all occasions the Minister's discretion will be stretched in favour of the pensioner? After all, the Minister will agree that these men earned their pensions in very difficult circumstances and that the pensions should not be taken away from them except under very great provocation. Is he willing to agree that the figures which he has given prove that war pensioners as a body are very law-abiding people?
    Mr. Boyd-Carpenter: I agree with the last part of the hon. Gentleman's supplementary question. With regard to the
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    earlier part of his question, under the Royal Warrant discretion in respect of the restoration of these pensions is imposed on the Minister of the day, and the fact that out of 3,000 cases forfeiture operated after release from prison in only fifteen and was cancelled in four more illustrates the spirit in which this discretion is administered.

    Douglas
    Mr. Patrick Maitlandasked the Minister of Pensions and National Insurance how many claims for National Assistance have been made by persons resident in the village of Douglas and Douglas, West, in the county of Lanark, during 1958, and this year, respectively.
    Mr. Boyd-Carpenter: I am informed by the National Assistance Board that information is not available in the form asked for, but that at the end of May 60 weekly assistance grants were being paid to persons in Douglas and six to persons in Douglas West, of whom six in all were persons registering for employment.
    Mr. Maitland: Cannot my right hon. Friend give any figures which measure the difference between last year and this year? Is he aware that about seventy families have already left this village and that it faces a grave problem of depopulation? Would he be prepared to consider trying to give help to the families which have transferred elsewhere to find work other than mining, many of whom encountered some hardship on the ground of disturbance when they moved?
    Mr. Boyd-Carpenter: The kind of thing which my hon. Friend has in mind sounds more a matter for my right hon. Friend the Minister of Labour and National Service than for me. On the question of figures, about which I am responsible for informing the House, my hon. Friend will appreciate that the numbers in these two villages are a very small proportion of those dealt with by the Board's big office at Hamilton.
    Mr. J. Griffiths: Will the right hon. Gentleman put his hon. Friend in touch with the Chancellor of the Duchy of Lancaster so that he can explain the achievements of the Government to his constituents?
    Mr. Boyd-Carpenter: I am sure that my right hon. Friend and my hon. Friend need no assistance in that good work.
    Mr. Maitland: My constituents are aware of it already.

    Widows
    Mrs. L. Jegerasked the Minister of Pensions and National Insurance how many widows over 50 years of age are now receiving pensions of 10s. a week.
    Mr. Boyd-Carpenter: About 80,000 widows between 50 and 60 have widows' basic pensions of 10s. a week, and another 34,000 over 60 have contributory old age pensions of the same amount. Most of these in the latter category will become eligible for the National Insurance retirement pension when they retire from regular work.
    Mrs. L. Jegerasked the Minister of Pensions and National Insurance if he will introduce legislation to abolish the category of 10s. widow and make such widows, over 50 years of age, eligible for the normal widow's pension.
    Mr. Boyd-Carpenter: No, Sir. This pension is payable only in respect of an old right preserved when the National Insurance Bill came into operation. To carry out the hon. Lady's suggestion would increase the disparity which already exists between these widows and those in identical circumstances who receive no pension because their only rights are under the present Act.
    Mrs. Jeger: Can the right hon. Gentleman say what representations he has received on this matter? Is he aware that there is growing public feeling that it is unfair to continue to penalise these women purely because their husbands died under the wrong Act of Parliament, their husbands having paid the proper insurance contributions in force during their lifetime?
    Mr. Boyd-Carpenter: I think the hon. Lady completely misunderstands the position, which is that most of these ladies receive this small pension in circumstances otherwise identical with those in which other widows receive no pension at all.
    Mrs. Jeger: In view of the unsatisfactory nature of the Minister's reply and his inaccuracy in suggesting that all
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    widows over 50 get only 10s. a week pension, I give notice that I will raise the matter on the Adjournment.

  MINISTRY OF POWER

    Nuclear Power Stations
    Mr. Corfieldasked the Paymaster-General whether, in view of both strategic considerations and past experiences of the danger of accidents at Windscale, he is satisfied that a concentration of no less than four proposed nuclear power stations on the lower reaches of the Severn is in the public interest; and in what other parts of the country, of similar or greater population density, comparable concentrations of generating capacity are contemplated or already in existence.
    The Paymaster- General (Mr. Reginald Maudling): One station is at present under construction at Berkeley and another is proposed at Oldbury. There are already much larger concentrations of generating capacity in the Trent valley and on the Thames Estuary.
    The Central Electricity Generating Board is investigating three other areas on the lower reaches of the Severn, but in these cases no definite proposals have yet been made. My noble Friend would not approve any site for a nuclear station unless he was completely satisfield about the strategic and safety factors involved.

    Electricity (Production Costs)
    Mr. Corfieldasked the Paymaster-General what is the cost per unit of electricity generated in the most up-to-date coal-operated power station as compared with the estimated cost of generation in the type of nuclear power station which the Central Electriciy Generaing Board proposes to erect at Oldbury-on-Severn; and to what extent, in view of the large existing stocks of small coal and the estimated effects of modernisation and mechanisation in the coal industry, he anticipates a change in relative costs in favour of coal.
    Mr. A. Robertsasked the Paymaster-General what report he has received from the Central Electricity Authority concerning the disparity of cost in producing electricity by coal, oil, and nuclear energy.
    Mr. Palmerasked the Paymaster General (1) if he will make available estimated figures showing the comparative costs of producing electric power from the use of coal, oil, and nuclear fissile material under similar base load operating conditions over the next 10-year period;
    (2) if he will issue a new White Paper reassessing the development of the British nuclear power programme in the light of the latest trends in primary fuel costs and capital charges of power installations.
    Mr. Maudling: The estimated cost of generation in the most up-to-date coal-fired power stations at present being planned ranges from 0·50d. per unit for stations situated near coalfields to 0·65d. per unit for similar stations situated remote from the coalfields. In so far as reliable comparisons are possible, the cost of oil generation would be roughly the same. On the basis of the latest designs of nuclear stations, the estimated generation cost would be between 0·65d. and 0·70d. per unit. Neither the site nor the design of the proposed station at Oldbury has yet been settled.
    Despite the recent fall in the capital cost per unit of modern conventional stations and the fact that coal prices may be expected to be more stable than could have been foreseen when the present nuclear programme was announced in 1957, there is reason to hope that the cost of nuclear power will fall below that of conventional power within the next decade.
    The position is kept continually under review, but my noble Friend does not consider that re-assessment of the nuclear power programme is called for at the present time.
    Mr. Palmer: In giving these figures, has the right hon. Gentleman taken into account the point contained in my Question, which is that similar base load running conditions should be taken for comparison?
    Mr. Maudling: Yes, Sir. The figures were in every case on the basis of a 75 per cent. base load operation factor.
    Mr. Roberts: In view of the large stocks of small coal on hand, does not the right hon. Gentleman agree that some direction should be given to reduce the price of small coal to the generating
    22
    stations, which would then deal with the cost of generating?
    Mr. Maudling: That is a matter of commercial policy for the National Coal Board.

    Fuel and Power Industries (Co-ordination)
    Mr. A. Robertsasked the Paymaster-General if he will convene a meeting of the chairmen of the National Coal Board, the Gas Council, and the Central Electricity Authority and representatives of the oil industry with a view to co-ordinating the fuel and power industries.
    Mr. Maudling: My noble Friend has a statutory duty to secure the co-ordinated development of fuel and power in Great Britain and he arranges such consultations as are necessary for this purpose.
    Mr. Roberts: Has such a meeting taken place recently between the chairmen mentioned in the Question?
    Mr. Maudling: My noble Friend has had meetings with all the leading figures in the fuel and power industries, but, as this is a confidential matter, I am not prepared to say whom he has met on any particular occasion.
    Mr. Shinwell: The right hon. Gentleman speaks about the power of coordinating, but is there any effective coordination in the fuel and power industries?
    Mr. Maudling: If by "co-ordination" the right hon. Gentleman means the suppression of competition, the answer is, "No."
    Mr. Shinwell: Surely this is a matter of considerable national importance. Surely competition has nothing to do with co-ordination. Is it not possible for the Minister to effect co-ordination between the three fuel and power industries while at the same time permitting an element of competition?
    Mr. Maudling: No, Sir. As the Ridley Committee said a few years ago, a co-ordinated fuel policy should be based on free competition, but when hon. Members opposite put forward what they call a national fuel policy what they normally mean is the abolition of competition.

    Research and Development Charges
    Mr. Palmerasked the Paymaster-General what proportion of the research and development charges for the civil nuclear power programme is borne by public funds through the Atomic Energy Authority; and what proportion is allocated on the same commercial basis as that for coal and oil burning stations.
    Mr. Maudling: All expenditure on research and development incurred by the Atomic Energy Authority was originally borne from public funds, but it is intended that the expenditure attributable to the civil power programme should be recovered in due course in the form of royalties payable on the electricity stations and as part of the price charged for fuel elements. The Authority also recover the cost of its consulting services from the electricity boards.
    Mr. Palmer: Will the right hon. Gentleman agree that points such as this should be taken into account when determining a future fuel and power policy based on true rather than hypothetical costs?
    Mr. Maudling: I agree. The hon. Member's Question raised an important point, and if he studies my Answer he will find that it covers the point satisfactorily.

    Electricity Supply
    Mr. Darlingasked the Paymaster-General what is his estimate of the percentage increase in electricity supply between 1960 and 1965; and what proportions of this increase are expected to be derived from coal, oil, nuclear energy and other sources, such as water power and undersea cables, respectively.
    Mr. Maudling: Electricity supply is expected to increase by almost 40 per cent., of which nearly two-thirds is expected to come from coal and rather more than a third from nuclear power. There will be a small reduction in the use of oil, partially offset by a slight increase in hydro generation.
    Mr. Darling: Is the right hon. Gentleman aware that last week we had one or two peculiar Answers about this kind of problem from the Parliamentary Secretary, and is he aware that we have
    24
    been very pleased to hear from him today that coal has a very bright future in regard to one customer at any rate?
    Mr. Maudling: I do not think that there has been any doubt for some time on the point that the demand for coal for electricity generation will certainly rise steadily.
    Mr. Palmer: In these estimates of future demand for electricity, has the right hon. Gentleman taken into account the possibility of a somewhat smaller nuclear power programme? Is it not a fact that the Central Electricity Generating Board would, if left to its own devices, rather prefer to have a smaller nuclear power programme?
    Mr. Maudling: I am certainly not aware of any such proposal by the Central Electricity Generating Board, and, of course, the estimates are based on advice given us by the Board itself.

    Oil Refining Capacity
    Mr. Darlingasked the Paymaster-General if he will estimate the probable percentage increase in oil refining capacity in the United Kingdom between 1960 and 1965.
    Mr. Maudling: There is spare refining capacity in the world today and the oil companies have not yet announced plans for expanding the capacity in the United Kingdom after 1960. I regret that I am unable to make a forecast.
    Mr. Darling: Will the right hon. Gentleman agree that, if our economy is to go on expanding and there is to be no further increase in oil refining capacity in this country during the next few years, we can make a very good guess at the supplies of the various fuels required for industries, and, therefore, to talk about free competition when one supply of fuel will be limited by capital investment is really not to present the true case? The needs of industries will be met by available fuels whatever the cost may be.
    Mr. Maudling: I do not think that the problem now is one either of availability of coal or the availability of capital for the National Coal Board. The problem is to sell the coal in competitive conditions with the oil industry.

    Gas Supplies
    Mr. Darlingasked the Paymaster-General what is his estimate of the percentage increase in gas supplies between 1960 and 1965; and what proportions of this increase are expected to be derived from coal, oil and other sources such as methane, respectively.
    Mr. Maudling: The total gas supplies are expected to increase by nearly 5 per cent. during this period. As it is expected that coal consumption by the industry will fall slightly during the period, the whole of this increase will be derived from oil and other sources.
    Mr. Darling: Does this not suggest that there should be a review of the gas industry's programme in regard to the production of gas from both coal and oil? Is the Paymaster-General absolutely certain that the Gas Council is correct when it says that gas produced from oil is cheaper than gas produced from coal? Could we not have a deeper investigation into all the relative costs, and will he not agree that the whole question of fuel supplies in this country should be looked at again in the light of the estimates he has made and the answers he has given in reply to Questions today?
    Mr. Maudling: My noble Friend is studying this particular problem in conjunction with the chairmen of the two nationalised industries concerned.

  COAL

    Expenditure and Manpower
    Mr. Nealasked the Paymaster-General to what extent, in view of the lessened demand for coal, he has authorised the National Coal Board to make changes in capital expenditure and manpower requirements.
    Mr. Maudling: The National Coal Board's review of the industry's future requirements is still in progress and has not yet been submitted to my noble Friend. In the meantime, the expenditure of £122 million on capital works has been authorised for 1959.
    Mr. Neal: Is the right hon. Gentleman admitting that the Coal Board is still muddling along without a plan? Does
    26
    he recall that the document issued by the Coal Board, "Plan for Coal", is now three years old? Ought it not to be revised quickly in the light of recent development?
    Mr. Maudling: The Coal Board is facing an extremely difficult problem. It is not a question of muddling along at all. The new plan will be available soon, and we shall study it with interest.
    Mr. J. Griffiths: Are we to understand that the Government's policy is that this must be a matter of free choice for the consumer and that, therefore, they look to a price war between these industries instead of co-ordinating them with a national purpose?
    Mr. Maudling: The Opposition themselves are not prepared to suggest any limitation of price competition in these matters.

    Stocks
    Mr. Nealasked the Paymaster-General to what extent he will sanction any further borrowings by the National Coal Board to finance the stocking of coal.
    Mr. Maudling: The National Coal Board's borrowings are subject to statutory limits. If these are likely to be inadequate either because of stocking or for any other reason, the approval of the House will be sought to the necessary extension.
    Mr. Neal: Can the right hon. Gentleman say whether this is yet another matter on which the Government have not yet made up their mind? What is the ceiling beyond which it would be considered uneconomic to stock more coal?
    Mr. Maudling: The Question asks whether we will sanction any further borrowings, and my answer makes it clear that we have made up our mind that we will sanction further borrowings if the House approves, and if it becomes necessary.
    Mr. Warbeyasked the Paymaster-General to what extent, on the basis of current trends in supply and demand he anticipates that his target of 3 million tons of coal added to colliery stocks during 1959 will be exceeded.
    Mr. Maudling: Undistributed stocks are now expected to rise by about 7 million tons this year.
    Mr. Warbey: Will the Minister take into account the fact that excess stocking results in a substantial increase in cost, and does not this add greatly to the argument in favour of reducing opencast coal mining?
    Mr. Maudling: I do not think any further cut in opencast coal is possible, for reasons which have been explained to the House on a number of occasions.

    Pits (Closures)
    Mr. A. Robertsasked the Paymaster-General what recent report he has received, in accordance with Section 3 (4) of the Coal Industry Nationalisation Act, from the National Coal Board regarding the closure of pits in the year 1960.
    Mr. Maudling: My noble Friend does not regard this subject as appropriate to Section 3 (4), but he expects it to be dealt with in conjunction with the National Coal Board's long-term plan now under review.
    Mr. Roberts: What consideration has been given to this matter in the immediate future in view of the apprehension that now exists in the coalfields?
    Mr. Maudling: As I think the hon. Member is aware, we have already said that there will be no further special closures in 1959. What is contemplated in 1960 will become apparent when the National Coal Board's plan comes forward in the near future.

    Opencast Mining
    Mr. Nealasked the Paymaster-General if, in view of the need to reassess the coal requirements of the country, he will give a general direction to the National Coal Board to estimate the amount of compensation necessary to terminate all contracts for opencast coal mining.
    Mr. Maudling: No, Sir.
    Mr. Neal: Do we understand from that reply that the Paymaster-General is not in favour of terminating opencast mining contracts? How long is he going to continue to get this inferior coal that he cannot sell? If he will take the trouble
    28
    to consult miners, the various Coal Board divisions, farmers, local authorities and coal merchants, he will discover that opencast coal has no friend outside Hobart House and Millbank.
    Mr. Maudling: Opencast coal is an extremely valuable national asset. It has already been announced that the opencast mining programme is being substantially run down over the next few years.

    Demand
    Mr. Warbeyasked the Paymaster-General whether he is yet in a position to give estimates of the anticipated demand for coal in 1960 and succeeding years.
    Mr. Maudling: My noble Friend hopes that with the revival in economic activity the recent fall in demand will be halted, but the level of demand in future years will depend on the competitive position of coal as well as on the expansion of the economy.
    Mr. Warbey: As the Minister has admitted today that coal is competitive with oil, certainly with respect to consumption in power stations, will he take further steps to ensure that there is a transfer from oil to coal burning in power stations, and will he also take into account the fact that the miners in the coal industry are looking urgently to the Government for a definite guarantee that when they produce the coal for which they are asked, the coal will be sold and not piled up at the pithead?
    Mr. Maudling: I do not think it is possible to guarantee the sale of all coal that is mined unless it is mined on a competitive basis. As to the electricity generating industry, its consumption of coal will certainly rise substantially in the next few years.
    Mr. Shinwell: Why does the right hon. Gentleman demand that the National Coal Board should be competitive in relation to other fuel and power industries and yet at the same time not issue instructions to the Coal Board to sell coal which is stocked at a lower price now? Is not that what is meant by competition?
    Mr. Maudling: No. The answer is that the nationalisation Statute passed by the right hon. Gentleman and his

    29
    party leaves, rightly in the opinion of the Government, commercial discretion in these matters to the National Coal Board.
    Mr. J. Griffiths: Is it not true that at the time when this country was suffering from a fuel shortage the National Coal Board was restrained from increasing its prices which competition would have allowed it to do? In one instance, the industry was restrained from doing so on the eve of a General Election to serve the interests of the party opposite. Are we now to understand that now that the situation has changed the Government say "Fend for yourselves and take the consequences"?
    Mr. Maudling: We do not intend to stop the Coal Board lowering its prices if it wants to do so. In these matters of price policy it is a matter for the Coal Board, which is the responsible commercial undertaking, to do what it thinks right.
    Mr. Griffiths: If at a time when competition would have allowed the Coal Board to increase its prices the Government of the day prevented it from enjoying advantages of that kind of competition, what right have the Government now to throw the industry on to its own resources against competition which the right hon. Gentleman knows is subsidised?
    Mr. Maudling: If it is a question of subsidised competition, that is another matter; but the Government do not believe, and the Opposition have shown no sign of believing, that the coal industry should have special protection against competition.

  MINISTRY OF SUPPLY

    Chemical Defence Experimental Establishment (Animals)
    Mr. Bodyasked the Minister of Supply how many more domestic animals will be required for experiments at the Chemical Defence Experimental Establishment; and how much longer these experiments are to be carried out.
    Mr. E. Johnsonasked the Minister of Supply what is the purpose of the Chemical Defence Experimental Establishment; and why it was necessary to
    30
    destroy 3,000 animals in six months at that establishment, in particular the 32 cats, 42 dogs, 20 pigs and 31 sheep.
    The Minister of Supply (Mr. Aubrey Jones): The purpose of the Chemical Defence Experimental Establishment is to devise means of defence against the possible use of chemical weapons in war. It is necessary to this work to assess the effect on man of particular chemical compounds. Rodents are used for the initial experiments and other animals are needed only if further investigation is required into the mechanism of action of any compound, when it becomes necessary to use an animal whose physiology is not unlike that of man. Dogs, cats and pigs have such characteristics and are commonly used by medical institutions. Sheep are used to assess the danger to grazing animals from herbage contaminated by toxic chemicals. All experiments are carried out by skilled staff licensed by the Home Office, whose inspectors have access to the laboratories without notice. The therapeutic procedures discovered at the Establishment have been used with success in saving the lives of both men and animals accidently poisoned by insecticides
    Mr. Lipton: Is the Minister aware that hon. Members who recently visited the Establishment were refused access to that part of the Establishment where these experiments were being conducted, although we now learn from the Minister that representatives from the Home Office can go there without notice? Why is there so much secrecy about this aspect of the work? Further, will he say from what source the dogs and cats are obtained?
    Mr. Jones: I think I am right in saying that when hon. Members paid their recent visit to the Establishment they did not, in fact, visit the Chemical Defence Establishment. They visited the Microbiological Research Establishment.
    Mr. Body: Will my right hon. Friend give some idea of how much longer these experiments are to go on?
    Mr. Jones: I should have thought it emerged from my Answer that it would be reasonable to conduct the experiments for as long as it was necessary to provide defence against the possible use of chemical weapons in war.
    Mr. Johnson: Is my right hon. Friend aware that there is a good deal of public concern at this apparent wholesale slaughter of animals for this purpose? The numbers seem enormous. Further, is he aware that his statement that experiments are to continue will not allay public feeling if there is to be no end to this business? Have those concerned not discovered what they want?
    Mr. Jones: I think my hon. Friend ought to know that the number of animals used in these experiments is, in fact, less than 1 per cent. of the total used in the country at large.
    Mr. Snow: Does the Minister realise that what was said by the hon. Member for Manchester, Blackley (Mr. E. Johnson) was agreed to by some hon. Members on this side? Does not the nauseating information given in the Question make nonsense of the emotional hysteria created when the Russians sent up one dog in a Sputnik?

    Dakota Aircraft
    Wing Commander Bullusasked the Minister of Supply if he will now make a statement as to proposed Government support for the replacement of the Dakota aircraft.
    Mr. Aubrey Jones: I would refer my hon. and gallant Friend to the statement which I made on 11th June in reply to a Question by my hon. Friend the Member for Yeovil (Mr. Peyton).
    Wing Commander Bullus: I read that original reply, but does not this support announced by the Minister for two aircraft of a similar type, one in the air and one on the drawing board, indicate that he has now abandoned his policy for the rationalisation of the industry
    Mr. Jones: No, Sir; I have not in the least abandoned any policy for the rationalisation of the industry. Both these aircraft have been started by their manufacturers of their own accord.
    Mr. Beswick: How much is this State assistance for the industry, which is what it amounts to, to cost? Secondly, as regards the Herald aircraft, what are the considerations justifying assistance now which were not equally valid two, three, or five or six years ago?
    Mr. Jones: In answer to the first part of the hon. Gentleman's supplementary question, I judge that the amount of money involved would be about £750,000 for each aircraft. As to the second part, all I can say is that interest has been expressed overseas in both aircraft.

    Factory, Beaconsfield
    Mr. Ronald Bellasked the Minister of Supply whether he is aware of the proposed reduction in activity at the Rotax factory in Beaconsfield; and what action he will take to help the employment position there by the placing of defence orders.
    Mr. Aubrey Jones: I am aware of this firm's plans which involve the transfer of some work from its Beaconsfield factory to its factory at Hemel Hempstead. This is a measure of rationalisation which has become necessary, in the firm's judgment, because of the decline in military aircraft work. As regards the second part of the Question, I can place defence orders only to meet the stated requirements of the Services.
    Mr. Bell: Does my right hon. Friend not think it desirable that all manufacturing capacity for aircraft components should be fully used so far as possible, and is he doing everything he can to encourage the use of British components in aircraft manufactured abroad?
    Mr. Jones: The answer to the second part of my hon. Friend's supplementary question is most certainly "Yes". Having regard to all that, however, one cannot, none the less, blink one's eye to the fact that the contraction in the demand for military aircraft does entail redundancies.

    Hovercraft
    Mr. Beswickasked the Minister of Supply to what extent, when considering the amount of financial assistance to be made available for the development of helicopters, he takes into account the potential r6le to be played by such vertical lift machines as the SRNI.
    Mr. Aubrey Jones: The Hovercraft is essentially a surface craft, but my Department has had continued interest in this project and is represented on and intends to remain in close touch with

    33
    the Company, that is, Hovercraft Development Limited, which is being financed by the National Research and Development Corporation.
    Mr. Beswick: Is it not perfectly obvious that the future of this aircraft joust he determined by, and will equally possibly determine, the future of other machines in which the Ministry of Supply is interested? Would it not be a matter of common sense in administration to have responsibility for this whole field centred in one Department?
    Mr. Jones: If application were made to my Department for help on this project, such a request would, naturally, be considered on its merits.

  HOSPITALS

    Mental Deficiency Schools (Supervisors)
    Mr. K. Robinsonasked the Minister of Health if he will take steps to assist the recruitment of supervisors and assistant supervisors for mental deficiency hospital schools and to stop the drift of these officers from the hospitals to the local health authorities.
    The Minister of Health (Mr. Derek Walker-Smith): The salaries of these officers were increased last November and were then in line with those paid to their counterparts employed by local authorities. Following a recent increase in the salaries paid by local authorities a claim for a further increase for these officers is under consideration by the appropriate Whitley Council.
    Mr. Robinson: Is the right hon. Gentleman aware that it is not only a question of salary but that the local authorities can offer much better conditions of service and, in particular, longer holidays to these officials? Is it not the fact that the hospital service is labouring under very great difficulties indeed, and will he use his influence, through his representatives on the Whitley Council, to try to iron out the anomalies in the interests of the hospital service?
    Mr. Walker-Smith: I am aware of this problem in regard to holidays and so on. The hon. Gentleman may be aware that, last January, the hospital
    34
    authorities were given discretion to allow somewhat similar concessions, but it is a little early yet to say what is the effect of this.

NATIONAL ASSISTANCE
3.30 p.m.
The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): I should like, with permission, to make a statement.
Her Majesty's Government and the National Assistance Board have decided that the standard of provision for the least well-off members of the community should now be in some measure improved in order to give them a share in the country's increasing prosperity.
Since 1952 the Board, with whom, as the House knows, the initiative in proposing increases in the scale rates of National Assistance has been placed by Statute, has been able, with the cooperation of the Government of the day, to maintain the scales of assistance at levels somewhat better than those originally fixed in 1948. That is the position today. On the other hand, the various amounts of income and capital which the Board is entitled to disregard in the assessment of need—the so-called "disregards"—are still at the level in cash terms at which they were fixed in 1948.
The National Assistance Board has recommended, and the Government have accepted, a proposal to increase the scale of assistance for a single householder from the present level of 45s. a week to 50s. and for a married couple from 76s. to 85s. a week, with appropriate increases in other rates.
It is also proposed to make a substantial change in the arrangements where a recipient of National Assistance has in his household an earning member of his family. At present, the rent taken into account by the Board in these cases is normally that fixed some years ago on the advice of local advisory committees, in many cases less than the actual rent. There is also a contribution of 7s. a week towards the general expenses of the household assumed to be made by the earning member. It is proposed in future normally to take account of the full rent, to abandon the concept

35
of an assumed contribution to general household expenses and instead to assess National Assistance on the basis that the earning member of the household and the recipient of assistance each contributes his own share of the total rent.
It is proposed to make increases in the disregards of capital, other than war savings, and of income of the order of 50 per cent.
The increases in National Assistance will apply generally to recipients of assistance, including those who draw it as a supplement to retirement pension or to unemployment or other National Insurance benefits, as well as to those who rely solely on assistance, either for long or short periods.
It is sometimes suggested that an application for National Assistance can involve some loss of self-respect. This is quite wrong. In our society today, assistance when in need according to the provision made by Parliament is the acknowledged right of the citizen. I am sure that hon. Members on both sides of the House, and people outside, will join me in expressing the hope that all those who are in need will make use of the State provision to which they are entitled. As has often been emphasised in this House, there can be complete confidence that the National Assistance Board and its officers administer this form of social service humanely and sympathetically. We are considering with the Board whether the terminology used in order books and other documents can be improved so as to obviate any possibility of misunderstanding.
Legislation will be needed to enable changes to be made in those disregards which are fixed by Statute, and I am today giving notice of presentation of the necessary Bill. I have also today laid the necessary regulations to give effect to the improvements in scale rates and other changes. A White Paper setting out the proposals in full will be available at the Vote Office at 4 o'clock this afternoon.
These proposals will cost about £32 million in a full year and, subject to the approval of Parliament, it is proposed to bring them all into operation together early in September.
Mr. Marquand: Is the right hon. Gentleman aware that on this side of the
36
House we recognise with pleasure the belated recognition by Her Majesty's Government that there are in this country already more than one million old-age pensioners in receipt of National Assistance? This is a belated recognition of a fact we have often emphasised from this side of the House, that these are the worst-off people in the country.
The right hon. Gentleman drew attention to the fact that normally the initiative for any increases of this kind lies with the National Assistance Board. On what date did the National Assistance Board inform the right hon. Gentleman that there were these large numbers of people receiving insufficient incomes? On what date did the Government receive the recommendation from the National Assistance Board?
Is it not a fact that it is as a result of the policy of Her Majesty's Government that it is now necessary to compensate millions of our fellow citizens for the increase in rents which the Government have imposed upon these unfortunate people? Further, how many additional people will be obliged to resort to National Assistance as the result of the proposals which the right hon. Gentleman has just announced? Already more than 1 million retirement pensioners, and very many more recipients of unemployment and sickness benefit, are on National Assistance. Will this not mean a vast extension of the system of the family means test which was so detestable during the period of the great depression?
As the Government have refused to make any increase in the retirement pension for old people, why do they now propose to make in September the sort of increase which we have asked for from this side of the House? Why has the date of September been chosen for the inauguration of these increases? Have the right hon. Gentleman and other members of the Government, in considering this matter, had regard to the date of the General Election?
Mr. Boyd-Carpenter: The dates of the various procedural steps will be given in the White Paper, which will be available in a few minutes. On the right hon. Gentleman's concluding question, the time from announcement to date of operation proposed is within two days

37
of what it was on the last occasion in January, 1958.
The right hon. Gentleman will be aware that rent and rates are dealt with separately from the scale rates under National Assistance and that, therefore, the question of changes in rents is largely irrelevant to a proposal to improve the scale rates.
As regards what the right hon. Gentleman was good enough to call a "belated recognition" of the desirability of making improvements in this direction, I remind the House, first, that to-day the value of the scales is above the original 1948 level, and secondly, that the proposed increase, unlike any of its predecessors, is not necessitated or called for by changes in the cost of living, but is a deliberate decision to improve the standards.
As regards the allegation of reviving the old family means test, when the right hon. Gentleman studies—he has a copy of my statement in front of him—what I said on the question of the assumptions where accommodation is shared with an earning member of the family, he will see that the move is in precisely the opposite direction.
This is not a question of anybody being obliged to resort to National Assistance. It is a deliberate intention to raise the standards, as the statement says, of the least well-off members of the community, and I think that it will be viewed as such.
Mr. Marquand: As the vast majority of recipients of National Assistance are also recipients of National Insurance benefits for retirement, unemployment and sickness, would it not have been better to grant this increased income by way of an increase in National Insurance benefits, thus conferring upon the recipients the right to receive these benefits as of right without a means test?
Mr. Boyd-Carpenter: This step concentrates this substantial sum of public money on those who almost by definition are most in need of it and includes the hundreds of thousands of people, whom the right hon. Gentleman's proposal would have excluded, who do not have any National Insurance benefit.
Mr. M. Lindsay: Does my right hon. Friend appreciate that the statement he
38
has just made will be generally welcomed and that the Government are very much to be congratulated upon it? My right hon. Friend mentioned the possibility of a change in the terminology. Will he consider whether this opportunity can be taken to get away from the phrase "National Assistance", which is difficult for proud people to accept, and to change the name to something like "supplementary means", "supplementary pension", or something of that nature?
Mr. Boyd-Carpenter: I am obliged to my hon. Friend for the opening part of his supplementary question. On the latter part, as my statement, I hope, makes clear, we are considering the use of different terminology, for example, such phrases as "supplement to pension" or "supplement to benefit" on the books which are taken to the post office for cashing. This is probably the most fruitful line of approach, though even that, for reasons which the House will appreciate, is something that will take some months after a decision is taken before it can operate.
Mr. Holt: In regard to the 50 per cent. increase in the disregards of capital and of income, does the Minister have any estimate from the National Assistance Board of the number of people likely to be affected by this proposal? Secondly, may we now expect in the near future an increase in the basic pension?
Mr. Boyd-Carpenter: Anybody who has his assistance diminished by reason of his resources of income or capital stands to gain from an increase in the disregards and there will be a number of people—it is impossible to specify precisely—who will become additionally eligible. In reply to the second part of the hon. Member's question, nothing have said this afternoon detracts from the very clear statements of policy which have been made from time to time on this subject, notably by my right hon. Friend the Chancellor of the Exchequer in winding up the Budget debate.
Mr. Gower: As this represents a substantial increase and also the possibility of increasing the numbers of people who will benefit, will not my right hon. Friend reconsider the suggestion of my hon. Friend the Member for Solihull (Mr. M. Lindsay) and get rid of the

39
word "Assistance" from the title of the institution? Will he get a different name for this body?
Mr. Boyd-Carpenter: I know that my hon. Friend's viewpoint is shared by a certain number of people. My own view, however, is that the institution itself by the devotion to duty of its officers, is earning an increasingly good name and that although, in suitable cases, we can deal with any unnecessary unwillingness to apply by the sort of expedients I have mentioned, I am inclined to doubt whether changing the name of this extremely well-administered body would itself help to that end.
Mr. T. Brown: It is obvious that we shall have an opportunity of discussing in detail the statement just made by the Minister. I should like to ask him one question. He has referred to the disregards. Can he give one solid reason why this matter was not attended to eighteen months ago, when we on this side advocated a change in the disregards? The right hon. Gentleman and his Department are fully aware that the disregards were fixed in 1948, eleven years ago, and that they have never been changed until the recommendations which the right hon. Gentleman has just submitted. He has referred this afternoon to the cost of living, which, no doubt, will be discussed later, but can he give one reason why the National Assistance Board did not give consideration sooner to an alteration in the disregards?
Mr. Boyd-Carpenter: In the first place, most of the disregards are not for the National Assistance Board but, being statutory, are a matter for the Government. It has generally been understood that the disregards ought not to be altered frequently—only a good deal of confusion and misunderstanding would be caused by that—and certainly not as frequently as the scale rates. It certainly seems that the time is now due to alter the disregards and it is the easier to do it effectively in view of the stability of prices over recent months.
Sir K. Joseph: In congratulating my right hon. Friend on this most welcome decision, may I ask two questions? First, will he clear up the assumption made by the right hon. Member for
40
Middlesbrough, East (Mr. Marquand) that this sum will go almost entirely to the elderly? Surely, by right hon. Friend stated that some of it will go to people who are unemployed, the chronic sick and those in other forms of distress, to whom this help will be particularly welcome.
Secondly, will my right hon. Friend pay great regard to the question of publicity? Some of us believe—[Interruption.] Hon. Members opposite are being extremely churlish about the whole question of helping the poorest in the land. Many of us believe that ignorance rather than pride stops some members of the community from using the National Assistance Board. I hope that every step will be taken to reach those who are entitled as of right but who do not know their rights.
Mr. Boyd-Carpenter: In round figures, of 1,650,000 regular payments of National Assistance, a little over 1 million are in respect of people over retirement pension age. The substantial balance are, of course, people who are unemployed, sick, disabled, and so on. On the second part of the hon. Baronet's question, I deliberately put words in my statement in which I suggested that hon. Members, on both sides, would wish to ensure that those who are genuinely in need of assistance are encouraged to apply for it.
It is important that there should be no doubt whatever about the right of the citizen in such circumstances and that the conditions on which Assistance is paid should be fully appreciated. For example, our discussion at later stages on the disregards will, I think, bring out clearly what some people even now do not know—that is, how substantial even the existing disregards are—and that, therefore, it is not necessary completely to exhaust one's savings to have an entitlement to National Assistance.
Mr. Crossman: While joining the right hon. Gentleman in his tribute to the officials of the National Assistance Board, may I ask a question about what I consider to be almost unprecedented action in raising the rate of National Assistance while keeping the standard rate of benefit fixed? Would the right hon. Gentleman not agree that, throughout the passage of his recent Measure,

41
he congratulated himself time after time on the number of people whom he had taken off National Assistance and implied that it was the Government's policy to reduce as far as possible the numbers of people who were compelled to go to National Assistance and to increase the numbers of those who could live on the basic pension?
Does this mean that the Government have entirely repudiated the policy of reducing the number of those compelled to go to National Assistance? Does it mean that the Government now have decided not to raise the rate of retirement benefit as far as possible or the benefit for other purposes, but to ensure that they try to use the poor law system where we were trying to get benefit as of right?
Mr. Boyd-Carpenter: That question is based on a false premise—that it is unprecedented to raise the Assistance scales and not the National Insurance Benefit scales. Since 1948, there have been four increases in the National Insurance and six in the National Assistance rates. On the last part of the hon. Member's question, as I said in reply to an earlier question, nothing that I have said today or which is involved in my statement diminishes in any way the perfectly clear assurance given, not only by my right hon. Friend the Chancellor of the Exchequer, but in paragraph 34 of the White Paper on Provision for Old Age.
Mr. Wigg: As the right hon. Gentleman is responsible for the assessment of National Service grants, would he say whether the concession now made applies to the dependants of National Service men who are serving or who will serve?
Mr. Boyd-Carpenter: If the question which the hon. Gentleman has in mind relates to National Service grants, it should be directed to my right hon. Friends the Service Ministers.

NATIONAL ASSISTANCE

  New Member makes Affirmation required by Law:
  John Jakob Mendelson, esquire, for Penistone.

  BILL PRESENTED
    EDUCATION
    Bill to enlarge the powers of the Minister of Education to make contributions, grants and loans in respect of aided schools and special agreement schools, and for purposes connected therewith, presented by Mr. Geoffrey Lloyd; supported by Mr. R. A. Butler, Mr. Henry Brooke, Mr. Simon, and Sir Edward Boyle; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 120.]
ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee[Progress, 11th June].
  [Sir CHARLES MACANDREW in the Chair]

  FINANCE BILL

    New Clause.—(EXEMPTION FROM SCHEDULE A FOR OWNER-OCCUPIERS.)
    (1) Where the total income of an individual includes or would, but for this section, include any sum under Part III of the Income Tax Act, 1952, in respect of a house or tenement of which the said individual is both owner and occupier, the sum aforesaid shall, subject to the provisions of this section, be disregarded for all the purposes of the Income Tax Acts other than the furnishing of information.
    (2) No individual shall be exempted from assessment under Schedule A by virtue of this section in respect of more than one house or tenement in any year of assessment.
    (3) For the purposes of this section, a house owned by a married woman living with her husband and occupied by them shall be deemed to be owned and occupied by the husband.—[Mr. Wade.]
    Brought up, and read the First time.
    3.53 p.m.
    Mr. Donald Wade: I beg to move, That the Clause be read a Second time.
    This Clause relates to Income Tax, Schedule A, commonly known as property tax. I think that the Chancellor of the Exchequer will probably agree that it is one of the most unpopular forms of Income Tax because it is calculated on theoretical and not on actual income. The object of this new Clause is to abolish Schedule A tax in so far as it affects owner-occupiers.
    In the most recent Liberal report on the subject of the distribution of ownership, the complete abolition of Schedule A tax is advocated. I am not in disagreement with that. If the Chancellor should decide to abolish Schedule A tax altogether, I would support him in doing so, but we had evidence in some of the earlier debates, mostly in the debate on Entertainments Duty, that the Chancellor would appear to move by stages towards the repeal of a duty or the repeal of a tax. I think that in this case, if a step is to be taken towards abolition, it should be in the direction which is most helpful, and that is the intention of this Clause.
    44
    Before I deal with some of the details of the Clause, I think it only right that I should say a few words about the broader principle, namely, the question whether this kind of tax is justified. I am, of course, aware of the observations in the Royal Commission's Report on the Taxation of Profits and Income. In the final Report, page 249, paragraph 826, the objections to Schedule A tax on owner-occupiers are set out. It is a short paragraph which reads as follows:
    "The witnesses who objected to the charging of tax on the owner-occupiers of dwelling houses did so on the grounds—

    (1) that notional income is not a fit subject for taxation; and

    (2) that it is inequitable to tax the beneficial enjoyment of a right of occupation of real property when the income which could, by parity of reasoning, be attributed to the owners of other forms of property (e.g., motor cars) goes untaxed."

    I think that I can fairly summarise the answer to those objections as follows, namely, the Commission agreed that the second point was logical. The members of the Commission made a distinction between a man's house and his chattels. I think that this answer should be examined very critically. The comparison is made between a dwelling-house and a car. It would seem to me that a more appropriate comparison would be between a dwelling-house, in the ordinary sense of the term, and a caravan. The Report states that a tax or charge is rightfully imposed upon the value of residential occupation. As I understand it, if I decide to buy and live in a caravan, however expensive it may be, I pay no Schedule A tax. In other words, if I decide to have my home on wheels, I pay no Schedule A tax. It is even more curious, if my information is correct, that if I decide to have my home on wheels and then take the wheels off, I still pay no Schedule A tax.
    I am not putting this forward as a means of avoidance of payment of Schedule A tax. I am not setting myself up as an adviser on tax evasion, but I think it is true there is no clear principle involved and the whole idea of imposing a tax on some notional benefit is wearing rather thin. There are other objections to this tax in addition to the widespread belief that it is anomalous.
    It must be admitted that a great deal of administrative work is involved in the collection of the tax and in the

    45
    provision and examination of maintenance claims. I know that the Chancellor may say that the amount collected is considerably more than the cost of collection. He may say that there will be a loss of revenue. It would be out of order to discuss other sources of revenue but one must keep in mind that considerable profit can still be made from land values. Putting that on one side for the moment, the fact that the gain by the Treasury in collecting this tax may be more than the cost of collecting it does not alter the position that there is a great deal of administrative work for the Inland Revenue staff and for the payers of the tax.
    Unfortunately, many taxpayers are not aware of their rights. I myself employ an accountant. I find it very difficult to be quite sure what I can claim and what I cannot. I leave it to an accountant. I think that the accountancy profession finds this a very troublesome subject to deal with. There are, however, many who do not go to an accountant. They do not know exactly what are their rights, and they fail to get full advantage of their entitlement to maintenance claims. The result is that the tax is unfair in its incidence.
    4.0 p.m.
    Again—and this is a consideration which is not so often raised—the owner of property who is subject to this tax enjoys no advantage of depreciation allowance. I think that, in theory at any rate, it would be possible to introduce a depreciation allowance, and I have considered that from time to time, but I think it would add to the complexities, and my desire is to simplify rather than to make our tax system more complex. Indeed, I think that another ground for the abolition of Schedule A would be the simplification of our tax system.
    There is another argument which is sometimes put forward, and it is this. Since the war tenants have had their rents subsidised in many ways, either directly by the Government and local authorities, or indirectly as a consequence of the Rent (Restrictions) Act, and it is sometimes said that it is time that owner-occupiers were helped a little bit to offset the advantage given to tenants. Personally, I would not press that argument. I do not think we should
    46
    be persuaded by the "me, too" line of argument. I prefer to base my case on the desirability of encouraging and facilitating home ownership and the need of simplification of our tax system.
    I think we must look forward to an increase in home ownership, and it should be welcomed. It is sometimes said that that might create difficulties for the mobility of labour, but I think that those difficulties can be met. If time permitted, I should have liked to deal with the problem of mobility of labour, but I think that that might be out of order.
    It may be asked, why pick on owner-occupiers and not all owners of property? The answer is this. The owners who let their property will pay tax in any event upon the rents which they receive, and if they pay property tax that reduces the amount which they pay on the net rents.
    I have considered other, alternative proposals. For example, there is the suggestion that there should be an increase in the statutory allowance. That has some merits, but it raises complications. For example, if I were a landlord who had little regard for the welfare of my tenants or the condition of my property, and I spent the very minimum on keeping my property in a decent state, I should welcome an increase in the statutory allowance because I should get automatic reduction in the amount of Income Tax which I should have to pay on my rents without having to spend anything more on repairs. Therefore, it is only fair and reasonable that we should try to help the owner-occupiers who are called upon to pay this tax on, if not a fictitious, at any rate a theoretical benefit. If relief is to be limited, if we are not to abolish the tax altogether, we should try to help the owner-occupier.
    Let me give, for example, the case of young married couples who are fortunate enough to find and buy a new house. During the first few years they may not have much expenditure on repairs and maintenance because the house is new, and therefore they have no maintenance claims; but many of them cannot afford at first to furnish the whole house completely, and they have a great deal of expenditure during those first few years, but not of a kind which can be set off against this

    47
    notional income. Therefore, it is only reasonable that we should try to do something for the owner-occupiers.
    I turn to the details of the new Clause. There are really ony three main points. It is, as I hope the Chancellor will agree, a quite modest proposal compared with total abolition. It applies only to owner-occupiers. Secondly, it applies only to one house. If I were wealthy enough to own and live in several houses, I should be entitled to claim for relief in respect of only one house. Thirdly, it applies to husband and wife; to quote the new Clause:
    "… a house owned by a married woman living with her husband and occupied by them shall be deemed to be owned and occupied by the husband."
    It has been suggested to me that there might be some modification of that proposal; firstly, that it should apply where the house is occupied for residential purposes only, and secondly, that this provision relating to the husband and wife should be extended to the parent or parents of the owner or to the child or children of the owner. Those suggestions are reasonable, and I would be quite willing to accept them.
    Returning again to that Liberal report which I mentioned at the outset of my remarks, this suggestion dealing with Schedule A is only one of many items of policy the purpose of which is to change the whole pattern of ownership. That is the aim, and this is only one item. If the Chancellor agrees with our policy of extending ownership—I know he turned down our proposals on other aspects of it last year—if he believes in what hon. and right hon. Members opposite call a property-owning democracy, it seems to me that here is an opportunity for him to help it.
    I have made the path as easy as possible by asking for this moderate benefit of partial repeal. I see no great administrative difficulties. I think this is a case of "Where there's a will there's a way" and there should be no great difficulty in finding the way. I trust, therefore, that the Chancellor will announce his decision to abolish this tax altogether, or, failing that, that he will accept either in every detail or in principle this new Clause.
    Mr. Graham Page: Either my hon. and learned Friend or the Chancellor will, I trust, in a few moments' time, stand at the Box to answer the proposal of the hon. Gentleman the Member for Huddersfield, West (Mr. Wade), and he will be standing there in a suit, his usual elegant suit—at least, I trust he will—and he would think it utterly ridiculous if anybody suggested that he ought not to have invested his money in that suit but that he ought to have invested it in something which earned income, and that because he has invested it in that suit he is to be charged tax on the net annual value of the suit; not just a once-for-all tax such as Purchase Tax, which the hon. Gentleman the Member for Huddersfield, West mentioned, but an annual tax upon that anachronism invented by Adam Smith as long ago as 1776, the net annual value.
    How can a suit have net annual value? Well, hon. Members have only to recollect Moss Bros. Perhaps my right hon. Friend hires his suit from Moss Bros. If he does, it only lends point to my argument, that there is a similarity between two essentials of life, clothing and housing, between a suit which one wears and a house in which one lives. Yet they are dissimilar in their tax propensities. This shows how terribly illogical is the argument that because a house is an essential of life that, therefore, if one is not an owner-occupier, one must rent one; that, therefore, if one is an owner-occupier, one must be charged tax on the beneficial enjoyment of it.
    Purists try to justify Schedule A tax, which is an annual tax on capital, by saying that the owner-occupier benefits from the house, that he has advantages over the man who is paying rent, and that it is unfair, therefore, to let him get off scot-free from tax. In justifying Schedule A they say that a house is quite different from any other asset, that it is a necessity of life, that if one does not own it one must pay rent, and that one can get income from it if one chooses not to live in it but to let it. One could say exactly the same thing about my right hon. Friend's suit.
    Perhaps I am labouring this suit example. Hon. Members may say "De minimis non curat tax." The suit is merely a small matter. Larger items like a car, a television set, jewellery, a

    49
    mink coat, a refrigerator, furniture, a cooker, a vacuum cleaner and, indeed, a caravan, are all articles which can be rented, and none is subject to Schedule A tax if it is owned. Therefore, Schedule A is a penalty upon one type of thrifty owner, the type whom we are endeavouring to encourage by the House Purchase and Housing Act. Yet the more he pays off the mortgage he may be able to raise by virtue of that Act the more Schedule A tax he has to pay. The more he improves his property, by reason of the reforms in law under that Act, the more he risks being assessed at a higher Schedule A figure. Because of his thrift he lives rent-free, and we tax him on the financial freedom which he has bought for himself.
    We tax him because he might have invested his money in an interest-bearing security. But where does the argument lead us that he might have invested his money elsewhere, which could have produced an income that would have been taxed? On this argument the tax inspector might say to him, "You might have invested in 8 per cents. and not in 3½ per cents. Therefore, I tax you on an investment at 8 per cent." He might say, "You must not leave your money idle in the bank earning no interest. I must assess you on the money lying in the bank." That is the logic of the argument that because a person invests money in a house he must be assessed as if he were earning an income from it.
    The inspector might tell my right hon. Friend "You should not have invested in that suit. You should have invested in something producing an income." I am sorry if I am stripping my right hon. Friend down to his vest and pants. What I am endeavouring to do is to strip the Schedule A argument to that ridiculous condition and, indeed, worse. Let me remove the last of the flimsy vestiges of the arguments for Schedule A. It is not a tax on dwellings or on housing accommodation. As the hon. Member for Huddersfield, West says, if a person lives in a caravan he escapes the Schedule A tax altogether. He purchases a £5,000 caravan and he is not charged Schedule A tax on it, but if he purchases a £500 cottage he has to pay under Schedule A. A person can live in a £10,000 houseboat and escape Schedule A. It is not a tax on house
    50
    accommodation. It is a tax on a house; and no other asset than a house suffers this annual tax.
    4.15 p.m.
    Moreover, there is a distinction between those who gain benefits from a house. For example, a council house tenant does not pay tax on the subsidised part of his rent. The result is that the owner-occupier has to pay part of the rent of his subsidised neighbour in a council house, and he is paying it out of taxed income. Let us suppose that there is a tenant and an owner-occupier both earning the same salary and both having no other income. After they have both suffered a P.A.Y.E. deduction, the balance in their hands is taxed income, but the owner-occupier is then called upon to pay a further sum in tax, namely, Schedule A on his house. Therefore, he is paying it out of taxed income.
    Mr. Douglas Jay: He does not pay rent.
    Mr. Page: Rent, of course, is not taxation. It does not go to the Chancellor. I complain that the Chancellor is collecting double tax. Out of his already taxed wages the owner-occupier is paying tax again. This is really double taxation with a vengeance. To the extent of his Schedule A assessment, he was paying 17s. in the £. He will now be paying 15s. 6d. in the £, and even that double taxation falls unevenly because of the fallacious principle of the net annual value.
    Two-thirds of the residential owner-occupied property in the country is based on a pre-war valuation for the purposes of Schedule A and the other one-third on a post-war valuation. Those who argue for Schedule A cannot possibly sustain any argument for that unfair discrimination between those who happen to be on a pre-war valuation and those who happen to be on a post-war valuation. If one is arguing for Schedule A and one is faced with that sort of proposition, one is forced to argue for a total revaluation. That is the only way to bring fairness if Schedule A tax is retained. Anyone who desires to argue in favour of a revaluation is politically quite welcome to do so but we all know how disastrous a revaluation of property for Schedule A might be at present.

    51
    Unlike a revaluation for rates, the Income Tax rate cannot be adjusted to meet the needs of the district. It must be levied at the general rate for the whole country. Therefore, a revaluation would be very serious at present.
    Here, then, is a tax which, first, is unique in being an annual tax on a hypothetical income and thus, in effect, is a capital tax. Secondly, it is a deterrent to a desirable form of thrift, namely, home-ownership. Thirdly, it is a tax the incidence of which is uneven, unfair and unjust. The only thing to be said for it is that it earns the Treasury £40 million gross, but £34 million if one knocks off the maintenance claims, and, I imagine, not much more than £30 million if one knocks off the cost of administration.
    I can imagine that from a Treasury point of view the Chancellor wants to hang on to the tax. Due to the immense success of Conservative housing policy over the past years, the total national gross value of the residential owner-occupied properties has risen immensely. Taking the last two years alone, that gross value has risen from £155 million to £175 million. That represents an increase of about £15 million in net annual value, and an increase of about £5 million in tax. I have no doubt that the Treasury sees a further increase in the yield from this tax from the housing policy of the next Conservative Government.
    I should like to warn my right hon. Friend, however, about the figures now appearing for maintenance claims. I do not want to deal with maintenance claims in detail, because there is on the Notice Paper a Clause which I understand we may have the opportunity of debating which deals specifically with statutory allowance and maintenance claims. But I would point out that when I and some of my hon. Friends started a little publicity on this subject twelve to eighteen months ago and, in the course of it, asked the Chancellor a few Parliamentary Questions, my right hon. Friend told us at that time that only one in every twelve residential owner-occupiers made a maintenance claim. Recently the figures given have been that one in every ten of the residential owner-occupiers makes a main-
    52
    tenance claim. So, from the publicity on this subject, the maintenance claims are increasing. I have a suspicion that they will increase yet more and that a large part of the other nine-tenths may be roused to make such claims. At the moment the one-tenth represents £6 million of maintenance claims. That is a reduction from the gross figure of £40 million yield from Schedule A tax to the £34 million which is the net yield.
    I would not be at all sorry if the maintenance claims became so popular that the net yield from this tax was so decreased, and the administration costs so increased, that my right hon. Friend found it not worth while collecting Vie tax any more. Schedule A is a tax on an educational disability; in other words, the lack of aptitude to tackle the complicated clerical work involved in making a maintenance claim. Therefore, it falls heavily upon the young manual worker or the elderly widow.
    I have seen this happen in the following respect. In the middle of my constituency most of the houses are small, owner-occupied ones. If I address an audience in the middle of my constituency amongst those people and mention Schedule A, they are delighted with the idea of it being abolished. At one end of my constituency, however, there are the rather wealthy house owners, and if I mention Schedule A in addressing an audience of those people, smirks appear on their faces until someone asks rather complacently, "But who pays Schedule A?" They all put in their maintenance claims, of course, and so it is those who are clever enough to make this claim who get off Schedule A.
    Mr. Douglas Houghton: The hon. Gentleman is suggesting that all that has to be done to put in a maintenance claim is to take the trouble to write out some figures. He must remind the Committee that it is necessary to spend the money on repairs. Moreover, the five years' average is quite a serious check on the rendering of maintenance claims year by year, as I have found out from personal experience, and I am sure he has, too.
    Mr. Page: I did not wish to imply that it involves merely writing out figures. It involves a lot more than that. It involves keeping receipted accounts over five years

    53
    and all the other complications—and, incidentally, spending the money on the property. I did not think that hon. and right hon. Gentlemen opposite were so foolish as to misunderstand me in thinking that one had not got to spend the money. Of course, one has to spend the money, but it does not take an enormous expenditure of money to cover the Schedule A assessment at the present cost of labour and materials. Perhaps we may come to that on a later Clause which is to be proposed. I am only saying now that we ought not to base any tax upon the lack of ability to escape from it, which is what is happening with Schedule A at present.
    If my right hon. Friend says that Schedule A is a good tax, that it ought to be retained, that administratively it can he collected and that he sees no reason for abolishing it, I shall be tempted to join the hon. Member for Huddersfield, West in the Lobby in support of his proposed Clause. If, on the other hand, my right hon. Friend says, "Schedule A is a had tax, let us get rid of it as quickly as we can, but I am sorry that I cannot afford to get rid of it this year"—
    Mr. John Rankin: Escape clause.
    Mr. Page: —then my protest would be no more than to abstain from voting.
    Mr. John Barter: This debate reflects a wide and widening public interest in the question of Schedule A. The process whereby a home owner is charged Income Tax on the basis of somebody else's assessment of what rent he might have received twenty-three years ago had his house existed, which it probably did not, and had he rented it, which he probably did not, is obviously absurd.
    This view of absurdity is taken by many responsible financial organs and professional organisations. In their representations to the Royal Commission on the Taxation of Profits and Income, the Institute of Chartered Accountants of Scotland took this view. As recently as during the time the Chancellor was preparing his recent Budget, representations were received from a number of organisations who supported the view, amongst them the Institute of Taxation, which made seven recommendations to the Chancellor, the first of which was that he should abolish Schedule A. Indeed, the Institute
    54
    concluded that part of its suggestion with the words,
    "The Institute is confident that no other proposal can carry a greater weight of argument in its favour."
    There were fifteen recommendations at the same time from the Association of Certified and Corporate Accountants. The first on the list was the abolition of Schedule A.
    The cause of the abolition of Schedule A has been espoused widely in the Press. The Financial Times leader of 14th February this year stated:
    "… in this case the removal of an indefensible part of the system would both improve our tax structure and serve a useful social purpose. It would not unduly favour owner-occupiers, who would still have their rates to pay, and would merely be put in the position enjoyed by owners of other kinds of non-income-producing property."
    This is a respectable argument from a financially respectable source.
    The Financial Times is not the only organ of the Press which has followed this line but, bearing in mind the advice recently given by the hon. Gentleman the Member for South Ayrshire (Mr. Emrys Hughes), I do not propose to quote from The Times or, indeed, any other paper.
    I must confess to having a preference for another proposed Clause on the same subject which appeared earlier on the Amendment Paper. That had the virtue of consistency, in that it took the same form as it did in last years' discussions on the Finance Bill. However, I am happy to see that the Liberal Party has come some way with us in our reform proposals, in that they are now prepared, which they were not last year, not to limit the concession to £100. The hon. Gentleman the Member for Huddersfield, West (Mr. Wade), in the course of his speech, took note of some other suggestions which I was pleased to make.
    It is important to see the historic background of this tax, because it is a pertinent part of the argument. The ownership of property has been considered a proper basis for assessing tax liability for over 1,000 years but it was first given legislative effect under the title of Schedule A in Addington's Property and Income Tax Act of 1803. It will be apparent to the Committee, therefore, that it has now lasted for a period of 156 years. Lest this long period of

    55
    operation should impart a fallacious aura of respectability, may I remind the Committee that its now utterly discredited predecessor, the Window Tax, lasted for 155 years. The Chancellor, by overlooking the wealth of advice he has received on this subject, has perpetuated this tax for one year more than its now utterly discredited predecessor.
    The main basis for the case to do away with Schedule A rests upon the change in the social structure of our society.
    4.30 p.m.
    Time was when the ownership of land was in the hands of the few and could reasonably be regarded as evidence of wealth. Indeed, in 1803, when this tax was first introduced, there were only 2 million homes in the whole of Great Britain—and for this information I rely upon the Chancellor's own estimate. By 1920 the number had increased to 8½ million and the number of owner-occupiers to a figure between 1 million and 1¼ million. After 30 years, in 1950, out of the 13½ million homes, there were 4 million-occupiers. In 1958, out of 15¾ million homes, there were 5½ to 6 million owner-occupiers. There are nearly half as many more owner-occupiers today as there were only eight years ago. This growth of owner-occupation has taken place during a period when Schedule A has been based on pre-war valuations and not on up-to-date valuations. Today, with this enormous, and I hope continuing, growth of owner-occupation, the ownership of a house is less evidence of wealth than evidence of a substantial debt to a building society.
    That is the picture of the change in the social structure compared with the day when Schedule A was first placed on the Statute Book: a population six times as great, nearly ten times as many homes, and probably one hundred times as many owner-occupiers.
    There are many other arguments in support of the abolition of Schedule A. In our Income Tax system the ownership of a house is the only subject of a notional assessment based on an income which might have been derived if a completely different set of circumstances had prevailed, and this is an extraordinary situation. Being itself artificial, it gives rise to a number of anomalies. The examples of persons living in a caravan
    56
    or in a houseboat have already been quoted, and there are many others which might equally be provided.
    My hon. Friend the Member for Crosby (Mr. Page) has pointed out that the tax is costly to administer. We are told that the Inland Revenue staff who would be released if Schedule A were abolished would save only about £500,000, but this is on the basis of only one person in ten making an application for additional maintenance relief on his house. At the moment about 600,000 people make a claim and over 5 million owner-occupiers do not. There is little doubt that, with the proper help, more people could claim than in fact do so at the moment.
    The present statutory allowance was fixed in 1928. It is deducted automatically from the gross value of the house. For the small house in 1928 it was fixed at one-quarter of the gross value of the house. Any excess of actual repair costs and the cost of fire insurance premiums over this statutory deduction can be claimed for Income Tax relief against the Schedule A assessment. I think that that covers the point made by the hon. Member for Sowerby (Mr. Houghton).
    The Parliamentary Secretary to the Ministry of Housing and Local Government, speaking on 5th May, 1958, said:
    "… I should say that it is fair to reckon that since that time the costs of house maintenance have risen three or four times."—[OFFICIAL REPORT, 5th May, 1958; Vol. 587, c. 1002.]
    The rise in the cost of house maintenance between 1928 and 1936, I think the Committee will agree, was negligible. It follows, therefore, that if the one-quarter relief for repair charges was considered reasonable, fair and adequate in 1928, and again in 1936–37 when the last valuation took place, and if the cost of repairs has risen by three or four times since that date, then a well-maintained house should properly attract relief from Schedule A today very nearly to the full extent of the Schedule A assessment.
    Does the Chancellor need convincing on this point? Or does he feel that every step should be taken to encourage the home owners to put in all justifiable maintenance claims, to send them rolling into the Inland Revenue offices, so that the Inland Revenue staff has to be built up and he finds that the yield from the

    57
    tax drops almost as rapidly as his administrative costs rise?
    I have said, and others have maintained, that the collection of Schedule A is a costly affair. It can be shown that the whole system of valuing every house in the country for Schedule A purposes is operated almost exclusively in order to tax the owner-occupier. The only classes of persons who are brought within the tax because of this valuation are the owner-occupier and the beneficial occupier, the person who enjoys a house at a rent less than the actual annual value. All the other classes concerned can already be taxed under other schedules by existing legislation. In consequence, the whole costly process of valuation for Schedule A purposes is carried out in order to grasp something from the owner-occupier.
    The whole system of maintenance claims is complicated and bewildering, and many people find it extremely difficult to follow. Unless the home owner seeks competent advice—and it often pays him to do so—he either does not know the system at all or he thinks that it does not apply to him. How often have we heard people say, "I cannot make a maintenance claim. I do not pay Schedule A because my building society interest exceeds Schedule A." That is a completely fallacious argument.
    Indeed, the whole system is complex and difficult of comprehension. For example, it takes an expert, whatever that word may mean in this connection, to understand that while a home owner cannot charge the cost of his own time in undertaking repairs in his house, he can in certain circumstances, and given certain conditions, make a charge for his wife's time for tax relief.
    As I understand it, the main arguments for retaining the tax are three-fold. First, there is the argument of taxable capacity. There is the false assumption that a man who owns a home, a mortgage and probably an outstanding bill for the rates is a wealthy man and, therefore, has taxable capacity which can be taken into account on this assessment.
    Secondly, there is the theory of alternative investment. This takes a number of forms, but in the main it rests on the assumption that the buyer of a house has, in his own option, the alternative
    58
    of buying a house or of investing the equivalent amount of money in an interest-bearing security. I do not know how many hon. Members have tried to raise a mortgage with a building society. I do not know how many have been to the building society and said, "I should like to borrow £3,000 from you and I will decide, after you have provided the money, whether to invest it in a house or in an interest-bearing security." The point is that the option does not exist for the average buyer of a house, and I think it is clear that in modern circumstances the majority of houses are purchased with the aid of mortgage finance in one way or another.
    The third argument rests on the yield of the tax—the £35-£36 million which this Tax produces in a year in its application to home owners.
    I have said enough to indicate that it is our confident anticipation that maintenance claims will increase in the coming years, that the yield of the tax will decline and that the cost of administering the tax will almost inevitably increase. In connection with the question of maintenance claims, the Chancellor may quite reasonably maintain that it would be fair, when he considered maintenance claims on 1959 values, that they should be offset against 1959 annual values of house property. In fact, of course, house property is still based on 1936–37 values.
    An important principle is at stake here. If the Chancellor adheres to the respectability of the argument for retaining Schedule A for owner-occupiers, then he must accept that a revaluation, probably to three times the present value—indeed, he has not disagreed with this figure when it has been put to him in Parliamentary questions—is inevitable. If that takes place, the owner-occupier's tax bill in respect of his house will rise by far more than three times. The increase may possibly take him into a new Income Tax or Surtax class. Those few who at present are putting in maintenance claims for excess costs of maintenance will not get more than the amount of relief which they are being given today on a lower valuation. The tax is either respectable, in which case the revaluation is inevitable, or else it is not and my right hon. Friend should pronounce its doom.

    59
    Property ownership makes for independence. It helps to diffuse power and it gives the individual a sense of security and responsibility. The natural desire to own is itself a powerful incentive to earn and to save, and both these activities, I think, should commend themselves to the Chancellor. Indeed, he has used that argument himself in other connections, and he should consider the argument pertinent in its application to the potential abolition of Schedule A.
    Home ownership has grown enormously during a period when assessments have been under-valued. There is a fear in the minds of many home owners about the possibilities of a revaluation and its consequences. I ask the Chancellor to remove that fear from the minds of home owners in this country and to give a further impetus to the development of home ownership, which I am sure we should all like to see. I prophesy that the tax will end and that the fiscal reform will come. I think that the Chancellor is the man to see that it does.
    Mr. T. L. Iremonger: My right hon. Friend is so sensitive, sympathetic and perspicacious that he may be aware that in an exceedingly tedious speech on the Budget I referred to this subject and said that I hoped he would see his way to abolish Schedule A. I therefore regard it as a point of honour to rise to support the new Clause. The arguments have been very well put by my hon. Friends, and I do not intend to delay the Committee further by going into them myself, but I give the warmest and most earnest support to the Clause. It has profound social implications. My hon. Friend the Member for Ealing, North (Mr. Barter) is quite right when he says that the tax will go any way and will go soon.
    It would be unreasonable to expect my right hon. Friend to accept the new Clause in its present form, and I would not normally vote for it, but rather than acquiesce in an outright rejection of it, I would vote for it. I therefore hope that my right hon. Friend will recognise the soundness of the general argument against the tax on social grounds and say that it has "the skids" under it and that he is seriously contemplating
    60
    abolishing it. I am sure that he will have opportunities of abolishing it for many years, but I hope that he will decide not to wait so long before he does abolish it. The Committee, I am sure, would be sympathetic if he recognised the strength of the arguments against the tax. I hope that he understands that if he feels that he must stand firm by the tax, root and branch and on principle, I shall have to go into the Lobby in support of the new Clause.
    4.45 p.m.
    Mr. Jay: We all want to encourage home ownership, but in doing that we do not wish to open a loophole for mass tax avoidance by big property owners. I have listened to the arguments put forward by hon. Members on both sides, and it seems to me that if we accept some of the sweeping proposals put forward the result would be that, under the guise of trying to help the small owner-occupier, we shall be giving tax reliefs to owners of large properties of many different kinds.
    I spend a lot of time encouraging the principle of home ownership in my constituency at weekends. I advise people who are badly housed to try to buy their own houses. But I never find that the difficulty they raise in this connection is the incidence of Schedule A. The difficulty in the way of the ordinary ill-housed father of a family becoming an owner-occupier is, first, the large deposit which is required. The Government have at last adopted our proposal for enabling loans of almost 100 per cent. to be made available.
    Another difficulty which hon. Members have not mentioned is the very high interest rate which has to be paid on the subsequent instalments. If hon. Members opposite and the Members of the Liberal Party are so keen on encouraging home ownership, they ought to be putting a little more pressure on the Chancellor to bring down the interest rates.
    Mr. Raymond Gower: Why does the right hon. Gentleman say that this proposal would put a lot of money into the hands of very large property owners? First, the Clause is limited to owner-occupiers and, secondly, to one house in owner-occupation. That is at

    61
    variance with the right hon. Gentleman's suggestion about a lot of money being put into the hands of property owners.
    Mr. Jay: I will deal with this matter in detail. It is true that the new Clause is confined to the owner-occupier, but the hon. Member for Huddersfield, West (Mr. Wade), who moved the new Clause, said that he wished to sweep away Schedule A altogether. Therefore, we ought to consider that proposition briefly. Some hon. Members opposite appeared to support that argument. If we were to wipe out Schedule A for Income Tax purposes it would simply mean a large tax relief for one form of property owner as compared with another. It would not operate fairly even as between the property owner who invested in securities—
    The Temporary Chairman (Mr. F. Blackburn): It is not necessary to answer points which are not raised by the Clause.
    Mr. Jay: That may be true, Mr. Blackburn, but these arguments have been advanced, and before we look at the more limited definition the point ought to be made in passing—
    The Temporary Chairman: I thought that the right hon. Member had made his point in passing before I stopped him.
    Mr. Jay: I was in the course of doing so. However, let us limit ourselves to the terms of the Clause, although the argument has already been upon a wider basis. Even if we limit ourselves to giving tax relief to the owner-occupier of residential property which is a much more attractive and plausible proposition—it would seem to go too far. Even if a person were in owner-occupation of only one house there might be a lot of land attached to it. I am quite unconvinced by the arguments put forward by the hon. Member for Huddersfield, West to the effect that there would be no inequity between the owner-occupier and the tenant who is renting his house out of untaxed income.
    The Royal Commission is quite right in saying that, in principle, there would be inequity in that case. There is no doubt that the ordinary tenant has to pay rent out of his untaxed income. The owner-occupier would be living in an
    62
    unrented house. He would be exempt from rent because he was receiving an income by virtue of the property which he had bought when he purchased the house, and he would be paying no tax on that at all.
    Mr. Barter: I rise only to correct a word used by the right hon. Gentleman. He referred to untaxed income. I am sure that he was seeking to imply that rent is paid out of taxed income and not out of untaxed income. Further, the right hon. Gentleman will bear in mind the fact that a house is purchased out of taxed income over a long period.
    Mr. Jay: Yes, I should have said "taxed income." But the house is normally purchased out of savings—or so I should think. Anyway, I will leave that point. It must be either purchased out of savings or out of borrowings.
    Mr. Page: When a house is bought by means of a building society mortgage the purchaser is paying his instalments out of taxed income all the time. He purchases his house out of taxed income.
    Mr. Jay: It would be possible for him to purchase some form of income in the form of securities, from his savings, or by borrowed money, and he would then pay tax on the income from those securities. Therefore, in principle it seems to me that the arguments advanced by the Royal Commission are quite sound.
    Much has been said by hon. Members opposite about suits of clothes, motor cars and caravans. It has been suggested that because caravans, houseboats and motor cars are not taxed houses should not be taxed. That is not a convincing argument. It is possible that hon. Members opposite may have made out a case for extending Schedule A to houseboats. Their argument may be extended in that way as well as the other. In all these matters of tax a line must be drawn somewhere, and the Royal Commission was right in saying that the fact that it was not practicable to extend the tax to durable goods such as motor cars was no argument for not having a tax upon houses.
    It does not seem necessary to abolish the tax altogether, and I understand that nobody is really arguing for that, or for a complete abolition for all owner-occupiers, however wealthy and however

    63
    large their houses and land. Nevertheless, there are two propositions to bear in mind in considering the advisability of making house purchase easier for the genuine small man. First, is there any reason why we should not apply the principle adopted in other parts of our Income Tax, of exempting some part of the income in question? We do that in the case of earned income allowance, where we have these wonderful fractions, such as two-ninths. Further, we exempt the first £15 of small savings. Is there any reason why that principle should not be applied in the case of Schedule A for the owner-occupier only?
    This is really a test of the sincerity of hon. Members opposite who claim that they are trying to help the small owner-occupier and not to open a large loophole for tax avoidance by the majority of property owners. If that is what they are genuinely asking for, is not there a case—as a start, anyway—for exempting a small proportion of the Schedule A income of the owner-occupier? Perhaps the most logical figure to take would be £15, which has already been granted in respect of other types of savings. A strong argument could be advanced for that proposition, and it would be of some help to the small man whom hon. Members opposite profess to want to help.
    Secondly, there seems to be a case for some easement in the matter of the statutory allowance for maintenance claims. That matter will be discussed on another Clause, and I shall not elaborate it further, but it would help the small man and remove an obstacle in the way of the potential home owner.
    Even though the Chancellor may stick to the fundamental principle advanced by the Royal Commission, that Schedule A is one of the bases of Income Tax, I hope that he will consider both the suggestions that I have made, which would encourage home ownership.
    The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I entirely accept the arguments in favour of the social benefits of home ownership advanced most persuasively by the hon. Member for Huddersfield, West (Mr. Wade), and also by my hon. Friends. I agree with the social philosophy lying behind the argument. It is a healthy
    64
    aspiration to want to own one's own home, and in general it is a source of satisfaction to do so. The Government have recognised the claims of home ownership in different ways. We have reduced the Stamp Duty and have taken a big step forward in recent legislation. The question is: would it be right to give the fiscal relief proposed, which would cost £40 million in a full year? I want to make it clear that that £40 million is a net estimate after making provision for the maintenance claims allowed.
    There are respectable arguments on either side, and it is not my wish or intention to reject the proposal out of hand or for all time. It is widely held to be unfair that tax should be paid on a possession which does not produce a cash income, but this view is by no universally held. There is a large body of opinion, which included both the majority and minority of the members of the Royal Commission, which holds equally strongly that it would cause serious relative injustice if the charge on owner-occupied property were abolished. Every hon. Member will probably feel that we should give proper weight to the expressed views of the Royal Commission, although, in a matter where social implications are involved, I do not maintain that such fiscal requirements should always overrule other considerations.
    An owner-occupied house may not produce cash income, but it produces the equivalent in the form of freedom from rent. Everyone must have a place to live in. My hon. Friend the Member for Crosby (Mr. Page) made a flattering reference to the elegance of my suit. I will not say whether the recent removal of hire-purchase restrictions has had anything to do with its acquisition, but the fact is that most people are owner-occupiers of their trousers, although not of their houses. Therefore, in doing what we would like to do for owner-occupiers we must be fair to those who, for one reason or another, cannot own their own houses and must therefore rent accommodation.
    Our present law gives no tax reduction for the rent of the taxpayer's residence. The householder must meet his rent out of his net income after tax, as he must in respect of any other household expenses.
    Mr. Stan Awbery: Does the Chancellor agree that Schedule A is a main charge upon the owner-occupier who, instead of paying rent to a landlord, has to pay it to the State?
    Mr. Amory: There is something in what the hon. Gentleman says. He receives no cash income but, other things being equal, he is better off than someone who has the same income but has to rent his accommodation
    5.0 p.m.
    If the charges under Schedule A were abolished, the tax system would be giving a benefit to the owner-occupiers as compared with a man who has to pay his own rent. There may be impelling arguments for giving that benefit, and there are certainly some strong arguments for doing it, but we must be in no doubt that that would be the effect. It would be a very important change in our tax law. If we were to relieve owner-occupiers from Schedule A tax, there would be a case for a claim by tenant occupiers that they should be given an Income Tax reduction in respect of the rent that they pay, Such a reduction would be very expensive indeed and would amount to perhaps another £60 million.
    The hon. Member for Huddersfield, West referred to the cost of collection. It is very difficult to separate the cost of collection of Schedule A from other forms of tax which are partially collected at the same time, but in our opinion the cost of collection of Schedule A tax at present is not abnormally high.
    I have been accused of illogicality in not taxing the enjoyment of other items of property besides land and houses. We live in a real and, perhaps, not too logical world, but we all have to have somewhere to live, and the ownership of other possessions is more a matter of choice. Caravans have been mentioned, but they were not made assessable for tax largely because they were mobile and not regarded as permanent homes. Boats of various descriptions rather fall into the same category. If caravans were permanently attached to the ground so that they could not be regarded as anything else but permanent homes, they would really fall into the category of houses rather than caravans.
    Mr. G. R. Mitchison: And yachts on the rocks?
    Mr. Amory: I am now taking a very great interest in the development of the Hovercraft.
    Practical considerations of valuation and assessment are against a general tax on the annual valuation of chattels, whatever objective case there might be otherwise; but, for example, motor cars are subject to Purchase Tax. As a practical matter, as things are at present, the owner-occupier is by no means ungenerously treated in his assessment because the ordinary Schedule A assessment is based on a valuation made in 1935, so that it does not result in a charge on the amount of rent that might otherwise have to be paid at current value. Despite this low valuation, the owner-occupier is able to make his maintenance claims by reference to his expenditure on repairs at current prices.
    Those who pay Schedule A this year will get relief through the reduction in the standard rate of Income Tax. On grounds of principle there is room for two views, and opinion is sharply divided. On the matter of principle, it is right that we should continue to give careful consideration to the arguments on either side, and, as I said at the beginning of my speech, I would not wish to express a dogmatic view between those arguments, or to say that the relief in Schedule A is something that we ought to shut out of our consideration for all times. I shall certainly not wish to do that, but, on the grounds of cost, I could not recommend the Committee to accept this proposal this year when such substantial relief is being given through the reduction in the standard rate of Income Tax to owner-occupiers, as to all other Income Tax payers.
    While I sympathise with the aims of the movers of the Clause, on grounds of cost alone I must advise the Committee that the Clause ought not to be accepted.
    Mr. Barter: Would my right hon. Friend find the argument more convincing if there were a great increase in the number of maintenance claims, with a consequent reduction in the net yield?
    Mr. Wade: The Chancellor always says "No" very politely, but it nevertheless seems to be "No". I would be

    67
    out of order if I were to attempt to show the loss of revenue might be raised in some other way. The Chancellor has told us that he is expressing no dogmatic view, but as his view seems to be one
    of sympathy but no reduction, I cannot withdraw the Clause.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 8, Noes 231.

    Division No. 133.]

    AYES

    [5.9 p.m.

    Bonham Carter, Mark

    Grimond, J.

    Bowen, E. R. (Cardigan)

    Hughes, Hector (Aberdeen, N.)

    TELLERS FOR THE AYES:

    Brown, Thomas (Ince)

    Kenyon, C.

    Mr. Wade and Mr. Holt.

    Davies, Rt. Hn. Clement (Montgomery)

    Smith, Ellis, (Stoke, S.)

    NOES

    Agnew, Sir Peter

    Emmet, Hon. Mrs. Evelyn

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

    Aitken, W. T.

    Errington, Sir Eric

    Legh, Hon. Peter (Petersfield)

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

    Erroll, F. J.

    Lennox-Boyd, Rt. Hon. A. T.

    Alport, C. J. M.

    Farey-Jones, F. W.

    Lindsay, Martin (Solihull)

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Fell, A.

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

    Arbuthnot, John

    Fisher, Nigel

    Longden, Gilbert

    Armstrong, C. W.

    Forrest, G.

    Loveys, Walter H.

    Ashton, H.

    Foster, John

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Atkins, H. E.

    Fraser, Hon. Hugh (Stone)

    Lucas, P. B. (Brentford & Chiswick)

    Baldock, Lt.-Cmdr. J. M.

    Freeth, Denzil

    Lucas-Tooth, Sir Hugh

    Balniel, Lord

    Galbraith, Hon. T. G. D.

    McAdden, S. J.

    Barber, Anthony

    Gammans, Lady

    Macdonald, Sir Peter

    Barlow, Sir John

    George, J. C. (Pollok)

    McLaughlin, Mrs. P.

    Barter, John

    Gibson-Watt, D.

    Maclean, Sir Fitzroy (Lancaster)

    Batsford, Brian

    Glover, D.

    McMaster, Stanley

    Beamish, Col. Tufton

    Glyn, Col. Richard H.

    Macmillan, Rt. Hn. Harold (Bromley)

    Bell, Ronald (Bucks, S.)

    Godber, J. B.

    Macmillan, Maurice (Halifax)

    Bennett, F. M. (Torquay)

    Goodhart, Philip

    Macpherson, Niall (Dumfries)

    Bevins, J. R. (Toxteth)

    Gough, C. F. H.

    Maddan, Martin

    Bidgood, J. C.

    Gower, H. R.

    Maitland, Hon. Patrick (Lanark)

    Biggs-Davison, J. A.

    Graham, Sir Fergus

    Markham, Major Sir Frank

    Bingham, R. M.

    Grant, Rt. Hon. W. (Woodside)

    Marshall, Douglas

    Birch, Rt. Hon. Nigel

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

    Maudling, Rt. Hon. R.

    Bishop, F. P.

    Green, A.

    Mawby, R. L.

    Black, Sir Cyril

    Gresham Cooke, R.

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

    Body, R. F.

    Grimston, Sir Robert (Westbury)

    Medlicott, Sir Frank

    Bossom, Sir Alfred

    Harris, Frederic (Croydon, N.W.)

    Molson, Rt. Hon. Hugh

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

    Harris, Reader (Heston)

    Morrison, John (Salisbury)

    Boyle, Sir Edward

    Harrison, A. B. C. (Maldon)

    Mott-Radclyffe, Sir Charles

    Braithwaite, Sir Albert (Harrow, W.)

    Harrison, Col. J. H. (Eye)

    Nabarro, G. D. N.

    Brewis, John

    Harvey, John (Walthamstow, E.)

    Nairn, D. L. S.

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

    Hay, John

    Neave, Airey

    Brooman-White, R. C.

    Heald, Rt. Hon. Sir Lionel

    Nicholson, Sir Godfrey (Farnham)

    Browne, J. Nixon (Craigton)

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

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

    Bryan, P.

    Henderson-Stewart, Sir James

    Noble, Cmdr. Rt. Hon. Allan

    Bullus, Wing Commander E. E.

    Hicks-Beach, Maj. W. W.

    Noble, Michael (Argyll)

    Burden, F. F. A.

    Hill, Rt. Hon. Charles (Luton)

    Oakshott, H. D.

    Butcher, Sir Herbert

    Hill, Mrs. E. (Wythenshawe)

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

    Campbell, Sir David

    Hinchingbrooke, Viscount

    Orr, Capt. L. P. S.

    Cary, Sir Robert

    Holland-Martin, C. J.

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

    Channon, H. P. G.

    Hope, Lord John

    Osborne, C.

    Clarke, Brig. Terence (Portsmth, W.)

    Hornby, R. P.

    Pannell, N. A. (Kirkdale)

    Cole, Norman

    Horobin, Sir Ian

    Partridge, E.

    Conant, Maj. Sir Roger

    Howard, Gerald (Cambridgeshire)

    Peel, W. J.

    Cooke, Robert

    Howard, John (Test)

    Peyton, J. W. W.

    Cooper, A. E.

    Hughes-Young, M. H. C.

    Pickthorn, Sir Kenneth

    Cordeaux, Lt.-Col. J. K.

    Hulbert, Sir Norman

    Pike, Miss Mervyn

    Corfield, F. V.

    Hurd, Sir Anthony

    Pilkington, Capt. R A.

    Courtney, Cdr. Anthony

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

    Pitt, Miss E. M.

    Craddock, Beresford (Spelthorne)

    Hyde, Montgomery

    Pott, H. P.

    Crosthwaite-Eyre, Col. O. E.

    Hylton-Foster, Rt. Hon. Sir Harry

    Powell, J. Enoch

    Crowder, Sir John (Finchley)

    Irvine, Bryant Godman (Rye)

    Price, David (Eastleigh)

    Crowder, Petre (Ruislip—Northwood)

    Jenkins, Robert (Dulwich)

    Prior-Palmer, Brig. O. L.

    Cunningham, Knox

    Jennings, J. C. (Burton)

    Profumo, J. D.

    Dance, J. C. G.

    Johnson, Dr. Donald (Carlisle)

    Ramsden, J. E.

    D'Avigdor-Goldsmid, Sir Henry

    Johnson, Eric (Blackley)

    Redmayne, M.

    Deedes, W. F.

    Jones, Rt. Hon. Aubrey (Hall Green)

    Rees-Davies, W. R.

    de Ferranti, Basil

    Kerby, Capt. H. B.

    Remnant, Hon. P.

    Donaldson, Cmdr. C. E. McA.

    Kerr, Sir Hamilton

    Renton, D. L. M.

    Doughty, C. J. A.

    Kimball, M.

    Ridsdale, J. E.

    du Cann, E. D. L.

    Lagden, G. W.

    Roberts, Sir Peter (Heeley)

    Duncan, Sir James

    Lambton, Viscount

    Robinson, Sir Roland (Blackpool, S.)

    Duthie, W. S.

    Langford-Holt, J. A.

    Roper, Sir Harold

    Eden, J. B. (Bournemouth, West)

    Leather, E. H. C.

    Ropner, Col. Sir Leonard

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

    Leavey, J. A.

    Scott-Miller, Cmdr. R.

    Sharples, R. C.

    Teeling, W.

    Ward, Dame Irene (Tynemouth)

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

    Temple, John M.

    Watkinson, Rt. Hon. Harold

    Smithers, Peter (Winchester)

    Thomas, Leslie (Canterbury)

    Webbe, Sir H.

    Smyth, Brig. Sir John (Norwood)

    Thompson, Kenneth (Walton)

    Webster, David

    Stevens, Geoffrey

    Thorneycroft, Rt. Hon. P.

    Whitelaw, W. S. I.

    Steward, Harold (Stockport, S.)

    Thornton-Kemsley, Sir Colin

    Williams, Paul (Sunderland, S.)

    Stoddart-Scott, Col. Sir Malcolm

    Vane, W. M. F.

    Wills, Sir Gerald (Bridgwater)

    Storey, S.

    Vaughan-Morgan, J. K.

    Wilson, Geoffrey (Truro)

    Stuart, Rt. Hon. James (Moray)

    Vickers, Miss Joan

    Wolrige-Gordon, Patrick

    Studholme, Sir Henry

    Vosper, Rt. Hon. D. F.

    Wood, Hon. R.

    Summers, Sir Spencer

    Wakefield, Edward (Derbyshire, W.)

    Taylor, Sir Charles (Eastbourne)

    Wall, Patrick

    TELLERS FOR THE NOES:

    Taylor, William (Bradford, N.)

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

    Mr. Finlay and Mr. J. E. B, Hill.

    New Clause.—(STAMP DUTIES: MARKET ABLE SECURITIES, &C.)
    Part VI of the Finance Act, 1947, so far as it increases any duty chargeable under or by reference to the headings "Conveyance or Transfer on Sale" or "Marketable Securities" in the First Schedule to the Stamp Act, 1891, shall not apply in relation to the conveyance or transfer of any stock or marketable security as defined by section one hundred and twenty-two of the Act where the amount or value of the consideration for the sale does not exceed five hundred pounds and the instrument contains a statement certifying that the transaction thereby effected does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration exceeds five hundred pounds.—[Mr. Wade.]
    Brought up, and read the First time.
    5.15 p.m.
    Mr. Wade: I beg to move, That the Clause be read a Second time.
    This Clause relates to the Stamp Duty on transfers of shares and other similar securities. It is another example of an attempt on the part of my hon. Friends and myself to achieve a more widespread distribution of ownership. Last year, we put forward a number of proposals which would have led to an extension of widespread share ownership. Unfortunately, they were not accepted by the Chancellor. I hope that we shall be more fortunate over this Clause and more fortunate than we were regarding the Clause which the Committee has just been discussing.
    As hon. Members will be aware, substantial relief regarding Stamp Duty has been made in the case of conveyances of property, and it seems to me illogical that a similar policy should not be applied to the transfer of shares. I am suggesting a very modest step. I do not suggest that the duty on the transfer of shares should be abolished altogether at once, although that is a step which should be taken. For the time being, I am asking for this relief up to a figure of £500 consideration on a particular
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    transfer. This would be a step forward to the abolition of this duty, which I hope we shall eventually achieve. There was an interesting article in the Midland Bank Review last May which was headed, "The nuisance of Stamp Duties". The article stated:
    "Once again a Budget has been opened without disclosing any attempt at or intention of rationalising Britain's agglomeration of taxes levied by way of adhesive or impressed stamps. We are still encumbered by a list of Stamp Duties that fills over eleven pages of the Annual Report of the Commissioners of Inland Revenue but produces little more than 1 per cent. of the total tax revenue."
    Later in the article, it is stated that these taxes:
    "were introduced in 1694—a remarkable year in Britain's financial history—as also were Death Duties, to help in carrying on war against France. Like the then Sovereign, William III himself, the Stamp Duties came from Holland, where they had been introduced seventy years previously."
    That early history is very interesting, but I must not pursue it now. This tax dates back to the Stamp Act, 1891, but the idea is very much older. About seventy years before William of Orange came over to this country, the Government in Holland were looking for new ways of raising revenue and offered a prize for the best new idea for a tax. Apparently the winner was the inventor of Stamp Duty. Times have changed very much since then, and I think that the Stamp Duty on transfers is more than a nuisance, as is suggested in the Midland Bank Review. It is in fact an indirect obstacle to the wider distribution of share ownership.
    Removal or reduction of the tax would be one way of facilitating a wider ownership of shares in industry. Any convenience there may be in collection is more than offset by objections which were not foreseen when Stamp Duty was originally introduced. For example, when firms introduce employees' shareholding schemes they find themselves faced with a number of obstacles. In

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    the first place, the dividends on shares are provided after payment of Profits Tax whereas a cash bonus is allowed in arriving at the tax payable. Similarly, on any transfer which takes place Stamp Duty is payable.
    Whether intentionally or not, the policy of the Treasury seems to me to encourage cash bonuses rather than the holding of shares, which is a form of saving. Furthermore, it would seem to have been Government policy for a good many years to encourage the general public to invest directly in Government securities rather than in industry. On the question of whether that is a sound policy, presumably the idea is that there is less risk if one invests in gilt-edged securities. I very much doubt that. There has been great risk in some gilt-edged securities since the war, and we have also learned a great deal about risk-spreading in industrial shares.
    It may be that Stamp Duty could have been halved as an alternative to the proposal which I am putting forward, but I think that under the proposal put forward by my hon. Friends and myself the amount of revenue lost would be less than in the case of other proposals. For that reason, I am suggesting that there should be a relief from tax on any transfer where the consideration is less than £500. There is no practical difficulty about that.
    It would be quite a simple matter to have endorsed on the back of a transfer the usual kind of certificate which has long been customary in the case of the conveyance of property. There is set out in the Clause the customary wording. It talks about a consideration not exceeding £500 in a particular transaction or series of transactions. I believe that the effect of this would be to encourage small savers to invest in industry.
    I am putting forward my arguments for the Clause very briefly, because I know that there are still many new Clauses to be considered tonight. I hope that what I am proposing will be taken very seriously, because I think it is true that at the present time the Stamp Duty on transfers, which was imposed at a time when circumstances were so very different, is impeding the wider distribution of ownership of industrial shares.
    Mr. Austen Albu: The hon. Member for Huddersfield, West (Mr. Wade) was not, it seemed to me, quite sure of the objects of the new Clause. The first of its objects, I think, we can support. There is no doubt that there are far too many Stamp Duties, on cheques and so forth, which may have been a proper method of raising taxation in the days before Income Tax, Purchase Tax, Petrol Duty and Beer Duty, but which today raise comparatively little revenue and are really no more than a nuisance.
    The object of the Clause is, of course, the object which the Liberal Party are frequently putting forward and which is now supported by the Conservative Party, particularly in the proposals put forward by the right hon. Member for Blackpood, North (Sir T. Low) and others for getting a much wider ownership of shares by workers and those with relatively small incomes. We have to consider whether it is really desirable that people with very small incomes should put relatively small amounts of money into equity shares. Even if they do so, it is certainly highly undesirable that they should use those shares for speculative purposes.
    It seems to me that the reduction of these duties would mainly assist those who wish to buy and sell shares frequently, because Stamp Duty cannot really be a serious deterrent to anyone buying shares in the hope that they will rise in value and which the person concerned intends to hold for a lengthy period of time. I say, therefore, that the Clause would in no way encourage the ownership of shares by small investors who wish to build up a portfolio of shares during their lifetime. It would, of course, help much more those who wish to buy and sell shares continuously, which is, of course, not an activity that can be undertaken with any success by amateurs operating without any knowledge and with practically the whole of their savings. It would be a very dangerous thing and something to be discouraged.
    In any case, I do not know whether the Clause is a practical one. How can one distinguish individual transactions from a series of transactions which do not exceed £500? Over what period of time, for instance, is this condition to

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    operate, and what is to be the sort of total value over the period of time, and so on? It seems to me that it will be extremely difficult to operate a Clause of this type with these conditions. I should not have thought that there was much of a case to be made out for the Clause at present.
    On the second ground which the hon. Member for Huddersfield, West put forward for making this change, there may well be a case for abolishing many of the Stamp Duties on the ground that they are an irritation and a nuisance and do not bring in any great revenue.
    Mr. John Diamond: There is very little that I wish to add to what has been said by my hon. Friend the Member for Edmonton (Mr. Albu) in his short speech. I should, perhaps, preface my remarks by saying that I feel a good deal more at home in talking on this Clause than I did on the previous one, which, I gather, had to do with rented suits—[Interruption.]—my owner-occupied suit.
    As far as the Clause is concerned, I understand that the objections to the present system are, perhaps, three in number. The first is that it is a great nuisance. Those who are more experienced practitioners than I in this field will perhaps know more about it. My impression is that of all the Stamp Duties which work smoothly this duty works the smoothest of all. There is a simple machinery by which it is collected, and I should not have thought that the objection could be sustained on the nuisance of collecting the revenue. Those of us who are interested in spending revenue on good social purposes are also interested in raising revenue painlessly.
    Another objection was that dealt with by my hon. Friend the Member for Edmonton, the objection that the present system prevented the wider ownership of shares of industrial companies, particularly of equity shares. I should have thought that precisely the opposite could be argued—that not only is it no deterrent, but, in fact, it is an encouragement to people once they have invested their money not to sell the shares in order to use the money for other Purposes.
    Once a person has paid the additional cost of the Stamp Duty on acquiring shares, he is deterred from selling them
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    because they would have to go up considerably in order to cover not only their original cost but the brokerage and Stamp Duty as well. Therefore, one is encouraged to hang on to the shares.
    There are all sorts of good reasons why there should be a wider ownership of shares. I gather that this was just a way in to the usual scheme which the Liberal Party was putting forward. The proposed method does not commend itself to me particularly, nor, I am quite sure, will it commend itself to the broad masses in the trade union movement. There are far better methods of achieving the object the Liberal Party has in mind than the one it is putting forward. It would not be appropriate to go into the details at the moment, although I would be delighted to do so. So far as the Liberals are concerned, one must not be very worried about the present problem of Stamp Duty.
    5.30 p.m.
    At present Stamp Duty is an effective deterrent to gambling. There are gambling transactions in very small amounts, and the limit of £500 would not exclude the majority of them. It is also quite impossible to find exactly what the transactions are, or to have any means of ensuring that a series of transactions is not involved. Normally it is the practice of those who gamble in any way to have large numbers of names of so-called investors who may all be acting for the same person, or there might be slightly different interests, and, therefore, one could justify a declaration falling within the proposal in this new Clause.
    The new Clause would encourage gambling and not achieve the purpose of eliminating the majority of gambling. Even its reference to a series of transactions would not do that. Far from discouraging the retention of investment, retention of investment is encouraged. As the reasons put forward for the new Clause do not commend themselves to me, and as I hope others will find themselves of the same view, this Clause should be resisted.
    The Economic Secretary to the Treasury (Mr. F. J. Erroll): I shall not follow the hon. Member for Huddersfield West (Mr. Wade) into a general discourse on the subject of Stamp Duties and whether they are right and proper

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    at present or not, but I thought it rather naive for him to describe—albeit by means of quotation—Stamp Duties as a nuisance. Of course, all tax collection seems a nuisance to a greater or lesser degree to the person who has to pay.
    Mr. Wade: I was quoting when I referred to the nuisance of Stamp Duty, but I also put forward more tangible objections.
    Mr. Erroll: I did say, "albeit by means of quotation".
    Mr. Mitchison: Do we understand the Government view to mean that the Midland Bank is naïve?
    Mr. Erroll: No, but I think the use of the word "nuisance" in a Review of this sort might be described as a somewhat naive description of Stamp Duties. That was reinforced somewhat by the hon. Member for Huddersfield, West. The question of whether Stamp Duty should be used to raise revenue to such an extent was, I think, admirably dealt with by the hon. Member for Gloucester (Mr. Diamond) in his owner-occupied suit, who pointed out that it was a very easy way of receiving revenue—which, of course, is one of the main advantages of maintaining Stamp Duties.
    I am glad that the hon. Member for Huddersfield, West, in moving the new Clause, pointed out that relief for small transactions other than in stocks and marketable securities was already available and has always existed. The reliefs now in force were improved, in 1952, in 1956, and again in 1958. The improvements in the reliefs for small transactions, as hon. Members will know, were designed to encourage home ownership. The proposal of the hon. Member would, however, not be appropriate for marketable securities. It would be impossible to supervise and the duty could only too readily be avoided. As I think he pointed out, in the case of convey, ances and transfers on the sale of property other than marketable securities, it is a condition of applying the reduced rates of duty that the instrument should contain a certificate 'that the transaction does not form part of a larger transaction, or a series of transactions in which the total consideration exceeds the specific amount for which the reduced rate of duty is applied.
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    This procedure could work satisfactorily in the case of a single piece of property such as a house or land or whatever type of property attracts the relief, but everyone will agree that such a requirement would not suffice to control the application of relief to marketable securities where the consideration is not more than £500. There would be nothing to stop a purchaser of a given stock or security buying some more of the same stock or security by means of a separate transaction shortly afterwards, or alternatively, perhaps buying a second lot of the stock through another dealer and transferring both parcels containing the necessary certificates. So the proposal would not be satisfactory in practice because of the opportunities of avoidance.
    I was rather surprised that the hon. Member should put the new Clause forward. A Liberal Party pamphlet entitled "Ownership for All" was published as recently as May this year—a pamphlet which acknowledges the assistance it has received in the form of
    "valuable advice from Mr. Donald Wade, M.P."
    It is interesting to find some of his advice enshrined on page 13. Under the heading "Removal of tax obstacles", the pamphlet makes reference to the difficulty and inequity of any attempted relief for small transactions and says:
    "e.g. Unit Trusts' investment deals would gain no benefit from relief limited to small parcels only; and …"
    Here is the important point—
    "evasion would also be easy."
    Here we have the spectacle of a respectable Liberal Member of Parliament offering one sort of advice to Liberal headquarters when a pamphlet is being drawn up and offering totally different advice to this Committee. On reflection, I am sure he will agree that the former was the right advice and he will agree that we ought to reject the proposed new Clause.
    Mr. Wade: I am sure the hon. Gentleman will agree that the recommendation in the booklet was the abolition of this Stamp Duty. I made it clear in my opening remarks that I should welcome total abolition. However, I foresaw the difficulties in taking a step towards that objective. If we have

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    learned anything from this debate it is that there are some difficulties in taking this step and the total complete abolition would be simpler. I agree that that would be simpler.
    The other purpose in bringing forward the new Clause was to ascertain whether the Government had any intentions on this matter. So far as I understand, the Government have no intention of doing anything to facilitate the transfer of shares. I do not propose to press this new Clause to a Division, but I am disappointed that no helpful information has been forthcoming from the Government.
    Question put and negatived.

    New Clause.—(GIFTS INTER VIVOS, ETC.)
    (1) Section forty-seven of and the Eleventh Schedule to the Finance Act, 1946 (which in relation to the effect for estate duty purposes of gifts inter vivos and of certain other transactions extended from three to five years the period before the death which is material for the purposes of the enactments referred to in the said Schedule), are hereby repealed and the enactments referred to in the said Schedule shall have effect accordingly in all respects as if the said section and the said Schedule had not been enacted.
    (2) This section shall have effect only in the case of any person dying on or after the seventh day of April, nineteen hundred and fifty-nine.—[Major Hicks Beach.]
    Brought up, and read the First time.
    Major W. Hicks Beach: I beg to move, That the Clause be read a Second time.
    This is an extremely simple point, and I think I can explain it to the Committee quite briefly. The intention of this new Clause is to restore the position as regards gifts inter vivos and the liability to death duties as it existed before the Finance Act 1946. I shall amplify what that would entail. When the liability for Estate Duty was created by legislation in 1894, it was provided that where a person made a gift inter vivos to any donee and died within a year of the gift, that gift was liable to be assessed for duty and was in fact aggregated in the estate.
    I say straight away that if we are to have a system of taxation such as Estate Duty, obviously there has to be some form of safeguard to protect the position in which a person makes a gift and dies, perhaps, a month or a week after making the gift. There has to be some form of protection, but the proposition in my new Clause is that the five-year rule is
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    too long and we ought to go back to the position by which a person had to survive only three years after making the gift. My reason for suggesting this change was largely caused by my experience as a practising lawyer over a great number of years.
    There are two fundamental reasons why this matter should be very carefully considered. First, I think I should have general support, certainly from this side of the Committee, and I hope from all sides, in saying that a gift inter vivos during the life of the donor is a highly desirable thing because it spreads the general welfare of the country at the earliest possible moment. I stated that in the debate in 1946 when the three-year rule replaced the five-year rule and I noticed at that time that there seemed to be universal agreement that gifts inter vivos were a good thing in themselves.
    My other practical approach to this matter is this. I do not suggest that anyone is seeking to avoid paying Estate Duty on gifts made within five years of the death of a donor, but the fact remains that very often it is quite innocently done and quite difficult to trace when gifts have been made in fact within five years. It would be the general view of the legal profession that the five-year period is too long and we should revert to the three years. As I said, it is an extremely simple point. What it really amounts to is, does the Committee want to encourage gifts inter vivos or not? If we do, I think the period should be reduced to three years.
    I want to make quite clear that I have been on record on many occasions as saying that I believe the whole system of Estate Duty is profoundly bad, and in proposing this new Clause I do not want it said against me that I am in any way supporting the instrument of Estate Duty. It is unsound because we are using capital for an income payment. That must be unsound from an economic point of view, and we are doing socially great harm in using this type of tax, which is simply dissipating capital for an income purpose. I hope the Government will accept the new Clause, but, if they do not accept it, I hope we shall have some assurance that the whole problem of Estate Duty will be reviewed.

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    5.45 p.m.
    Anyone who deals with these matters, as I have done for a great number of years, knows quite well that there are any number of anomalies and that cases of great hardship arise. As I say, in my view this is a thoroughly out-of-date tax when one studies the economic position. Therefore, I hope that if I do not get my new Clause accepted, I shall at least receive an assurance from the Government Front Bench that the whole matter will be considered before next year.
    Mr. Diamond: Will the hon. and gallant Gentleman explain exactly what his view is about the reorganisation of Estate Duty in relation to gifts inter vivos? Is he arguing that it is difficult to collect the Estate Duty on gifts inter vivos when they have been made five years before death as opposed to three years, and, therefore, that gifts inter vivos ought to be separately taxed as gifts, or is he arguing that they should not be taxed at all?
    Major Hicks Beach: I can answer that straight away. I am not in favour of a gift tax. My proposition is a simple one. It may be the view of hon. Members opposite that Estate Duty is a good tax, but it is not my view. What I say is that if we have Estate Duty we should have a period, which is a realistic one, when we can make a gift inter vivos. Probably I have more experience than the hon. Member and than most hon. Members on this point, and my opinion is that a five-year period is not practicable. If we want a practical approach, three years is the right period. One year would be too short.
    Mr. Mitchison: I always listen with great interest and attention to the hon. and gallant Member for Cheltenham (Major Hicks Beach) on the subject of Estate Duty. He appears to be particularly concerned with the financial aspects of death, and he contrives to make as cheerful a speech on the subject as one reasonably can. I listened to this one with my usual respect and attention.
    Let me tell the hon. and gallant Gentleman of one rather personal sympathy. I have always understood that the present provisions of Estate
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    Duty are thought to result in putting grandfathers into refrigerators when they reach an advanced age and a certain state of decrepitude. Being myself a grandfather no longer as young as I used to be and having in my house a particularly efficient refrigerator, I may be said to have a personal interest in the matter.
    Apart from that, I listened to hear what the reason was for the proposed change. I listened very carefully. The only reason I heard was that it was the general view of the legal profession. I walked up a little lane by the Law Courts yesterday and passed a well-known legal bookseller, and it cannot have been a coincidence that practically the whole of the window was occupied by copies of a recently published treatise on avoidance. I am sure that that can have had nothing to do with the question of Estate Duty that we are now discussing.
    However, the hon. and gallant Member must be well aware that one of the objects of this provision is to prevent people from making gifts at a very late stage of their life and so avoiding death duty. The only argument that I have ever heard put forward for this sort of reduction in connection with that was that they then might be less likely to be ingenious in avoiding. But I do not think that argument was put forward by the hon. and gallant Member, and I am sure that his sense of logic is too great to allow him to put it forward.
    The hon. and gallant Member said that we all approve of gifts inter vivos. That is as may be, but I must point out to him that we do not merely impose taxes for reasons of morality. The hon. and gallant Member referred to the Clause discussed at the time of the 1946 Bill. It was pointed out by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), who was then the Chancellor of the Exchequer, that in a very large number of countries, including, at that time at any rate, the United States of America, gifts inter vivos actually are taxed, and that in this respect we are more moderate in our taxation than those other countries.
    In the light of that, I should have thought that when a Clause of this sort was put forward we ought to have some better justification for it than that it was

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    the general view of the legal profession. It is almost the first time that I have ever heard the legal profession, of which I, too, am proud to be a member, held up as such a final and authoritative judge of our morality in these matters.
    Lieut.-Colonel W. H. Bromley-Davenport: I intervene for a moment only. We have been asked what the reason is for the new Clause proposed by my hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach). I well remember the shouting, the expostulations and the noises coming from our Front Bench at the time that the right hon. Member for Bishop Auckland (Mr. Dalton) passed the legislation in 1946 extending the time limit from three years to five years. Therefore, the answer which I shall give from my point of view—and it is the point of view of all the back benchers on this side of the Committee—is that the reason is that we want to pass some Conservative legislation and put an end to Socialist legislation.
    Mr. Erroll: I thought that my hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach) was about to embark on a general discussion of the principles of Estate Duty. I would agree with him that it is indeed a fascinating subject, but I would ask him not to expect me to reply to the points of general principle which he raised, except to deal with one point which he made concerning the injustice of collecting tax on capital and using it for revenue purposes.
    I would point out that the Government spend far more revenue each year on capital account than is raised by means of Estate Duty, so that if one were to try to equate one with the other one would find that the yield from Estate Duty was nothing like enough to offset or equal the amount spent on capital account by the Government from year to year.
    I am sorry that I have not been able to give my hon. and gallant Friend the reassurance for which he asked, namely, that I should state that there will be a review of the whole Estate Duty problem. Of course, Estate Duty, as with all other taxation matters, is kept under constant review in the Treasury and elsewhere, but I cannot add to that generalised and well-worn statement.
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    The question, therefore, is: should we stick to the five-year period or should we have a shorter period—five years or three years? I was glad that my hon. and gallant Friend did not suggest a one-year period; he agreed that that was too short.
    My hon. and gallant Friend the Member for Knutsford (Lieut.-Colonel Bromley-Davenport) rightly reminded me of the loud opposition which we, then in opposition, gave to the proposals carried by the Socialist Government of the day in 1946 to lengthen the period from three years to five years.
    Mr. Mitchison: I have looked the matter up. The Clause came up in Committee in 1946. Mr. Keeling, then a Member of the House, spoke on it, and my right hon. Friend the member for Bishop Auckland (Mr. Dalton) spoke on it, and the only other speaker in the discussion before the Division was the hon. and gallant Member for Ayr (Sir T. Moore), who simply said:
    "The whole thing depends upon the scale of the original Death Duties."—[OFFICIAL REPORT, 24th June, 1946; Vol. 424, c. 824.]
    That was all the discussion on this matter that I can trace.
    Mr. Erroll: Both the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) and I were Members of the House of Commons at that time, and one must remember that there were several stages of the Finance Bill, as there are now. The hon. and learned Gentleman has probably not had time to look at the other stages of the Finance Bill. It should also be remembered that HANSARD is notoriously reluctant to include in its text such noises as "Oh", laughter or those extraordinary noises which from time to time readily emanate from my hon. and gallant Friend the Member for Knutsford.
    I return to the essential point of this short debate, which is whether it should be a five-year period or a shorter period. Here I must make the argument one of principle. The purpose of the five-year period is to protect the revenue from loss of duty through gifts of property late in life. This means that we must deter the individual from avoiding duty by giving property away in his lifetime, and the longer the period, therefore, the greater the protection and the more

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    effective the deterrent. The five-year period was started in 1946, since when the rates of duty have been increased, so that the need for this protection is now at least as great as it was in 1946, if not more so.
    Basically, Estate Duty may be regarded as a tax on capital passing in the ordinary course of human life and human death. Therefore, property should not escape the charge simply because steps have been taken to prevent its passing on death. In the light of this, I believe that a five-year governing period is by no means excessive, especially as we, unlike many countries, have no gifts tax. I think it is important to remember that point. In these circumstances, a five-year period is not excessive. Therefore, I hope that the Committee will reject the new Clause if my hon. and gallant Friend is not prepared at this stage to withdraw it.
    Viscount Hinchingbrooke: I feel that the observations of my hon. Friend the Economic Secretary, who usually delights the Committee with his wit, tact, charm and considerable knowledge of these subjects, will on this occasion come in a rather distasteful way to hon. Members, particularly to some of us on this side of the Committee.
    It is rather unexpected to hear these rather flat observations fall from my hon. Friend's lips, and I conceive that he has not given this subject in this very short debate the consideration which, as a thorough-going Conservative Minister, he ought to have given it. I think he has accepted a plain brief from the officials, who have, quite rightly, no concept of what the scale, scope, effect and purpose of taxation should be from the point of view of the governance of the State but are concerned to get as much money into the Treasury as they possibly can and to justify it by any possible sort of means.
    I feel that those people in the country who are expecting a Conservative Government at some stage in the next five years or less to undertake a comprehensive review of the whole incidence of Estate Duty will be greatly disappointed by the speech which my hon. Friend has been called upon to make, no doubt because of assiduous duties in another
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    direction and because of his allowing a piece of paper with these absurd and curious arguments to be laid before him.
    There are very large forces in this country exemplified in newspapers and magazines and in societies of every sort and kind which are interested in this subject. There is the whole of the Conservative Party machine. There is the Conservative Parliamentary Party which, as my hon. Friend ought to know—I do not see why I should not reveal it to the Committee, because I am not going to speak about it in detail—has done a great deal of work on the subject and entertains high expectations and high hopes. This is another example of the most unfortunate and unpleasant way in which Ministers get detached from the thinking of the Conservative Party and its ultimate purpose when they get into the high Government machine and spend all their time with these neutral officials in the Treasury. I do not use the word "neutral" in the sense that it has been used in the case of Mr. Liberace, as we heard last week.
    Perhaps it is too much to expect a further reply from my hon. Friend, and I notice that my right hon. Friend the Chancellor of the Exchequer cannot be present during this short debate, but I trust that, having permitted myself this short outburst, before the Finance Bill has finished its course, perhaps on Report or on Third Reading, the Chancellor will indicate that it is the purpose of the Government to allow some review, either Parliamentary of extra-Parliamentary or Governmental or purely party, which will result in some change being made in the heavy incidence of this legislation over the past thirty or forty years which in some respects has done grave damage to our society.
    6.0 p.m.
    Mr. Gower: My only complaint about the reply of my hon. Friend the Economic Secretary is that he seemed to display an unhealthy appetite for the proposition of bringing the taxpayer to heel. It may well be that there is a good case for the five-year period. I think that, on balance, there probably is. The five-year period may well be necessary; but my hon. Friend seemed to imply that it is a jolly good thing. He seemed to have the sort of appetite for it which would feed on more. I hope that that is not

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    true. I hope that his appearance was deceptive and that he will take the view that we should always be vigilant in this House—
    Mr. Ellis Smith: I do not see any sign of it.
    Mr. Gower: —not in bringing the taxpayer to heel but in seeing that the taxpayer is not imposed upon too much by the State.
    Mr. Frederic Harris: I got the impression from what my hon. Friend the Economic Secretary said that it was evil for anybody to give his estate away. I fail to understand why the Minister should say that. He should justify that remark to the Committee.
    Mr. Erroll: If I may say a word in reply to my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), I should like to point out that this Clause deals only with the period—five years or a shorter period. There is no question of a general debate on the principles or the ethics or the justification for Estate Duty. If we are to have Estate Duty, the question is, what is a reasonable period? Five years seems to be the right period. If one lives for longer than five years after making the gift, the gift does not attract Estate Duty, and that should be a sufficient answer to my hon. Friend the Member for Croydon, North-West (Mr. F. Harris).
    As for the noble Lord's remarks about my accepting a Treasury brief, it may be that I have got out of touch with certain of my back-bench colleagues. I do my best to rectify that in the Smoking Room and elsewhere. But I do deprecate very much his suggestion that I have merely taken an official brief from neutral officials. There is no question of that at all. If my hon. Friend likes, he may see my notes which guided me. They are all written out in my own handwriting after careful study of all the evidence placed at my disposal. I accept complete responsibility for what I said. I am only sorry that the noble Lord should have found it so unsatisfactory.
    Mr. Albu: It is always a fascination to us on this side of the Committee when we have these debates which affect Estates Duty. I think it would be in order for me to refer to the fact that
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    the new Clause was moved on a matter of principle in order to encourage the disposition of estates by gifts rather than by legacies.
    It is interesting to observe the passionate feelings which are aroused by any attempt by the party opposite to redress the movement which we on this side of the Committee have been trying to make towards a more equal distribution of property. It shows what utter humbug it is when we read these statements of party policy concerned with attempts to bring about a wider distribution of property.
    The Economic Secretary made it clear that the retention of the five-year period was essential if we were to maintain the purpose of Estate Duty at all. It is clear that hon. Members opposite, including the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), are passionately in favour of reducing the period in which inter vivos gifts are taxed in order to make it easier to give away property so that it does not become taxable on death. This would make it more difficult to change the system of the distribution of property whereby 1 per cent. of the people own 50 per cent. of the property. We on this side of the Committee support a wider property-owning democracy and we support the Government in resisting these extremely reactionary ideas.
    Mr. F. P. Crowder: I wholly associate myself with the remarks made by my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke). It is a very bad reflection on the Government and the Conservative Party that the Minister should have made the sort of speech which he delivered a few moments ago. It is even worse when he has to admit that it was his own speech and not one that was planted on him at the Box. The Government have been in office for eight or nine years. We have had ample opportunity during that time to take some steps to reduce the penal effect which Estate Duty is having upon families and the country as a whole. There has been no review of this matter and no steps have been taken in any shape or form to reduce the tax.
    I like this Clause because it reduces the period from five to three years. I submit that it would be more useful if

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    any gift made inter vivos were subject to the duty at varying rates over a period of years, instead of having this ghastly idea of gambling with death—for that is what it is, and nothing else. One knows of cases where old people have been advised by their doctors to spend a day or two in bed each week in order that they can survive the necessary period to enable the gift to be made free of tax. That sort of policy, in my view, is wholly undesirable.
    Death duty should be reviewed carefully, because it is most unfair in nearly every instance. If often causes unemployment and breaks up estates which need not have been broken up, thereby affecting the traditions of our country and in particular of the countryside.
    I think it was last year that I introduced a Bill called the Variation of Trusts Bill, which fortunately very few Members on the other side of the Committee were able to undertand. I am bound to say that to begin with I had the greatest difficulty in understanding it myself.
    The Deputy-Chairman (Sir Gordon Touche): Order. I am not sure how these remarks relate to the Clause under discussion.
    Mr. Crowder: They relate in this way, Sir Gordon. We were supported in that Measure by the party opposite which, to my surprise, did not mind the Revenue getting a great deal less money as a result of the Bill. What they liked was the prospect of the large estates being broken up and, as it were, sorted out into smaller portions throughout the families concerned. I cannot see why, if such a Measure meets with the acceptance of hon. Members opposite, gifts inter vivos at certain rates and in certain sizes should not be treated in that way.
    I think that at the moment the rule is that any person may make a gift of £500, and no more, in any one year. One would have thought that that figure should have been increased somewhat and should be taxed at different rates. Of course, as the noble Lord pointed out, the whole matter should be the subject of review. It could have been subject to review during the past eight or nine years when this party has been in office. I am sorry to see this excellent new
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    Clause brushed aside in the somewhat casual fashion which the Minister has seen fit to adopt this afternoon.
    Mr. Harold Wilson: In view of the fact that we have discovered something about which the Tory party really cares, and in view of the very obvious manner in which the Economic Secretary—despite the fact that he has admitted that he can not only write but can even read his own writing—has very much upset some of the leading members of the intelligentsia of his own party, would it not be appropriate if we were to adjourn the debate for long enough to enable the Chancellor to come and intervene? This seems to be a major matter which affects the internal morale of the Conservative Party, and we hate to see it so divided.
    The Deputy-Chairman: I could not now accept a Motion, "That the Chairman do report Progress and ask leave to sit again".
    Mr. Wilson: I was not moving to report Progress, Sir Gordon, because I thought it most unlikely that you would accept such a Motion, but I hoped that I had taken long enough in making my point to allow the Front Bench to send for the Chancellor so that he might measure the extent of the revolt which appears to be taking place on his back benches.
    Question put and negatived.

    New Clause.—(DEPENDENT RELATIVE—MOTHER DESERTED.)
    In subsection (1) of section two hundred and sixteen of the Income Tax Act, 1952 (which relates to relief for dependent relatives, after the words "or his or his wife's widowed mother", there shall be inserted the words "or his or his wife's mother who has been deserted by her husband":
    Provided that no person shall by virtue of this section be liable to pay more tax than that person would have been liable to pay if this section has not been passed.—[Mr. Houghton.]
    Brought up, and read the First time.
    Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.
    What is clearly called for now is an act of atonement on the part of the Government, and this new Clause gives them the opportunity. It is a very small point. I hope that the Financial Secretary has his notes written in his own fair

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    hand and is ready to concede to the Committee the small relief here suggested, which was the subject of favourable notice by the Royal Commission.
    At present, the dependent relative relief is given only in respect of dependent relatives incapacitated by old age or infirmity or to widowed mothers without proof of old age or incapacity. The new Clause is designed to extend the relief without proof of old age or incapacity to mothers who have been deserted by their husbands. Reference to this was made in paragraph 200 of the Second Report of the Royal Commission on the Taxation of Profits and Income, and I will read the brief comment there made:
    "The improvements that we recommend are:?
    (a) The dependent relative allowance should be extended to cover the case of a mother who has been deserted by her husband, without requiring any proof of disability. At present such proof is dispensed with only in the case of a widowed mother, but the two cases seem to us the same in principle."
    Although I think my name has been associated with this proposal for some years, I do not recall that it has ever been discussed on the Finance Bill. I may be mistaken there, but I do not recall ever taking part in a debate on this particular matter. It need not cause the Chancellor any misgivings on the ground of cost. I do not think that it can cause any difficulties in administration. As the Royal Commission said, the deserted mother seems to be in the same category as the widowed mother for this purpose, and I hope that the hon. and learned Gentleman is empowered to recommend the Committee to accept the new Clause.
    It will be interesting to see whether the Chancellor of the Exchequer is for or against the deserted mothers or whether, as on an earlier occasion this afternoon, he will prove himself to be a better tight-rope walker than a yachtsman, as when he steered a balanced course between the Schedule A abolitionists and the Schedule A retentionists without glancing to the left or to the right. It will be interesting to see whether hon. Members opposite are as much in favour of deserted mothers as they appear to be in favour of clamorous under-assessed owner-occupiers who
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    could not tell the difference between a house and the Chancellor's suit.
    Sir James Duncan: Will the hon. Gentleman explain the proposal a little further? What happens if the wandering swain comes back? Does the tax then have to be paid?
    Mr. Houghton: I do not think that the hon. Member for South Angus (Sir J. Duncan) is out to help me, somehow. I do not wish to be diverted from this simple proposition which is now becoming very clear to the hon. and learned Gentleman and which, I feel sure, he is anxious to concede.
    6.15 p.m.
    That is all there is to it. The dependent relative relief in the case of widowed mothers has been given expressly by the will of the House, without, in their case, a request for some proof of disability, as there is in other cases. Here is another category of mother, not widowed but deserted by her husband, who should qualify on equal terms.
    The only conceivable reason which the hon. and learned Gentleman may, I think, put against this proposal is this. He may say that it is easier to prove that a mother is widowed than to prove that she is deserted by her husband. I doubt whether this question is of practical importance in this connection. As I have said on other occasions, the practice of the Inland Revenue, in considering claims for relief, is to accept the word of the taxpayer. If he says that he is married and his wife is living with him, the Revenue does not send a long list of question and a request for proof. If he claims for children under the age of 16 or over the age of 16 but still receiving full-time education, the taxpayer's claim is usually accepted. So it is with dependent relatives.
    There are occasions when, on some ground or other, on information received, or as a result of some doubt which arises, the Inland Revenue may ask the taxpayer to furnish evidence in support of his claim. In this case, if a claimant were asking for dependent relative relief for his mother deserted by her husband, and the Revenue asked for some proof of that, I do not think there would be any difficulty in supplying proof if it were a bona fide claim qualifying under the new Clause.
    Mr. Geoffrey Stevens: Will the hon. Gentleman not agree that, if the taxpayer is dead, the inspector of taxes sometimes asks for proof of that, and asks for production of probate as well?
    Mr. Houghton: Yes. I do not say for a moment that the Inland Revenue does not ask for proof of certain facts. Occasionally it does. At times, false claims are discovered quite accidentally. But I think that the Financial Secretary will accept my proposition that the taxpayer's word is taken. In certain cases, if proof is sought, the Inland Revenue is fully entitled to press for it, and the taxpayer can usually supply it if he has a good claim.
    I do not think that anyone would object to a quite specific definition of "separation" for the purpose of qualifying under the new Clause. Some mothers may be deserted by their husbands and have not taken steps to establish the fact that they have been deserted. They may have made no claim for maintenance. There may be no judicial separation; in some cases, there may not even be a separation agreement. However, these difficulties are encountered in connection with alimony and payments of different kinds to spouses. The sort of difficulty which might arise administratively is well within the competence of the Inland Revenue to deal with without unnecessary trouble to the taxpayer or difficulty to itself.
    As to the claim of the deserted wife, on terms comparable to those of the widowed mother, the Committee will accept the general view of the Royal Commission that they differ little in principle. I know that, after what I said the other day, I must not rely too heavily upon the recommendations of the Royal Commission. I said then—I repeat it—that its recommendations are a good guide in these matters. The Chancellor of the Exchequer has relied on the Royal Commission once this afternoon, and he will probably do so again before the day is over. My right hon. and hon. Friends and I will not complain about that. I do not base my proposal solely on the fact that the Royal Commission recommended this; but that it did so is of help in moving the Clause. I sincerely hope that we shall have a favourable response from the Financial Secretary.
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    I now await a revolt on this matter from the benches opposite equal to the heat and emotion generated on gifts inter vivos with which we were dealing a few minutes ago.
    Sir James Duncan: The hon. Member for Sowerby (Mr. Houghton) was not fair to me in saying that I was not helping his cause. I was trying to get him to explain what he meant at a moment when he was attacking this side of the Committee. If I put him off his stroke, I am glad, but he was less than fair in an answer he made. He said that the proposal would be easy to administer. I can see all sorts of difficulties sticking out a mile in the administration of this proposal. What is "deserted" in law? It will be extremely difficult for the Inland Revenue to accept or refuse a claim in any case unless there is some technical description of "deserted", which I do not think that there is. If a mother is divorced she is not deserted in this sense, because she ceases to be a liability. Therefore, we are left with the indeterminate kind of deserted mother whose husband has gone off and may return. What will happen in that case? I asked the hon. Gentleman that earlier, but he did not answer. Does the family have to pay back the money if the husband returns? That is merely one of the administrative difficulties which I can see sticking out a mile.
    I can understand the Royal Commission's idea in suggesting that there should be some help, and I agree with it if this can be dealt with administratively, but I see very grave administrative difficulties in dealing with it on the lines proposed by the hon. Gentleman.
    The Financial Secretary to the Treasury (Mr. J. E. S. Simon): The effect of the Clause is to extend an existing relief, granted at the moment by virtue of Section 216 of the Income Tax Act, 1952, whereby there is relief in favour of a person who maintains his own or his wife's widowed mother, whether incapacitated or not, to cover a deserted mother, whether incapacitated or not.
    Generally speaking, this is to some extent an anomalous relief, a relief which inures to the benefit of someone who is not incapacitated. Nevertheless, as the hon. Member for Sowerby (Mr. Houghton) said, the relief has been approved by Parliament. The hon.

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    Gentleman is right in saying that this extension was recommended by the Royal Commission. The fair way in which we ought to look at such recommendations is the way which I suggested last week, namely, that a recommendation of the Royal Commission is not in any way binding on the House of Commons, but it is entitled to very great weight and, other things being equal, effect would probably be given to it.
    In the present case, there are difficulties in this Clause and in this recommendation. First, I am bound to point out a drafting difficulty which would preclude us from writing this particular new Clause into the Statute Book. I have made attempts to draft new Clauses and Amendments to the Finance Bill, but I have never succeeded in getting one right. We all recognise that the draftsman, with his great skill, experience and sources of information is at a very great advantage compared with even someone like the hon. Member for Sowerby who has great experience in those matters. At present Section 216 of the Income Tax Act, 1952, reads:
    "If the claimant proves that he maintains at his own expense … his or his wife's widowed mother, whether incapacitated or not …"
    The new Clause proposes that we should write in the words:
    "or his or his wife's mother who has been deserted by her husband".
    Therefore, Section 216 would then read:
    "or his or his wife's mother who has been deserted by her husband whether incapacitated or not".
    which is certainly not the effect which the hon. Gentleman seeks. That is no doubt a matter which is capable of adjustment later.
    There are more serious difficulties, some of which were adverted to by my hon. Friend the Member for South Angus (Sir J. Duncan). It would be impossible to defend a position which would give the allowance for a mother who was not incapacitated if she obtained a divorce on the ground of desertion, but would refuse it if she was not incapacitated and the divorce was obtained on other grounds. For example, a mother who had divorced her husband on the ground of adultery could probably not claim that she had been deserted. In certain circumstances,
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    it might amount to desertion, but, generally speaking, it does not. Another example is a case of wilful neglect to maintain. The woman might even obtain a small maintenance order which was not honoured, but she might not be deserted. Other examples are, first, where there is a deed of separation, which normally terminates a state of desertion; secondly, a judicial separation, which normally terminates a state of desertion; and thirdly, a separation order in a magistrates' court.
    For all those reasons, it is impossible to defend an extension which would not cover all divorced or legally separated mothers. However, the Royal Commission recommended this extension. The hon. Gentleman gave reasons for desiring to extend it to a mother who had been abandoned in any way or ill-treated by her husband so that she was forced to live alone. My hon. Friend was clearly anxious to see some extension, if it could be achieved without producing the anomalies and difficulties to which he drew attention.
    If the hon. Gentleman will withdraw his Clause at this stage, my right hon. Friend is prepared to table a new Clause at a later stage of the Bill which will cover the case which the hon. Gentleman has in mind but will go a little further and therefore avoid the sort of difficulties which I know the hon. Gentleman has in mind and to which my hon. Friend referred.
    The hon. Gentleman is right in saying that the cost of such an extension would not be in any way an impediment to such an improvement to the law. We believe that, dealt with in that way, the administrative difficulties could be overcome.
    6.30 p.m.
    Mr. Houghton: I am much obliged to the hon. and learned Gentleman and I am full of apology to the hon. Member for South Angus (Sir J. Duncan). I am, in fact, overcome. Here at last, at this late stage in the Bill, the hon. and learned Gentleman has responded to the many appeals that I have made to him. I will not pursue the matter further. We look forward to the new Clause which the Chancellor will put down later.
    I am sure that we will not look a gift-horse too closely in the mouth. I agree

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    that, to make the extension tolerable to others besides deserted mothers, there would be other categories to include as well, and I have no doubt that suitable protection should surround the enlarged concession. I beg to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(PERMISSION FOR AN OVER- SEAS TRADE CORPORATION TO HAVE A NON-RESIDENT SUBSIDIARY.)
    Section twenty-three of the Finance Act, 1957, shall be amended by the omission of the word "and" at the end of sub-paragraph (ii) of paragraph (a) of subsection (1), and the insertion of "or
    (iii) it is a principal company not itself carrying on a trade but having a subsidiary company which is not resident and is not carrying on a trade in the United Kingdom but is carrying on a trade outside the United Kingdom, and which would itself qualify as an Overseas Trade Corporation if it were so resident, and section thirty-five of the said Act shall be amended by the addition at the end thereof of—
    '(4) Where the Overseas Trade Corporation receives from another company such as is referred to in section twenty-three, subsection (1), paragraph (a) (iii), being a non-resident subsidiary company a dividend on shares in that company or a grant or loan from that company and

    (a) the non-resident company is a subsidiary of the Overseas Trade Corporation, or

    (b) both the non-resident company and the Overseas Trade Corporation are subsidiary companies of the same principal company which is also an Overseas Trade Corporation

    the dividend, grant or loan shall constitute trading income of the recipient'".—[Mr. Stevens.]
    Brought up, and read the First time.
    Mr. Geoffrey Stevens: I beg to move, That the Clause be read a Second time.
    At this stage in our proceedings, I do not propose to weary the Committee with a recapitulation of the inauguration of the concept of an Overseas Trade Corporation. It is, however, worth while recalling that three years ago, when my right hon. Friend the Prime Minister was Chancellor of the Exchequer, in a debate on this subject he gave a clear indication that the Government looked favourably towards this new kind of concept in our taxation practice of a person resident in this country but not
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    liable in respect of a substantial part or, perhaps, the whole of his income to United Kingdom taxation.
    In the following year, 1957, my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) went a considerable way towards implementing the undertaking given by his predecessor. That undertaking was, however, restricted severely. It was restricted to companies registered in this country and trading overseas by means of branches, but not trading overseas by means of subsidiary companies in the overseas country.
    There were three reasons why that limitation was imposed by my right hon. Friend. First, it was largely a new concept and the Government and the Inland Revenue wished to have practical experience of its working—something like a pilot scheme, for example—before considering its wide extension. Secondly there was the question of cost, on which I shall say a word presently. Thirdly, there was the feeling that if the Overseas Trade Corporation concept was extended to subsidiary companies registered overseas, unfair or undue advantage might be taken of the procedure by United Kingdom persons and companies who wished to avoid their proper share of taxation.
    That conception has not taken matters far enough. The experience that we have now gained with overseas branches has been sufficient to enable us to consider the implementation of my right hon. Friend's undertaking in 1956. I know it is sometimes said that British companies can obtain Overseas Trade Corporation advantages if they trade through subsidiaries overseas provided the affairs of those subsidiary companies overseas are conducted by local boards of directors. If they do that, it is true that the profits of those overseas subsidiaries pay local taxation and not United Kingdom taxation, but only to the extent that the profits earned overseas are not remitted to this country. As soon as they are remitted here, they become liable to United Kingdom taxation at the full standard rate.
    I will explain why that is a serious drawback. One of the principal reasons why the Government felt that the O.T.C. concept was a wise one is that it frequently happens that a British company

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    trading overseas in one country makes a profitable "go" of it in that country and builds up reasonable reserves. It then wants to transfer the profits to another branch of its organisation in another country. By means of the existing O.T.C. concept, that is possible. There can be a transfer from a branch in country "A", which is already on a profitable basis, to a branch in country "B", which is developing.
    If, on the other hand, because of local feeling—we are all aware of the development of nationalist feeling throughout the world in recent years—the business of the branch of the British company overseas has had to be converted into a limited company registered overseas with its day-to-day business also controlled overseas, it may well be that the only way in which it can make a remittance to another branch of the business in another country is by remitting a dividend to this country. At once it becomes liable to tax at the full standard rate, and switching from one country to the other becomes an uneconomic proposition.
    We on this side have no wish to place United Kingdom industrialists overseas in a particularly beneficial position vis-à-vis anybody else. All we have sought to do is to put them on the same basis as industrialists of other nations trading in those other countries so that they do not have a tax handicap. Organisations which are run by different countries can switch from one country to another without incurring a tax penalty. As matters stand at present, however, that cannot be done if the United Kingdom company is operated by a subsidiary company overseas.
    I have referred to cost. I remember well that when my right hon. Friend the Member for Monmouth gave us the O.T.C. concept in relation to overseas branches, the estimate of cost was put at a figure which many of my hon. Friends and I considered to be exceedingly high. I wonder whether we have now had sufficient experience for my right hon. Friend the Paymaster-General, who is to reply to this discussion, to give an idea of the actual cost of the O.T.C. conception for overseas branches. Secondly, can he give a reasonable estimate of the likely cost of
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    extending the proposal to overseas subsidiary companies?
    I have referred to the possibility of unscrupulous people using the device of overseas companies to get an unfair tax advantage. I do not think there is a serious risk of that. Even if there were, I would have thought that two Sections of the Income Tax Act, 1952, should give the Inland Revenue sufficient safeguards. It is true that Section 468, which makes specific reference to
    "transactions which result or may result, directly or indirectly, in the avoidance of liability to income tax,"
    is limited to the transfer of a trade or business or the transfer of part of a trade or business from a United Kingdom resident to someone overseas. There is, however, also Section 469, which covers all transactions in which the buyer is a person over whom the seller has control, the seller is a person over whom the buyer has control, or both buyer and seller are closely related by the operations of a third person. Those two Sections of the Income Tax Act alone, let alone the other safeguards provided in the Act, should be sufficient to safeguard against any improper conduct.
    I suggest strongly that this extension of the O.T.C. concept to give the full benefit must come some time, and I believe that the time has come now. Our overseas trade is more important than ever before. Admittedly, it is doing extremely well, but it must do better still. Now is the time to remove the tax handicap on British industry so that it can really go full steam ahead. I commend the new Clause to the Committee.
    Mr. Peter Remnant: I rise to support briefly the remarks of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens). I must declare an interest in that I am endeavouring to grow tea in East Africa and I wish to refer to that angle of this matter, and to the particular instance of an O.T.C. company in the United Kingdom with a Tanganyika-registered company, which, of course, cannot be an O.T.C., but of which the United Kingdom company is a 100 per cent. owner.
    That company, in the early stages of its development, does not find it as easy

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    as it was two or three years ago to borrow money there. That means sending remittances from the United Kingdom, and at the present moment any remittance from the United Kingdom company, which is an O.T.C., to the Tanganyika-registered company is held by the Inland Revenue in this country to be, as in fact it is, a remittance to a non-O.T.C. and as a consequence is grossed up for tax purposes. That being so, development in East Africa becomes an extremely expensive business under the regulations as they stand.
    Owing to various political developments, the individual settler is trying to sell his wholly developed or partly developed, or perhaps not developed at all, farm or small garden to the bigger institutions. They are all sellers today, so prosperity in the future in that part of the world needs a steadier. I have been trying to obtain the interest of Government channels in it. They have been good enough to say that if I would put up a proposal to them they would give it favourable consideration. Here is a very simple method of providing about 30 per cent. more cash for development purposes than one is able to do now.
    I understood the objection of my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) two years ago when he was apprehensive about the switching of exempted income. My hon. Friend the Member for Langstone, in his proposal, also provides that the company concerned comes within the classification of a subsidiary, but I personally, perhaps because the company I am concerned with owns 100 per cent. of the equity, would be prepared to see him raise the proportion a little above the majority holding and to something rather higher if the income can still be treated as exempted income.
    The point that I want to make in support of my hon. Friend's proposal is that the regulation, in the law as it stands, is hindering development overseas where those companies have followed what has become the current practice of being registered in the country in which they operate. I hope that my right hon. Friend the Paymaster-General will appreciate that, in our view, the time is now ripe for some amendment and alteration in the provisions.
    6.45 p.m.
    The Paymaster-General (Mr. Reginald Maudling): This is a very complicated branch of our taxation law, but my hon. Friends the Members for Portsmouth, Langstone (Mr. Stevens) and Wokingham (Mr. Remnant) have put the point to the Committee with absolute clarity. It is, of course, a point which has been discussed before in this Committee on more than one occasion. It was discussed on 15th July last year, when my right hon. Friend the Chancellor, as the Committee will remember, made a statement on the subject. At that time he did not feel that he could accept this proposal for several reasons. The first was that, as a matter of principle, the idea of an Overseas Trade Corporation was to put a resident company into a better position and thereby encourage people to remain as residents.
    Secondly, my right hon. Friend pointed out that nothing in the O.T.C. legislation had put a non-resident company in a worse position than it was before. It can be argued that it is relatively in a worse position because an overseas branch is in a better position. There is a considerable point in what my hon. Friends have said about the importance of many overseas businesses being conducted by subsidiaries resident overseas rather than by branches. My right hon. Friend certainly shares their view both on this matter and on the importance of doing all that we can to remove hindrances in the way of expanding British businesses overseas.
    As a result of that, my right hon. Friend has been giving some study to these problems in the course of the year and has had the benefit of the advice of a number of interested people—deputations with special knowledge of this matter and companies and business associations with special knowledge and experience—and I am sorry to say that he still feels unable at this stage to accept the proposal that is advanced.
    The reasons are really those which my right hon. Friend gave last year. As I said, he pointed out that in principle there was a strong case on the side of my hon. Friends, but there was also a case in principle on the other side. The difficulty is a practical one. It is the difficulty of how to prevent the avoidance of taxation arising from the result

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    of the extension proposed by this Clause. My right hon. Friend explained last year, as the Committee will remember, that it would be unwise for him to go into details of methods of tax avoidance. After his having given long and further consideration to this problem, we are still advised that there are substantial dangers of avoidance involved. It would be possible to go a considerable way towards mitigating these dangers, but that would involve very complicated and long provisions difficult to insert in the Bill at this stage, and it is not certain that even then the provisions would be enough to prevent the risk of avoidance.
    That is the main consideration that my right hon. Friend has in mind. All the consideration and thought given to this matter in the last twelve months have not, I am afraid, convinced him that the case for this Clause is a conclusive one. There is also the matter of cost. I must admit that I cannot give a very definite figure. It is not possible yet to give the figure for which my hon. Friend the Member for Langstone asked, because experience is not yet adequate to give a definite figure. In the case of this proposal, it would be even more difficult to try to quantify the loss of revenue that would be involved. I can go no further than to say that several million pounds would be involved. It would be unwise to say anything more definite than that.
    So there are still these objections which stand in the way of accepting the principle in this Clause—first, the danger of avoidance which it seems difficult, if not impossible, to overcome; and second, the fact that some substantial cost would be involved. With the principle of enabling British businesses to expand overseas and the fact that in many cases it is desirable to operate by non-resident subsidiaries there is no disagreement and no argument. My right hon. Friend feels with considerable regret that, in spite of all the study given to the problem, he cannot yet feel that it would be right to accept this proposal.
    Mr. Mitchison: I am glad that the right hon. Gentleman has given the reply which he did. It has always seemed to me that there must be almost insuperable objections to this proposal. That was the view of the right hon. Gentleman
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    the Member for Monmouth (Mr. P. Thorneycroft) when he was Chancellor and introduced these provisions, and when, in relation to these and similar proposals, he pointed out the extreme difficulty of ensuring that a non-resident subsidiary did not, for example, carry on a trade in the United Kingdom or do any of the other things which would disqualify it from being an Overseas Trade Corporation. That is a practical difficulty, and if, in fact, supervision is impracticable, I am sure that the hon. Member for Portsmouth, Langstone (Mr. Stevens) would agree that that is a very grave objection to a Clause of the kind proposed.
    These objections, repeated in somewhat mysterious form today by the right hon. Gentleman, were raised by the Chancellor of the Exchequer, who on 15th July, 1958, said:
    "It would be unwise for me to put ideas into anyone's head by describing the sort of methods of tax avoidance that I would be afraid of, but it is a real difficulty and at this stage we have not yet found any way round it."—[OFFICIAL REPORT, 15th July, 1958; Vol. 591, c. 1098.]
    I confess to the Paymaster-General that I listened to his speech with the vulgar hope that the secrets would be disclosed, and that some ideas would be put into the heads of people in such a way as would prevent them at the same time from using those methods, but we remain still a trifle mystified as to what they are.
    We are glad, however, to see that the Government in this respect are still of the opinion that there is no real way round the unnamed, undescribed and mysterious methods of tax avoidance which the Chancellor had in mind a year ago.
    Mr. Stevens: I am sure we all appreciate the difficulties in the way of framing legislation so as to ensure that there shall be no improper use of the wider concept, but I still think that the wider concept must come in due course, and it is up to me and to those who think with me to try to assist the Chancellor to find ways of preventing tax avoidance so that, perhaps, I shall have better luck next year. It is in that hope that I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(REPAIRS ALLOWANCE UNDER SCHEDULE A.)
    Subsection (3) of section one hundred of the Income Tax Act, 1952, shall be amended as follows—

    (a) by the substitution of one-half for one-fourth in paragraph (a);

    (b) by the substitution of two-fifths for one fifth in paragraph (b);

    (c) by the substitution of forty for twenty and one-third for one-sixth in paragraph (c).—[Mr. Stevens.]

    Brought up, and read the First time.
    Mr. Stevens: I beg to move, That the Clause be read a Second time.
    We had a debate earlier today on various aspects of Schedule A tax, whether it should or should not be abolished altogether, or whether it should be abolished for owner-occupiers. I remember that the Royal Commission on the Taxation of Profits and Income did report that land was, in its opinion, a proper subject for taxation, and I did hear the Chancellor this afternoon say, what is undoubtedly true, that there is room for two views on this subject. It is my experience of life, and drawn from a large number of cases, that where there is room for two views compromise can very often be achieved and is possibly the best solution, and this new Clause, I would think, is an amiable compromise, a safe passage between the Scylla of abolition of Schedule A altogether and the Charybdis of retaining it in its present form altogether.
    I do not myself think that the case for the abolition of Schedule A, even on the owner-occupier, is the strong case, is the proper one, but I do agree that Schedule A tax does require some modification. There has been a very considerable change in money values since the fractions which we now use for arriving at the statutory repairs allowance were calculated. The cost of repairs has varied a great deal in the last twenty or thirty years.
    It is perfectly true, as was said in the earlier debate, that it is competent for a householder to make a Schedule A maintenance claim, but whilst it is perfectly true that the owner of a large property knows, or frequently knows, all about these things, a very large number of small house-owners do not. I know that ignorance of the law is no excuse. It is the fact, however, that the wealthier
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    house-owner can afford to employ an expert to assist him in these matters, while the elderly, living in retirement in a small house, cannot do so. Therefore, I am quite certain that a very large number of Schedule A maintenance claims go in default of the making.
    I am well aware that the Royal Commission, in dealing with the question of the statutory deduction for repairs, said that in its view any variation should await revaluation. In our earlier debate some reference was made to revaluation. We have been awaiting revaluation for twenty years, and we really cannot go on interminably postponing some rectification of these anomalies, bringing some form of justice, particularly to small house-owners, by awaiting a revaluation that never seems to come.
    This new Clause seeks to double the present statutory repairs allowance, and that, obviously, will bring proportionately and practically more benefit to the small owner than to the large. I believe that, because of his constant postponement of revaluation, this constant postponement of bringing justice to these people, the time has come to do something now, and I commend to the Committee this new Clause which, I suggest, is a compromise between two views.
    Mr. Page: I want to support my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) in moving this new Clause, not merely because it gives me a chance to come back to the attack on Schedule A, but because I sincerely believe that this Clause provides a possible compromise which will put right a number of existing anomalies and dispose of some of the unfairness and injustice which falls upon the Schedule A taxpayers.
    If one takes a figure of gross value such as £40, the statutory allowance is £10, as the law stands at present. These figures were fixed as long ago as the mid-'thirties, and that £10, I think hon. and right hon. Members will agree, is represented by about £30 today. I make that estimate upon the following facts. In 1939 a craftsman in the building trade received 1s. 9d. an hour; he now recieves 4s. 10½d. an hour. Therefore, the cost to anyone engaging him on repairs is 279 per cent. of the 1939 figure. The labourer's hourly rate in 1939 was

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    1s. 3¾d.; it is now 4s. 4d.; that is, 336 per cent. of the 1939 figure. For materials, approximately it is 306 per cent. of the 1939 costs. So about 300 per cent. is the average increase in the cost of these items, the increase in the cost to the householder of repairs.
    On that basis our new Clause ought to have asked for the statutory allowance to go up to three-quarters instead of one-half in the ranges between £40 and £100 gross value. For example, we ought to have asked for a deduction of £30 from £40 instead of £20. I think the new Clause as it stands is, therefore, amply justified by the increases in the cost to the householder of repairs, but it may be said that one ought not to modernise the statutory allowance without modernising gross values. That argument is fallacious, because gross values, at any rate of property let, have indeed been modernised by the tax on excess rents. If the property is let the landlord pays, not only Schedule A tax, but tax on the excess rent as well. So to that extent gross value has been modernised, and yet the statutory allowance remains the same. Gross value, indeed, is meaningless except in relation to the owner-occupier.
    Again, it may be said that this new Clause benefits the owner-occupier more than the landlord. It does if one looks at it proportionately. For example, taking the figure of £40 gross value again, under the new Clause a landlord will be paying on £80 rent less £20 statutory allowance. I take from the Rent Act, 1957, the rent limit of twice the gross value. He will be paying on £60 instead of £70 whereas, under the new Clause, the owner-occupier will be paying on £40 less £20; that is to say, he will be paying on £20 instead of his present liability of £30. Although proportionately there is a difference between the owner-occupier and the landlord, if the Clause were accepted there would be in both cases a reduction of tax liability of £10.
    7.0 p.m.
    The Rent Act, 1957, however, embodied an up-to-date assessment of the relationship between rent and repairs and, therefore, between gross value and repairs. Rents were fixed by the Rent Act, 1957, for those properties which remain in control, at twice the gross
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    value, if the landlord carries out the repairs. But if the tenant carries out the repairs, the rent limit is four-thirds of the gross value. Therefore, we recognised by that Act that repairs were one-third of the permissible rent, which means two-thirds of the gross value, and not merely one-quarter as recognised by statutory allowance under the law at present.
    Therefore, if the landlord does all the repairs and receives twice the gross value by way of rent, he gets a statutory allowance of only one-quarter of the gross value. On figures between £40 and £100 gross value, he gets only one-fifth by way of statutory allowance. These figures, based on the Rent Act, themselves recognised that the landlord must, almost invariably, put in a maintenance claim. On a gross value of £40, the Rent Act recognises that repairs are £28 13s. 4d. a year, but the owner gets a statutory allowance of only £10 a year. These sort of figures get wider apart as one goes up the scale in gross values. At a gross value of £100, the Rent Act recognises repairs of two-thirds of £100, or £66 13s. 4d., and yet the statutory allowance at only one-fifth is a mere £20. At figures of £200 gross value the gap is even wider. At two-thirds of £200 the Rent Act recognises the repairs to be £133 6s. 8d., but the statutory allowance comes out at £36 13s. 4d.
    This wide discrepancy between what we have statutorily recognised as the proper amount for repairs is nothing but an incitement to maintenance claims, with all the administrative expense and difficulties which those represent and the unjust collection from those who cannot cope with these complicated claims. With the probable increases in the claims, I doubt whether the Chancellor will lose very much by accepting the Clause. He may well gain in preventing administrative expense by keeping down the necessity for maintenance claims. Even if he is a bit out-of-pocket on it, it is right and proper that he should be.
    The stupid rules about maintenance claims exclude many proper maintenance items. Nothing can be claimed under maintenance for work that a person does himself. Neither can he claim anything for repairing a movable electric or gas fire, although he may prefer that type to the fixed type. He can claim nothing for adhesive lino for the floor, but he can

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    claim for adhesive paper for the walls. A person can claim for papering the walls but not for covering the floor, and so on, with all the complications about the distinction between improvements and repairs. I do not think that the doubling up of the statutory allowance, as suggested in the new Clause, does very much to cover this, but even if it goes only a little way it is something. In supporting the Clause, I hope that it is a paving amendment for a future Finance Bill which will abolish Schedule A tax on the owner-occupier altogether.
    Mr. Gerald Nabarro: Before we part with back bench speeches in support of the Clause, I should like to add a few words on the latter part of what my hon. Friend the Member for Crosby (Mr. Page) has just said.
    Questioned about the administrative cost per £100 of the revenue collected, three separate and senior inspectors of taxes have told me that the most expensive form of direct taxation to collect in terms of administration is Schedule A. I do not think that there can be any reasonable argument about that, because of the extraordinary complexities arising today in the matter of maintenance claims and so many marginal issues which the ordinary householder does not trouble to take to the local commissioners for adjudication.
    Because of changed designs in appliances for heating purposes, for example, and in many other fixtures and fittings in houses, as a result largely of scientific advance, it is often nearly impossible for inspectors of taxes to adjudicate on what element of improvement or otherwise is represented by a replacement of the article. There have been endless, and very legitimate, arguments by taxpayers with local inspectors to try to decide what element of the replacement price is rightly attributable to obsolescence and what element, if any, may be attributed to improvement of the asset. If the latter, it is wholly excluded, more often than not, from the maintenance claim.
    Over the years, I have had many arguments with tax inspectors, and I am only one individual quoting from individual experience among hundreds of thousands in the country. I readily confess—
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    though it would be out of order to pursue it further now—that I am an outright abolitionist in the matter of Schedule A, which in net revenue collects only £34 million in a full year.
    Mr. Wade: How, then, did the hon. Member vote in a Division earlier this afternoon?
    Mr. Nabarro: I do not think that I was here. I am not sure. I had to miss a number of Divisions on the Finance Bill in Committee through earlier outside engagements, but I am not sure about that one.
    I am an outright abolitionist of Schedule A because it is so excessively expensive administratively to collect. I would far prefer that the Chancellor had devoted £34 million to cancelling Schedule A altogether rather than to the relief of taxation on beer, for example. He would have benefited far more people and our national economy generally. I support the Clause. I want the words on record because I propose, in concert with my hon. Friend the Member for Crosby, to pursue the matter more energetically on a future Finance Bill. I regard the Clause as only the tiniest advance towards the desirable objective of the cancellation of Schedule A tax.
    The Clause, however, would have one important effect. A large number of piffling maintenance claims would be eliminated if the statutory allowance were doubled, and this would relieve local offices of the Inland Revenue of much minor administrative work which in my opinion—I go further than the hon. Gentleman the Member for Crosby—would not result in any loss to the Revenue, having regard to the high cost of collecting multitudinous small sums of Schedule A tax throughout the country.
    I hope, therefore, that my right hon. Friend will receive sympathetically the pleas under the various headings made by my two hon. Friends and myself.
    Mr. Houghton: There is no doubt that Schedule A is in a mess, but I question whether it is possible to tinker with it and do any good. Undoubtedly there will have to be a review of the whole position of this tax in our fiscal structure. There will have to be a Schedule A revaluation before long if the tax is to make any sense. At the moment, it

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    seems to us on this side of the Committee that it would be undesirable and unjustifiable to double the statutory repairs allowance over the whole range of Schedule A, though we should certainly be more favourably disposed towards the new Clause if it were confined to owner-occupiers.
    There are two Schedule A taxes at present: the assessments made on landlords on rents received and the assessments made on owner-occupiers on the hypothetical annual value of the house which the taxpayer owns and lives in. As regards the latter, I do not think any hon. Gentleman opposite will dispute the assertion that the assessments on owner-occupiers are distinctly below the current letting values. They are pre-war values. The last revaluation was over twenty years ago, and there are literally thousands and thousands of owner-occupied houses of which the assessments today are the same as the last Schedule A revaluation in 1936–37.
    Mr. Page: From that, does it not follow that there is a certain unfairness when a new house is valued at present?
    Mr. Houghton: I do not want to go too far away from the proposed Clause, but since the hon. Gentleman has intervened with that point, it is a fact that most new houses built for owner-occupation are assessed on a value comparable with other owner-occupied houses and not with tenanted houses nearby. I know that the practice of local commissioners varies in this matter, but, in general, owner-occupiers enjoy the lower level of valuation, even where the house has been built since the last Schedule A revaluation.
    It could, of course, be said as regards owner-occupiers that to double the statutory relief for repairs would be to concede the current level of expense for repairs and set it off against the prewar level of annual value. To that extent it could be suggested that it would be unjustifiable to give relief in terms of current cost on repairs against pre-war level of annual value. However, there are many respects in which the owner-occupier spends time and money on the maintenance of his property which he finds difficulty in including in a maintenance claim, and some allowance could be made for much time and trouble that he spends on his property and which a
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    landlord would probably incur as actual expense and thereby be enabled to make a maintenance claim. So we would see some justification for differentiating between the owner-occupier and giving him more relief than in the case of the landlord of tenanted property.
    7.15 p.m.
    As regards the landlord of tenanted property, as the hon. Member for Crosby (Mr. Page) has pointed out, we must recognise that he is paying on current rentals in most cases. Where the Schedule A assessment itself is below the current rent then the excess rent provisions are there to take care of the excess, and many landlords who are increasing rents under the Rent Act will be liable to additional assessments under Schedule D for the excess rent received over and above the gross value for Schedule A purposes.
    So there is this difference between the owner-occupier and the landlord of tenanted property, that the owner-occupier enjoys, by and large, the benefit of pre-war valuation whereas the landlord of tenanted property does not. But the landlord of tenanted property is conducting his affairs, generally speaking, more on a business footing. In many cases it would not make much difference to him if his tax liability were transferred from Schedule A to Schedule D; he would be taking gross rent less outgoings, expenses and the rest, and some reformers of Schedule A suggest that tenanted property should be transferred to Schedule D in the same way as years ago the assessments of agricultural land, which were at one time a specified proportion of gross annual value—the multiple of gross annual value—were transferred from Schedule D to Schedule B. For the present, however, they are assessable under Schedule A and they are entitled to the statutory reduction for repairs not only on Schedule A itself, but on the additional value assessed for the excess rents.
    In both cases, of course, maintenance claims may be made. I do not agree with the hon. Member for Kidderminster (Mr. Nabarro), however many senior inspectors he has been talking to, that Schedule A tax is by far the most uneconomical to collect. It is little known how streamlined much of this work can be under Pay-as-you-earn. Thousands

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    of owner-occupiers are taxpayers under P.A.Y.E. The net annual value of their property is set off against their personal reliefs, and their coding is altered accordingly. I have pointed out continually to P.A.Y.E. taxpayers that they should look on their coding notices to see that there has been included in the coding notice relief of Schedule A assessment because it has been set off against the personal allowance. So, in fact, there are thousands of properties on which Schedule A tax is not collected because it is all swept up in P.A.Y.E. deductions which reduces the amount of work on Schedule A considerably.
    Hon. Gentlemen opposite have made heavy weather of maintenance claims, speaking as if a chartered accountant is needed to make them. The hon. Member for Huddersfield, West (Mr. Wade), who I believe is a solicitor, made the astonishing confession that he had to employ an accountant to do his Schedule A maintenance claim. I was very surprised to hear that. What has the legal profession come to that it has to go to accountants in order to draw up a few comparatively simple figures of expenditure incurred on property?
    Mr. Nabarro: Will the hon. Gentleman permit me to interrupt, because he is being less than fair to the hon. Member for Huddersfield, West (Mr. Wade)? I am not an amateur in drawing up tax returns, but I would not attempt to draw up my own tax returns, particularly in Schedule A matters. I employ a chartered accountant to do it because he knows many of the undesirable habits of the Inland Revenue in these matters. Only a chartered accountant can put his finger upon all the allowable items under these complex maintenance claims in respect of Schedule A.
    Mr. Houghton: I will not pursue that point except to say that it is about time that more taxpayers went to their local tax office and obtained free advice on these matters, because that is where they can obtain it. I do not go either to solicitors or to accountants to do my maintenance claims, and I have had no difficulties at all, because I think that I am able to differentiate between maintenance and repairs on the one hand and improvements on the other hand.
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    I know that in some cases there are fine points, but the general argument I make is that these claims are not as difficult as has been suggested. The form has been simplified. I agree that it is tiresome to have to go back five years and to keep bills and records over the years, but it would be a mistake to suggest that the maintenance claim procedure is so difficult that taxpayers cannot avail themselves of it or that professional fees should be incurred in order to make the claim. I know that a good deal of my speech perhaps sounds like the Financial Secretary to the Treasury, but I am speaking from my own experience and from the facts. In very large measure, those who are entitled to claim under the maintenance repairs procedure are aware of it, even though many of them, for one reason or another, may not trouble to claim.
    Mr. Diamond: It would be wrong of me to refer in any way to any of the remarks which have been made about the accountancy profession, but may I tell my hon. Friend that if he goes to a stationer he can buy a very simple form, at a very small cost, on which he can make out his will; and that if he does so he will join the large number of those who are the solicitor's best friend.
    Mr. Page: Has not the hon. Member for Sowerby (Mr. Houghton) also disclosed a case in which the taxpayer does not realise that he is paying Schedule A? When it is hidden in their P.A.Y.E. arrangements many taxpayers do not realise that they are paying Schedule A and, therefore, do not realise that they can make a maintenance claim.
    Mr. Houghton: My hon. Friend the Member for Gloucester (Mr. Diamond) is not being fair to the Committee when he suggests that the problems of the home-made will can be compared with making a fairly simple claim for maintenance relief based on the actual expenditure incurred, which is verifiable by receipted vouchers. There is not much difficulty about that. The hon. Member for Kidderminster is wearing a most pained look and going through the "simple chap" act again. He is not as simple as he makes out, and I do not believe that he will find any difficulty in completing his maintenance claim if only he will apply his mind to it. There

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    are not many fine points which any taxpayer has to understand about it when dealing with the general run of maintenance claims on the owner-occupied dwelling-house.
    Mr. Nabarro: When I was making a short contribution to the debate a few moments ago the hon. Member sat in his place vigorously nodding assent to the comments which I made about the difficulties in separating what is a genuine replacement in respect of an obsolescent or worn-out asset in the home from an improvement, particularly where the replacement involves a part element of improvement. That is the cause of endless squabbles with the Inland Revenue. The hon. Member has given us a very interesting speech in the last few moments. Why will he not comment on that point, which is one of the nubs of this difficulty?
    Mr. Houghton: I nodded my head when the hon. Member was saying that because it is about the only point of difficulty which can arise. It is a matter of judgment, not of mathematical certainty, as to how much of a given expenditure is on improvements and what proportion can be regarded as making good part of the house which would clearly require renewal every now and again. These matters are usually settled quite amicably and satisfactorily by agreement. I probably receive as much correspondence on Income Tax as any other hon. Member of the Committee, and I am bound to say that the amount of correspondence which I receive on this subject is very small indeed.
    I draw attention to the Royal Commission's observations on this point, to which the hon. Member for Crosby referred. If we double the statutory relief for repairs all round, that may give to many people a relief for repairs they may not do without in any way assisting those whose maintenance claims would exceed even the increased amount given for repairs. In most cases, where an owner-occupier is spending money on the property and keeping it in good order, he has a maintenance claim and would still have a maintenance claim if the reliefs were increased. Our general feeling about the new Clause is that we cannot support it.
    Mr. Maudling: My hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) was very persuasive, but for reasons which I shall try to explain we cannot regard the new Clause as an acceptable compromise. There was considerable discussion earlier today on the principle of Schedule A, and it would be wrong to go over that again. I must confine myself to the relatively narrow points contained in the new Clause.
    The new Clause would not affect in any way the expenditure which people are entitled to claim as a deduction from Schedule A assessments. People are entitled, and in future would be entitled, to claim as a deduction from their assessment all that they properly spend upon the maintenance of their property. The only difference would be how much they were assumed to have spent without having to produce proof of it. That would affect two cases. It would affect people who could make a maintenance claim above the existing limits but do not do so for one reason or another, and it would help people who spend less than the new limit and who would therefore receive a benefit to which they were not entitled.
    I think that the arguments put forward in favour of the Clause are, first, that the cost of repairs has risen greatly—and it certainly has—and therefore that the statutory deductions should be increased; and, secondly, that maintenance claims present difficult problems for people and that many people who are entitled to put them in do not in fact do so. That is clearly true.
    The first point was answered by the Royal Commission. The fact is that the statutory allowance is a proportion of the assessment, and if the allowance has not gone up it is because the assessment has not gone up. It is the assessment on which the owner-occupier pays, and obviously it would be wrong to deal with one in the absence of dealing with the other. I will not go into the question of the probable date of any revaluation, because some of my hon. Friends seem to have slightly differing views on whether it is desirable that this should be early or late, but there is a considerable case for the Royal Commission's comment that any change in this matter should be postponed until revaluation.

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    It could be argued that the cost of repairs has risen proportionately more than the level of rents. The Royal Commission considered that matter and said that it had received comparatively little evidence on the subject. Here again, I think it felt that a clearer picture would emerge after revaluation and a gradual readjustment of rents. I therefore think that there is much in what the Royal Commission says, that one must regard the statutory deduction as a proportion of the assessment and that the two would naturally move together, because to triple a man's deductions without increasing his assessment would be illogical.
    7.30 p.m.
    The second argument, which in many ways is very persuasive, is that the business of making maintenance claims is difficult and not properly understood and that many people, particularly small property owners, the owners of small houses and elderly people, find these forms very difficult indeed. We have had two extreme points of view on this question of how difficult it is to fill in a maintenance claim, and I cannot accept either extreme. It is all very well for the hon. Member for Sowerby (Mr. Houghton) to say that he finds no difficulty, but, if I remember correctly, he spends a lot of time advising other people on how to fill in their Income Tax forms, and if he cannot do his own, heaven help us. I therefore think that his evidence in the matter is not particularly good.
    Mr. Jay: Is it sufficiently clearly stated on the form which the taxpayer has to fill in that it is possible for him to make these claims?
    Mr. Maudling: I was coming to that. The right to claim is pointed out in various forms issued by the Inland Revenue, including demands for and receipts for Schedule A, notes accompanying the Income Tax return forms and P.A.Y.E. coding notices. The Revenue distributes pamphlets and instructions to people, but the fact is that many people find these pamphlets very difficult to understand.
    It is difficult to come down on one side or the other of the argument. It should be easy for all of us to put in
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    maintenance claims, but in fact we know that for many people it is difficult. Another part of the argument mentioned by my hon. Friend the Member for Kidderminster (Mr. Nabarro) was that, having put in the maintenance claim, the question arises of determining on some points whether they are maintenance or an improvement. I cannot accept his solution of declaring the taxpayer to be right in every case, which could not possibly be accepted by the Revenue, but there is much in what the hon. Member for Sowerby said about the desirability of people obtaining the assistance of the Inland Revenue offices and the local inspectors. The Inland Revenue authorities are always ready to be very helpful on these matters, and if people used their services more they would be considerably helped. Nevertheless, there is a problem which we must recognise.
    Of course, the new Clause also refers to landlords, and I doubt whether the case is anything like as strong in respect of landlords as in respect of owner-occupiers. Most landlords should be able in the course of their business of property owning to make a maintenance claim, and they will be able to claim their full deductions, whereas if the statutory allowance were raised, as has been suggested, in a number of cases the landlord might receive greater deductions in respect of repairs than the money he is spending on repairs. I am saying this to point out that there are considerable difficulties in the proposal.
    I have deliberately said that a serious problem arises here and that it would be wrong to minimise it. I would, however point out that there are two cogent reasons why it is impossible to accept this proposal this year. The first is that the sheer volume of work involved in re-coding up to 5 million P.A.Y.E. taxpayers would be impossible for the Revenue to undertake on top of the enormous volume of work it is doing on the repayment of post-war credits. That is a practical point worth bearing in mind.
    Mr. Nabarro: I cannot challenge that statement because a private Member has not access to the statistics of that kind or to the reasons. There are 5½ million owner-occupiers in the country. Does my right hon. Friend suggest that 5 million of them pay their Schedule A

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    taxes through P.A.Y.E.? It seems inconceivable to me that 90 per cent. of them are dealt with through P.A.Y.E. I should have thought that the minority were dealt with through P.A.Y.E. and that the majority paid the tax directly.
    Mr. Maudling: I will check the figure, but that is the one I have been given. Certainly it would be a very large undertaking.
    The second and stronger argument—which will once again cause my hon. Friend to protest—is the cost of the proposal. It would be £18 million this year and £24 million in a full year. That alone would be enough to rule it out for this year.
    To implement this proposal would be an enormous administrative task and result in much loss of revenue, which my right hon. Friend could not face this year. As for the merits of argument, I suggest that they are divided. There is the social fact, of the difficulty experienced by many people in making maintenance claims. On the other hand, there are the arguments that I have put forward as to the effect of the Clause, and also the cogent arguments put forward by the hon. Member for Sowerby, which reinforce my argument about the administrative difficulties and the cost of the proposal.
    Mr. Stevens: If the debate has brought to the attention of some owner-occupiers who did not know it before the fact that they can make maintenance claims it will have served a useful purpose. I have been convinced by what my right hon. Friend has said that further consideration of the matter should await revaluation. For that reason, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(EXTENSION OF RELIEF UNDER S. 9 OF FINANCE ACT, 1956.)
    (1) Subsections (1) and (2) of section nine of the Finance Act, 1956 (which provide relief from income tax on certain savings bank interest) shall, subject to the provisions of the next following subsection, apply in respect of dividends on shares of a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1955, and in respect of interest on deposits with such a society or with a registered friendly society, as they apply in respect of interest on deposits with the Post Office savings bank.
    (2) Where by virue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

    (a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and

    (b) the amount of relief, if any, to which he is entitled by virtue of that subsection,

    that excess shall be disregarded for all the purposes of the Income Tax Acts.—[Mr. Beswick.]
    Brought up, and read the First time.
    Mr. Frank Beswick: I beg to move, That the Clause be read a Second time.
    The purpose of the Clause is to extend the Income Tax concession granted under Section 9 of the 1956 Finance Act to cover interest on shares invested with a society registered under the Industrial and Provident Societies Acts, and also the interest on deposits with the so-called penny banks organised by such societies. The effect of the Clause would be to exempt the first £15 of interest on such investments and deposits from the payment of tax.
    The reason for this is that we want to encourage genuine small savings and also to remove a discrimination imposed upon co-operative societies by the 1956 Act. The Clause deals with genuine small savings. The Government have assisted and encouraged many savings which are neither genuine nor small. Premium Savings Bonds, which are pushed with such extravagant advertising, seem to be neither genuine, in large part, nor small. But the average amount of the individually held share capital in co-operative retail societies is only £20, and there are about 12 million individual shareholders.
    We are, therefore, speaking for no narrow section of people. In view of the very large number of people involved, I should have thought that there would be an administrative saving which would appeal to the Chancellor. As the Committee will know, the total amount of any one shareholding is now limited by law to £500 and, in the case of bank deposits, to £50. Furthermore, the interest paid on those shares and deposits, whilst not restricted by Statute, is low in practice, and it is usually limited by the rules of the society which, in turn, has to be approved by the Registrar of Friendly Societies.
    It is, therefore, difficult to visualise any better or more solid body of genuine

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    savings than those for which we are asking only the concession already granted in respect of other savings. The Royal Commission warned us against tax reliefs for what it termed "delusive savings", but I challenge anyone to say that there is any element of that kind connected with deposits in the co-operative societies' banks, or in any holding of their shares. There is nothing false or delusive about those shares; they are rock-bottom savings of some of our worthiest people.
    No matter what office he holds, the Paymaster-General usually speaks on these matters in Committee on Finance Bills, and when he was holding another office he stressed that the 1956 concession was possible because the savings then effected accrued to the Government. But the Government, the State, or the nation has no more effective recruiting agent for savings than the Co-operative movement. Co-operative societies are not paid by the Government. No expenses are incurred. Yet a considerable proportion of all the savings collected by these societies go to the Treasury, because they are reinvested in Government securities. The figures vary from society to society. In some societies rather more than half the total amount of money saved in this way is reinvested in Government securities, and the average amount of all societies is estimated at 28 per cent. On this basis alone, if the Chancellor really wants to encourage savings which find their way into the Treasury and are at the disposal of the Government, I would have thought that there was a case for the Clause.
    But there is another case for it. I believe it to be in the national interest to encourage the Co-operative movement in this country. There are many reasons for this belief, and I will not go into all of them—I should probably be out of order if I sought to do so—except to say that the Government are repeatedly stating that they want to cut the cost of living, and also that they are against monopolies; in fact, they have passed legislation to indicate that they would like to curb monopoly practices. In the fight against undesirable monopoly practices there is no greater ally to which they can turn than the Co-operative movement.
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    I claim that these societies have been more successful in this field than any amount of Government legislation. Only this weekend I had brought to my notice a certain matter in which co-operative trading concerns were up against certain trading practices of a competitor—not a small man, to whom we often hear references made in this connection, but the Unilever combine. This combine has a controlling interest in Batchelor's peas, Bird's Eye Foods, Mac Fisheries, and Wall's sausages and ice cream, and through its subsidiary, the Home and Colonial Stores, it also controls Pearks, Maypole Stores, Liptons, Meadow Dairies, and Allied Stores.
    I doubt whether many people who walk down the High Street and see the different names on the shops realise the connecting interest between these firms. The relevance of that matter to the Clause is that in different ways under recent Finance Acts those companies have been encouraged and assisted by way of tax reliefs, while, under the same Finance Acts, there have been discriminations against the Co-operative movement and that element in the co-operative societies which is a champion of the consumer against industrial monopoly practices.
    I should have thought that, if we are interested in a healthy democratic nation, we ought to go out of our way to encourage the Co-operative movement wherever possible and fair, and I claim that the Clause would go a long way towards giving it the encouragement which, in the national interest, is desirable. Moreover, it would restore equity as between this category of small savings and other categories which were helped by the 1956 Act. I therefore hope that the Government will remove at any rate one disability which they have placed upon the Co-operative movement and accept this new Clause.
    7.45 p.m.
    Sir Frederick Messer: When we last discussed a similar Clause on the Finance Bill last year, I thought there was some response in the attitude of the Government, although not in their decision. It is difficult to understand why the Clause cannot be accepted, because it appears to have a very desirable object. If we want to encourage small savings we must make the process of saving as easy as possible, and I can

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    conceive of no easier method than is available to a member of a co-operative society. He needs to do nothing at all in this matter. He does not have to put his hand into his pocket; he does not have to take a bank book to the bank. All he does is to allow his credits to accumulate, saving as he does so. His dividends are registered and his interest is calculated. This is the easiest way of saving money.
    For that reason alone, I should imagine that the Government would see some value in the Clause—and probably a value even greater that the desire to save on the part of many of the people who are just within the Income Tax range. They are saving in this easy way money which they might not save otherwise.
    We have been discussing a Clause relating to house repairs. Many co-operators allow their dividends and interest to accumulate and then use them for the purpose of decorating and maintaining their houses. In this way they are doing something which is of social value, and I should have thought that these people are entitled to be regarded as on the same level as those who put their savings into the Post Office. They should have £15 of their savings interest exempted from Income Tax.
    In addition, most co-operative societies run penny banks. There is usually a limit of about £10. When members of a co-operative society make their purchases, it is possible for them to put the small sum which they receive in change into their account at the penny bank instead of taking it away. If we are to look after the character of the people of this country, we have to do more than preach to them that moral standards need to be raised. We have got to do something, and I should have thought that we would be enabling character to be formed by a process of this description.
    I will not put it too high, but there is a further value in the Co-operative movement. We have here a body of people who, though they have what are called shares, are not really investing in shares in the sense that is understood on the Stock Exchange. The shares that they hold are really a deposit, because they cannot sell them. They cannot wait until the market is favour-
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    able and get more for them than they paid. There is no profit in the transaction. They are not earning something which, as a result of some arbitrary action in some direction by somebody, can increase the value of a share, if not actually, at least nominally.
    For these reasons I support the new Clause, and hope that the Government will give us some encouragement to believe in equity, because all that we are doing in the Clause is to say that, though the money is not being put in the Post Office and the Government are not getting the use of it, saving in itself is a valuable thing.
    We sometimes talk of interest, and I am old enough to remember one of the reasons why I lost my seat in 1931. There was a scare that the money put into the Post Office was going to be used if the Labour Government got back. Like many working-class people in those days, my constituents did not realise that when they put money into the Post Office it was always used. They had no idea what created the 2½ per cent. interest that they received. They thought that if they put £2 in the bank it got married and had a family, and that was the interest. They did not understand that, wherever money is deposited, it must be used to earn interest.
    We are not dealing with shareholders who live from their shares. We are dealing with people who have deposited a small sum of money and are drawing a dividend on their purchases and an interest on the amount that remains at the end of a period which justifies the interest being paid. I hope, therefore, that the Government will be prepared to accept the Clause.
    Mrs. Harriet Slater: I support the new Clause, and I hope that the Government will reconsider their past decisions. The Clause really deals with the position of 12 million people who are the consuming population of this country. They are ordinary working-class people who in their small way are indirectly helping the amassing of small savings through co-operative societies.
    The Co-operative movement has repeatedly been legislated against, particularly by this Government, and this is an instance where the Government

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    have legislated not only against the Co-operative movement as such but against a large number of ordinary people who desire to save whatever they can through their membership of the Co-operative movement.
    I have had a long experience in the Co-operative movement. Many people leave their dividends in as part of their share capital so that the money will be available when they require it. When I first got married, I left my dividends in to help to pay off the mortgage on the house that I was buying. Other people leave them in and build up their small savings to ensure that their children are able to have a holiday. If these people had not had their savings in the Cooperative movement they would not have had their holiday, and in particular their children would have been deprived of it.
    Other people leave their savings in to make sure that the money is available to cover their rates. I have been in that position, too. In the early days of my married life, I left my dividend in and was very glad of it. Sometimes I did not use it, but it was there as a security to make sure that the rates and mortgage on my house were being paid.
    The Government have made a great song and dance about a property-owning democracy. Through the Co-operative movement large numbers of people are, in effect, a property-owning democracy. Not only are they trying to build up their savings. Through the Co-operative movement, they are becoming owners of shops and warehouses. It is because of the savings that are left in, and the shares which are built up, that the Co-operative movement has been able to make the progress it has during the past years.
    If a person puts his money into the Post Office, he is exempt from paying tax on the first £15 of interest. If, however, he puts 10s. or £1 into the penny bank week after week, or if he leaves in his dividend, he has to pay tax on his small savings. That, in itself, is an injustice, and it means that the Government are legislating against a vast number of ordinary people. It does away with the claim that the Government and those people up and down the country who work for National Savings
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    want to make it as easy as possible for people to save. This is the easiest possible way in which money can be saved but the Government are making it as difficult as possible by this kind of—
    Sir Peter Roberts: The hon. Lady mentioned the word "injustice". Is it being suggested that if these people, instead of putting their money into co-operative savings, took it to a joint stock bank, or put it into an ordinary bank, that would be an injustice which should also be remedied?
    Mrs. Slater: Is the hon. Gentleman suggesting that the vast number of people who are members of co-operative societies would put money into a joint stock bank?
    Sir P. Roberts: They could do.
    Mrs. Slater: Not many of them could do that. The point is that they do their shopping every week, and there is here a very easy way of encouraging savings.
    Sir P. Roberts: The hon. Lady used the word "injustice".
    Mrs. Slater: It is all right for hon. Gentlemen who have not known how difficult things can be. It is an injustice because the people I am referring to are ordinary people who, week after week, put their shillings in the penny banks and leave their dividends to mount up as their share capital.
    Let us be perfectly frank and honest about it. Because it happens to be the Co-operative movement, and for no other reason, the Government have legislated against the co-operator in this way. It is another instance of private enterprise operating against the Cooperative movement, which is a democratic undertaking representing the working-class people of this country. I have no hesitation in being frank and honest about this. We say that if the Government wish to ensure an easy method of promoting small savings, here is an honest way to do so, by the provision of the concession suggested in the Clause.
    8.0 p.m.
    Mr. Maudling: Much has been said by hon. Members opposite about discrimination and injustice. I have never heard so much said with so little

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    foundation for it. There is no case for what has been said. I am sorry to speak so strongly to the hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater), but if she studies her speech, she will find that she cannot square her argument with the facts of the situation.
    How can the hon. Lady talk about injustice and discrimination against the co-operatives? Until 1956 all investment income was liable to Income Tax. One exemption, and only one, was made in that year, in respect of money put into Post Office and Trustee Savings. I will come to the reasons in a moment. They were given clearly at the time by my right hon. Friend the Prime Minister, who was then Chancellor of the Exchequer. That was the sole exception. I cannot understand why it should be argued that there has been discrimination against the co-operatives. If we extended that exemption to the cooperatives, we should be discriminating against other forms of investment income, which I do not think would be logical.
    Mr. Holt: Savings Certificates hear no tax whatever and have not borne tax for years.
    Mr. Beswick: May I remind the Paymaster-General of something which I am sure my hon. Friend had in mind—the way in which, for National Assistance purposes, certain small savings are exempted but not co-operative savings?
    Mr. Maudling: That is true, but Savings Certificates are not investment incomes. I said that all investment income was liable to Income Tax.
    My right hon. Friend, speaking then as the Chancellor of the Exchequer, said that he was taking this form of investment income because, in the first place it was investment at a low rate of interest, 2½ per cent. and also particularly because
    "the money would pass directly to the Government. It would therefore assist the Government's monetary policy because more of the State's borrowing needs would be met without increasing the liquidity of the joint stock banks."—[OFFICIAL. REPORT, 7th June, 1956; Vol. 553, c. 1437–8.]
    This form of savings was singled out at the request of the National Savings Movement, a long-standing request, as a mode of saving which my right hon. Friend wished to encourage because of its inherent characteristics; and particularly because the money passed
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    straight to the Government without increasing the liquidity of the joint stock banks and thereby creating monetary problems.
    The moneys invested with the co-operative societies does not pass those tests. Therefore, if it is suggested that this exemption be extended to cooperative societies, I do not understand how we could avoid extending exactly the same exemption to all other forms of small savings, particularly deposits with joint stock banks or societies and clubs of all kinds. I do not understand why it should be argued that one form of small savings outside the Government circle should be chosen for a special exemption which at present is confined only to that form of savings.
    Mr. Beswick: The right hon. Gentleman has said that co-operative savings do not pass the two tests which he mentioned, the fact that the interest paid is small and that the money went to the Government. I challenge the right hon. Gentleman to deny that the interest on these savings is small. Of course, it is small. There is a statutory limitation on the total amount, but the interest is small. Regarding the point about the money going direct to the Government, I have already said that in the case of many co-operative societies rather more than half of the money does go to the Government and it does not cost the Treasury anything to collect it.
    Mr. Maudling: That is my point. Money put into Post Office Savings goes to the Government. In the case of money lent to the co-operative societies, a proportion—
    Mr. Beswick: A large proportion.
    Mr. Maudling: —of the money is invested in Government securities, which is a different process, and obviously the effects on the economy are different.
    If one argues in favour of this Clause on the ground that it would encourage small savings, obviously that argument is one which would appeal to any Government, and to the Committee. But can we justify the acceptance of this Clause on that argument alone without at the same time treating all other forms of investment income on the same basis? I do not see how it is possible not to do so. A good proportion of the money

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    invested in co-operative societies is used for trading in competition with other business enterprises. Can that money be given a special preference which is not given to the money invested in competing enterprises? I do not think that is possible.
    If we went to the extent of spreading this concession round to the first £15 of investment income generally, the cost would be about £40 million a year, which is a sum that it is not possible for my right hon. Friend the Chancellor to contemplate giving up for this purpose. I am afraid, therefore, that I must advise the Committee to reject the proposal.
    I am sorry that it should be thought that by doing something for Government securities, and nothing for any other form of saving, we are discriminating against the co-operative societies. I do not think that argument would hold water. If we accepted this Clause, we should be discriminating in favour of the co-operative societies and against everyone else, which would be wrong. Because I think that is the case, I must advise the Committee to reject the Motion.
    Mr. H. Wilson: My hon. Friend the Member for Uxbridge (Mr. Beswick) commented on the fact that year by year, no matter what position is held by the right hon. Gentleman the Paymaster-General, we may always look forward to his interventions in these Finance Bill debates. He began to intervene when he was Parliamentary Secretary to the Ministry of Transport and Civil Aviation and continued when he was Economic Secretary to the Treasury with great skill and artistry. In 1956, when he was Minister of Supply, he intervened, and now, as Paymaster-General, he still comes to help out. There is one single theme underlying all the appearances of the right hon. Gentleman. When the Government have a particularly thin case to argue, their motto is always, "send for Reggie."
    We can well understand why that should be. Obviously, the Chancellor would be much out of his depth in discussing this matter. I know that the Chancellor would sometimes like to be a bit more out of his depth than sometimes he is, because sometimes he gets in excessively shallow circumstances. The
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    Economic Secretary, whom we are always delighted to hear, speaks with great courtesy, but the hon. and learned Gentleman is in the dog house this afternoon, and after his performance, and the vicious attack on him from what I described earlier as the Tory intelligentsia—from Knutsford and elsewhere—it would obviously have been dangerous to deploy the hon. and learned Gentleman on this occasion; and so the Paymaster-General has been called in.
    I am bound to say that the Paymaster-General has lived up to his reputation and has put the best face on the thinest of cases. He began by attacking the argument used by my hon. Friend on the subject of discrimination and pressed it to the point where even a representative of the Labour Party was moved to intervene, and quite rightly. Of course, Savings Certificates have this exemption and there is pretty good evidence to show that, in the last year or two, since the investment in Savings Certificates has been relatively so attractive, the Chancellor has been muttering slightly ominous hints on the subject recently.
    A considerable proportion of the money put into Savings Certificates has come from the richer taxpayers. Clearly, this is an attractive form of saving for those normally assessed at the higher rates of tax. Money invested in Savings Certificates enjoys this tax exemption, as do the Post Office Savings. Yet the Paymaster-General says that there is no discrimination, although the exemption does not cover one of the biggest elements of small savings in this country—I emphasise that it is small savings, unlike a lot of Savings Certificate investment. But the right. hon. Gentleman says that there would be discrimination involved were this exemption extended to cover such small savings.
    The Paymaster-General got into a very odd argument. He said something about the liquidity of the joint stock banks and that Post Office savings investment do not involve an increase in the liquidity of the joint stock banks. Of course not, but is it suggested that if someone leaves his shares in a co-operative society or leaves his dividends in, it would increase the liquidity of the joint stock banks?
    Mr. Maudling: If the Government cannot borrow direct from the investor, they must borrow more from the banks.
    Mr. Wilson: I am sorry, but I do not follow the right hon. Gentleman's argument. Is he trying to give an incentive to the co-operator to take his money out of the co-operative society and put it into the Post Office Savings Bank so that the Government will need less money from the banks? Is that his argument? It is not very clear, at least on this side of the Committee. Perhaps we shall have it explained in more detail later.
    In any case, the right hon. Gentleman for once is really living in the days of 1956. That is, of course, an advance on most of his colleagues—by about 100 years. He will probably remember that on the Second Reading of the Finance Bill on 9th May, 1956, I suggested various means of dealing with the problem of the liquid reserves of the joint stock banks. I suggested something on the lines of Treasury deposit receipts. I was glad to see that last year the Chancellor introduced the system of special deposits. Surely it is not beyond the wit of the Treasury and the Bank of England to find a means of controlling the problem of the liquidity of the joint stock banks. They have invented a mechanism for it, although it is true that they have not used it yet. It was a thin argument for the right hon. Gentleman to put forward.
    We are here dealing with a very valuable source of savings. It is intertwined in the whole development of our social history. Among the most important developments of the nineteenth century were the co-operative societies, the trade unions, and the friendly societies. This has been an historic means of increasing savings in this country, especially in industrial areas, but not exclusively there. It has contributed greatly to the development of thrift. My hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) said that when she was first married she put aside money in this way to help to pay off the mortgage on her house. That is a frequently encountered happening in industrial areas. I know that the house next to the one where I was born was paid for exclusively out of "co-op divi." by an old lady who is now dead, though her children are still alive. Do we want to encourage that kind of saving to continue? Of course we do.
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    The second point that I want to make is that this is straight saving. There is nothing fishy about it. It is done for the purpose of saving. Sometimes it may be done relatively involuntarily, as my hon. Friend the Member for Tottenham (Sir F. Messer) said. It is not part of a means to a capital gain. Nobody puts any money on one side in the "co-op" in the hope of getting some fantastic gain such as hon. Gentlemen opposite are lauding as part of the capitalist system at the present time. There is no market in these shares or deposits. One does not find them varying in value from day to day, week to week, or month to month. The Clores of this world do not operate in "co-op" savings and deposits; these are straight savings. There is nothing that they would like to do better, but, thank goodness, this is one field which they cannot enter.
    This is not a capitalist organisation. It is part of the warp and woof of our social life, and there is no possibility of variation in the value of these savings. If anyone wants to draw them out, they are drawn out at par, and if one puts savings in they are put in at par. There is, therefore, all the difference in the world.
    I cannot understand the philosophy even of the right hon. Gentleman, who puts his case with such lucidity. Time and time again the Government justify these vast capital gains and say that they ought not to be taxed. Believe me, Mr. Clore's activities would be very much restricted if there were a tax on capital gains. Yet when it comes to the savings of really worth-while people who try to save a shilling or two a week or leave their dividend in the co-operative society at the end of the half-year, the interest on those savings has to be taxed down to the last halfpenny. So I hope the Government—I am glad the Chancellor is here to listen to the debate—will think again about this.
    I have a final point to put to the right hon. Gentleman. Why is he discriminating in this way? In economic terms—I now leave the social arguments for the economic ones—all savings are needed in this country. When the Chancellor presents his Budget statement year by year, he rightly emphasises that what we are interested in is the balance between investment and savings from the national

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    point of view, and his estimate of the balance between investment and savings very much determines the size of the Budget surplus that he considers necessary to enable us to maintain an even path between inflation on the one hand and deflation on the other.
    8.15 p.m.
    Therefore, since, as we have been reminded, this new Clause provides for 12 million small savers—they are small savers, with an average saving of £20 per head—and since we always hear this sob-stuff from hon. Gentlemen opposite about the need to encourage small savers, I am surprised that we have not had more support for the new Clause from hon. Members opposite. We hear of such schemes as "Every man a capitalist", the scheme of the right hon. Member for Blackpool, North (Sir T. Low), the investment trusts, and all the rest of it. I am bound to wonder whether the motive of hon. Gentlemen opposite is to increase small savings or simply to try to trap a lot more people into supporting Tory ideas about equity shares. What is the real truth about it?
    We know that hon. Gentlemen opposite are opposed to the community as a whole having a stake in the wealth which comes as a result of the operations of big business from the wealth which the community itself creates. Now we find that in connection with an old-established form of small saving the Government are unwilling to wipe out this discrimination which was introduced by the Prime Minister in 1956. This creates grave doubts in our minds about the real motives from which hon. Gentlemen opposite, when they get out of this Chamber, are appealing for more efforts by the small savers and, particularly, a greater participation by the wage earners of the country in various forms of small savings.
    I hope the right hon. Gentleman will now admit that his arguments were as "phoney" as I think I have proved them to be. Perhaps the Chancellor will overrule him, because he has been listening to what has been said. At any rate, I hope that one of the right hon. Gentlemen will say that they have agreed to accept the Clause. We are not fussy and do not insist on the new Clause being accepted with its present wording. I
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    think it has been drafted with skill, but if the Chancellor will accept its principle and undertake to bring forward a new Clause on Report, we shall be happy. We are prepared to compromise with the Chancellor. If there is no compromise, it will be necessary to press the matter to a Division.
    Mr. Coldrick: I wish to say a few words in support of the Clause. It appeared to me that the right hon. Gentleman was arguing that it would be unfair to the savings movement, the trustee savings banks and so forth if he accepted the Clause. Besides my long association with the Co-operative movement, I have been a member of a savings committee and a trustee of a trustee savings bank, and I can give the right hon. Gentleman an assurance that, generally speaking, those organisations would encourage the granting of a small concession to the Co-operative movement such as is now available to depositors in the trustee savings banks, the Post Office Savings Bank, and so on.
    One should realise—if the right hon. Gentleman had had experience of this he would know—that during the war and at other times members of savings committees frequently found that in order to set an example to the rest of the people in their area they had to approach the Co-operative movement and ask it to put a substantial amount into war savings. I was the president of the Bristol Co-operative Society during the war, and from time to time we inaugurated savings campaigns in Bristol by putting £20,000 or £30,000 directly into war savings. Such contributions should be appreciated.
    On a previous occasion I drew attention to the fact that there has been a deterioration in the quality of Conservative representation in this House compared with a century ago. If they look at the history of the Co-operative movement, even Conservatives will be obliged to admit that some of their most illustrious predecessors, such as Lord Rosebery, encouraged the development of the Co-operative movement precisely because they believed that if they developed the Co-operative movement they would develop habits of thrift and frugality. They felt that if the people saved they would develop a measure of independence which would lend quality

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    to the British character. They have succeeded to a remarkable extent. This is not a one-sided advantage.
    I recall a meeting of a co-operative society being convened for people who had been members of the society for over forty years. I confess that we imagined that probably a hundred or so would attend but, to our great astonishment, there were well over 700. The important point about that meeting is that some people—railway workers and others—had been fortunate enough to have permanent employment and in consequence they had allowed their dividends to accumulate until they reached the maximum for those days of £200. But I am not exaggerating when I say that a substantial proportion of that membership at the meeting confessed to me that they were eking out their old-age pensions by drawing continuously week after week a portion of the savings that they had accumulated in the Co-operative movement. One may take it for granted that even at present there are hundreds of thousands of people in this country who would be drawing more from National Assistance than they are drawing if they were not drawing from their savings accumulated over many years' membership of the Co-operative movement.
    As my right hon. Friend the Member for Huyton (Mr. H Wilson) has indicated, I cannot see why we should distinguish between these forms of savings. As I have pointed out in the past, the arguments from the Front Bench opposite change constantly. In practice, the Co-operative movement is virtually doing precisely what the trustee and other savings banks are doing. One is compelled by law to do it and the other is doing it on a voluntary basis.
    When I first raised this matter I found that a large number of people who were associated with the Co-operative movement in this country regarded the movement not as a trading organisation but as their bank. It is all very well for people trained in commerce and in the universities to talk so freely about their deposit accounts, current accounts, and so forth. The fact is that there are millions of people in the country who have no account and are timid of going to banks. But they do know their cooperative society. In consequence, if they are going to save they do so
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    through the co-operative society. Knowing local people, I know that if they meet any adversity they immediately go there.
    One found at the time when I first raised this matter that 86 per cent. of the capital in the Co-operative movement was not employed in trade. Only about 14 per cent. was so employed. The other 86 per cent. was invested either in local government or in Government assets, so that in practice the Co-operative movement was approximately in the position that is occupied by the trustee and other savings banks. The Government virtually had the control, although they were not compelled to ensure that the money was available to them.
    I appeal to the right hon. Gentleman and his hon. Friends to be generous and broadminded. For the past thirteen years, whether a Conservative or a Labour Government has been in office, some of us have served on an advisory committee for the purpose of extending co-operation throughout the Colonies. Let us be under no illusion; sensible Members opposite will agree, I think, that if democracy is to be developed in the Colonies and if self-reliance and a measure of prosperity are to be extended, there is no better instrument through which these could be developed than a co-operative organisation.
    I grant that some hon. Members opposite are anxious that these aims should be achieved through the Co-operative movement. Nevertheless, having brought these people from the Colonies over here and trained them at great expense, we proceed to demonstrate to them that we single out the Co-operative movement in this country for an exceptional form of treatment so that instead of encouraging it we discourage it in this country, while encouraging it abroad.
    Unfortunately, the right hon. Gentleman has indicated that, in his opinion, this Clause would discriminate against other trading organisations. I have taken several deputations to the Treasury on this question. We have never claimed special privileges or advantages for ourselves. We have argued with the Treasury that we would like to see this concession granted to all small savers. We are not asking for a limited privilege. Those people who have saved only £20, or perhaps as much

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    as £100, are not engaged in speculative business and, for the most part, that money is placed at the disposal of the people who manage this country. Therefore, I sincerely appeal to the Government, without entering too much into party strife, to recognise that this is a
    concession which would benefit millions of people and would contribute to a movement which has already contributed much to the Government.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 184, Noes 223.

    Division No. 134.]

    AYES

    [8.28 p.m.

    Albu, A. H.

    Healey, Denis

    Pannell, Charles (Leeds, W.)

    Allaun, Frank (Salford, E.)

    Herbison, Miss M.

    Pargiter, G. A.

    Awbery, S. S.

    Hewitson, Capt. M.

    Parker, J.

    Bacon, Miss Alice

    Hilton, A. V.

    Paton, John

    Balrd, J.

    Hobson, C. R. (Keigley)

    Pearson, A.

    Balfour, A.

    Holman, P.

    Pentland, N.

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

    Holt, A. F.

    Plummer, Sir Leslie

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

    Houghton, Douglas

    Popplewell, E.

    Benson, Sir George

    Howell, Charles (Perry Barr)

    Prentice, R. E.

    Beswick, Frank

    Hoy, J. H.

    Price, Philips (Gloucestershire, W.)

    Bonham Carter, Mark

    Hughes, Cledwyn (Anglesey)

    Probert, A. R.

    Bottomley, Rt. Hon. A. G.

    Hughes, Emrys (S. Ayrshire)

    Pursey, Cmdr. H.

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

    Hughes, Hector (Aberdeen, N.)

    Rankin, John

    Bowen, E. R. (Cardigan)

    Hunter, A. E.

    Redhead, E. C.

    Bowies, F. G.

    Hynd, H. (Accrington)

    Reeves, J.

    Boyd, T. C.

    Irvine, A. J. (Edge Hill)

    Roberts, Albert (Normanton)

    Braddock, Mrs. Elizabeth

    Irving, Sydney (Dartford)

    Roberts, Goronwy (Caernarvon)

    Brook way, A. F.

    Janner, B.

    Robinson, Kenneth (St. Pancras, N.)

    Brown, Thomas (Ince)

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

    Rogers, George (Kensington, N.)

    Burton, Miss F. E.

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

    Ross, William

    Butler, Herbert (Hackney, C.)

    Johnston, Douglas (Paisley)

    Royle, C.

    Butler, Mrs. Joyce (Wood Green)

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

    Short, E. W.

    Callaghan, L. J.

    Jones, David (The Hartlepools)

    Simmons, C. J. (Brierley Hill)

    Castle, Mrs. B. A.

    Jones, Elwyn (W. Ham, S.)

    Skeffington, A. M.

    Champion, A. J.

    Jones, T. Idwal (Wrexham)

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

    Chetwynd, G. R.

    Jones, T. W. (Merloneth)

    Smith, Ellis (Stoke, S.)

    Cliffe, Michael

    Kenyon, C.

    Snow, J. W.

    Coldrick, W.

    Key, Rt. Hon. C. W.

    Sorensen, R. W.

    Collick, P. H. (Birkenhead)

    King, Dr. H. M.

    Soskice, Rt. Hon. Sir Frank

    Corbet, Mrs. Freda

    Lawson, G. M.

    Sparks, P. A.

    Cronin, J. D.

    Ledger, R. J.

    Spriggs, Leslie

    Davies, Ernest (Enfield, E.)

    Lever, Leslie (Ardwick)

    Stewart, Michael (Fulham)

    Davies, Harold (Leek)

    Lewis, Arthur

    Stones, W. (Consett)

    Davies, Stephen (Merthyr)

    Lipton, Marcus

    Strachey, Rt. Hon. J.

    Deer, G.

    Logan, D. G.

    Summerskill, Rt. Hon. E.

    de Freitas, Geoffrey

    Mabon, Dr. J. Dickson

    Sylvester, G. O.

    Diamond, John

    McCann, J.

    Taylor, Bernard (Mansfield)

    Dodds, N. N.

    MacDermot, Niall

    Thomson, George (Dundee, E.)

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

    Mclnnes, J.

    Thornton, E.

    Ede, Rt. Hon. J. C.

    McKay, John (Wallsend)

    Tomney, F.

    Edelman, M.

    McLeavy, Frank

    Viant, S. P.

    Edwards, Robert (Bilston)

    Mahon, Simon

    Wade, D. W.

    Edwards, W. J. (Stepney)

    Mallalieu, E. L. (Brigg)

    Warbey, W. N.

    Evans, Albert (Islington, S.W.)

    Mann, Mrs. Jean

    Watkins, T. E.

    Finch, H. J. (Bedwellty)

    Mason, Roy

    Weitzman, D.

    Fitch. A. E. (Wigan)

    Mayhew, C. P.

    Wells, Percy (Faversham)

    Foot, D. M.

    Mellish, R.J.

    Wells, William (Walsall, N.)

    Forman, J. c.

    Mendelson, J. J.

    White, Mrs. Elrene (E. Flint)

    Fraser, Thomas (Hamilton)

    Messer, Sir F.

    Wilkins, W. A.

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

    Mitchison, G. R.

    Willey, Frederick

    Greenwood, Anthony

    Moody, A. S.

    Williams, Rev. Llywelyn (Ab'tillery)

    Grenfell, Rt. Hon. D. R.

    Morris, Percy (Swansea, W.)

    Williams, W. R. (Openshaw)

    Grey, C. F.

    Moss, R.

    Willis, Eustace (Edinburgh, E.)

    Griffiths, David (Rother Valley)

    Moyle, A.

    Wilson, Rt. Hon. Harold (Huyton)

    Griffiths, Rt. Hon. James (Llanelly)

    Neal, Harold (Bolsover)

    Winterbottom, Richard

    Griffiths, William (Exchange)

    Noel-Baker, Francis (Swindon)

    Woodburn, Rt. Hon. A.

    Grimond, J.

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

    Woof, R. E.

    Hale, Leslie

    Oliver, G. H.

    Yates, V, (Ladywood)

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Oram, A. E.

    Hamilton, W. W.

    Oswald, T.

    Hannan, W.

    Owen, W. J.

    TELLERS FOR THE AYES:

    Hastings, S.

    Padley, W. E.

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

    Hayman, F. H.

    Palmer, A. M. F.

    NOES

    Agnew, Sir Peter

    Arbuthnot, John

    Baldock, Lt.-Cmdr. J. M.

    Aitken, W. T.

    Armstrong, C. W.

    Baldwin, Sir Archer

    Alport, C. J. M.

    Ashton, H.

    Balniel, Lord

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Atkins, H. E.

    Barber, Anthony

    Barlow, Sir John

    Grimston, Sir Robert (Westbury)

    Noble, Michael (Argyll)

    Barter, John

    Hall, John (Wycombe)

    Nugent, Richard

    Batsford, Brian

    Harris, Frederio (Croydon, N.W.)

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

    Baxter, Sir Beverley

    Harris, Reader (Heston)

    Orr, Capt. L. P. S.

    Beamish, Col. Tufton

    Harrison, Col. J. H. (Eye)

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

    Bell, Philip (Bolton, E.)

    Harvey, John (Walthamstow, E.)

    Osborne, C.

    Bell, Ronald (Bucks, S.)

    Heald, Rt. Hon. Sir Lionel

    Page, R. G.

    Bevins, J. R. (Toxteth)

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

    Pannell, N. A. (Kirkdale)

    Bidgood, J. C.

    Henderson-Stewart, Sir James

    Partridge, E.

    Bingham, R. M.

    Hesketh, R. F.

    Peel, W. J.

    Birch, Rt. Hon. Nigel

    Hicks-Beach, Maj W. W.

    Peyton, J. W. W.

    Bishop, F. P.

    Hill, Mrs. E. (Wythenshawe)

    Pickthorn, Sir Kenneth

    Black, Sir Cyril

    Hill, John (S. Norfolk)

    Pilkington, Capt. R. A.

    Body, R. F.

    Holland-Martin, C. J.

    Pitt, Miss E. M.

    Bossom, Sir Alfred

    Hope, Lord John

    Pott, H. P.

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

    Hornby, R. P.

    Powell, J. Enoch

    Boyle, Sir Edward

    Hornsby-Smith, Miss M. P.

    Price, David (Eastleigh)

    Braithwaite, Sir Albert (Harrow, W.)

    Horobin, Sir Ian

    Prior-Palmer, Brig. O. L.

    Brewis, John

    Howard, John (Test)

    Profumo, J. D.

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

    Hughes-Young, M. H. C.

    Ramsden, J. E.

    Brooman-White, R. C.

    Hurd, Sir Anthony

    Rawlinson, Peter

    Browne, J. Nixon (Craigton)

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

    Redmayne, M.

    Bryan, P.

    Hyde, Montgomery

    Rees-Davies, W. R.

    Bulius, Wing Commander E. E.

    Hylton-Foster, Rt. Hon. Sir Harry

    Remnant, Hon. P.

    Burden, F. F. A.

    Iremonger, T. L.

    Renton, D. L. M.

    Cary, Sir Robert

    Irvine, Bryant Godman (Rye)

    Ridsdale, J. E.

    Cole, Norman

    Jenkins, Robert (Dulwich)

    Rippon, A. G. F.

    Conant, Maj. Sir Roger

    Jennings, J. C. (Burton)

    Roberts, Sir Peter (Heeley)

    Cooke, Robert

    Jennings, Sir Roland (Hallam)

    Robinson, Sir Roland (Blackpool, S.)

    Cooper-Key, E. M.

    Johnson, Dr. Donald (Carlisle)

    Roper, Sir Harold

    Cordeaux, Lt.-Col. J. K.

    Johnson Eric (Blackley)

    Ropner, Col. Sir Leonard

    Corfield, F. V.

    Kaberry, D.

    Scott-Miller, Cmdr. R.

    Courtney, Cdr. Anthony

    Keegan, D.

    Sharpies, R. C.

    Kerr, Sir Hamilton

    Shepherd, William

    Craddock, Beresford (Spelthorne)

    Kimball, M.

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

    Crosthwaite-Eyre, Col. O. E.

    Lagden, G. W.

    Smithers, Peter (Winchester)

    Crowder, Sir John (Finchley)

    Lambton, Viscount

    Smyth, Brig. Sir John (Norwood)

    Crowder, Petre (Ruislip—Northwood)

    Langford-Holt, J. A.

    Stevens, Geoffrey

    Cunningham, Knox

    Leavey, J. A.

    Steward, Harold (Stockport, S.)

    Currie, G. B. H.

    Leburn, W. G.

    Stoddart-Scott, Col. Sir Malcolm

    Dance, J. C. G.

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

    Storey, S.

    D'Avigdor-Goldsmid, Sir Henry

    Legh, Hon. Peter (Petersfield)

    Studholme, Sir Henry

    Deedes, W. F.

    Lindsay, Martin (Solihull)

    Taylor, Sir Charles (Eastbourne)

    de Ferranti, Basil

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

    Taylor, William (Bradford, N.)

    Donaldson, Cmdr. C. E. McA.

    Loveys, Waltor H.

    Temple, John M.

    Doughty, C. J. A.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Thomas, Leslie (Canterbury)

    du Cann, E. D. L.

    Lucas, P. B. (Brentford & Chiswick)

    Thompson, Kenneth (Walton)

    Duncan, Sir James

    Lucas-Tooth, Sir Hugh

    Thompson, R. (Croydon, S.)

    Eden, J. B. (Bournemouth, West)

    McAdden, S. J.

    Thorneycroft, Rt. Hon. P.

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

    Macdonald, Sir Peter

    Thornton-Kemsley, Sir Colin

    Errington, Sir Eric

    McLaughiln, Mrs. P.

    Tilney, John (Wavertree)

    Erroll, F. J.

    McMaster, Stanley

    Turner, H. F. L.

    Farey-Jones, F. W.

    Macmillan, Rt. Hn. Harold (Bromley)

    Turton, Rt. Hon. R. H.

    Finlay, Graeme

    Macmillan, Maurice (Halifax)

    Vane, W. M. F.

    Fisher, Nigel

    Maddan, Martin

    Vaughan-Morgan, J. K.

    Forrest, G.

    Maitland, Hon. Patrick (Lanark)

    Vickers, Miss Joan

    Fraser, Hon. Hugh (Stone)

    Manningham-Buller, Rt. Hn. Sir R.

    Vosper, Rt. Hon. D. F.

    Galbraith, Hon. T. G. D.

    Markham, Major Sir Frank

    Wakefield, Edward (Derbyshire, W.)

    Gammans, Lady

    Marples, Rt Hon. A. E.

    Wakefield, Sir Wavell (St. M'lbone)

    Garner-Evans, E. H.

    Marshall, Douglas

    Wall, Patrick

    George, J. C. (Pollok)

    Maudling, Rt. Hon. R.

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

    Glover, D.

    Mawby, R. L.

    Ward, Dame Irene (Tynemouth)

    Glyn, Col. Richard H.

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

    Webbe, Sir H.

    Godber, J. B.

    Medlicott, Sir Frank

    Webster, David

    Goodhart, Philip

    Morrison, John (Salisbury)

    Wills, Sir Gerald (Bridgwater)

    Cough, C. F. H.

    Mott-Radclyfle, Sir Charles

    Wilson, Geoffrey (Truro)

    Gower, H. R.

    Nabarro, G. D. N.

    Wolrige-Gordon, Patrick

    Graham, Sir Fergus

    Nairn, D. L. S.

    Woollam, John Victor

    Grant, Rt. Hon. W. (Woodside)

    Neave, Airey

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

    Nicholson, Sir Godfrey (Farnham)

    TELLERS FOR THE NOES:

    Green, A.

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

    Mr. Gibson-Watt and Mr. Whitelaw.

    Gresham Cooke, R.

    Noble, Comdr. Rt. Hon. Allan

    New Clause. —(REDUCTION OF DUTY ON DIESEL FUEL FOR PUBLIC SERVICE VEHICLES.)
    On and after the fifth day of August, nineteen hundred and fifty-nine, there shall be allowed from the customs duty a rebate at the rate of two shillings and sixpence a gallon and from the excise duty a rebate at the rate of one shilling and threepence a gallon
    138
    on the delivery of hydrocarbon oil for use in any mechanically propelled vehicle driven by diesel fuel and licensed as a public service vehicle for the carriage of passengers. —[Mr. McLeavy.]
    Brought up, and read the First time.
    Mr. Frank McLeavy: I beg to move, That the Clause be read a Second time.
    The Temporary Chairman (Mr. F. Blackburn): I suggest that with this Clause we should discuss the new Clause (Repayment of duty on hydrocarbon oil used by public service vehicles outside built-up areas).
    Mr. McLeavy: The purpose of the Clause is to exempt public service vehicles for carriage of passengers from Customs duty, commonly referred to as fuel oil taxation. The Chancellor has received most urgent representations from the industry, but his only response up to date has been a small concession on licence duties. Unfortunately, this concession cannot have any material effect upon the financial difficulties confronting the industry. Only the most direct assistance to prevent this downward trend can prevent the industry from an extremely difficult financial position.
    The industry is as firmly on the rocks as the Chancellor of the Exchequer was himself eight days ago, but our difficulties are not due to bad seamanship but to an attack by Treasury pirates. Like the Chancellor's passengers, our passengers in the countryside have to find their way home as best they can. We hope that the Chancellor tonight will bring to our rescue the good old British launch "Fair Play" so that we may refloat and set our sails once again for the wider seas of public service.
    I will refer shortly to the history of this tax. Prior to the Budget of 1950, the tax on fuel oil used for road transport purposes was 9d. a gallon. Indeed, throughout the last war no change in taxation was thought desirable, although the need to restrict its use was certainly very pressing. However, after the war by three successive increases in 1950, 1951 and 1952 the tax was increased by 1s. 9d., making the total tax of 2s. 6d. per gallon. This tax represents in artificial costs, something like 2½d. —3d. per vehicle mile, which to an industry accustomed to work to several decimal places in its cost per mile is enormous.
    What was the purpose of these increases in the tax upon fuel oil? The Budget statements of both the late Sir Stafford Cripps and the right hon. Gentleman who is now Lord Privy Seal, who were responsible for the major part of these increases, made it clear that the main reasons for them were to restrict consumption and to save dollars and, to
    140
    some extent, the heavy cost in foreign exchange. So far as I can ascertain from the records, neither the late Sir Stafford Cripps nor the Lord Privy Seal ever suggested at the time that these increases were for the purpose of increased revenue. What the industry cannot understand is why these increases are retained when the real difficulties for which they were imposed have been overcome.
    I suggest to the Chancellor that it is not to the credit of Parliament that we should take advantage of emergency measures to impose a permanent financial burden upon industry. If no other reason could be advanced, a sense of honour should impel the Chancellor to remove this tax forthwith.
    I want to deal with the unfairness of the tax to passenger road transport. Even if we consider the tax purely from a revenue angle, it represents an unfair discrimination as between general users, particularly in the industrial sector. If this oil is used by stationary machinery in the factory, it is untaxed. If, however, it is used for the purpose of transporting workers or goods to or from the factory, which in itself is also a charge upon the cost of production, it is heavily taxed. Indeed, the more one looks at this tax the more illogical it becomes.
    Our bus services are an essential part of our industrial, commercial and social life. The carrying of workers to and from work, whether to the factory, the office or shop, is just as important a part of our industrial needs as the factories themselves. To discriminate between fuel oil used in the factory and that used to get the workers to and from work seems to me to be unreasonable. Even the children going to school or the housewife doing her shopping have a bearing upon the industrial aspect of the problem.
    8.45 p.m.
    What is our case for the exemption of buses from fuel oil taxation? We say that the tax is an unfair discrimination as between two types of industrial users, that it has become a major factor in the present financial difficulties of the industry and that the cut in unremunerative services and the general curtailment of services in cities, towns, urban and rural areas presents a serious problem which can be relieved only by removing fuel oil taxation.

    141
    Traditionally, the bus industry has always run a very high percentage of its services at a loss, the better paying routes paying for the less paying routes. I think that this was appreciated very clearly by the Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation when he paid what I thought at the time was a well-deserved tribute to the industry. The Joint Parliamentary Secretary, speaking in the debate on 2nd July last, said that: In the main, these operators were extremely good—and we should record it—in carrying their share, and even more than their share, of unprofitable routes. I suggest to the Chancellor that this tribute by the Joint Parliamentary Secretary was no mean tribute. It was a very fair tribute arising from his experience of the industry and from his connection with the Ministry itself.
    I should like to say a few words about the rural services. I have spoken time and again about the rural services, but I want also to combine the position of the rural services with that of the services throughout the whole of the country. It is no secret that over the past six years enormous cuts have been made in our bus services. Those services were reduced by many millions of miles. For instance, the Maidstone and District Motor Services alone cut nearly one million miles of service. Furthermore, not only were hundreds of rural services reduced in frequency but many were abandoned altogether. I suggest again to the Chancellor that if he is to stop this rot he has to do it now in the form of a substantial reduction or the abolition of the fuel oil tax.
    The Minister of Transport announced a few weeks ago that he was setting up a committee to examine the rural bus problem. I shall be interested to see what new information it will produce which is not already known to the Minister and the Government generally. The real interest of rural bus services is tied up with the wider national services. They can only be made available if the national passenger transport undertaking has the financial means to cover the services. They can only survive—and I emphasise this—if subsidised either by the State or by the larger bus undertakings.
    The suggestion has been made that rural bus services could be maintained
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    by the use of a kind of utility bus. I am rather surprised that the Government are willing to listen to such a stupid idea.
    Mr. Ellis Smith: Who suggested that?
    Mr. McLeavy: The other side.
    The facts are that the buses must be interchangeable between one route and another, and the buses must be available for keeping the services running at weekends and so on. Small buses are no use at peak traffic periods. So the idea behind the small utility bus is all right in theory but is unworkable in practice. No undertaking wants to have a large number of small utility buses clogging up its garages. Everyone knows that on market days and at weekends and during peak traffic periods the small utility bus would be of no use whatsoever. Therefore, it would have to be taken off the routes and replaced by a larger bus. So the utility bus is a very undesirable remedy for the difficulty.
    I should like for a moment to deal with the wider issues involved. The difficulty in the bus industry is now a national one. The Chancellor, I hope, will not attempt any longer to assume that it is confined to rural areas. Curtailment of services in the populated areas is causing real hardship to the travelling public. The position in urban and rural districts is growing worse every day.
    What is wanted is not merely acceptance of the fact that the problem exists, or sympathetic words from the Chancellor of the Exchequer. We have had them far too long. What is wanted today is a bold approach to this problem, and I suggest that the approach has got to be of such a substantial character that it will enable the bus undertaking to carry out its work.
    I understand that it is permissible to discuss with this new Clause the new Clause relating to the repayment of duty on hydrocarbon oil used by buses in rural areas, the new Clause in the name of the hon. Member for Yeovil (Mr. Peyton) and some of his hon. Friends on the Government side. I should like to say a few words about that Clause. I do not believe in any fancy scheme involving complicated bookkeeping and designed to distinguish between the areas of routes covered by the bus services, as suggested by that new Clause. I do not believe that that is a practical solution

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    to the whole question of our bus difficulties.
    I am perfectly sure that both the Chancellor and the Government as a whole know that the only remedy for these difficulties is to take away the burdensome tax which becomes such a tremendous amount per car mile.
    Mr. Ellis Smith: We must go on hands and knees to obtain remission.
    Mr. McLeavy: I think it is unreasonable for the Chancellor and the Government to refuse today to withdraw a tax which was imposed mainly for purposes other than that of revenue. I have appealed time without number for fair play for the bus industry. No one would dispute that there is no other industry that has made so great a financial sacrifice in order to provide a service satisfactory to the general public, whether in the towns, cities, urban areas or rural areas. No industry has been more humbugged by petty-fogging and totally unnecessary taxation than has the bus industry.
    I remember very well that during the war, when people with executive jobs in industry who were working for the war effort were receiving inflated wages, bus drivers and conductors and those who had to supervise them had their wages or salaries kept down at the Government's request and had very few increases. Whilst people in many other industries, including those holding administrative posts, were given big salaries, the bus operators were providing these services at a time when the then Government said, "We must not allow the bus fares to rise unduly." The loyalty and devotion to the cause of the war effort of those of us who were engaged in the bus industry has been to our disadvantage during the period of peace. No one has cared two hoots about the sacrifices in wage standards which those in the industry made during the war. No one worries today about the fact that busmen went right down the wage ladder and are still down that ladder today. All that is dead and gone. Those services were rendered, but there has been a very poor reward for the patriotism, loyalty and service which the bus industry gave during the dark days of war.
    144
    I ask hon. Members opposite, in fairness to those who are engaged in this industry, whether anyone believes that, apart from the railways, there is any other industry which has to provide a service to the travelling public whether it pays or not. Commercial vehicles run only if there is a profitable load to be taken from one point to another, but passenger bus services must work to a schedule laid down by the Traffic Commissioners. The buses have to provide a certain percentage of unremunerative services. During a large part of the day there is no question of carrying a full load of passengers. The industry's whole financial difficulty arises from the fact that it is a public service and is charged with providing public transport for the community at large. I believe that if the general public realised that the inconvenience they suffer today in the countryside, the cities and the towns, is due to the fact that the passenger transport industry is crippled by heavy, unfair fuel oil taxation, there would be a strong protest throughout the country.
    9.0 p.m.
    Finally, I make an appeal to the Chancellor of the Exchequer. The industry is entitled to expect from the right hon. Gentleman a frank statement of the position. It is not good enough to say that the Minister of Transport is making an inquiry into the difficulties of the rural services. The whole industry should be included in that inquiry, not one section only. It seems to me to be commonsense to remove the tax and give the passenger transport industry a real chance to do a good job for the travelling public.
    Mr. John Peyton: I am grateful to you, Mr. Blackburn, for your courtesy in allowing us an opportunity of referring to the Clause standing in my name and in the names of my hon. and right hon. Friends—(Repayment of duty on hydrocarbon oil used by public service vehicles outside built-up areas). It has a much more modest but a much more urgent purpose than that of the Clause proposed by the hon. Gentleman the Member for Bradford, East (Mr. McLeavy).
    I hope very much that our Clause, despite the circuitous route it adopts to reach the objective of helping the rural services, will commend itself to my right

    145
    hon. Friend. I am not certain whether he will be aware that the Clause is derived from the 1928 Finance Act, a provision which was concerned mainly with fuel used in fishing boats. I do not wish at this late hour to indulge in any unseemly or personal references to my right hon. Friend's adventures in boats. Nevertheless, I commend our Clause to him. It is one which undoubtedly, in the language of the racecourse, is classically bred. It may be said to be by that well-known staying stallion, "Treasury" out of that consistent mare, "Unintelligibility", a union which my right hon. Friend will be the first to recognise has provided goodly progeny in the past.
    The purpose here is to prevent further curtailment in the countryside of essential transport services. I do not believe that it is necessary to argue this case at great length. My right hon. Friend the Chancellor, who himself represents a rural area, is well acquainted with it already. If he does not feel moved to accept the proposed Clause, which is on the Paper for his consideration, I hope that at least he will, to revert to my previous metaphor, himself ride a winner in this direction on the Report stage, because there can be no doubt of the urgency of this matter.
    Mr. Ellis Smith: Will the hon. Gentleman forgive me for interrupting? Many of us are listening with great sympathy to the case he is stating, but will he say something about the administrative difficulties?
    Mr. Peyton: I am coming to that if the hon. Gentleman will give me a chance.
    The effect of this Clause would be to give a rebate of fuel duty to buses for mileage in non-built up areas. This has the advantage of avoiding the difficulty of defining what is and what is not a rural area. Mileage in non-built-up areas is easily ascertainable, which is one great virtue of the new Clause. At the same time, I recognise that if the purposes of the Clause are to be fully implemented there will have to be some consequential regulations by the Commissioners of Customs and Excise. I say quite frankly to the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) that I yielded to the temptation of preserving what clarity there was
    146
    available and also of taking advantage of brevity, at least at this stage, in the hope that I might tempt my right hon. Friend into taking the kind of action which we desire.
    Mr. Ernest Popplewell (Newcastle-upon-Tyne, South): Would the hon. Member explain a little further his reference to a non-built-up area? On a bus route from town A to a point 15 miles distant, for instance, the bus might pass through three or four villages or similar built-up areas. Would the journey through those villages be deducted from the mileage in non-built-up areas?
    Mr. Peyton: All that it is necessary to say at the moment is that the mileage in a non-built-up area along a given route for any vehicle is easily ascertainable. Built-up areas have been clearly defined in the Road Traffic Acts, mainly in the 1934 Act and also in the 1956 Act. I admit that this is a difficulty. On the other hand, it is possible to establish a criterion. I do not know whether this criterion will commend itself to my right hon. Friend.
    Mr. Popplewell Mr. Popplewell rose—
    Mr. Peyton: I think that it would be better if I did not take up time to persuade the hon. Member of the wisdom of this criterion. If he has a better alternative to suggest to me, I shall be glad to listen to it.
    Decency demands that one should make some estimate or guess of the cost of a concession which one asks the Chancellor to make. I believe that this concession would cost him between £7 and £8 million a year. The other day, with great wisdom, he made a concession in respect of cinemas. We are asking for a concession for those in the countryside who wish to go to cinemas and who also wish to travel for other purposes. These are people in desperate difficulties, because they are unable to get the transport on which their lives depend.
    I suggest that the Clause would be of proportionately greater benefit to the small operator, which is surely what my right hon. Friend wishes to see in these difficult days. I do not think that such a Clause would have the support of the industry, which I am certain would rather adhere to the case which it has made on a number of occasions and which has been made in the House for

    147
    an all-round reduction in or abolition of duty in respect of all buses. As I said at the beginning, however, we have in mind the fact that there is an urgent need to do something to prevent a further curtailment of these rural services. Whether the Committee which my right hon. Friend recently appointed reaches fruitful conclusions or not, inevitably the issue will come back to my right hon. Friend.
    A lady wrote to one of my hon. Friends the other day and put the point graphically, if somewhat amusingly. She wrote, "We have no convenience here and we have to walk six miles to the nearest town." I do not ask my right hon. Friend to be influenced by every one of those words, but I ask him to realise that there are many people living in the countryside today, particularly older people who find the problem of getting about very difficult and painful. I hope that he will find it possible, either now or later in the Bill, to give some concession which will be of valuable and marked assistance to rural transport, which I think has a very strong claim upon his generosity.
    Mr. G. A. Pargiter: While I congratulate hon. Members opposite on the ingenuity with which they have framed their new Clause, it seems to me a pity that they have weakened the total strength of what might be adduced in favour of our Clause by advancing a proposal which seems to me impossible to operate and which I have no doubt the Chancellor will shoot down in flames.
    We know that the Chancellor will tell us how difficult it would be to operate even the suggestion which we make in respect of all road passenger vehicles. He will tell us that he has every sympathy with the proposal, because we have heard from many Chancellors how sympathetic they are about these things, but when it comes to a question of action it is surprising how much ingenuity their Department can show in putting forward what, as a matter of policy, it has already been decided to do.
    If the Chancellor is sympathetic towards this proposal and intends to do something about transport services, he could surely find ways and means by which the amount of fuel used for road
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    passenger services could be carefully calculated and returns made in such a way that the rebate could be paid properly and fairly for this purpose only. I should like him to tell us exactly how much decline in revenue there has been over the last few years from fuel oil duty on passenger service vehicles. It is masked all the time by the increased revenue from petrol and fuel oil used in commercial vehicles other than passenger vehicles.
    The Chancellor has no need to worry on the score of falling revenue. If he will consider what he is getting in revenue from passenger services and deal with that matter alone, he will appreciate that the law of diminishing returns has been operating for some time in the sphere of passenger transport services. Further, if he would consider the fact that an increase in total passenger services could provide adequate services both in country and town, he might find that the loss of revenue, which he would deprecate to begin with, would be recovered to a considerable extent, if not entirely. Does a small loss really matter, if we are getting in return a more efficient service at a lower cost than at present? Bus operators are saying that they are between the upper and nether millstones. If they increase their fares less people travel, but if they do not they have to run at a loss, and if they take off some of the buses it means a still greater depreciation of revenues, very often without corresponding savings.
    The case for the Clause is unanswerable. It has been made in past years, but, as the years go by, it becomes ever more urgent. It is not one of those pet ideas which do not really matter; it is a problem of real urgency. Every time the Chancellor dodges the issue the position becomes worse and the travelling public suffers increasingly. It is an unfair burden, which ought not to be borne.
    The Clause could contribute considerably to a reduction in the cost of living. One of the vital items of most people's expenditure is the cost of travelling to and from work. If something could be done to reduce that cost and to provide adequate passenger services it would benefit both industry and the public and, ultimately, it would mean only a very

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    small loss to the Exchequer. For all those reasons it is time for the Chancellor to be a little more forthcoming than he and his predecessors have been in the past.
    9.15 p.m.
    Mr. G. Wilson: I oppose the new Clause and commend instead the Clause—(Repayment of duty on hydrocarbon oil used by public service vehicles outside built-up areas)—which my hon. Friend the Member for Yeovil (Mr. Peyton) has already mentioned. I do so because hon. Members on this side of the Committee think that this is a good Finance Bill and, much as many of us would like to see the abolition of or a substantial reduction in the duty on fuel oil, commonly known as Derv, to make any such sweeping change would destroy the whole pattern of the Bill.
    The Clause to which my hon. Friend has referred, however, is a much more limited and practical one, which could be accepted. I would draw the attention of the Committee to the history of the provision upon which the Clause is modelled. It arises from a Clause inserted in the 1928 Finance Bill by the right hon. Member for Woodford (Sir W. Churchill), who was then Chancellor of the Exchequer, in reply to a plea from the then Member for North Cornwall—Commander Wiljiams—who asked for special consideration for fishermen.
    In the Finance Bill a large concession had been made in connection with derating, and in order to find the revenue for it a tax of fourpence was put upon fuel. Exemptions were originally provided in respect of farm tractors and fishermen but, when the duty on kerosene was withdrawn—it was thought not right to tax fuel used by the poorest section of the community—the concession to the fishermen was dropped. On Report, however, Commander Williams persuaded the then Chancellor to reinsert the concession in respect of fishermen. The wording of the Clause to which my hon. Friend has already referred is only slightly amended to meet the present situation in respect of public service vehicles.
    In the 1928 Finance Bill it was pointed out that only a small amount of fuel was used by fishermen but that the concession was important for them because they were in a bad financial position.
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    That is the position of the rural buses at present. We believe that the Clause would be preferable to the one which has been moved, which does not specifically help the rural buses but helps everybody. In addition, it is limited to Derv, whereas the later Clause includes petrol, so that it would help the minority of buses running on petrol, which are mostly in rural areas.
    Far from its being a precedent, as I have explained, the precedent was set in 1928. Nobody else has used this except in exceptional circumstances which we suggest have now arisen in connection with the rural buses. There is no difficulty in deciding what proportion of a bus route is outside a built-up area. The effect of the Clause would be a substantial concession to those buses which run mostly in rural areas, and there would be a slight concession to those services which were run entirely, or mainly, inside a built-up area.
    As was said, the money involved by adopting the Clause we propose would be very much less than if the Clause proposed by the hon. Member for Bradford, East (Mr. McLeavy) were accepted, and for that reason I think it would be reasonable to ask the Committee to press the Chancellor to give some further consideration to the matter.
    Mr. R. E. Prentice: We all agree that the new Clause on the Order Paper in the names of hon. Gentlemen opposite is one that would cost the Exchequer less than the Clause we propose, but in a year in which tax concessions of many kinds have been made, road transport as a whole should have been one of the national priorities. The case for giving relief for road passenger transport is one that is becoming stronger every year. As other hon. Members have pointed out, many arguments have been put to successive Chancellors of the Exchequer, both in this House and by representatives of the industry, over a number of years.
    Each year the problem has become more difficult because of the increased number of private motor cars going on the roads and taking passengers away from the industry. Difficulties have also increased because the costs of the industry have been going up. These concessions should not be confined to rural transport. While I agree that there is a

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    strong case for the concession being given to rural transport, many of the services affected are in urban areas.
    Many transport undertakings serve urban and rural districts simultaneously. The London Transport Executive has very considerable country services. Its urban services help to finance the rural services and less profitable urban routes. Many rural services would be preserved if the stronger new Clause moved from this side of the Committee were accepted.
    The London Transport Executive is a very efficient organisation which gives very good service, but it has been operating for some years under a pattern of changing social habits which have affected the passenger transport industry. The position has been aggravated by the financial policy of the Government. There was a great deal of public protest last year at the number of cuts that were made in transport services. There were protests from borough council representatives, organisations like the trades councils, and many individual people. On taking those complaints up with the London Transport Executive, we were told of the very real difficulties which made the cuts unavoidable.
    My hon. Friend the Member for Bradford, East (Mr. McLeavy), who has great experience in the transport industry, referred to one of the difficulties facing transport undertakings. It is the way in which wages and salaries of people employed in passenger transport have declined in relation to those of practically all the rest of the community in the last 20 years. It really is not good enough that the public should expect to get cheap transport at the expense of those who are employed in the transport services. We were reminded of this very drastically last year at the time of the London bus strike. Higher fares have had to be imposed from time to time. There is a limit to the extent to which they will be effective, but they have had a serious effect upon people living in constituencies like mine who have to do a lot of travelling to their place of work. The problem in the rural areas is worse still. It is not good enough for the Government to shuffle off this responsibility on to another special committee.
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    The Government can help by accepting either of these proposals, preferably that advanced by hon. Members on this side of the Committee. If the position in the rural areas is allowed to go on declining at the present rate, we shall be heading for a situation in which there will be few bus services at all in the purely rural areas. What shall we say to the people who live there? Will they be told that they must have a car in order to get about? People generalise too much about the increased use of cars. Millions of people will never own motor cars, either because they cannot afford one, or because they cannot drive or because they are unwilling to drive, or for reasons of that kind. We cannot aggravate the depopulation of the countryside by failing to provide proper road transport services in the country areas.
    I anticipate that the Committee will be told that it is not the financial policy which causes these difficulties, but that they are occasioned by the increased number of motor cars, by the change in social habits because people stay at home to watch television and do not use the public transport services as much as they did previously, or reasons of that kind. But the difficulties have been aggravated by the financial policy. It is a problem of cost, and a fact which I do not think can be avoided by the Government is that were they to make this reduction in taxation for which we ask, some road services would remain in operation which otherwise would have to close down during the next 12 months. I think we have a right to appeal to the Government to change their attitude.
    Sir Robert Cary: This is the fourth occasion on which I have spoken on this subject since my right hon. Friend the Chancellor presented his Budget. I ask his forgiveness, and I promise that I will try not to reiterate some of the things which I have said before.
    We had a gentle winter and we are enjoying a fine summer, which one hopes will continue. But assuredly it will be followed by hard and severe winters. To see our rural services wither and fade away in such circumstances when further and drastic cuts have been made in counties like Lincolnshire—
    Mr. Harold Davies: And Staffordshire.
    Sir R. Cary: These cuts are general. The rector for the South Ormsby group of parishes wrote a letter to The Times on this subject. When speaking of severe winters, I am thinking of counties like Kent on the eastern side of the country and of Lincolnshire. Those are areas where the services are withering and may become non-existent.
    I am glad to follow the hon. Member for East Ham, North (Mr. Prentice), because in using the word "priorities" the hon. Gentleman touched on the essence of the problem. Surely, the bus fare which is a basic part of the cost of living, is entitled to rank on equal terms with the price of a cinema seat in the matter of concessions.
    For these general reasons I appeal to the Chancellor to adopt the method advocated by my hon. Friend the Member for Yeovil (Mr. Peyton), who put the case cogently and clearly. That is a method other than the straight cut advocated by hon. Members opposite. Their method would cost about £30 million, as we were told by the Financial Secretary in a recent debate, but my hon. Friend's suggestion would cost about £7 million to £8 million. That is a possibility, as one of my hon. Friends said, without basically changing the structure of the Budget.
    9.30 p.m.
    Mr. McLeavy: If we took advantage of the Clause proposed by hon. Members opposite, would the hon. Gentleman advise the Committee that that would meet the whole position?
    Sir R. Cary: No, it would not meet the whole of the position. The emphasis in our Clause is placed upon rural services. The hon. Member for Bradford, East (Mr. McLeavy) made his case on the general needs of the industry.
    I came down for the Budget debate expecting the 2s. 6d. to be swept away. While it was a most satisfying Budget, and while I am grateful to the Chancellor for what he has done in other directions and still grateful to him for the concession which he made about licences, which cost £6 million, I still feel that there is an urgent public need to be met not over the industry as a whole but in particular on the rural services which will have to go through such a trying time this coming winter.
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    I was glad that an hon. Member opposite mentioned the motor car versus the bus. The way the position of the motor car is being grossly overstated is fantastic. Thousands of our constituents in rural areas are slogging the lanes with heavy baskets. As to there being a motor car per person, there is not even a motor car per family, and when a family has a motor car it is generally used by one individual. What do we see today, even at weekends? Two-thirds of the cars do not even go out. The car is a happy thing which the head of the family tinkers with while he waits for his Sunday dinner. It is just as well that the cars do not come out. On my main road in Kent this weekend there was a queue extending five miles. No matter what one did, one could not get along that road for two or three hours. It is just as well that today the motor car has taken the place of the cottage piano of fifty years ago with its golden candles. Only occasionally was one allowed to go into the parlour and lift the lid of the piano. Of course, we have candelabra on small grand pianos, but today the motor car, I am afraid, gets preference over all that type of furniture.
    The hon. Member for Bradford, East raised the subject of the distribution of fuel. We are talking about Derv. I will not weary the Committee with details from an excellent publication that I have which has been issued by the petroleum industry, but we use in the industry roughly 2 million tons of Derv. Gas, diesel oil and fuel oil, all freed from taxation, are used about nine times as much for electricity generation, gas making, central heating and glass making and by the oil refineries for their own use and, above all, by the railways. All that is free. Yet in the narrow sector about which we are speaking there is a burden of taxation at the 2s. 6d. rate. I suggest that it is still a burden which we ought not to contemplate for much longer if we really want the industry to survive, but I feel that, in particular, my hon. Friend is right in placing the emphasis in his Clause on the rural services.
    Mr. Harold Davies: The hon. Gentleman's plea has touched my heart. I live in a rural area, and I agree entirely with the sentiments which have been expressed. Perhaps he would press the

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    Chancellor a little more. The Prime Minister suggested that we may have one day to move 12 million people out into the country districts. Would not the hon. Gentleman suggest that a small donation from the defence fund might help the rural bus services to solve the problem? Therefore, why not go for the £30 million that my hon. Friends and I want?
    Sir R. Cary: I am glad the hon. Gentleman has mentioned the subject of defence. Perhaps I may widen out my thoughts a little.
    Mr. Davies: I am sorry now that I started the hon. Gentleman off on that subject.
    Sir R. Cary: A new Clause, rather like a Bill on Second Reading, has a main theme of intention or virtue which is not particularly concerned with matters of administration or with how the Measure is to be paid for. There are some considerations which are rather wider than the technicalities of the subject, and the Committee ought to consider these aspects.
    First, these services have taken years to build and have employed the energies of many firms. For instance, chassis makers like Leylands and body builders like Northern Counties and Metropolitan-Cammell have a deep interest in the survival of these routes. But can it be far from the mind of my right hon. Friend the Minister of Defence that suddenly the mobility in our rural areas might wither when the situation elsewhere is not so happy? But quite apart from the Ministry of Supply, the Ministry of Transport and other Departments which are directly or indirectly concerned with this matter, there are other considerations. I do not wish to see any further withering of our rural services, nor in this fine industry as a whole which has been built up over many years and which, by means of the shop window which it represents, has been responsible for many grand orders in the export trade.
    Mr. Tudor Watkins: I am glad that we have been able to discuss these two new Clauses, and I shall be glad of a concession in one direction or another. I propose
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    to deal in particular with the Clause in the name of the hon. Member for Yeovil (Mr. Peyton), and I wish to emphasise the importance of a concession being granted to bus services generally. I wish to place greater emphasis, however, on rural bus services.
    I was a member of a deputation of the Rural District Councils Association for England and Wales and the Association of Parish Councils. As the vice-president of the former, I met the Parliamentary Secretary to the Ministry of Transport and Civil Aviation and discussed the problem generally. The question of fuel oil tax was not raised as such. The seriousness of the problem and its effect on rural bus services has not yet impressed itself on people in the industrial areas. It is a very important problem, and I hope that at some time the House of Commons will give attention to rural depopulation.
    Many constituents often ask, if subsidies can be given to agriculture and other industries, why cannot they be given to rural transport? Last year, in company with others, I met the Financial Secretary to the Treasury and discussed this issue of the fuel oil tax. We were heard sympathetically, but it is now time that something was done. The Chancellor should bear in mind the opinions which have been expressed from both sides of the Committee. There have been reports from Wales stressing the seriousness of this matter.
    The task of the traffic commissioners is very difficult today. I certainly should not like to be the traffic commissioner dealing with central Wales at the present time. It is a terrible job to cope with all the problems which arise. The situation is very serious because, when branch lines are closed, although an indication is given at inquiries or meetings of the consultative committees that alternative transport services will be provided, within twelve months there is, in fact, no transport at all. This is the serious side of it, and I ask the Chancellor to pay particular attention to that.
    Another important aspect of the problem arises in this way. The small bus operators, and even the large companies such as the Western Welsh Bus Company, have now reached the stage where they are dispensing with conductors and having buses worked by one man. This

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    means redundancy in the country areas, which, in its turn, adds to rural depopulation. One remedy would be to give relief from tax as is suggested by these new Clauses. I would support either in an effort to obtain a concession.
    I hope that the Chancellor will, as one hon. Member after another has said, make some definite move to give relief, and not just think in terms of setting up an inquiry. I should not mind a committee of inquiry being appointed if, within its terms of reference, it were possible to suggest some definite means of dealing with this problem of taxation on both petrol and fuel oil and providing a remedy for the transport problems of rural districts today. The situation is indeed very serious. I have heard the excellent arguments which have been adduced from both sides, and I now add my appeal to the Chancellor. On the last occasion I spoke, the right hon. Gentleman followed me and made a concession about Entertainments Duty on cinemas. I am certain that the whole Committee would congratulate him if he were to make another concession this time for the relief of the rural bus operators, and I am happy to support either of the two new Clauses.
    Colonel Richard H. Glyn: I am glad to have this opportunity of saying how much I agree with a great deal that the hon. Member for Brecon and Radnor (Mr. Watkins) said. I support the new Clause spoken to by my hon. Friend the Member for Yeovil (Mr. Peyton) because I sincerely believe that, while the whole industry is in some difficulty, there is real danger in the situation now facing the bus services in rural areas. In the district in which I live and which I know best, the bus services have contracted very sharply during the last four or five years, and many of them are still not paying. The bus operators are frankly saying that, unless something is done, there will have to be further substantial reductions in services.
    Everyone, I know, is grateful to my right hon. Friend for his concession with regard to licences, but that will hardly be enough to save some of the operators who are in the greatest difficulty. Further reductions will have a disastrous effect on the countryside. We must think of the housewife who already has to walk, in some cases, as much as five
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    or six miles to reach the nearest bus stop. This is a serious undertaking for her, particularly if she is old and has to think of getting back on wet evenings carrying her shopping. In the sparsely populated areas of the countryside, such as my constituency, the outlying villages become less and less popular and people leave them just because they have no access to the towns where the big shops are.
    For all these reasons, I hope that my right hon. Friend will accept the new Clause of my hon. Friend the Member for Yeovil, or, if it is impossible for him to do that, I hope that he will at least find other means of arriving at the same result. Once rural transport services are abandoned, there seems to be no possible way of restoring them again, and this. I feel, is the most serious factor of all.
    9.45 p.m.
    Mr. Tom Brown: As the debate has gone so far, there seems to be a large measure of agreement. I support the new Clause moved by my hon. Friend the Member for Bradford, East (Mr. McLeavy) from a different point of view, bearing in mind the changing pattern of industry as we see it in northwest Lancashire. Within the last few years there has been a considerable change. It is an inevitable change, because our coal mines in that area are worked out. Men have to travel long distances. When men travel long distances they must pay excessive fares. I am not complaining about the L.U.T., which is represented by the hon. Baronet the Member for Manchester, Withington (Sir R. Cary). The L.U.T. plays its part very well. Occasionally it slips up, but we must excuse it for that.
    In my district within the last twenty-five years twenty pits have closed. I have the honour to represent a large coal mining constituency. At present we have only one colliery in commission. In a few months' time that colliery will cease to operate. Three mines have just closed, Garswood Hall, and Maypole. Where are those miners to seek their livelihood? They must travel a distance of seven miles to St. Helens in one direction, Mosley Common in another direction, and Agecroft and Pendleton in another direction. I do not want to carry this argument to any great length,

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    but many of these men who are supposed to be working seven and a half hours a day are away from home twelve and a half hours. They spend five hours travelling morning and night to and from their work.
    The Chancellor should give consideration to this Clause from the point of view of the changing pattern of industry in industrial areas. We are finding it very difficult to persuade men to travel when they are offered alternative work in the occupation in which they have been brought up and reared, namely, the pit. They say that it is too far to travel and that the expenses are too great. In some areas the N.C.B. has to come to the rescue; where the bus fare exceeds a certain amount the N.C.B. subsidises the bus fares incurred by the men. The N.C.B. does that because it wants to persuade men to go to new collieries.
    At present a large colliery is in the course of being sunk—Parkside. It is the first shaft to be sunk in Lancashire for thirty-five years. It means that the miners have to travel long distances. When they travel long distances, apart from the physical fatigue, they have to pay excessive fares, because there is no other means of transport convenient to convey these men from their homes to the new collieries or the development of some old collieries which is taking place.
    I want the Chancellor to focus his mind upon a certain area which is now worked out. The Wigan coalfield is passing out. The Ince and Ashton-in-Makerfield district is passing out from a coal-producing point of view. The N.C.B. is doing its best to find the miners concerned employment, but it can find them employment only in a distant town or a distant coalfield. The Chancellor should examine the Clause from that point of view.
    If men and their families are being asked to go elsewhere to earn their livelihood where the occupation in which they have been reared is coming into existence, it is highly desirable that they should be given facilities to do so, by being provided with convenient travelling facilities at a reasonable cost. It is all very well for us in the House of Commons to say that we can find work for the men elsewhere, but if it involves
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    any extra bus fares we will have difficulty. I beg the Chancellor to examine our proposal from that viewpoint.
    The National Coal Board and its officials are doing all they can to seek work elsewhere in the industry for the men who have been trained in it. If the Board is prepared to help in this way, surely the Chancellor could give it a fillip by trying to reduce the bus fares to the new development areas.
    Some people will say that I am always pleading the cause of the miner, and there may be justification for that.
    Mr. Ellis Smith: That is what my hon. Friend is here for.
    Mr. Brown: I am here for lots of things. I plead with the Chancellor to help this nationalised industry to find work for its men by making it as easy and as cheap as possible to get to the place where the work is provided for them.
    Many arguments could be advanced. Other industries and other industrial workers may be having the same experience. In this one district, however, we now face the issue that our pits are closing down. Our men must seek their livelihood elsewhere and must travel long distances. Only a few days ago, I said to a man, "If you are in such difficulty that you must pay this heavy expenditure, why not seek a residence near the colliery where you will work?" That is a sound argument to advance, but it is another matter to examine the situation confronting such a man.
    That man is established in his parochial soil. He has lived there for forty years. He has brought a family into the world and has reared them and now they are working in the district. If he uproots himself and his family, he must pay their travelling expenses back to the place from which he moves. The hon. Baronet the Member for Withington, whom I see in his place, will agree with what I say. Therefore, I ask the Chancellor to review this question from an entirely new point of view.
    The contraction of industries within a locality necessitates their employees travelling long distances to work elsewhere and paying excessive fares. It has been said that if the companies operating in these working-class areas can get a concession from the Chancellor in the

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    shape of a reduced tax on fuel oil, they will pass it on to the travelling public. That remains to be seen. We have had those promises before. I feel, however, that the directors of the bus companies have a genuine desire to help those who through no fault of their own must pay excessive fares to and from their work.
    I should like briefly to give a picture of a day in the lives of these men. They work seven and a half hours a day underground, but many of them are away from home twelve and a half hours, three to four hours of which is spent in travelling. That gives the Committee some idea of the distances that these men have to travel and of the costs they have to pay. If the Chancellor can help as we suggest, not only will he be doing a service to mining and other industries which, unfortunately, have had to change their areas but he will be rendering a great service to himself and to the Government. Therefore, I plead with him again, as I have done on many other occasions, to give serious consideration to the proposal contained in the new Clause.
    Mr. W. F. Deedes: I am sorry to add even a moment or two to this debate at the end of what I know to the Chancellor has been a very long proceeding. Even so, most hon. Members will get home more easily and quickly tonight than some of our rural constituents.
    I support the Clause in the name of my hon. Friend the Member for Yeovil (Mr. Peyton) because I think it faces a dilemma which the Treasury has not faced. The dilemma is that if we ask the Chancellor to reduce the tax over the whole field by a sum which will assist rural transport, then we shall be asking him for more money than he will be prepared to give. On the other hand, if we ask him for a smaller sum, it will not be sufficient to assist rural transport. The only answer, whatever administrative criticism may be made of the new Clause, is some sort of discrimination on the lines which my hon. Friend has proposed. I think that there is a degree of urgency about this Clause and this proposal.
    A new Clause may have two possible effects. It may at once go to the heart of the Chancellor and attract a favourable response. It may sow a small seed
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    which fructifies during the year and produces a better result in twelve months' time. But twelve months will be too late for the proposition we are now discussing. I think that my right hon. Friend will say that an inquiry is being set up and that it will consider, among other things, the possibilities that my hon. Friend has put forward. That is so, but, when the inquiry is finished, this will go straight back to the Chancellor because he is the only person who can find the final solution of this problem.
    I think that this matter has gone on long enough. Over and over again for some months—for some years now—I and other hon. Members on both sides of the House, who represent rural areas have made an earnest and, I think, a rather reasonable plea on behalf of rural transport. I hope that my right hon. Friend tonight will be able to say something more than that an inquiry has been set afoot, and will give our rural constituents some prospect of avoiding, as I can see happening in the very near future, their being cut off as they have never been cut off since the advent of the internal combustion engine.
    Mr. Sydney Irving: I support the hon. Member for Ashford (Mr. Deedes) in the sense of urgency which he has endeavoured to project into this discussion. I support the new Clause moved by my hon. Friend the Member for Bradford, East (Mr. McLeavy) because I believe in the interdependence of town and country in the maintenance of transport services. I believe, as my hon. Friend the Member for East Ham, North (Mr. Prentice) has said, that the rural services depend on the profitability of the urban services for their continuance.
    I have some sympathy with the hon. Member for Yeovil (Mr. Peyton) because I have a constituency which has a large rural area, the beautiful Darenth Valley. Of all the matters that have concerned my constituents in rural areas over the last four or five years none has agitated them more than the curtailment of bus services. There have been public meetings, parish councils have protested, and there have been petitions and resolutions. Local authorities have pressed the local traffic advisory committee, but all to no avail. Cuts have gone on and there have been a number

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    of withdrawals of bus services. All this has been forced on London Transport because it must cut out unremunerative services. For country people I believe that this deterioration in the services constitutes considerable hardship meaning longer waits, earlier return from town and a general restriction of movement for young and old and I have here letters which show the distress which is caused particularly to old people. It does mean a widening of the gap between town and country which we ought to be trying desperately to bridge.
    10.0 p.m.
    I welcome, too, the reduction in the vehicle licence duty, but it is not enough. As my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) pointed out in the Budget debate, this constitutes only about one-third of 1d. a mile in a general working expenditure of 2s. per mile and this cannot constitute the difference between profitability and loss; nor can it mean the difference between an unremunerative service and a remunerative one.
    We believe that the transport services of the country should be run as a public service, but under the present arrangement the only thing which can save the industry and maintain the rural services is a reduction of this fuel duty. If the Chancellor can find it possible to make any sort of concession tonight he will certainly earn the gratitude of many of my constituents and of many other people throughout the country.
    Mr. Ernest Davies: If the Chancellor of the Exchequer needed any convincing of the urgency of this problem of rural road passenger transport, I think that he will have been convinced by hon. Members tonight.
    Mr. Cyril Osborne: On a point of order, Sir Gordon. Does the calling of the hon. Member for Enfield, East (Mr. Ernest Davies) mean a gag on the debate?
    The Deputy-Chairman: It means nothing of the sort.
    Mr. Davies: This is the Committee stage of the Bill, and I am not attempting to gag the debate, but it was considered that the time had come when the point of view of the Opposition Front Bench
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    should be put forward, and it would help the debate, I am sure, if the Chancellor of the Exchequer gave his views.
    The Chancellor has heard from both sides of the Committee what I consider to be the very strong arguments adduced in favour of both the new Clauses. We on this side prefer the one which has been moved by my hon. Friend the Member for Bradford, East (Mr. McLeavy). We consider that its acceptance would have a real effect upon the industry today, and that it would be more practical and more simple in operation than the new Clause in the name of the hon. Member for Yeovil (Mr. Peyton). Administratively it would be simpler. In our view, the new Clause in the name of the hon. Member for Yeovil would constitute considerable difficulty administratively.
    The problem of the road passenger transport industry today is a comparatively simple one. It is that the higher operating costs, and the fall in passenger traffic as a result of the resort to private transport and the change in habits, has led to a serious deterioration in the industry which has compelled operators to eliminate a number of their services. Needless to say, those services which are eliminated or whose frequency is reduced are the unremunerative ones, the majority of which are in rural areas. As a result, the whole structure of the industry as envisaged by the licensing system is threatened.
    The Act of 1930 provided, in effect, for monopoly powers to be given to the large operators in urban and rural areas, and in return for those monopoly powers they were expected to operate unremunerative services. That system has prevailed until recently, but during recent years the larger companies as well as some of the smaller ones have been compelled to eliminate those unremunerative services in order that they can maintain their profits and dividends. Unfortunately, the road passenger transport industry is still largely operated by companies, and a very large section of the industry is still in private enterprise, which has to operate at a profit. It has to maintain profits and dividends, and it resorts to these reductions in services and the elimination of the unremunerative routes. The Maidstone and District Motor Services, mentioned by my hon. Friend the Member for Bradford, East, cut out 1 million vehicle miles

    165
    in the last twelve months. The company did that and was able to maintain its dividend.
    All I mention this for is to show that the companies in the industry as organised at present have no alternative but to carry on in the way they are; but the great danger is that the element of public service on which the road passenger transport industry has been built, particularly since the licensing system was introduced, is being threatened today, and that the continuation of the industry on public service lines is coming rapidly to an end.
    I think that the Chancellor will also have been convinced by speeches made in previous debates on the Bill and by what has been said today from both sides of the Committee, particularly by his hon. Friends who, no doubt, will have made a bigger impression on him than we on this side of the Committee have made. I am sure that he must have been convinced of the failure of the concession which he made—welcome though it was to the industry—to have any real effect in bringing about an improvement. Already some companies have had to raise their fares. They held them at a certain level before the Budget in the hope that relief would be forthcoming. Having seen that the relief is inadequate, they have been compelled to increase their fares further.
    We on this side of the Committee prefer our new Clause to that suggested by hon. Members opposite. We doubt whether it is administratively possible to put theirs into operation, and whether it is possible to differentiate between vehicle miles run through urban areas and those run through rural areas. As so many of the routes run through both, if relief were given on that basis one could not be sure that it was going where it was most needed.
    We prefer our own new Clause also because the industry's problem is not confined to the rural areas. As was pointed out by some of my hon. Friends, there is a problem also in the urban areas, for very much the same reason—the resort to private transport. Cuts in services have been experienced in London, and a very large number of municipalities are in difficulty in maintaining their bus services at their previous levels and in continuing to give
    166
    the service that is required. Unfortunately, therefore, this problem is not confined to rural areas. Relief must be given to the industry as a whole if the public service element is to be retained.
    Previously, when we moved a similar new Clause, two arguments were advanced against it. The first was that it introduced discrimination and could not be operated administratively. That argument was debunked by the speech of the Paymaster-General when we discussed a Clause in the Bill which makes a small concession on Excise licences. The right hon. Gentleman then made it clear that in the imposition of tax it was quite easy and practicable to discriminate between diesel oil and petrol, and it was being done already. As has been pointed out, roughly 87 per cent. of the diesel fuel oil consumed today is exempt from tax. To exempt a further 13 per cent. would not introduce administrative difficulty. If 87 per cent. is exempt today without a black market developing, surely all diesel fuel used in these public service vehicles should be exempt. It would bring relief to the industry, because some 84 per cent. of the buses operate on diesel oil today. There has been a steady growth in the diesel vehicles and a diminution in the petrol-driven vehicles, and that process is continuing.
    The main argument which the Chancellor will advance will be that this cannot be afforded because it would cost £30 million. He has made other large concessions in this Budget but, apart from that, I would point out that recently the Minister of Transport informed the House that on his estimate there will be 12½ million vehicles operating on our roads within ten years. This means that there will be a great increase in the amount of tax the Chancellor will derive from both derv and petrol, and with the steady increase in the number of vehicles—half a million a year—his tax revenue from this source is bound to increase substantially. That will give the right hon. Gentleman an opportunity of making some concession. If he cannot go the whole way as regards diesel for public service vehicles, he could go some way towards it, anticipating the great increase in tax revenue which will accrue to him over the coming years.
    So I ask the Chancellor to take seriously the arguments which have been

    167
    advanced tonight from both sides of the Committee. There are millions of people who must travel to work, or must travel for other purposes, by public transport daily. Those are the people who cannot afford, or for other reasons do not have, private transport of their own. It is those people who are being deprived to some extent today of the service they require. It is true that the business man in a sense is subsidised to the extent that he has a car and his business expenses in part pay for the cost of his travel to and from work. Those using public transport can get no such relief, and they are the ones who need it most. So I ask the Chancellor to take into account the arguments which have been put forward tonight, to realise that this is a real and urgent problem, and that some further action other than that which he has taken already is needed.
    Mr. Amory: I agree with the hon. Gentleman the Member for Enfield, East (Mr. Ernest Davies) that serious arguments have been put forward in the debate this evening. It is a serious subject and, therefore, I do not want to dismiss those arguments in the least lightheartedly.
    First, I want to make clear the limits of the problem with which we are dealing. The Hydrocarbon Oil Duty applies to all light oil, that is to say petrol, whatever the purpose for which it has been used. It applies only to heavy oils, including diesel, when those oils seriously displace, that is to say compete, with petrol, and that means on the roads. Right hon. and hon. Gentlemen opposite have sought a relief for all buses in the Clause they have put forward. My hon. Friends have sought to isolate rural services in an ingenious way, but one which is open to various objections in practice, I am afraid. I have said on earlier occasions that it would be difficult to make a fuel concession specifically for rural buses. The Government recognise the problem and have been concerned about it for some time. That is why my right hon. Friend the Minister of Transport is to set up a committee to inquire into the whole problem, and I trust that some practical solutions will emerge from that inquiry.
    When we speak of the Hydrocarbon Oil Duty we may be tempted sometimes to think in terms of private motoring,
    168
    but of the £355 million which I hope to get from this duty, the private car pleasure use will amount to not more than one-fifth, even if half the petrol consumed in cars is taken as being for pleasure rather than for business motoring. One has to bear that fact in mind when considering the effects of giving way to requests for discriminatory treatment in this or that case.
    10.15 p.m.
    There are a number of good cases for discrimination if only it were possible to consider them in isolation or if we had no need to be seriously concerned about what happened to the hydrocarbon oil duty as a whole. The first question is whether special exceptions are in principle acceptable. As long as we make no exceptions, the integrity of the duty and its yield of £355 million is not jeopardised, and that has been the policy ever since the inception of the duty thirty-one years ago, but once we started making exceptions the climate would change completely and the pressures, which are strong enough as it is, would become very hard to resist. This is not just theory. The Motor Spirit Duty which preceded the oil duty, as I think I mentioned previously in our discussions, collapsed and was repealed in 1921 simply because exceptions to it made it no longer viable.
    Mr. G. Wilson: Will my right hon. Friend bear in mind that in 1928 an exception was made in the rebate on the light Hydrocarbon Oil Duty for fishermen and that this was the precedent for the new Clause put down by my hon. Friends?
    Mr. Amory: It is true that an exception was made in respect of fishing boats and lifeboats, but these exceptions did not affect road transport. What I am saying is that once we start making exceptions which apply to road transport we begin to get into very great difficulties.
    In 1928 the then Chancellor of the Exchequer, the right hon. Member for Woodford (Sir W. Churchill), replied to a Question with both the old and new duty in mind. He said:
    "I am well aware that the old petrol tax of 6d. was ruined as a fiscal instrument by the introduction of an enormous variety of exceptions of this kind and that kind, each exception leading to another, and many of them leading

    169
    to evasion and leakage in connection with the tax."—[OFFICIAL REPORT, 1st May, 1928; Vol. 216, c. 1517.]
    In Committee on the Finance Bill he subsequently said:
    "So far as this duty is concerned, we are like people in a diving bell; we cannot afford to open a single chink, otherwise the water will rush in and we shall be drowned".—[OFFICAL REPORT, 25th June 1928; Vol. 219, c. 161.]
    That was true then, and in substance I think it is still true. Exceptions would be very dangerous indeed if the duty is to be maintained, for apart from the encouragement which every other claim would derive, there is a potential chain reaction. If diesel oil for buses at a cost of £26½ million a year, why not petrol for buses? And if petrol or diesel for buses, then why not for road transport of all kinds in the outlying areas? Next, why should we burden road transport or business transport or industry or agriculture, which also affect, however remotely or uncertainly, the cost of living? It is difficult to deny the logic or indeed the social and economic force of such arguments.
    Mr. Julian Snow (Lichfield and Tam-worth): In an endeavour to help the right hon. Gentleman in the difficulty in which he finds himself, may I ask him to address himself to the question of the present serious over-production of oil in the world, which I think is running at the rate of 100 million tons a year and as a result of which certain oil exporting countries are having to find new markets? All of this should demonstrate that the world oil price should be dropped. Is the right hon. Gentleman satisfied that the Government are doing their best to extract oil at the best price in the world market in an endeavour to reduce our running costs in this country?
    Mr. Amory: The point which is relevant to our discussion is that oil is imported into this country and that an unlimited extension of its use would not be entirely free from difficulty to our economy.
    Mention has been made of the exception of lifeboats, and I have already referred to that. The effect on the cost of living has been mentioned, but that would depend on how far any reduction in the duty was passed on in the form of lower charges and not better services.
    170
    So much for the objections in principle, but there would also be very weighty administrative difficulties, particularly under the Clause put forward by my hon. Friends concerning rural transport. We must remind ourselves that the main reason for the shortage of rural services is not the impact of the oil duty but the lack of use of those services. I do not dispute that an exemption from tax would undoubtedly help in that direction, but it would not in itself be a basic solution to the problem and we should be deceiving ourselves if we thought that it would.
    My hon. Friends have put forward an ingenious definition which I agree is precise, but I do not think that it would work because if we adopted built-up areas as a definition we should create a number of extreme anomalies. One or two hon. Members have referred to some of them. Many villages are built-up areas and in the parts of many towns and the environs of many towns there are stretches of road with no speed limit. The mileages would either have to be calculated as a proportion of mileage on a very arbitrary basis or on such a detailed basis of individual journeys and individual vehicles, that it would make control very difficult indeed. As my hon. Friend the Member for Yeovil (Mr. Peyton) mentioned, the industry itself has not smiled on a differentiation of the kind which has been suggested.
    I am afraid the truth is that if we consider a particular case in isolation it is always possible to devise some administrative means—perhaps disproportionally expensive in time, and not entirely satisfactory—to give effect to it, but the administrative difficulties acquire force if one exemption leads to another, and that is the thing that worries me more than anything else about these Clauses. The administration of the duty would break down under the cumulative weight of burdensome and yet too easily evaded controls. In this case I have come to the reluctant conclusion that the administrative difficulties reinforce the arguments of principle that I have mentioned, and that once exceptions are made it will be almost impossibly difficult to draw the line.
    Apart from the cost of the Clause, which, on top of the very big reliefs

    171
    already afforded under the Bill, would be so great as to be quite unacceptable, that is the reason why—
    Mr. Harold Davies: I can see the Chancellor's difficulty, but on the question of cost, is it not possible, as suggested by hon. Members on both sides of the Committee, for some discussion to take place between him and the Minister of Defence, whereby we could spend £30 million less on defence in order to carry out the real work of defence, namely, the movement of people? How can we expect to move 12 million people without rural transport?
    Mr. Amory: My brief answer is that I have 101 good uses for anything that I may get out of my right hon. Friend the Minister of Defence.
    For the reasons I have given, realising all too clearly the problem which exists, particularly in the rural areas—whose case my hon. Friends have argued with such moderation this evening—I must say that I cannot see a solution by way of either of the proposals put forward. Although I share the anxieties expressed by hon. Members and agree that we must somehow find a solution to the problem, I must advise the Committee not to accept the new Clause.
    Mr. Cyril Osborne: I have sat here all the evening, and this is the first time that I have sought to speak. I apologise to the Committee for speaking so late in the debate, but I have received a deputation from my constituents asking me to make a point which has not yet been made, and I feel that it is my duty to do so. Despite what any hon. Member may say, I intend to do so.
    I want my right hon. Friend to consider the problem of the rural buses through the eyes of a Minister of Agriculture, which office he formerly held. Tonight he has considered the problem purely as a Chancellor of the Exchequer, but what would he have said when he was Minister of Agriculture and wanted the maximum amount of food produced
    at home? People in my constituency have seen one branch line of the railways closed down; they are seeing all the small railway stations closed, and the slow trains taken away. It is, therefore, almost impossible for the women in the scattered villages to get into the market towns, because the road services are also being taken away. The women are very reasonably saying that if the authorities will not provide transport for them to go into the towns at least once a week, they are not prepared to stay in isolated villages and allow their menfolk to grow the food we need.
    The Chancellor said that his right hon. Friend the Minister of Transport would set up a committee to investigate the problem, and that he trusted that some practical solution would be found. The only solution to be found is the one that he will find, because it is a question of money. He must either make it easier and cheaper for the buses to run in rural areas or he must subsidise them.
    Will he consider the matter as he would have done before he became Chancellor, and remember that the amount of money being asked for by either Clause under discussion, and which would give rural buses a chance of providing the services which are required, at least in a large county like Lincolnshire, would be as nothing to the money that he would have to find to import food that we could grow ourselves?
    Finally, will he ask his officials to refer to The Times and read a letter written a few weeks ago by an Anglican priest from my constituency pleading the case of his parishioners who were cut off because the bus services were taken away? I know that the problem is difficult, but I beg him to do something quickly: otherwise, in his former existence as Minister of Agriculture he will deeply regret the fact that he is refusing to act as Chancellor of the Exchequer.
    Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 169, Noes 208.

    Division No. 135.]

    AYES

    [10.30 p.m.

    Albu, A. H.

    Balfour, A.

    Bonham Carter, Mark

    Allaun, Frank (Salford, E.)

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

    Bottomley, Rt. Hon. A. G.

    Awbery, S. S.

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

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

    Bacon, Miss Alice

    Benson, Sir George

    Bowen, E. R. (Cardigan)

    Baird, J.

    Beswick, Frank

    Bowles, F. G.

    Boyd, T. C.

    Howell, Charles (Perry Barr)

    Popplewell, E.

    Braddock, Mrs. Elizabeth

    Hoy, J. H.

    Prentice, R. E.

    Brockway, A. F.

    Hughes, Cledwyn (Anglesey)

    Price, J. T. (Westhoughton)

    Brown, Thomas (Ince)

    Hughes, Emrys (S. Ayrshire)

    Price, Philips (Gloucestershire, W.)

    Butler, Mrs. Joyce (Wood Green)

    Hughes, Hector (Aberdeen, N.)

    Probert, A. R.

    Callaghan, L. J.

    Hunter, A. E.

    Pursey, Cmdr. H.

    Castle, Mrs. B. A.

    Hynd, H. (Accrington)

    Rankin, John

    Champion, A. J.

    Hynd, J. B. (Attercliffe)

    Redhead, E. C.

    Cliffe, Michael

    Irvine, A. J. (Edge Hill)

    Reynolds, G. W.

    Coldrick, W.

    Irving, Sydney (Dartford)

    Roberts, Albert (Normanton)

    Collick, P. H. (Birkenhead)

    Janner, B.

    Roberts, Goronwy (Caernarvon)

    Corbet, Mrs. Freda

    Jay, Bt. Hon. D. P. T.

    Rogers, George (Kensington, N.)

    Cronin, J. D.

    Johnson, James (Rugby)

    Ross, William

    Darling, George (Hillsborough)

    Johnston, Douglas (Paisley)

    Short, E.W.

    Davies, Rt. Hn. Clement (Montgomery)

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

    Skeffington, A. M.

    Davies, Ernest (Enfield, E.)

    Jones, David (The Hartlepool)

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

    Davies, Harold (Leek)

    Jones, Elwyn (W. Ham, S.)

    Smith, Ellis (Stoke, S)

    Davies, Stephen (Merthyr)

    Jones, J. Idwal (Wrexham)

    Snow, J. W.

    Deer, G.

    Jones, T. W. (Merloneth)

    Sorensen, R, W.

    Diamond, John

    Lawson, G. M.

    Soskice, Rt. Hon. Sir Frank

    Dodds, N. N.

    Lee, Frederick (Newton)

    Sparks, J. A.

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

    Lever, Leslie (Ardwick)

    Spriggs, Leslie

    Ede, Rt. Hon. J. C.

    Lindgren, G. S.

    Stewart, Michael (Fulham)

    Edelman, M.

    Logan, D. G.

    Stones, W. (Consett)

    Edwards, Robert (Bilston)

    Mabon, Dr. J. Dickson

    Strachey, Rt. Hon. J.

    Edwards, W. J. (Stepney)

    McCann, J.

    Summerskill, Rt. Hon. E.

    Evans, Albert (Islington, S.W.)

    MacDermot, Niall

    Sylvester, G. O.

    Fitch, A. E. (Wigan)

    McInnes, J.

    Taylor, Bernard (Mansfield)

    Fletcher, Eric

    McLeavy, Frank

    Thomson, George (Dundee, E.)

    Foot, D. M.

    Mallalieu, E. L. (Brigg)

    Thornton, E.

    Forman, J. C.

    Mason, Roy

    Tomney, F.

    Fraser, Thomas (Hamllton)

    Mayhew, C. P.

    Ungoed-Thomas, Sir Lynn

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

    Mendelson, J. J.

    Usborne, H. C.

    Greenwood, Anthony

    Mitchison, G. R.

    Wade, D. W.

    Grenfell, Rt. Hon. D. R.

    Moody, A. S.

    Warbey, W. M.

    Grey, C. F.

    Morris, Percy (Swansea, W.)

    Watkins, T. E.

    Griffiths, David (Rother Valley)

    Moss, R.

    Weitzman, D.

    Griffiths, Rt. Hon. James (Llanelly)

    Moyle, A.

    Wells, Percy (Faversham)

    Griffiths, William (Exchange)

    Noel-Baker, Francis (Swindon)

    Wells, William (Walsall, N.)

    Grimond, J.

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

    White, Mrs. Eirene (E. Flint)

    Hall, Rt. Hn. Glenvil (Colne Valley)

    Oliver, G. H.

    Willey, Frederick

    Hamilton, W, W.

    Oram, A. E.

    Williams, Rev. Llywelyn (Ab'tillery)

    Hannan, W.

    Oswald, T.

    Williams, W. R. (Openshaw)

    Hayman, F. H.

    Owen. W. J.

    Healey, Denis

    Padley, W. E.

    Willis, Eustace (Edinburgh, E.)

    Herbison, Miss M.

    Palmer, A. M. F.

    Wilson, Rt. Hon. Harold (Huyton)

    Hewitson, Capt. M.

    Pannell, Charles (Leeds, W.)

    Winterbottom, Richard

    Hilton, A. V.

    Pargiter, G. A.

    Woodburn, Rt. Hon. A.

    Holman, P.

    Parker, J.

    Woof, R. E.

    Holmes, Horace

    Pearson, A.

    Yates, V. (Ladywood)

    Holt, A. F.

    Pentland, N.

    Houghton, Douglas

    Plummer, Sir Leslie

    TELLERS FOR THE AYES:

    Mr. Simmons and Mr. Wilkins

    NOES

    Agnew Sir Peter

    Bryan, P.

    Fisher, Nigel

    Aitken, W. T.

    Bullus, Wing Commander E. E.

    Gammans, Lady

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Burden, F. F. A.

    Garner-Evans, E. H.

    Arbuthnot, John

    Cary, Sir Robert

    George, J. C. (Pollok)

    Armstrong, C. W.

    Clarke, Brig. Terence (Portsmth, W.)

    Gibson-Watt, D.

    Ashton, H.

    Cole, Norman

    Glover, D.

    Atkins, H. E.

    Conant, Maj. Sir Roger

    Glyn, Col. Richard H.

    Baldock, Lt.-Cmdr. J. M.

    Cooke, Robert

    Godber, J. B.

    Baldwin, Sir Archer

    Cooper-Key, E. M.

    Goodhart, Philip

    Balniel, Lord

    Cordeaux, Lt.-Col. J. K.

    Gough, C. F. H.

    Barber, Anthony

    Corfield, F. V.

    Gower, H. R.

    Barlow, Sir John

    Courtney, Cdr. Anthony

    Graham, Sir Fergus

    Barter, John

    Craddock, Beresford (Spelthorne)

    Grant, Rt. Hon. W. (Woodside)

    Batsford, Brian

    Crosthwaite-Eyre, Col. O. E.

    Green, A.

    Baxter, Sir Beverley

    Crowder, Petre (Ruislip—Northwood)

    Gresham Cooke, R.

    Bell, Philip (Bolton, E.)

    Cunningham, Knox

    Grimston, Sir Robert (Westbury)

    Bennett, F. M. (Torquay)

    Currie, G. B. H.

    Hall, John (Wy combe)

    Bidgood, J. C.

    Dance, J. C. G.

    Harris, Frederic (Croydon, N.W.)

    Bingham, R. M.

    D' A vigdor-Goldsmid, Sir Henry

    Harris, Reader (Heston)

    Birch, Rt. Hon. Nigel

    Deedes, W. F.

    Harrison, A. B. C. (Maldon)

    Bishop, F. P.

    de Ferranti, Basil

    Harrison, Col. J. H. (Eye)

    Black, Sir Cyril

    Donaldson, Cmdr. C. E. McA.

    Harvey, John (Walthamstow, E.)

    Body, R. F.

    Doughty, C. J. A.

    Hay, John

    Bossom, Sir Alfred

    du Cann, E. D. L.

    Heald, Rt. Hon. Sir Lionel

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

    Duncan, Sir James

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

    Boyle, Sir Edward

    Eden, J. B. (Bournemouth, West)

    Henderson-Stewart, Sir James

    Braithwaite, Sir Albert (Harrow, W.)

    Elliott, R. W.(Ne'castleupon Tyne, N.)

    Hesketh, R. F.

    Brewis, John

    Errington, Sir Erio

    Hill, Mrs. E. (Wythenshawe)

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

    Erroll, F. J.

    Holland-Martin, C. J.

    Browne, J. Nixon (Craigton)

    Finlay, Graeme

    Hope, Lord John

    174

    175

    Hornby, R. P.

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

    Ropner, Col. sir Leonard

    Hornsby-Smith, Miss M. P.

    Medlicott, Sir Frank

    Scott-Miller, Cmdr. R.

    Horobin, Sir Ian

    Morrison, John (Salisbury)

    Sharples, R. C.

    Howard, John (Test)

    Mott-Radclyffe, Sir Charles

    Shepherd, William

    Hughes-Young, M. H. C.

    Nabarro, G. D. N.

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

    Hunt, Sir Anthony

    Nairn, D. L. S.

    Smithers, Peter (Winchester)

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

    Neave, Airey

    Stevens, Geoffrey

    Hyde, Montgomery

    Nicholson, Sir Godfrey (Farnham)

    Steward, Harold (Stockport, S.)

    Hylton-Foster, Rt. Hon. Sir Harry

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

    Stoddart-Scott, Col. Sir Malcolm

    Iremonger, T. L.

    Noble, Comdr. Rt. Hon. Allan

    Storey, S.

    Irvine, Bryant Godman (Rye)

    Noble, Michael (Argyll)

    Studholme, Sir Henry

    Jenkins, Robert (Dulwich)

    Nugent, Richard

    Taylor, Sir Charles (Eastbourne)

    Jennings, J. C. (Burton)

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

    Taylor, William (Bradford, N.)

    Johnson, Dr. Donald (Carlisle)

    Orr, Capt. L. P. S.

    Teeling, W.

    Johnson, Eric (Blackley)

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

    Temple, John M.

    Kaberry, D.

    Osborne, C.

    Thompson, Kenneth (Walton)

    Keegan, D.

    Page, R. G.

    Thompson, R. (Croydon, S.)

    Kerr, Sir Hamilton

    Pannell, N. A. (Kirkdale)

    Thorneycroft, Rt. Hon. P.

    Kimball, M.

    Partridge, E.

    Thornton-Kemsley, Sir Colin

    Lambton, Viscount

    Peel, W. J.

    Tilney, John (Wavertree)

    Langford-Holt, J. A.

    Peyton, J. W. W.

    Turton, Rt. Hon. R. H.

    Leavey, J. A.

    Pickthorn, Sir Kenneth

    Vane, W. M. F.

    Leburn, W. G.

    Pike, Miss Mervyn

    Vaughan-Morgan, J. K.

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

    Pilkington, Capt. R. A.

    Vickers, Miss Joan

    Legh, Hon. Peter (Petersfield)

    Pitman, I. J.

    Vosper, Rt. Hon. D.F.

    Lindsay, Martin (Solihull)

    Pitt, Miss E. M.

    Wakefield, Edward (Derbyshire, W.)

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

    Pott, H. P.

    Wakefield, Sir Wavell (St.M'lebone)

    Loveys, Walter H.

    Powell, J. Enoch

    Wall, Patrick

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Price, David (Eastleigh)

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

    Lucas, P. B. (Brentford & Chiswick)

    Prior-Palmer, Brig. O. L.

    Ward, Dame Irene (Tynemouth)

    Lucas-Tooth, Sir Hugh

    Profumo, J. D.

    Webbe, Sir H.

    Macdonald, Sir Peter

    Ramsden, J. E.

    Webster, David

    McMaster, Stanley

    Rawlinson, Peter

    Whitelaw, W. S. I.

    Macmillan, Rt. Hn. Harold (Bromley)

    Redmayne, M.

    Wills, Sir Gerald (Bridgwater)

    Macmillan, Maurice (Halifax)

    Rees-Davies, W. R.

    Wilson, Geoffrey (Truro)

    Maitland, Hon. Patrick (Lanark)

    Renton, D. L. M.

    Wolrige-Gordon, Patrick

    Manningham-Buller, Rt. Hn. Sir R.

    Ridsdale, J. E.

    Markham, Major Sir Frank

    Rippon, A. G. F.

    TELLERS FOR THE NOES:

    Marples, Rt. Hon. A. E.

    Roberts, Sir Peter (Heeley)

    Mr. Brooman-White and

    Maudling, Rt. Hon. R.

    Robinson, Sir Roland (Blackpool, S.)

    Mr. J. E. B. Hill

    Mawby, R. L.

    Roper, Sir Harold

    New Clause.—(PROFITS TAX—DISTRIBU TION CHARGE.)
    Paragraph (c) of subsection (1) of section thirty-five of the Finance Act, 1947, shall be amended by the insertion after the word "period" in the third line the words "but before the first day of April, nineteen hundred and fifty-eight".—[Mr. Stevens.]
    Brought up, and read the First time.
    Mr. Geoffrey Stevens: I beg to move, That the Clause be read a Second time.
    The Report of the Royal Commission on Taxation of Profits and Income has been quoted on a number of occasions and I make no apology for quoting it again. One of the recommendations of the Commission was that the two rates of Profits Tax should be amalgamated, in other words, that there should be the same rate of tax payable on profits which were distributed as on profits which were not. When my right hon. Friend the Chancellor of the Exchequer announced in his Budget statement last year that he had put an end to the two different rates of tax, most people thought that he meant what he said, but subsequent experience, in a limited number of cases but on an important number of occasions, seems to have indicated that what he said was not wholly true. In the case, for example, of a company which had ceased to trade before 31st March, 1958, but made a distribution subsequent to that date, the distribution was liable, or we seem to have found that it was liable, to Profits Tax at the higher rate.
    It is a fact that for a certain number of years, certainly ever since the Royal Commission presented its Report, a good many companies which were wholly-owned subsidiaries of a parent company have not been put into liquidation because those who were directing the fortunes of those companies realised that at some time in the future a Chancellor of the Exchequer would implement the recommendations of the Royal Commission and marry the two rates of Profits Tax. Having heard what the Chancellor had to say last year, having heard what the Financial Secretary had to say in the course of the Committee stage, and having understood that the two rates of Profits Tax had been amalgamated, they proceeded to rationalise their financial
    178
    set-up, to liquidate the subsidiary and to distribute the proceeds, only to find that they were liable to a distribution charge.
    No question of trickery arises, because in the case of a 100 per cent. subsidiary company the assets were available to the principal company in any case, but the situation is really one of those which sometimes make one feel that the law is an ass. If no distribution were made after 31st March, 1958, and the company, which may have been dormant, which may have ceased trading for some years, starts up a new trade or business, it is beyond question—[Interruption.]
    I am delighted to find the "Shadow Chancellor", the right hon. Member for Huyton (Mr. H. Wilson), so very interested in matters of finance. It gives one real hope about the future of the country in the hands of a Chancellor who is so interested in financial matters that he carries on a domestic conversation during an interesting debate. But that is by the way.
    Mr. H. Wilson: If the hon. Gentleman will forgive me, I am very concerned, as I am sure all Members in the Committee are, that some of the new Clauses are fully and adequately debated. It takes a little consideration and organisation, after so many hon. Members with a very real interest in the last Clause have spoken, to ensure that some of the important new Clauses in the names of hon. Members on this side of the Committee are also adequately debated.
    Mr. Stevens: As a relatively new Member of the Committee, I must, of course, yield to the right hon. Gentleman and his knowledge of procedure. It occurs to me, as a relatively new Member, that matters of that kind are better discussed off the Floor of the House rather than in the middle of a debate, but the right hon. Gentleman knows more about manners and things of that sort than I do. I readily yield to him in that respect. Surely I could not be more generous than that.
    As I have said, the position is rather ridiculous, because a remedy exists. If a company, though it has been dormant and has ceased to trade for some years, starts up a new trade or business sub-

    179
    sequent to 31st March, 1958—a trade or business which may have no relationship whatever with the trade or business which it previously carried on—and has then a chargeable accounting period ending wholly after 31st March, 1958, and then goes into liquidation, it can make a distribution at the present single rate of 10 per cent. without any distribution charge being involved. The situation seems to me to be ridiculous and anomalous.
    My Clause seeks to give effect to what I think most people thought were the Chancellor's intentions, to have a flat rate of Profits Tax and to put an end to the distribution charge as from 31st March, 1958. The Clause seeks to clear up that situation, which I think was unwittingly created, and I hope that it will prove to be acceptable to the Government.
    10.45 p.m.
    Mr. Erroll: Despite the persuasive way in which my hon. Friend has introduced his new Clause, the fact is that in last year's Finance Bill it was made clear that liabilities in respect of past chargeable accounting periods would not be affected although the provisions relating to the differential scheme were repealed. Moreover, Section 27 (1, b) of the Act expressly extended the time limit for the making of assessments in respect of distributions in cases where trading had ceased before that date.
    I think my hon. Friend will agree that on the merits of the proposal surely the line drawn in 1958 is the right one. If a company ceased to carry on a trade or business before 1st April, 1958, so that it never had any trading profits which were chargeable to Profits Tax at the flat rate, there does not appear to be any good reason why it should be given the benefits which flowed from the introduction of the flat rate. Trading ceased and perhaps liquidation was begun in the full expectation that tax at the higher rate would be payable on any subsequent distribution of past profits, and it would be giving an uncovenanted benefit to the company to give this tax up.
    It is possible to say that perhaps immediately before the introduction of the flat rate all companies expected that sooner or later some such provision
    180
    would be introduced, and it is wrong that somecompanies should be relieved of this retrospective liability just because they continued trading after 31st March, 1958, while those which had ceased trading do not share this benefit. On the other hand, companies which finally ceased trading on 1st April, 1958, were never subject to the flat rate of Profits Tax, and it seems right that they should be all treated alike, whether they completed their distributions before or after that date.
    I should like to explain to my hon. Friend that it is possible for a company which ceased trading before 1st April, 1958, and did not go into liquidation, to escape the liability to Profits Tax on the higher rate on subsequent distributions if it resumes trading. My hon. Friend suggested that this might give rise to anomalies. I do not think so. It is quite fair that if the company resumes trading it should be able to distribute at the new flat rate in the period now when the flat rate of Profits Tax is properly attracted to the profits so earned.
    If the law were now amended on the lines which my hon. Friend suggests, and distributions made after the end of March, 1958, by companies which had ceased to carry on a trade or business before that date were relieved of Profits Tax at the higher rate, a number of cases which have been settled since March, 1958, would have to be reopened. Moreover, tax would be given up in cases in which the distribution of the companies' accumulated profits has been delayed until after 31st March, 1958, only by reason of a dispute about the tax liability, and these companies would secure a benefit. But some of these companies have been guilty of tax avoidance, including dividend stripping, and it would be unjustifiable to give these companies yet a further benefit which they might undoubtedly secure through the acceptance of this proposed new Clause.
    I hope, therefore, in view of this explanation, which I hope my hon. Friend will agree is fair, he will withdraw the Clause.
    Mr. Stevens: I still think an anomalous position exists in respect of a certain number of companies, but I see the difficulty, not least in respect of those

    181
    companies where the liabilities have been agreed. For that reason, I beg to ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.
    Mr. H. Wilson: On a point of order, Mr. Blackburn. I think it would probably be for the convenience of the Committee at this stage were I to say that, after consultation with my hon. Friends whose names appear on the Notice Paper—and after having had a brief consultation, I might add, with the hon. Member for Huddersfield, West (Mr. Wade)—we do not now propose to move the new Clause entitled "Reduction of rate of profits tax in certain cases." In saying that, perhaps I might express the hope, on behalf of my hon. Friends, that it will be favourably looked at on Report, should we put it down.
    The Temporary Chairman (Mr. F. Blackburn): That is a matter for Mr. Speaker. I understand that permission has been given for a Division on the new Clause "Additional personal relief for widowed householders."

    New Clause.—(ADDITIONAL PERSONAL RELIEF FOR WIDOWED HOUSEHOLDERS.)
    In relation to a claimant who proves that for the year of assessment she is a widow and is the occupier of a house or part of a house occupied as a separate dwelling, section two hundred and ten of the Income Tax Act, 1952 (Personal relief), shall have effect with the substitution of references to one hundred and ninety pounds for references to one hundred and forty pounds (which indicate the amount of relief for a claimant not living with or maintaining his wife).—[Mr. H. Wilson.]
    Brought up, and read the First time.
    Motion made, and Question put, That the Clause be read a Second time:—
    The Committee divided: Ayes 144, Noes 194.

    Division No. 136.]

    AYES

    [10.53 p.m.

    Albu, A. H

    Holman, P.

    Pentland, N.

    Allaun, Frank (Salford, E.)

    Holmes, Horace

    Plummer, Sir Leslie

    Awbery, S. S.

    Houghton, Douglas

    Popplewell, E.

    Bacon, Miss Alice

    Howell, Charles (Perry Barr)

    Prentice, R. E.

    Baird, J.

    Hoy, J. H.

    Price, Philips (Gloucestershire, W.)

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

    Hughes, Cledwyn (Anglesey)

    Probert, A. R.

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

    Hughes, Hector (Aberdeen, N.)

    Pursey, Cmdr. H.

    Benson, Sir George

    Hunter, A. E.

    Redhead, E. C.

    Beswick, Frank

    Hynd, H. (Accrington)

    Reynolds, G. W.

    Bottomley, Rt. Hon. A. G.

    Hynd, J. B. (Attercliffe)

    Roberts, Albert (Normanton)

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

    Irvine, A. J. (Edge Hill)

    Rogers, George (Kensington, N.)

    Boyd, T. C.

    Irving, Sydney (Dartford)

    Ross, William

    Braddock, Mrs. Elizabeth

    Janner, B.

    Short, E. W.

    Brockway, A. F.

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

    Simmons, C. J. (Brierley Hill)

    Brown, Thomas (Ince)

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

    Skeffington, A. M.

    Butler, Mrs. Joyce (Wood Green)

    Johnson, James (Rugby)

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

    Champion, A. J.

    Johnston, Douglas (Paisley)

    Smith, Ellis (Stoke, S.)

    Cliffe, Michael

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

    Snow, J. W.

    Coldrick, W.

    Jones, David (The Hartlepools)

    Sorensen, R. W.

    Collick, P. H. (Birkenhead)

    Jones, Elwyn (W. Ham, S.)

    Soskice, Rt. Hon. Sir Frank

    Corbet, Mrs. Freda

    Jones, J. Idwal (Wrexham)

    Sparks, J. A.

    Cronin, J. D.

    Jones, T. W. (Merioneth)

    Spriggs, Leslie

    Davies, Ernest (Enfield, E.)

    King, Dr. H. M.

    Stewart, Michael (Fulham)

    Davies, Harold (Leek)

    Lawson, G. M.

    Stones, W. (Consett)

    Davies, S. O. (Merthyr)

    Lee, Frederick (Newton)

    Strachey, Rt. Hon. J.

    Deer, G.

    Lever, Leslie (Ardwick)

    Summerskill, Rt. Hon. E.

    Diamond, John

    Lindgren, G. S.

    Sylvester, G. O.

    Dodds, N. N.

    Mabon, Dr. J. Dickson

    Taylor, Bernard (Mansfield)

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

    McCann, J.

    Thomson, George (Dundee, E.)

    Ede, Rt. Hon. J. C.

    MacDermot, Niall

    Thornton, E.

    Edwards, Robert (Bilston)

    McInnes, J.

    Ungoed-Thomas, Sir Lynn

    Evans, Albert (Islington, S.W.)

    McKay, John (Wallsend)

    Usborne, H. C.

    Fitch, A. E. (Wigan)

    McLeavy, Frank

    Watkins, T. E.

    Fletcher, Eric

    Mallalieu, E. L. (Brigg)

    Weitzman, D.

    Foot, D. M.

    Mayhew, C. P.

    Wells, Percy (Faversham)

    Forman, J. C.

    Mendelson, J. J.

    Wells, William (Walsall, N.)

    Fraser, Thomas (Hamilton)

    Mitchison, G. R.

    White, Mrs. Eirene (E. Flint)

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

    Morris, Percy (Swansea, W.)

    Willey, Frederick

    Greenwood, Anthony

    Neal, Harold (Bolsover)

    Williams, Rev. Llywelyn (Ab'tillery)

    Grenfell, Rt. Hon. D. R.

    Noel-Baker, Francis (Swindon)

    Williams, W. R. (Openshaw)

    Willis, Eustace (Edinburgh, E.)

    Grey, C. F.

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

    Wilson, Rt. Hon. Harold (Huyton)

    Griffiths, David (Rother Valley)

    Oram, A. E.

    Winterbottom, Richard

    Griffiths, Rt. Hon. James (Llanelly)

    Oswald, T.

    Woodburn, Rt. Hon. A.

    Griffiths, William (Exchange)

    Owen, W. J.

    Woof, R. E.

    Hannan, W.

    Palmer, A. M. F.

    Yates, V. (Ladywood)

    Hayman, F. H.

    Panned, Charles (Leeds, W.)

    Healey. Denis

    Pargiter, G. A.

    TELLERS FOR THE AYES:

    Herbison, Miss M.

    Parker, J.

    Mr. J. T. Price and Mr. Wilki

    Hilton, A. V.

    Pearson, A.

    NOES

    Agnew, Sir Peter

    Gower, H. R.

    Nugent, Richard

    Aitken, W. T.

    Graham, Sir Fergus

    Orr, Capt. L. p. S.

    Amory, Rt. Hn. Heathcoat (Tiverton)

    Green, A.

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

    Arbuthnot, John

    Gresham Cooke, R.

    Osborne, C.

    Armstrong, C. W.

    Grimond, J.

    Page, R. G.

    Ashton, Sir Hubert

    Grimston, Sir Robert (Westbury)

    Pannell, N. A. (Kirkdale)

    Atkins, H. E.

    Hall, John (Wycombe)

    Partridge, E.

    Baldock, Lt.-Cmdr. J. M.

    Harris, Frederic (Croydon, N.W.)

    Peel, W. J.

    Baldwin, Sir Archer

    Harris, Reader (Heston)

    Peyton, J. W. W.

    Balniel, Lord

    Harrison, Col. J. H. (Eye)

    Pickthorn, Sir Kenneth

    Barber, Anthony

    Harvey, John (Walthamstow, E.)

    Pike, Miss Mervyn

    Barlow, Sir John

    Hay, John

    Pilkington, Capt. R. A.

    Barter, John

    Heald, Rt. Hon. Sir Lionel

    Pitman, I. J.

    Batsford, Brian

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

    Pitt, Mist E. M.

    Baxter, Sir Beverley

    Henderson-Stewart, Sir James

    Pott, H. P.

    Bell, Philip (Bolton, E.)

    Hesketh, R. F.

    Powell, J. Enoch

    Bennett, F. M. (Torquay)

    Hill, Mrs. E. (Wythenshaw)

    Price, David (Eastleigh)

    Bidgood, J. C.

    Hill, Jinn (S. Norfolk)

    Prior-Palmer, Brig. Sir Otho

    Bingham, R. M.

    Holland-Martin, C. J.

    Profumo, J. D.

    Bishop, F. P.

    Holt, A. F.

    Ramsden, J. E.

    Black, Sir Cyril

    Hope, Lord John

    Rawlinson, Peter

    Body, R. F.

    Hornby, R. P.

    Redmayne, M.

    Bonham Carter, Mark

    Hornsby-Smith, Miss M. P.

    Renton, D. L. M.

    Bossom, Sir Alfred

    Horobin, Sir Ian

    Ridsdale, J. E.

    Bowen, E. R. (Cardigan)

    Howard, John (Test)

    Rippon, A. G. F.

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

    Hughes-Young, M. H. C.

    Roberts, Sir Peter (Heeley)

    Boyle, Sir Edward

    Hurd, Sir Anthony

    Robinson, Sir Roland (Blackpool, S.)

    Braithwaite, Sir Albert (Harrow, W.)

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

    Roper, Sir Harold

    Brewis, John

    Hylton-Foster, Rt. Hon. Sir Harry

    Ropner, Col. Sir Leonard

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

    Iremonger, T. L.

    Scott-Miller, Cmdr. R.

    Bryan, P.

    Irvine, Bryant Godman (Rye)

    Sharpies, R. C.

    Bullus, Wing Commander E. E.

    Jenkins, Robert (Dulwich)

    Shepherd, William

    Burden, F. F. A.

    Jennings, J. C. (Burton)

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

    Cary, Sir Robert

    Johnson, Dr. Donald (Carlisle)

    Smithers, Peter (Winchester)

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson, Eric (Blackley)

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

    Cole, Norman

    Kaberry, D.

    Stevens, Geoffrey

    Cooke, Robert

    Keegan, D.

    Steward, Harold (Stockport, S.)

    Cooper-Key, E. M.

    Kerr, Sir Hamilton

    Stoddart-Scott, Col. Sir Malcolm

    Cordeaux, Lt.-Col. J. K.

    Kimball, M.

    Storey, S.

    Corfield, F. V.

    Lambton, Viscount

    Studholme, Sir Henry

    Courtney, Cdr. Anthony

    Langford-Holt, J. A.

    Taylor, Sir Charles (Eastbourne)

    Craddock, Beresford (Spelthorne)

    Leavey, J. A.

    Teeling, W.

    Crosthwaite-Eyre, Col. O. E.

    Leburn, W. G.

    Temple, John M.

    Crowder, Petre (Ruisllp-Northwood)

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

    Thompson, R. (Croydon, S.)

    Cunningham, Knox

    Legh, Hon. Peter (Petersfield)

    Thorneycroft, Rt. Hon. P.

    Currie, G. B. H.

    Lindsay, Martin (Solihull)

    Thornton-Kemsley, Sir Colin

    Dance, J. C. G.

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

    Tilney, John (Wavertree)

    D'Avigdor-Goldsmid, Sir Henry

    Loveys, Walter H.

    Vane, W. M. F.

    Deedes, W. F.

    Lucas, Sir Jocelyn (Portsmouth, S.)

    Vaughan-Morgan, J. K.

    de Ferranti, Basil

    Lucas-Tooth, Sir Hugh

    Vickers, Miss Joan

    Donaldson, Cmdr. C. E. McA.

    Macdonald, Sir Peter

    Vosper, Rt. Han. D. F.

    Doughty, C. J. A.

    McMaster, Stanley

    Wade, D. W.

    du Cann, E. D. L.

    Macmillan, Rt. Hn. Harold(Bromley)

    Wakefield, Edward (Derbyshire, W.)

    Duncan, Sir James

    Macmillan, Maurice (Halifax)

    Wakefield, Sir Wavell (St. M'lebone)

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

    Manningham-Buller, Rt. Hn. Sir R.

    Wall, Patrick

    Errington, Sir Eric

    Markham, Major Sir Frank

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

    Erroll, F. J.

    Marples, Rt. Hon. A. E,

    Ward, Dame Irene (Tynemouth)

    Finlay, Graeme

    Maudling, Rt. Hon. R.

    Webster, David

    Fisher, Nigel

    Mawby, R. L.

    Whitelaw, W. S. I.

    Gammans, Lady

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

    Wills, Sir Gerald (Bridgwater)

    Garner-Evans, E. H.

    Medlicott, Sir Frank

    Wilson, Geoffrey (Truro)

    George, J. C. (Pollock)

    Nabarro, G. D. N.

    Wolrige-Gordon, Patrick

    Glover, D.

    Nairn, D. L. S.

    Glyn, Col. Richard H.

    Neave, Airey

    TELLERS FOR THE NOES:

    Godber, J. B.

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

    Mr. Brooman-White and

    Goodhart, Philip

    Noble, Michael (Argyll)

    Mr. Gibson-Watt.

    New Clause.—(OVERSEAS TRADE CORPORATIONS: AVOIDANCE OF DISQUALIFICATION BY HOLDING COMPANIES.)
    (1) Where a principal company not itself carrying on trade but having a subsidiary company resident in the United Kingdom satisfies the Commissioners of Inland Revenue that for any period for which the status of the principal company falls to be determined under section thirty of the Finance Act, 1957, the principal company failed, apart from this section to qualify as an Overseas Trade Corpora-
    tion by reason only that, in consequence of some act done by the subsidiary company of which the principal company had no previous knowledge and from which it obtained no material advantage, the principal company was excluded by the proviso to subsection (1) of section twenty-three of that Act (holding companies excluded if having subsidiaries resident in the United Kingdom which are not Overseas Trade Corporations), then if the Commissioners of Inland Revenue in their discretion so direct the act shall not prevent the principal company being treated as an Overseas Trade Corporation for that period.
    (2) The powers conferred on the Commissioners of Inland Revenue by the foregoing subsection are in addition to, and not in derogation from, the powers conferred by subsection (2) of the said section thirty (under which the Commissioners may direct to be disregarded disqualifying acts done by the company whose status is in question and disqualifying events over which that company had no control).
    (3) This section shall be construed as one with Part IV of the Finance Act, 1957; and subsection (4) of the said section thirty (which relates to appeals) shall apply in relation to the refusal of a direction under this section as it applies in relation to the refusal of a direction under subsection (2) of the said section thirty.—[Mr. Stevens.]
    Brought up, and read the First time.
    11.0 p.m.
    Mr. Stevens: I beg to move, That the Clause be read a Second time.
    Where there is a group of companies of which one is the parent company, all the companies in that group must themselves be overseas trade corporations for the parent company itself to be an O.T.C. It means that all the companies have to be registered in this country but trading overseas. Equally, it follows that if one of the subsidiary companies in the group loses its O.T.C. status and for some reason is disqualified, the parent company also ceases to be an overseas trade corporation and that may mean a very severe loss of taxation advantage to the parent company.
    I had on the Notice Paper a new Clause—(Loss of status by an Overseas Trade Corporation being a principal company)—which provided that if any subsidiary company in any circumstances lost its O.T.C. qualification that would not necessarily disqualify the parent company. The Chair, in its wisdom, has not selected that new Clause. This new Clause is very much narrower than that. It is limited to cases where the subsidiary O.T.C. company loses its qualification in circumstances which are not only unknown to the parent company but which confer no tax advantage on the parent company.
    The new Clause provides that if the Commissioners of Inland Revenue, in their discretion so direct, in other words, if they feel that this is not a matter which should cause the parent company to be penalised, the principal company can continue to be treated as an overseas trade corporation for the period during which the subsidiary failed to match up
    186
    with the provisions of the 1957 Act. It seems to me very clear that this is a right and proper provision. It seems quite wrong that the parent company should accidentally lose its O.T.C. status. I commend the new Clause warmly to the Committee, and I hope that my right hon. Friend will be prepared to accept it.
    Mr. Maudling: This is a narrow but important point which on Report on last year's Finance Bill my right hon. Friend the Chancellor of the Exchequer promised to consider further. He has been thinking about it and is in agreement with my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) that in these circumstances, where a subsidiary has committed an act of which the parent company is unaware and from which the parent company derives no material benefit, it is reasonable that the parent company should not be heavily penalised. The new Clause makes provision to give the Commissioners discretion to remedy the situation, should it arise. My right hon. Friend is in agreement with the arguments advanced and with the Clause itself, and I ask the Committee to accept it.
    Mr. Mitchison: But in what circumstances are the Commissioners to exercise this discretion? It would seem at first sight that the holding company having a subsidiary company must be responsible for what is done by the latter. If it does not know, it ought to know what the subsidiary is doing. No doubt those in charge of a company have occasionally to be responsible for acts of which they had no knowledge, just as in other walks of life people have to be responsible for acts of which they have no knowledge. But this rather remarkable separation may result in some cases where the discretion ought to be recognised. I think that the right hon. Gentleman the Paymaster-General ought to give the Committee some further indication of the practical limits within which the Commissioners will exercise their discretion. Or is it to be left entirely to them?
    Mr. Maudling: The Commissioners will exercise their discretion when they are satisfied that the conditions set out in the Clause have been met and that it is a genuine case; in other words, when an act has been committed without the

    187
    notice of the parent company and from which the parent company receives no material benefit. If they are satisfied that it is a genuine case, I expect them to use their discretion.
    Mr. Mitchison: Is that what the Clause says? It would be simple if it said that if they were satisfied they would do so-and-so, but I understand from the Clause that this is a discretionary power for the Commissioners. The right hon. Gentleman said that if they are satisfied that the conditions in the subsection are fulfilled they are bound to direct, whereas the Clause reads
    "if the Commissioners of Inland Revenue in their discretion so direct …"
    There is reference to a discretion, and we are completely in the dark as to the lines on which it will be exercised. If all it means is that if the Commissioners are satisfied that the terms of the subsection have been fulfilled they will make this direction, that ought to be the language of the Clause
    Mr. Stevens: Perhaps I can help the hon. and learned Member. There is no mystery about this. One of the essential qualifications for an overseas trade corporation is that it shall trade. It might well be that for a short time only a branch overseas, representing an overseas trade corporation resident in this country, might cease to trade, and technically, in the strict sense of the 1957 Act, that would disqualify the overseas trade corporation subsidiary, which in turn would disqualify the parent company. An incident of that sort is not a dreadful thing and it should not visit the parent company with heavy tax penalties. That is the sort of thing I had in mind when I tabled the Clause. The qualification for O.T.C. status is narrowly drawn, and rightly so. There is no mystery about this.
    Mr. Mitchison: I am sorry to be insistent, but that explanation takes me no further. The example which the hon. Member gave was of an omission, not of an act. The subsection refers to an act. It may be an inadvertent act as far as the principal company is concerned. I am dealing with a different point. By the terms of the subsection it is a matter for the discretion of the Commissioners.
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    The Paymaster-General told us that they will always exercise that discretion if the terms of the subsection are fulfilled. That state of affairs is usually expressed by saying that if the Commissioners are satisfied about so-and-so they shall do so-and-so. The language of the Clause is wider—in the sense that the Commissioners appear to have more to do, although narrower in its operation—and I am simply suggesting that if that is what is intended the simplest thing is to say in plain language what is intended and not to talk about a discretion when what is meant is satisfaction.
    Question put and agreed to.
    Clause read a Second time, and added to the Bill.

    New Clause.—(STAMP DUTIES ON CONVEYANCES ON SALE, &C.)
    There shall be substituted for subsection (2) of section thirty-four of the Finance Act, 1958, the following subsection:
    "(2) Where the amount or value of the consideration is less than three hundred pounds, but the instrument is not certified at three thousand five hundred pounds, the duty instead of being charged at the rates stated in subsection (1) above for every fifty pounds or fractional part of fifty pounds of the consideration shall be charged at rates equal to half the amounts so stated for every twenty-five pounds or fractional part of twenty-five pounds of the consideration or, if the consideration is less than twenty-five pounds, at rates equal to one-tenth of the amounts so stated for every five pounds or fractional part of five pounds of the consideration or, if the consideration is less than five pounds, at rates equal to one-fortieth of the amounts so stated for every twenty-five shillings or fractional part of twenty-five shillings of the consideration".—[Mr. du Cann.]
    Brought up, and read the First time.
    Mr. Edward du Cann: I beg to move, That the Clause be read a Second time.
    This is a narrow but, I hope the Committee will think, a not unimportant point, and I will endeavour to explain it as shortly as I can. The present rate of Stamp Duty payable on the issue of bearer warrants or on the conversion of registered shares to bearer is three times the ad valorem duty applied to the nominal value of the shares represented by the bearer warrant, in question. The minimum value in the ad valorem scale for this purpose is £5.
    The practical effect, therefore, of this situation is that when shares of a

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    nominal value of less than £5 are issued the duty is always the same, namely 6s., that is, 6 per cent. For example, if a share of a nominal value of £1 were issued, the duty would be 6s. or 30 per cent, in the case of a share with a nominal value of 10s. the duty would amount to 6s., or 60 per cent.
    The new Clause repeats subsection 2 of Section 34 of the Finance Act, 1958, with one exception, which is the three final lines of the new Clause:
    "… or, if the consideration is less than five pounds, at rates equal to one-fortieth of the amounts so stated for every twenty-five shillings or fractional part of twenty-five shillings of the consideration."
    The object is to set steps below £5, which is the current minimum, to ensure that the rate of duty payable on smaller nominal values is very much less than what is, I suggest, under the present extraordinarily high scale. The four steps are as follows: Up to 25s. the rate of duty would be Is. 6d., up to 50s., 3s., and up to 75s., 4s. 6d. In each case this corresponds to the 6s. scale which is currently in force for shares of £5—which is 6 per cent.
    I hope the Committee think that this is a fair and reasonable point. It may be that it would be advantageous to introduce additional steps, but I hope none the less, whatever is thought about graduation, that it will be agreed that the point is right.
    The Financial Secretary to the Treasury (Mr. J. E. S. Simon): My hon. Friend the Member for Taunton (Mr. du Cann) has explained the purpose of this Clause which we think in principle a reasonable one. The point is really that although the duty on the transfer of stocks and marketable securities is generally referred to as one of two per cent., in point of fact it proceeds in steps, and it is only at the step that the duty is precisely 2 per cent. On higher amounts the marginal increase over 2 per cent, is unimportant, but on the smaller amounts it can be quite a considerable divergence. For example, the duty on the transfer of a share for £1 is 2s., which is equivalent to a 10 per cent. duty. But the anomaly is even greater when one comes to bearer shares, where the Stamp Duty is an amount equal to three times the duty which would be chargeable on a transfer of a. share, so that on a £1 share it is 6s,. or 30 per cent, of the nominal value.
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    What my hon. Friend is seeking to do is to graduate the scale downwards to relieve that extraordinary incidence of duty. It would have little effect on Stock Exchange transactions because these very small amounts are rarely dealt with on the Stock Exchange, but it might have some effect in dealings in units of a unit trust, particularly on re-purchase, and with small dealings on bearer shares.
    There is one matter which we do not think satisfactory. This Clause would not only cover dealings in securities but also dealings in small amounts of property. Occasionally, when one has a conveyance of a house which would come under the various concessions made in recent years, one has at the same time a conveyance of a small amount of property, or an easement, going with it. The duty as the Clause is drawn on such a transfer might involve an odd halfpenny. Unfortunately the stamp has to be impressed and there is no machine for impressing a halfpenny stamp. We think that a Clause can be devised which will meet my hon. Friend's point while obviating the administrative difficulty to which I have referred. If my hon. Friend is willing to withdraw the Clause my right hon. Friend will bring forward a new Clause on Report to meet his point.
    11.15 p.m.
    Mr. Mitchison: We have been told that this Clause would have little effect on Stock Exchange dealings, and so I suppose. We have further been told that it would affect our unit trusts, with which no doubt the hon. Member for Taunton (Mr. du Cann) is familiar, and also dealings in bearer securities. Bearer securities are beginning to have a certain political content. Tate & Lyle and other companies are arranging for the sale of their shares to their employees. This is not a matter which I wish to discuss at the moment, but it appears that the new Clause is directed, perhaps not entirely, but largely, towards that practice, and is for the benefit of those who think that that is the right way of dealing with any extra remuneration which is given to employees.
    It may be said that the shares are freely purchased, and the rest. Major considerations are involved here, which we cannot discuss now—I imagine that the Clause will be withdrawn—but we

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    shall watch with interest what the Government propose by way of a substitute, and we shall do so having regard to some of the social implications of the policy encouraged by the Government in these matters.
    Mr. du Cann: In view of what my hon. and learned Friend has said, for which I am most grateful, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.

    New Clause.—(AMENDMENT OF S. 16 (10) OF FINANCE ACT, 1954.)
    Subsection (10) of section sixteen of the Finance Act, 1954 (which defines "new" in relation to machinery and plant for the purposes of investment allowances as meaning unused and not secondhand) shall be amended by the addition of the following proviso:—
    "Provided that after the seventh day of April, nineteen hundred and fifty-nine, a ship shall not be deemed to be secondhand by reason only of the fact that capital expenditure on the provision of the ship or part thereof was incurred by a person to whom no investment allowance was made or due in respect of that expenditure."—[Mr. J. Howard.]
    Brought up, and read the First time.
    Mr. John Howard: I beg to move, That the Clause be read a Second time.
    The Clause amends Section 16 (10) of the Finance Act, 1954, which reads:
    "In this section, 'new' in relation to plant and machinery means unused and not secondhand."
    The provisions of the Clause are intended to relate entirely to ships and not to plant and machinery in general.
    The shipping industry is faced with a riddle, which it must solve. The riddle is: when is an unused ship a new ship, and when is it a secondhand ship? On the answer to that riddle depends the question whether or not a shipowner is entitled to an investment allowance. The Committee will know that it sometimes happens that a ship changes hands whilst on the stocks, in the shipyard, and an anomaly has arisen in the application of investment allowances under different types of building contracts.
    The Committee will recall that special treatment has been given to the shipping industry in relation to investment allowances, with the object of providing more
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    new ships for the British merchant navy. Investment allowances on new ships are an important factor in deciding when a new ship is a commercial proposition at a particular price and when it is not, but in order that an unused ship may be a new ship it must clearly fall within the provisions of Section 16 (10) of the Finance Act, 1954.
    I understand that there are two ways in which a United Kingdom shipowner may acquire an unused ship. In the first place he can put a contract to the shipyard for a ship, pay the instalments as they become due, and claim the investment allowance on each instalment. That is the conventional type of contract.
    There is a second type of contract which is being increasingly used. Under this type, a shipowner places a shipbuilding contract in which the property in the ship does not pass from the shipbuilder to the shipowner until the vessel is actually delivered. Under this type of contract, the shipowner receives a provisional investment allowance only on each building instalment as he passes it over to the shipbuilder, and the investment allowance becomes absolute when the shipowner accepts delivery on completion of the vessel. That is somewhat analogous to the hire-purchase contract in other matters, and, for simplicity, I propose to call this the hire-purchase type of contract.
    Under both forms of contract, the ultimate owner may change from time to time. In other words, a ship may be sold after it has been laid down and before it has been completed. In the first type of contract, the conventional contract, a United Kingdom shipowner acquiring a ship during the course of construction from another United Kingdom shipowner who placed the first contract receives the investment allowance on those instalments he actually pays to the shipbuilder after acquiring the title to the vessel, the first shipowner having already received investment allowances on the instalments he has paid up to the date of the sale. No investment allowance is granted to the second shipowner in respect of the sum he pays for the benefit of the transfer of the contract because the Inland Revenue regards the situation, technically, as one in which the partially completed ship is a secondhand ship. In other words, although it is unused, it was in somebody else's

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    possession before the shipowner who owned it at the stage of launching completed his part of the contract.
    It is customary, therefore, when a price is fixed between the first shipowner and the second or subsequent shipowner, to adjust the price at which the contract changes hands in order to take account of the investment allowance which the man who placed the contract received.
    If a United Kingdom shipowner acquires a partially completed ship under construction for a foreign owner under the conventional type of contract, he still receives the investment allowances on the instalments he pays after acquiring the contract from the foreign owner, but he is, of course, unable to obtain any form of allowance for the investment allowances which would normally have been available on the earlier instalments because the foreign owner does not pay British Income Tax and, therefore, is not entitled to any investment allowance, and, indeed, because the ship was, at the stage of transfer secondhand. Nor can he secure—and herein lies the point of the new Clause—any adjustment in price to take account of the investment allowance similar to the adjustment a shipowner would be allowed under the conventional type of contract had he taken a transfer from a United Kingdom shipowner, again because we have this difficulty about the foreign owner not paying British Income Tax.
    However, should the first United Kingdom shipowner buy a similar vessel in precisely the same state from the same foreign owner but, this time, under the hire purchase type of building contract, the United Kingdom owner would receive the investment allowance not only on the instalments which he pays after acquiring the contract but also on the price he pays to the foreign owner for the transfer of the ship-building contract, thus obtaining investment allowance on the whole cost of buying the vessel. The vessel is not second-hand, because it is still in the possession of the shipbuilder and only after completion and on delivery is it transferred.
    Thus, we have two identical ships both bought from a foreign owner who placed the original contracts. One ship being built under a hire-purchase type of contract carries investment allowance
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    on the whole cost to the United Kingdom shipowner, and the other being built under the conventional contract carries the investment allowance only on the final instalments, leaving part of the cost relating to the unused, partially completed but second-hand ship outside the scope of relief through the investment allowance.
    I need hardly remind the Committee that this can be a very great disadvantage financially, which becomes greater as the date of the purchase of the contract comes closer to the date of completion. It might well be the major factor in deciding a United Kingdom shipowner against adding a ship to the British merchant fleet. It is a negation of the aim which the investment allowance is intended to achieve.
    I do not propose to weary the Committee with references to the advantages of adding to the British merchant fleet, but I am sure the Committee will be with me when I say that the British shipowner who under current conditions is prepared to add a ship to his own fleet and to the British merchant fleet should be encouraged and that this anomaly should be removed. This modest Clause, which seeks to rectify the anomaly, would allow more ships to be added to the British fleet and its existence has already prevented certain ships from being acquired for Britain.
    Mr. Douglas Marshall: I wish to support what has been said by my hon. Friend the Member for Southampton, Test (Mr. J. Howard). This is a very complicated Clause which he has explained clearly to the Committee, and I hope that the Government will view it sympathetically. Investment allowances have been allowed for shipping from time to time primarily in order that the fleet may be modernised. It is also important that our mercantile marine should be enlarged and wear the "Red Duster." This Clause will help in that direction. With a world recession in trade it is difficult to help the shipping industry, but the acceptance of this Clause by the Government would help to enlarge the British mercantile marine.
    Mr. Mitchison: There is much in the points which have been advanced in favour of this Clause, but there are two questions which I wish to put. Tonight

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    we have heard a great deal about Conservative principles. We on this side of the Committee are always interested to discover what they are, if there are any, and we should like to know what is the attitude of the Government or the Conservative Party, whichever way it is put, regarding retrospective legislation in favour of the subject. This appears to be in favour of the subject, and it is clearly retrospective to 7th April, 1959. I ask that the Government give a clear definition, which we hope will hold good for some time, of what are the Conservative principles regarding the question of retrospective legislation. If they could add a word about their practical application, it would be useful.
    My second question is this. A ship is to be deemed to be secondhand by reason of the fact mentioned in the proviso which was clearly explained by the hon. Member for Southampton, Test (Mr. J. Howard). But it would not be deemed to be secondhand by reason only of that. In what circumstances is it secondhand and in what circumstances is it deemed to be secondhand? This is a negative, limited and rather curious proviso, and while we can see the negative side, we should not mind seeing the positive side too, and since it is late at night, that last remark applies to Conservative policy generally.
    11.30 p.m.
    Mr. Simon: My hon. Friend the Member for Southampton, Test (Mr. J. Howard) very clearly described what the new Clause seeks to do. Shipbuilding contracts, as I understand it, normally provide for payment by instalments, and they fall into two types. In the first category, type A, the property in the ship under construction passes to the prospective owner as the instalments are paid. In the second case, type B, which my hon. Friend called the hire-purchase contract, no property passes until the final payment for the ship is made. A ship may pass in ownership while it is still under construction, and it may pass from a foreign owner to a British owner or from a British owner to a British owner.
    Therefore, we have four types of case. The first is where both owners are subject to United Kingdom Income Tax, and we have the first type of contract,
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    where the property passes as the instalments are paid. There the second owner gets the full benefit of the investment allowances indirectly through the price in the way described my my hon. Friend.
    The second case is where both owners are again liable to United Kingdom Income Tax, and it is the second type of contract, where the property passes only on the payment of the final instalment. There again, the second owner gets the full benefit of the investment allowances, because the investment allowances are disallowed to the first owner and credited in full to the second owner.
    The next group of cases is where the first owner is not subject to United Kingdom Income Tax. With the second type of contract, type B, where the property passes only when the last instalment is paid, the second owner gets the full benefit of the investment allowances exactly as he would on purchase from a United Kingdom owner.
    But in the fourth type of case he does not. He will get only part of the allowances. My hon. Friend is entitled to say that that is an anomaly which enures to the disadvantage of anybody purchasing a ship for our Mercantile Marine.
    Unfortunately—for the reason touched upon by the hon. and learned Member for Kettering (Mr. Mitchison)—I do not think the new Clause meets the case which my hon. Friend desires to meet. It says:
    "… a ship shall not be deemed to be secondhand by reason only of the fact that capital expenditure …"
    and so on. But a ship is, in fact, secondhand irrespective of that fact. In other words, the new Clause has no effect on whether it should be considered to be secondhand or not for the purpose of the tax law, and that is because "new" is defined under the existing law as "unused and not secondhand." Therefore, one must give a different meaning to "not secondhand" from "unused." Consequently, "secondhand" can mean only that it has passed from one owner to another. I do not know whether I have made the point clear to my hon. Friend.
    I am, therefore, bound to say that the Clause does not effect what my hon. Friend seeks to do. But my right hon. Friend would like to consider the

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    matter further before the Report stage. Without giving any specific undertaking, perhaps I can say that we have been impressed by the point put forward by my hon. Friend. I should like to examine it further to see whether there will be any interests which would be adversely affected. If everything is as indicated by my hon. Friend, we can perhaps ourselves then put down a Clause in the correct form on Report.
    In view of that, perhaps the hon. and learned Member for Kettering will excuse me from further defining Conservative principles.
    Mr. H. Wilson: Before the hon. and learned Gentleman leaves that point, may I ask this question? When the Chancellor does put down a Clause on Report to deal with the rather serious anomalies, from what date is the Clause likely to operate?
    Mr. Simon: I heard what the hon. and learned Member for Kettering said, and I have registered the point. Perhaps we can discuss it when the new Clause is put down.
    Mr. Wilson: That would be most natural and appropriate, but after all that the hon. and learned Gentleman said last week on the subject of retrospective legislation, I am surprised that he even wants time to consider this point. If he meant what he said last week, there can be only one answer to the question which my hon. and learned Friend and I have put to him.
    Mr. Frederick Willey: The hon. Member for Southampton, Test (Mr. J. Howard) and the Financial Secretary have spoken with such lucidity that I have had some difficulty in fully comprehending the discussion.
    I am sure that had the hon. Member for Sunderland, South (Mr. P. Williams) been here, he would have joined me in thanking the hon. Gentleman for calling the attention of the Committee to this anomaly. I gather from the Financial Secretary that the important contribution that he made was to appear sympathetic to the removal of this anomaly. As one who represents one of the major shipbuilding towns in the world, I am obliged for this small concession. But as this matter is to be considered further by the Chancellor, whom we recognise as an able seaman, we hope that he will
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    not only discuss this anomaly but will seriously discuss with the Ministry of Transport the general issue facing British shipping at the moment.
    This matter is causing a great deal of anxiety amongst shipbuilders. Therefore, in thanking the Financial Secretary for what he said, I hope the Chancellor will take the opportunity of looking at the broader question of the difficulties which British shipping is facing at the moment, efficient though it is. These difficulties are bearing heavily upon the shipbuilding industry.
    I hope that not only will this anomaly be removed but that we will shortly have a statement from the Government to the effect that they are seriously seized of the present difficulties facing the industry.
    Mr. Stanley McMaster: The matter has been very well put by my hon. Friend the Member for Southampton, Test (Mr. J. Howard), but I would urge the Chancellor, when he considers drafting a new Clause, to consider making it retrospective to 7th April. The shipbuilding industry, which is extremely important to the country, faces very stiff opposition from shipowners flying flags of convenience. Therefore, I would urge the Chancellor to pre-date the Clause to 7th April.
    Mr. J. Howard: In view of the complication of this proposed new Clause and my hon. and learned Friend's assurance that the matter will be considered on Report, I beg to ask leave to withdraw the Motion.
    Motion and Clause, by leave, withdrawn.
    Mr. H. Wilson: On a point of order, Sir Charles. The proposed new Clause entitled "Exemption from estate duty of money passing to certain galleries, museums, &c." is another of the Clauses which we propose not to move, and we hope to table it on Report.

  Eighth Schedule.—(ENACTMENTS REPEALED.)
  The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Hay): I beg to move, in page 34, line 13, column 3, at the beginning to insert:
  From the beginning of October, nineteen hundred and fifty-nine, the words "not exceeding five hundredweight in weight" and

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  the word "untreated" in paragraph (a) of subsection (5) of section five.
  This Amendment is consequential on that made on 10th June, dealing with snow ploughs and similar equipment. That being so, I do not think that I need add anything to the words on the Order Paper.
  Amendment agreed to.
  Schedule, as amended, agreed to.
  Mr. H. Wilson: At this stage, it is usual to felicitate the Chancellor for having piloted the Bill through—if I may use the phrase once again, although I think that that analogy has been rather overplayed in the successive sittings of the Committee. I think that the right hon. Gentleman will agree that this has been achieved, with fairly adequate discussion of new Clauses, in less time than for many years past. That is a tribute to both sides of the Committee for their business-like handling of the work
  We have had one or two casualties in that the extent to which hon. Members on both sides wanted to speak on Entertainments Duty and on the diesel oil tax meant that we could not move all the Amendments that we would have wished by a reasonable hour. We felt that it was more for the convenience of the Committee and the House as a whole to withdraw those Amendments than to embark on further debate at that hour of the evening.
  I think, however, that everyone will agree that we have had a very constructive series of debates, even if the Chancellor has not improved very much on his last year's record in the acceptance of Amendments. With the exception of one accepted this afternoon, all those to which he has agreed have come from the other side of the Committee. We have managed to get through the entire Committee stage without any unduly late sittings. There were rumours, I think, that we would be sitting very late tonight—which is no doubt the reason why my hon. Friend the Member for Gloucester (Mr. Diamond) came ready prepared in his pyjamas. I am glad that he will not need them, and we would like to join in thanking the Chancellor for the way in which the Bill has been piloted through Committee.
  Mr. Amory: I should like to thank the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) for the words he has used—with the exception of the repeated use of the analogy of piloting which, frankly, I do not quite understand. It is always very satisfactory when one gets safely into port, and I think we can say we have done that. Many of the Amendments and new Clauses have been debated very fully and forcefully, but I do not think that I can ever remember a Finance Bill in which the business has been dealt with so steadily, with very full and appropriate discussion of the more important items, and in a more pleasant atmosphere than has been the case this year. For that, I would like to thank all hon. Members.
  Bill reported, with Amendments; as amended, to be considered Tomorrow, and to be printed.[Bill 121.]

  STEAMSHIP PASSENGER SERVICE, FISHGUARD AND WATERFORD
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hughes-Young.]
  11.44 p.m.
  Mr. J. C. Jennings: On 29th May this year, the Wales and Monmouth Transport Users' Consultative Committee met to consider a proposal from the British Transport Commission to discontinue the passenger service between Fishguard and Waterford. On that date, the committee ratified the request of the Transport Commission. That date of 29h May is an important one in my argument, because I want to examine how the decision was made.
  Tonight, I am not concerned to discuss the economics of the position. Because of the time factor, I intend to concentrate on three aspects. I make three charges. The first is that while the letter of the law might have been observed, the whole question was prejudged and cut and dried before the consultative committee met on 29th May. I shall produce abundant evidence to prove this.
  Following upon that argument, I should like to examine the transport users' consultative committee system as exemplified in this case and prove that such a committee is a useless body to

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  protect the interests of the travelling public. In other words, I want to show that these committees are mere puppets of the Transport Commission and that the whole system of consultative committee work is suspect of hocus-pocus and jiggery-pokery. My third charge is that the service has been taken off at the height of the season, which is the height of lunacy.
  Let me come to my first charge, that the issue is prejudged and cut and dried. I said that I would produce abundant evidence to prove this. All of the dates which I shall mention have to be related to 29th May. On 4th April, the S.S. "Great Western," affectionately known as "Aggie," was taken off service for overhaul. The dismantling of passenger accommodation began immediately. The ship returned to service on 30th May. It is significant to note that all the second-class passenger accommodation had been abolished. Accommodation for only 130 first-class passengers was left. The total accommodation of the ship was 450. Therefore, I charge the Transport Commission with having dismantled two-thirds or more of the passenger accommodation, almost two months before the date when the committee had to meet to make a decision whether the service should be discontinued.
  My charge, then, is that the Transport Commission anticipated the decision and took action thereon. What fools the Commission would have looked if the consultative committee had refused their application. Did the committee know of this action of anticipating the decision? If it did, the committee was guilty of betraying its trust. If it did rot know, if it was not informed by the Commission, the B.T.C. was guilty of gross deception, both of the consultative committee and of the public. Will my hon. Friend the Joint Parliamentary Secretary find out whether the Commission informed the consultative committee of this dismantling? This may be called intelligent planning on the part of the Commission, but others would call it by far harsher names.
  I took up the matter with the Minister by letter and sent him correspondence. He answered me on 26th May, when he said:
  "The Commission in making the proposal must obviously make provisional arrangements
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  so that if the proposal is endorsed by the committee, no time is lost in acting on it."
  That is the Commission's excuse. The Commission certainly lost no time. It did the dismantling nearly two months before the committee met. Would one call this "provisional arrangements," or would one call it prejudging the issue?
  Let me give further proof. I have in my possession three letters. The first is from the Dublin headquarters of the Automobile Association, dated 28th April, a month before the committee met and nearly three weeks before the last date for filing objections, 15th May.
  The letter states:
  "We have been advised by British Railways that from 29th June next passengers will not be carried between Fishguard and Waterford."
  There is no equivocation about that statement.
  Again anticipating the Committee's decision, a letter dated 28th May from the Station and Quay Superintendent, Fishguard Harbour, to another applicant said:
  "I regret to inform you that after June 27th next no passengers will be conveyed on the direct Waterford steamer".
  Again no equivocation. There is no question of saying that certain proposals had been made. The letter simply says categorically that no passengers would be carried.
  A letter from the British Transport Commission Passenger Department, Waterford, dated 21st May said:
  "I wish to inform you that owing to the suspension of passenger facilities from 29th June, 1959, I have now transferred your application to Fishguard Harbour."
  There again, there is no equivocation but a definite statement. Here are three letters from transport authorities which state without any hesitation that the services will be discontinued and all three were sent before the Committee had even met on 29th May.
  The next proof I have is that before 17th March the British Transport Commission had already come to an agreement with the Waterford Harbour authorities as to what should take place, and the agreement was almost signed, sealed and delivered between those two bodies that passenger services should be discontinued and a total freight service substituted. What chance had any passenger from the travelling public if he appeared

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  before the consultative committee? The whole set-up smacks of jiggery-pokery. The whole thing was a fait accompli before the committee met.
  On 14th June the consultative committee sent out a letter recalling its decision. I make one extract from it. The committee said it was
  "… fully aware that the British Transport Commission ran the risk of their proposals being unsupported by the committee but sensibly, in our view, avoided passenger bookings for the Waterford route after 27th June."
  Here is a case of a consultative committee bending over backwards to support the Transport Commission's case and proving itself to be nothing but a subservient mouthpiece of the Commission. This raises the whole question of the work of transport users' consultative committees and the whole system. The Minister, in a letter to me on 26th May, said:
  "These consultative committees are independent bodies appointed by the Minister under the Transport Act as watchdogs of user interests."
  This case illustrates the cancer that is attacking the consultative system throughout the country. The dice are loaded in favour of the Commission. The system is now suspect and is nothing but an elaborate façade to impress the Government. The figures prove it. This case is the classic example, but in 1954, of 118 closure proposals, 116 were ratified and only two were rejected. In 1957–58, of 246 proposals, 12 were rejected and 13 modified. Worked out as a percentage, it means that 93 per cent. of closure proposals brought before the committees were ratified and only 7 per cent. either rejected or modified.[An HON. MEMBER: "Shocking."] I submit that justice has not been seen to be done. Is that what will happen on the Stranrear-Larne route? Is that what will happen to the "Tutbury Jenny" on the Burton-Tutbury line? Is that what happened in my own Division to Marchington and Barton last year? It makes me wonder about the efficacy and the honesty of consultative committees. In the circumstances of this case, I submit that the Minister should reexamine the whole question of the machinery for the protection of the public.
  The third charge which I make is that this service is being taken off at the
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  height of the tourist season. I know what we shall be told; we had the answer from the committee. If the Commission is pleading a loss of £10,000 a year, however, this is an astonishing time to take off a boat, for it is the height of the tourist season.
  I promised that I would speak for not more than a quarter of an hour, and that I would share the debate with the Minister. In view of the evidence which I have produced tonight—and I could produce more—I ask my hon. Friend to ask the Minister to use his directive powers to postpone the operative date until he himself has seen a deputation of users of this route. Hon. Members may wonder why I have become so interested in this route, because my constituency is in the middle of England. I have used the route and I had hoped to use it many more times. In addition, I have constituency interests because we export from Burton not only beer but practical brewers. Many of them live in the Waterford area and their families travel there from Burton. I have a constituency interest in the matter as well as fighting for the vital principle of the protection of the transport-using public. I ask my hon. Friend to impress on the Minister our request to meet him. Will he re-examine the circumstances in order to issue a directive?
  My last point is a legal and procedural point. This service was brought into being by an Act of Parliament of 1898. It laid upon the company the duty to provide and order its service between Fishguard and Waterford as well as between Fishguard and Rossclare. If this Act has not been amended or repealed, can this passenger service be discontinued without the authority of the House or of some statutory body set up by the House? I know that in 1940 the Act was suspended by a revocation order, but I gathered that after the war this itself would be revoked. Has any Act been passed since which amends or repeals the original Act? If not, I submit, as a layman, not being legally qualified, that it would require some form of Parliamentary action, on the Floor of the House, to discontinue the service between Fishguard and Waterford.
  I am so disturbed at what I have learned in the investigation of and research into this case and by my experience in other cases that I think that the

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  whole system affecting our railways, and particularly the protection of travellers, with respect to the actions of the consultative committees, should be the subject of inquiry. I urge my hon. Friend to suggest to the Minister that there should be an independent inquiry on the lines of the Bowes Committee on inland waterways. There should be a similar committee on the railways and we should inquire whether the consultative procedure is working satisfactorily.
  11.59 p.m.
  The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Hay): The subject which my hon. Friend the Member for Burton (Mr. Jennings) has raised is concerned, strictly speaking, with the uneconomic operation of the British Transport Commission passenger service between Fishguard and Waterford. My hon. Friend has hit out in somewhat vigorous style, attacking the Commission, the transport users consultative committee and one or two other people, but I hope he will forgive me if I do not try to answer his points in precisely the way he put them. One has to look at this whole subject from the point of view of what it is that the Commission is trying to do, and then consider whether it has acted properly.
  This service is carried out by the "Great Western", a ship built in 1934, of some 1,750 tons, with a speed of 14 knots. It carried out three crossings a week in each direction, and it has accommodation for 450 passengers. The bald economic facts are that the average number of passengers carried in this steamer last year was only 33 in the winter and 150 in the summer. Throughout the whole of 1958 only 20,000 passengers were carried. Any impartial examination of these figures shows that here is a ship being greatly under-used. The Commission estimates, and its figures have not been challenged, that it loses about £10,000 a year on this one ship. When one looks at 1958, if the Commission is losing £10,000 and carried only 20,000 passengers, it means that each passenger carried cost the Commission 10s. I will not labour the point, because my hon. Friend wants to turn attention to the way this has been handled. Before passing to criticisms of the consultative committee, I will explain the situation of the Commission itself.
  Mr. William Teeling: A lot of the people travelling on this steamer are presumably travelling with their own cars and will want to do so in future. They may also be coming from Ireland to England and, I understand from the British Travel Association, bringing a good deal of money into England. That 10s. may well be not lost.
  Mr. Hay: My hon. Friend perhaps has not quite understood. The actual loss in the Commission's accounts on the operation of this vessel—with wages of crew, fuel, etc.—amounts to £10,000 a year. There are also other services between Ireland and this country, about which I will say something.
  In the light of these facts, the Commission came to the conclusion that, as this passenger service had become so uneconomic and was, in its view, incapable of expansion to become a paying proposition, the service should be withdrawn and the ship converted to a cargo vessel including, incidentally, much more accommodation for cars.
  There is an alternative service between Rosslare which is available now. It consists of two ships which operate in the summer and three in the winter. It is a much shorter journey, three and a quarter hours at sea instead of eight hours, and there are more sailings. During the summer months these are daily, excluding Mondays, instead of three times a week. The ships are faster, doing at least 20 knots, they are larger—of 3,000 tons—and there is much more accommodation. It is important to realise that only on 11 days last year was the combined traffic through Waterford and Rosslare in excess of the accommodation available on the Rosslare route alone—which is for 1,300 passengers. That is the background, briefly, to the decision of the Commission to withdraw this service.
  I would remind the House that the Commission is operating under very great pressure from my right hon. Friend, Parliament and the public to reduce its operating losses and break even as soon as possible. That means that, whether it be railways or ships, the Commission must reduce and ultimately eliminate its uneconomic services while developing and improving those services for which there is a demand.

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  I now turn to what my hon. Friend said about the transport users' consultative committees. Despite my hon. Friend's strictures, I would emphasise that these committees do extremely useful work and have the complete confidence of my right hon. Friend. They are independent advisory bodies, set up under an Act of Parliament, and the consultative committee consists of 21 members. Its membership is drawn from a very representative cross-section of user interests and it is required by the Act to draw its membership from those interests. They include agriculture, commerce, industry, labour and local authority interests. The Commission itself must be represented and there must be three independent members appointed by the Minister, one of whom is the Chairman.
  There is a great deal of misunderstanding about the function of these committees. They are not a kind of court of appeal; they are not licensing authorities, and they are certainly not arbitration tribunals. They form a piece of machinery set up by Parliament to act as a channel through which the Commission can consult user interests. They constitute an influential body of users who can make their views known to and felt by the Commission.
  In this case the proposal of the Commission was put to the consultative committee for Wales and Monmouthshire on 17th April. Public notice was given in a large number of newspapers and by poster advertising at many railway stations in this country and in Ireland, and it was also circulated to 12 national organisations and interested bodies, including Waterford Corporation. No objections from organisations and bodies were received to the proposal to close the service. Only six letters of protest were received by the Commission or by the committee from people resident in the United Kingdom. Only six letters were received from Ireland, although it is fair to say that one of those included a petition against the closure which purported to contain 70 signatures, but all these were of residents—shopkeepers for the most part—of Waterford.
  The committee considered the proposition on 29th May and recommended unanimously that the Commission's pro-
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  posal should be accepted, and that it should operate from 29th June. In coming to that conclusion there was no question of the committee rubber-stamping the proposal of the Commission. I have looked carefully at the complete minutes of the committee. Its discussion occupied a considerable time. The representatives of the Commission were cross-questioned intensively by members of the committee, and no unbiased person reading that record could come to any conclusion other than that the Committee had given the matter the most careful consideration but had been persuaded by the merits of the case that this was a completely uneconomic service which must be withdrawn if the taxpayer was not indefinitely to go on bearing some part of the loss.
  The final point is the question of notice given to objectors. There was no undue haste between the publication of the proposal and the hearing. The Committee made every attempt to give all those who had objections the greatest opportunity of making known their views, although it was not practicable in the time available to allow them all an opportunity to give evidence. The proceedings of these committees do not take a judicial form. People do not give evidence and cross-examine other witnesses. These committees conduct their procedure in the same way as any other committee. The committee had before it very full written reports by many people, and I am certain that it did its best to sift the matter, taking full account of the objections which were raised.
  My hon. Friend asked whether, in the light of all his complaints about the conduct of the committee, my right hon. Friend would be prepared to issue a direction to the Commission to withdraw its proposal or, at least, to postpone it until a deputation had been received. I must tell the House and my hon. Friend that I have already discussed this matter exhaustively with my right hon. Friend, who is afraid that in the clear circumstances of the case and in view of the detailed examination carried out by the committee, he cannot see his way to comply with the request which has been made by my hon. Friend. My right hon. Friend feels that in the circumstances it would not be right for him to issue a direction of this kind.

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  Finally, I should like to say a word about the legal aspect. The situation is a little complicated, but I will try to make it as clear as I can in the two or three minutes remaining to me. Under the Act of 1898, an obligation was laid upon the old Great Western Railway to provide two daily services, one between Fishguard and Rosslare and the other between Fishguard and Waterford. The Great Western Railway was relieved of this obligation by an Order made under the Defence Regulations in 1940.
  Mr. G. B. H. Currie: It has been repealed.
  Mr. Hay: May I repeat the explanation before it is criticised? The position will then be clearer to the House.
  The Great Western Railway was relieved of that obligation by an Order made under the Defence Regulations in 1940. This provides that the two sections in question should cease to have effect until such time as the Order is revoked. As the House knows, we tried in the Transport Charges, &c. (Miscellaneous Provisions) Act, 1954, to keep certain Orders in force on a statutory footing. This was one of the Orders which is so continued.
  The obligations under the 1898 Act, which would now fall upon the Transport Commission as successors to the Great Western Railway, cannot be lifted without United Kingdom legislation. In the meantime, they are kept in suspense. It is obviously desirable that before any legislation, promoted by the Commission or by anyone else, is introduced
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  into the House to have the effect of lifting this obligation permanently, an attempt at least should be made to reach some kind of agreement with the Irish authorities who are affected. It might even be necessary to have legislation in the Dail—I do not know. In any event, the Commission is seeking agreement and has already obtained some degree of success in its attempts with the Waterford Corporation.
  My right hon. Friend's position is that he would certainly take no action to revoke the Order and so bring these old statutory provisions back into full force before every attempt has been made to solve the problem by agreement, followed by agreed legislation. The position, therefore, is that I am advised that there is no current statutory liability upon the Commission to maintain this service. If my right hon. Friend made an order under the 1954 Act, that obligation would return, but in present circumstances he is not prepared to do that, as I have explained.
  I realise that my hon. Friend may not be altogether satisfied with this. My main point, however is that this was and is a completely uneconomic service and it is something that we cannot allow to continue indefinitely. In my right hon. Friend's opinion the Commission needs support and understanding in the difficult task that it is trying to carry out.
  Question put and agreed to.
  Adjourned accordingly at fourteen minutes past Twelve o'clock.

AGRICULTURE, FISHERIES AND FOOD
  Stern-fishing and Freezing
  Stern-fishing and Freezing
  Grey Squirrels
  Grey Squirrels
  Irish Cattle Imports
  Irish Cattle Imports
  World Fishing Boat Congress
  World Fishing Boat Congress
  Land (Opencast Mining)
  Land (Opencast Mining)
MINISTRY OF POWER
  Miners, Scotland (Employment)
  Miners, Scotland (Employment)
MINISTRY OF HEALTH
  Maternity Services (Committee's Recommendations)
  Maternity Services (Committee's Recommendations)
  Poliomyelitis (Vaccination)
  Poliomyelitis (Vaccination)
  Migraine (Research and Treatment)
  Migraine (Research and Treatment)
  Poliomyelitis Vaccine (Stockton-on-Tees)
  Poliomyelitis Vaccine (Stockton-on-Tees)
  Chiropodists (Training)
  Chiropodists (Training)
  Doctors' Remuneration (Royal Commission)
  Doctors' Remuneration (Royal Commission)
HOSPITALS
  Manchester (Proposals)
  Manchester (Proposals)
  Cardiff Royal Infirmary (Eye Tests)
  Cardiff Royal Infirmary (Eye Tests)
  EUROPEAN CONVENTION ON ESTABLISHMENT
  EUROPEAN CONVENTION ON ESTABLISHMENT
  EUROPEAN CONVENTION FOR PEACEFUL SETTLEMENT OF DISPUTES
  EUROPEAN CONVENTION FOR PEACEFUL SETTLEMENT OF DISPUTES
  GIBRALTAR (SPANISH RADIO)
  GIBRALTAR (SPANISH RADIO)
EMPLOYMENT
  Factory Inspectorate
  Factory Inspectorate
  Southfield, Blairmuckhill and Branchal Collieries
  Southfield, Blairmuckhill and Branchal Collieries
  Disabled Persons
  Disabled Persons
  Weston-Super-Mare
  Weston-Super-Mare
  Group Apprenticeship Schemes
  Group Apprenticeship Schemes
  Apprentice Training
  Apprentice Training
NATIONAL FINANCE
  Post-war Credits
  Post-war Credits
  Estate Duty (Works of Art)
  Estate Duty (Works of Art)
  MAURITIUS (CHINESE POPULATION)
  MAURITIUS (CHINESE POPULATION)
TRANSPORT
  Public Service Vehicles
  Public Service Vehicles
  Road Accidents
  Road Accidents
MINISTRY OF DEFENCE
  Medium Tank (Discussions with Germany)
  Medium Tank (Discussions with Germany)
HOME DEPARTMENT
  Probation Service (Committee)
  Probation Service (Committee)
TRADE AND COMMERCE
  New Potatoes (Imports from Greece)
  New Potatoes (Imports from Greece)
ROYAL AIR FORCE
  Service Voters
  Service Voters
  Slate (Imports)
  Slate (Imports)
LOCAL GOVERNMENT
  Water and Sewage Wayleaves
  Water and Sewage Wayleaves
  Sewerage Schemes, Dover Rural District
  Sewerage Schemes, Dover Rural District

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

MESSAGE FROM THE QUEEN
THE EARL OF SCARBROUGH: My Lords, I have the honour to present to your Lordships a Message from Her Majesty the Queen signed by her own hand. It is in these terms:
"I have received your Address praying that the International Wheat Council (Immunities and Privileges) Order, 1959, be made in the form of the draft laid before Parliament.
"I will comply with your request."

FATAL ACCIDENTS BILL
2.36 p.m.
Order of the Day for the Second Reading read.
LORD BIRKETT: My Lords, I beg to move the Second Reading of the Fatal Accidents Bill. Before your Lordships proceed to the more controversial Business of the day perhaps I can explain this modest and useful little Bill quite shortly, because I do not think that there will be any opposition, in any quarter of this House, to its provisions. The Bill has one purpose namely, to amend the Fatal Accidents Act, 1846, more usually and popularly known as "Lord Campbell's Act"—because this is yet another illustration of the reforming zeal of Lord Campbell in the world of law. The purpose of the Act of 1846 was simple it was to introduce a new cause of action; and that was that when any person had died because of fie tortious, wrongful, act of another, those dependants of the deceased person who had lost their support in life could either sue or have an action brought on their behalf for damages in the Common Law courts, the measure of damages always being the loss of the support which they had sustained.
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In that Act of 1846 the dependent relatives mentioned were husband and wife, parent and child. They were specifically mentioned. But by Section 2 (5) of the Act there were to be included in those relationships grandparents, grandchildren, step-parents and step-children. Oddly, and illogically, enough, step-grandchildren were not within the ambit of the Act. Clause 1 (1) of the present Bill proposes to add to the list of relatives who can sue or have an action brought on their behalf, and the new category is to be uncles and aunts, brothers and sisters, or any issue of them. That is the whole purport of Clause 1 (1) of this Bill—merely to enlarge the number of the dependants who may be able to sue in the courts where they have lost their support through the wrongful act of some other person who has occasioned them their loss. That being so, it was necessary in Clause 1, in subsections (1), (2), (3) and (4), to make rules for the ascertainment of the dependent relatives.
I ought just to say to your Lordships, here and now, that by the Law Reform (Miscellaneous Provisions) Act, 1934, it had already been decided that, where the relationship was illegitimate, for the purposes of the Fatal Accidents Act the illegitimate child should be regarded as the child of the mother and the reputed father. Secondly, by the same Act, the Act of 1934, it was decided that where the child has been adopted under one of the various adoption orders that child also should be regarded as the child of the deceased. So the law at the present time, without this Bill, is that in the case of the specified relatives—husband, wife, parent, child, grandparents and so on—if the child is illegitimate it does not matter; if the child has been adopted it does not matter; and if it is a step-relationship that does not matter at all. That is the law as it exists at this moment.
This little Bill, which of course extends the number of the relatives, provides that those provisions of the Acts I have cited shall be continued and shall include also the new class of relative that has now been put into the Bill. If your Lordships will look as subsection (2) (a) of Clause 1 you will see that it provides that:
"any relationship by affinity shall be treated as a relationship by consanguinity…"

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That means merely that a relationship by marriage shall be treated as though it were a relationship by blood. That is put into the Bill in consequence of this kind of occurrence—which is an actual occurence. A deceased man who had been killed by the negligence of another was, al the time of his death, supporting his son's widow and children. The odd thing was that the grandchildren could sue under the Act of 1846 but the stepdaughter could not. Now under this Bill the relationship of affinity can be regarded as a relationship by blood—
LORD SILKIN: My Lords, does the noble and learned Lord mean "daughter-in-law"?
LORD BIRKETT: My Lords, I mean daughter-in-law. The other practical illustration was that where a wife's mother was living in the house with the deceased, and the deceased was maintaining her, the mother was held to have no claim. It is for that reason that the provision in subsection (1) (2) (a)—the relationship by affinity—is put into the Bill. I might tell your Lordships that most of these incidents occur only at rare intervals, but there is no reason why the law should not provide that justice should be done, even though such instances arise only rarely and from time to time.
The provision that: "any relationship of the half blood" shall be treated as a "relationship of the whole blood," is necessary because of the new category of brothers and sisters, uncles and aunts; and the words
"and the stepchild of any person as his child"
merely reaffirm the provisions of the Law Reform (Miscellaneous Provisions) Aot, 1934. Subsection (2) (b) merely reaffirms that the adopted child shall be treated as the child of the person or persons by whom it was adopted and not as the child of any other person; and subsection (2) (c) merely confirms, again, the provision in the Law Reform (Miscellaneous Provisions) Act, 1934, that the illegitimate child shall be treated as legitimate. In subsection (3) there is a definition of "adopted", and your Lordships will observe that although this Bill, as I shall point out, for a very important reason does not apply to Scotland or Northern Ireland, neverthe-
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less in both Scotland and Northern Ireland adoption orders are frequently made, either under the Act of 1858 or under earlier provisions, and therefore it was necessary in this Bill to take steps to allow the orders of Scotland or Northern Ireland to be proved in the customary way.
Subsection (4) of Clause 1 is purely consequential and arises in this way. Under Section (6) of the Law Reform (Married Women and Tortfeasors) Act, 1935, it was provided that if more than one action was brought for the same loss the aggregate of the damages recovered should not exceed the amount of the damages recovered in the first action; but the Act of 1935, of course, referred to the relatives in the Act of 1846—parent and child, and so on—and it was necessary here to provide for the new categories brothers and sisters, uncles and aunts. That is the reason why that consequential subsection is placed there. That is everything with regard to Clause 1. Your Lordships will see that the purpose of the Bill in Clause 1 and its subsections is merely to add to the list of persons entitled to sue in proper circumstances or to have an action brought on their behalf for damages under the Act of 1846.
Now we turn to Clause 2, which deals solely with damages. I have always felt, for my own part—and I see the noble and learned Lord, Lord Denning, sitting in front of me—that the two most difficult tasks a judge ever has to perform are, first, to find the appropriate sentence in a criminal case, and secondly, to find the appropriate award in a civil action for damages. If the difficulty of assessing damages in an ordinary case is great, it is infinitely greater under the Fatal Accidents Act, for all the Act of 1846 says is that the jury shall award such damages as they think proportionate to the injury suffered by the person on whose behalf the action is brought; no more than that. But the courts have always laid it down—there was a leading case a very long time ago—that the amount of damages was to be assessed as a lump sum and was to be a balance between the loss the dependent relative had sustained and the benefits to be put on the other side which the dependent relative had gained.

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My reason for saying that that is a difficult matter in a fatal accident case is that one can bring an action for libel and get damages of £5,000 or £10,000, while never really having suffered any loss at all; because damages are presumed and are at large in the hands of the jury. But in a fatal accident action, when there is a young widow, as frequently happens, with her life in pieces because her husband has been killed by the negligence of another, all the grief and suffering and loss must be utterly disregarded, and it must be brought down always to pounds, shilling and pence—what is the financial loss on balance suffered in the case.
There is an Act called the Fatal Accidents (Damages) Act of 1908 which makes a statutory exception; that is, in a word, that any monies which come to the dependent relative because of an insurance policy shall be left out of account. It is a good illustration of the way Parliament does its work that there is no logic at all in that statutory exception. It arises in this way. A company called the Railway Passengers Insurance Company got a Private Bill—a Private Bill, mark you!—enacted, under which they were entitled to say to the people who took out their policies, "The money paid by this company can be left out of account under the Fatal Accidents Act of 1846." There was no reason why it should be done, but it was done. Naturally, other companies said, "If they have it, why should not we also?" By 1908 there were more than forty companies applying for the same exemption, which one or two companies had received; and the Board of Trade of those days, 1908, said, "We will make a Public Act, cutting out altogether, in every case, insurance monies." Therefore, when the judge or jury is assessing damages under the Fatal Accidents Acts to-day it leaves out of account any money paid by way of insurance.
In 1948 another statutory exception was made: that all the benefits paid under the National Insurance Acts were to be left out of account. That is the position at this moment: this Bill confirms the provisions of those two statutory exceptions, and goes a little further. As regards pensions, some pensions, of course, are paid by way of insurance; and, if so, they are left out of account.
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But many pensions are not. To give one illustration, all the Civil Service pensions have to be brought into account. Others may be left out, but they may not.
Secondly, as your Lordships well know, many employers have funds out of which, on death, they pay certain sums to the widow or relatives. It was held in the courts that those sums must be brought into account—that was in a case in which British European Airways were concerned. Then trade unions have funds from which they pay out for the benefit of dependants; co-operative societies do the same; benevolent societies do the same. This Bill, by Clause 2, states
"In assessing damages in respect of a person's death in any action under the Fatal Accidents Act, 1846, there shall not be taken into account any insurance money, benefit, pension or gratuity which has been or will or may be paid as a result of the death:"
So all those little matters, which can be very momentous in individual cases, are brought within the scope of this Bill; and if it becomes law then not merely will insurance monies be left out of account, not merely will National Insurance benefits be left out of account, but all pensions and true gratuities will be left out of account, too. Subsection (2) of Clause 2 merely confirms what I said: that the benefits under the Acts of 1946 shall still be continued.
Then we come to Clause 3. Subsections (1), (2), and (3) of Clause 3 are merely formal. Subsection (4) states:
"This Act shall apply only to actions brought in respect of deaths occurring after the commencement of this Act."
That is to say, there shall be no retrospective legislation in this field. There are many reasons why it is wise that this should be so, and that is enacted. Then, finally, it is stated:
"This Act shall not apply to Scotland or Northern Ireland."
The Fatal Accidents Acts do not apply to Scotland, but the Acts from 1846 to 1908 do apply to Northern Ireland. The reason why this provision is put here, that this Bill shall not apply to Northern Ireland, is this. if the Parliament of Northern Ireland decide themselves that they would like to legislate upon this topic, by Section 6 of the Government of Ireland Act, 1920, they would not be able to do so if their legislation was

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in any sense counter to the legislation in this Bill. Therefore, it has been felt wise that the Parliament of Northern Ireland shall be left to adopt a similar measure, if it so pleases, but should not be handicapped by the provisions included in this Bill.
LORD BOOTHBY: My Lords, may I ask the noble Lord a question? What happens to Scotland, which has not a Parliament?
LORD BIRKETT: My Lords, Scotland is left out of this Bill and was left out of the previous Fatal Accidents Acts. This Bill does not apply to Scotland because none of the Fatal Accidents Acts does. Scotland is such a strong and sturdy and independent country that it takes a line of its own. At any rate, the Fatal Accidents Acts do not apply to it.
That is the whole of the matter I wish to put before your Lordships. I think your Lordships will agree that this is a modest Bill, a useful Bill. It means very much to people who happen to be included in the kind of circumstances I have mentioned, and I commend it to your Lordships for a Second Reading.
Moved, That the Bill be now read 2a.—(Lord Birkett.)
2.56 p.m.
LORD SILKIN: My Lords, I rise only to express our deep gratitude to the noble and learned Lord for the way in which he has explained this little Bill. I am sure that no noble Lords who listened to him can fail to appreciate entirely both the history of this matter and the effect of this Bill. It is, as he said, a modest and useful little Bill; and I can assure him that there will be no opposition from this side of the House or any endeavour to slow down the progress of the Bill.
I myself have never found that the omission of the class of persons it is now intended to bring in as dependants has crossed my path. I have been in practice for forty years or more and I have never come across a case where a person who would be a dependant under this Bill has, in fact, suffered. But obviously, from what the noble and learned Lord has said, there have been such cases, and it is right that they should be brought in; and even if there are only one or two, to the persons concerned it is a very important matter.
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There is only one point upon which I should like to ask the noble and learned Lord's view, and that is in regard to Clause 1 (3) and adoption. There are, in fact, a great many adoptions where no adoption order has been obtained. A person may have taken a distant relative into his home and treated him as his own child—a distant relative not coming within the definition or scope of this Bill but who is nevertheless in fact treated as a member of the household. I take it that such a person would not be regarded as a dependant, and it may be worth while to look at that point to see whether we can include under the Bill people adopted in fact, in addition to those adopted by order. But subject to that—and it is a small point—I am sure the whole House would wish to give this Bill its blessing.
2.58 p.m.
LORD McCORQUODALE OF NEWTON: My Lords, I have no wish to do other than commend this Bill, which I think is a very useful measure. But, so far as Clause 2 is concerned, I should like to suggest that it is essential that it should be clear and not likely to lead to more litigation than there has been before because of its wording. I am a little unhappy about the phrase:
"…any insurance money, benefit, pension or gratuity"
and the definitions of those words. For example, with regard to insurance money is return of premiums covered? I believe that that is a doubtful point. Some payments are made by lump sums. A lump sum in a pension scheme not operated by the insurance company is presumably not insurance money; nor is it a benefit, pension or gratuity, and yet it surely should come into the scheme. Then there is the word "gratuity". I wonder whether its meaning is clear. Would that cover "without prejudice" payments or sympathetic payments made by the employer to the widow when subsequently litigation and proceedings started? These are small points and I should not like to press them now. I merely suggest that they might be worth consideration. so that when the Bill becomes an Act it is quite clear and there will he no need for further litigation.
3.0 p.m.
THE LORD CHANCELLOR (VISCOUNT KILMUIR): My Lords, I rise to welcome the Bill on behalf of Her

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Majesty's Government and to express our gratitude, not only to my noble and learned friend Lord Birkett for the persuasive terms in which he has urged the Bill in this House, but also to those honourable Members of another place who have given so much care and consideration to it. From the debate that we have had, I think that there is no doubt at all about the general and keen support for Clause 1 of this Bill. Indeed, the examples which my noble and learned friend gave of a disabled sister or widowed daughter-in-law being unable to recover although they were entirely dependent on the deceased for their support when he was alive shows the necessity of the extensions of which we have heard. With regard to Clause 2, my noble friend Lord McCorquodale of Newton made it quite clear that he was not against the elimination of the anomalies that exist at the moment, but he was anxious—and it is a very important point—that the anomalies should not be erased by the creation of new anomalies. I think it would be useful if he would raise the matter on the Committee stage so that my noble and learned friend Lord Birkett can give us his view.
My noble friend Lord McCorquodale of Newton was kind enough to give me notice of the matters that are worrying him, and I should like to make one or two points so that he can have them investigated. With regard to the term "insurance money", it is our view, after very careful consideration, that this term covers sums paid or payable under any contract of assurance or insurance—that is, the payments that were excluded by the Act of 1908. As my noble friend is aware, some doubt was raised on that point in another place; and we have reexamined it. It is difficult to import a definition which would meet my noble friend's point, and we thought that the best that we could do to achieve certainty was to attract the existing Case Law on the subject. But if my noble friend has any doubts I shall be only too glad to go into that point. My noble friend is absolutely right in raising the question of lump sum payments. That is a defect which, in my view, subject to what my noble and learned friend Lord Birkett says, should be remedied in Committee; and no doubt an Amendment will be put down to deal with that point.
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My noble friend Lord McCorquodale of Newton also raised the question of ex gratia payments. As the law stands, the purely ex gratia payment, and any other purely spontaneous gift, cannot be taken into account in the reduction of damages, because it is not a benefit coming to the relatives in direct consequence of the death. Although such a payment may be following the death, it is due purely to the good will and generosity of the donors, and is not a benefit which the relatives were entitled to—or, at least, had a firm and reasonable expectation to receive—in consequence of the death. Again subject to what my noble and learned friend Lord Birkett says, that is what I have been able to extract (and I think it is the correct view) from the case of Peacock v. The Amusement Equipment Company, with which my noble and learned friends are familiar. The Bill is not intended to make any change here. Similarly—and this is another point that my friend raised—the Bill does not alter the law in regard to payments made without prejudice. These are my reactions to the points raised by my noble friend Lord McCorquodale of Newton. If he still has any doubts on these points, I shall be very pleased to consider them before the Committee stage and I am sure that my noble and learned friend Lord Birkett would also be delighted to join in any such consideration.
It was suggested that I might refer the question of the assessment of the damages to the Law Reform Committee. I do not want my noble friend Lord McCorquodale of Newton to be in any false position over this matter. There are a number of interesting and important subjects "in the queue", if I may so put it, for that Committee, and I do not want my noble friend to prejudice his position on this Bill by waiting for action of that kind. I think he would be well advised to consider the matter on this Bill; because once the Bill is on the Statute Book, who knows when the next Bill may come? Nobody knows that better than my noble friend Lord McCorquodale of Newton. Finally, I join with all noble Lords in welcoming the Bill, and in congratulating my noble and learned friend.
LORD BIRKETT: I will not detain your Lordships more than a moment,

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but I should like, first of all, to express my gratitude to my noble and learned friend on the Woolsack for dealing so succinctly and so clearly with the points that have been raised by my noble friend Lord McCorquodale of Newton. I have no reason to disagree with anything that my noble and learned friend has said; and I would merely endorse the view which he has expressed—that I should welcome any opportunity of making this Bill clearer in any respect in which it is now doubtful.
There is one matter I ought to have mentioned—and it was raised by my noble friend Lord McCorquodale of Newton—and that is as to the question of the lump sum. Quite clearly, in Committee there must be remedied what I think is an oversight in this Bill, and that is the leaving out of any question of the lump sum. For example, under Regulation 13 of the National Health Services Superannuation Regulations, 1955, lump sums are frequently paid on death. Now they are not benefits within the meaning of this Act; neither are they gratuities, because the recipients are legally entitled to them: but, clearly, they ought to be treated on the same footing as the benefits, pensions and gratuities referred to in the clause. I therefore propose, on the Committee stage, to remedy that point in regard to lump sums.
With regard to the other points raised by Lord McCorquodale of Newton, so far as the insurance monies are concerned I do not think there will be any difficulty. Under the Act of 1908, the words are "monies arising from any contract of assurance or insurance". I myself have never been able to discover what difference there was between a contract of assurance and one of insurance; but there it is in the Act of 1908. However, I do not anticipate any difficulty in making that point quite clear.
On the other point, of gratuities, I am quite conscious that difficulties may arise, but I do not think that by any pre-vision or foresight in the world one will ever be able to prevent these difficulties from arising. The case to which my noble and learned friend on the Woolsack referred (and I will not read it at any length) of Peacock v. The Amuse-
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ment Equipment Company, in the House of Lords, happened to be a case in which I delivered one of the judgments. Put in a sentence, that was a case where a wealthy woman had died as a result of the tortious act of another person, and she had left all her money to the two children of her former marriage and nothing to the husband, who was totally dependent on her. He brought an action under Lord Campbell's Act and he was confronted by the fact that the two children of the former marriage, out of pure compassion, had made a lump sum gift to him. It was contended that that ought to be taken into account. I am glad to think that the Court of Appeal, of which I was a member, said that it should not be taken into account as it did not arise in connection with the death, but it was argued at very great length. And until anything interferes with that decision, it is the law of the land. It may be that similar difficulties may arise, but I cannot imagine that any form of words would ever overcome the possibility of these matters arising from time to time. I would add that any assistance that I can give in this matter will be gladly given.
I should also like to thank the noble Lord, Lord Silkin. The point he raises has also been in my mind at the moment. This should he done under an order of adoption, otherwise there might be all sorts of spurious claims of adoption in the courts; but I will certainly give this matter close consideration and consult with my noble and learned friend to see whether we can do anything about it. I beg to thank noble Lords for their kindness.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

SOLICITORS (AMENDMENT) BILL [H.L.]
Returned from the Commons, agreed to.
CRIMINAL JUSTICE ADMINISTRATION (AMENDMENT) BILL
Returned from the Commons with the Amendments agreed to.

STREET OFFENCES BILL
3.13 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do resolve itself again into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 1:
Loitering or soliciting for purposes of prostitution
1.—
(2) A person guilty of an offence under this section shall be liable, on summary conviction, to a fine not exceeding ten pourds or, for an offence committed after a previous conviction, to a fine not exceeding twenty-five pounds or, for an offence committed after more than one previous conviction, to a fine not exceeding twenty-five pounds or imprisonment for a period not exceeding three months or both.
(3) A constable may arrest without warrant anyone he finds in a street or public place and suspects, with reasonable cause, to be committing an offence under this section.
(4) For the purposes of this section "street" includes any bridge, road, lane, footway, subway, square, court, alley or passage, whether a throughfare or not, which is for the time being open to the public; and the doorways and entrances of premises abutting on a street (as hereinbefore defined), and any ground adjoining and open to a street, shall be treated as forming part of the street.
LORD MESTON LORD MESTON moved in subsection (2), to substitute "five" for "ten" [pounds]. The noble Lord said In the absence of my noble friend Lord Grantchester, I ask your Lordships' permission to take the various Amendments standing in his name. I may say that my noble friend is delegate to the Assembly of the Western European Union now meeting at Strasbourg, and therefore he is not able to be present to-day. With your Lordships' permission, I should like to talk about Amendments Nos. 6, 7 and 8 together. The object of these Amendments is to reduce maximum fines from £10 to £5 and £25 to £10. I submit that the present figures are too severe. Furthermore, it has been brought to my notice by a welfare worker that if fines are raised to their present level, it may happen that some particularly unpleasant types of men will pay the fines for the unfortunate women
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and then put them upon their nefarious payrolls. That is an aspect which has been brought to my notice, and I now bring it to the notice of your Lordships. The whole thing is a matter of opinion, and therefore, without saying any more, I beg leave to move the first Amendment.
Amendment moved—
Page 1, line 9, leave out ("ten") and insert ("five").—(Lord Meston.)
LORD CHESHAM: I am obliged to the noble Lord for taking these Amendments together, and if your Lordships will permit me to do so, I will comment on these Amendments and also on No. 9, as it is difficult for me to deal with them without making some reference to Amendment No. 9, although I realise that that Amendment will have to be taken separately on its own merits when we reach it. The effect of these three Amendments, taken by themselves, would be to provide that the penalties for convictions under subsection (1) shall be a fine not exceeding £5 on a first conviction, a fine not exceeding £10 on a second conviction, and a fine not exceeding £10 or imprisonment for a period not exceeding three months, or both, for each subsequent conviction. Taken together with the next Amendment put down by the noble Lord, Lord Grantchester, their effect would be that the maximum penalty would be £5 for a first offence and £10 for any subsequent offence, and that would be the lot. It may be that that was what was in the mind of the noble Lord, Lord Grantchester, who unfortunately is unable to be with us to-day. If that is so, I can only say that it is a powerful example of extracting the teeth. This is a case in which the Government are trying to set up a live and active watchdog, and if these Amendments were accepted, they would have the effect of reducing the hound to a mumbling, toothless animal which would be of little avail for its duties.
The object of the Bill has been repeatedly stated, both by my noble and learned friend on the Woolsack and by my self, to be to clear the streets of a nuisance, and in spite of what the noble and learned Lord, Lord Denning, said on Second Reading about the virtual impossibility of doing anything about the problem of prostitution, I can see no

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reason for not doing what we can. As I have pointed out to your Lordships before, if it is possible to achieve any secondary or, perhaps I should say, ancillary effect by this Bill, I think that it is proper to do so. One of the ancillary objects of the Bill is to discourage girls anti women from becoming prostitutes. It is hoped, by making the trade unprofitable, by providing for increased money penalties, and by making them liable to imprisonment if they should persist, to persuade more of these women to accept probation. Even if we were to retain imprisonment, this would be less likely to be achieved if the maximum fines that could be imposed were £5 for a first conviction and £10 for every subsequent conviction. As maxima, these are insufficient sums, having regard to current money values and to the amount which can be earned by prostitutes. So it would he no effective deterrent until a woman had been twice convicted; and the penalties on the earlier convictions would probably be not sufficient to induce a woman to accept probation, as we all wish. By the third conviction, she may have been a prostitute for some considerable time and become quite hardened to that life. If imprisonment is also to be deleted, I think it is clear that the object we all have in mind will not be achieved.
The provisions of subsection (2) are based on the recommendations of the Wolfenden Committee, in paragraph 275 of their Report that the maximum penalties for street offences should be increased and that a system of progressively higher penalties should be introduced. The actual penalties provided are those recommended by the Committee, and the Government do not regard the fines as excessive, having regard to current money values.
I would make this final point. The fines provided in the Bill are maxima—they are not automatic—and it will be for the court to select the appropriate sum in any particular case. It may well be that in many cases the courts will consider something less than the maximum to be appropriate, but I think the power to impose the more substantial fines ought to be available to the courts. I shall have a word or two more to say in reference back to this point when we come to Amendment No. 9, but in the meantime, I hope I have shown to your
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Lordships the undesirability of reducing these proposed maximum fines.
LORD MESTON: I thank the noble Lord for his reply. I am only a deputy in this matter, and I do not propose to waste time. I beg leave to withdraw Amendment No. 6; Amendments Nos. 7 and 8 I shall not move; but, so far as Amendment No. 9 is concerned, other noble Lords may wish to speak on that.
Amendment, by leave, withdrawn.
BARONESS WOOTTON OF ABINGER BARONESS WOOTTON OF ABINGER moved, in subsection (2) to delete "or imprisonment for a period not exceeding three months or both". The noble Baroness said This is an Amendment to which we attach great importance. The Bill as it now stands proposes to impose in certain cases, after conviction, a penalty of three months imprisonment or a fine of £25 or both. The first point I should like to make is that these penalties are extremely high for an offence which is essentially one of nuisance or causing annoyance. They are not penalties for prostitution, but penalties for soliciting for the purpose of prostitution in the street or in some similar place. My second point is that the whole trend of opinion to-day is against the value of short terms of imprisonment; that is to say, terms of imprisonment of one. two or three months. I think there is a good deal of evidence that in those cases in which already women are in prison for offences connected with prostitution the results have been most disappointing. The noble Lord opposite referred to imprisonment as being a live and effective watchdog. I would ask him to observe what in fact has been the success of his watchdog in trying to deal with women convicted of other forms of offences connected with prostitution.
LORD CHESHAM: I apologise to the noble Baroness for interrupting, but when I mentioned "watchdog" I was referring to the whole provisions of the Bill and not to any one item.
BARONESS WOOTTON OF ABINGER: I should imagine that the watchdog of imprisonment must be very much the more formidable part of this team of watchers to which the noble Lord refers.
Finally, I would say this. The penalties prescribed in the Bill, if I read the Report of the Wolfenden Committee correctly, are not precisely in keeping

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with the recommendations of that Committee. The noble and learned Viscount opposite referred (if I may put it this way) with great reverence more than once last week to the recommendations of this Committee. In passing, perhaps one may observe that this reverence must be tempered by the fact that Her Majesty's Government apparently are interested only in those parts of the Committee's Report which follow page 78. But if I read the Report correctly, the Committee recommended penalties of three months imprisonment or a fine of £25, not both. I think that the final words "or both" have slipped into this Bill. On those three grounds, I beg to move this Amendment.
Amendment moved—
Page 1, line 13, leave out from ("pounds") to end of line 14.—(Baroness Wootton of Abinger.)
LORD STONHAM: I am inclined to agree with the noble Lord, Lord Chesham, with regard to his comments in dealing with the early Amendments which related purely to fines. It was for that reason that my noble friend and I did not support those earlier Amendments. We feel, in any case, that they are merely more or less an adjustment to the value of money, although it is true that they are graduated and not a flat rate fine. However, we have totally different feelings with regard to this question of a sentence of imprisonment. This really is a savage punishment for a street offence. Although I keep harking back to this point, I must come back to it again. This will be the fourth time that I have asked—but I have not yet had a reply—what Her Majesty's Government are doing in the administrative sense. The noble and learned Viscount the Lord Chancellor said at an earlier stage of the Committee that he would make inquiry and let me know. I regard this aspect as most important and completely wrapped up with the matter that we are now discussing. If these prostitutes can be moved from places like Stepney simply through public outcry, it must be, I imagine, through administrative action.
The noble Lord, Lord Chesham, mentioned that this was a watchdog. The watchdog does not seem to be very effective. Last week I ventured to give
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an indication of how prostitutes were advertising by means of cards, and I learned from a London evening newspaper the next day that they had made a search and found that the cards had been removed simply because of a mention of them here. It would appear that your Lordships are somewhat better watchdogs than the minions of the law. I hope that that point will be cleared up, because this is a savage thing to do when you are applying it only to one party to the offence—namely, the woman, and not to the man.
My noble friend Lady Wootton of Abinger mentioned the fact that these short-term sentences do little good. I think that in these cases they will do harm and not any good. The warning given by the Advisory Council on the Treatment of Offenders underlines the evils of short-term imprisonment, and in my view this applies with greater force in the case of prostitutes. It cannot possibly be any help to reform them morally. We have constantly been told that this is to be a deterrent but that at the same time we are hoping to reform these women. I think these short sentences are far more likely to cause them to corrupt other prisoners, who are aware of the difficulties of finding employment when they leave prison and may more readily turn to prostitution on the advice of in prison prostitutes. Or, conversely, the prostitute who has had three or more convictions under this Bill and then received a prison sentence may the more readily accept prison tutorship in a life of crime of another kind.
A prison sentence in these cases cannot do any good. It is incomparably more savage than the sentence for any other similar offence. It is discriminatory, in that only the woman is charged and convicted; and all these convictions, if they are made, will depend entirely on the opinion or word of the constable without any need to prove annoyance. Therefore, I submit that a prison sentence of this kind is bound to add to the possibilities and to the scale of corruption, because prostitutes in danger of imprisonment are far more likely to attempt to bribe the police either to overlook them, or to accept a substitute, in the same way as is done by street bookmakers. In those circumstances, I believe that imprisonment will prove

1097
neither a deterrent nor a means of reformation, and I hope that the Government will accept this Amendment.
3.29 p.m.
LORD BOOTHBY: Perhaps I might say a word or two in support of this Amendment. I should like to begin by emphasising the point made by the noble Baroness, Lady Wootton of Abinger, that we are always apt to forget that prostitution, as such, is not an offence in this country. That is why my objection to branding a class of people as "common prostitutes" on the evidence of one policeman remains. What we are punishing here is annoyance in the street—soliciting for the purpose of prostitution—and I submit to your Lordships that the punishment of imprisonment for annoyance, and not for an act of prostitution itself, is far too excessive.
I should like to ask the noble and learned Viscount, if he is going to reply, what purpose the Government have in mind in this matter. Does he think that a short sentence of three months applied to the case, as it evidently will be, only of the hardened prostitute is going to reform her? I cannot conceive that that is possible. On the contrary, I entirely agree with what noble Lords have already said that the dangers of hardened prostitutes corrupting other inmates of the prison are very great. It is for the same reason that I am greatly concerned—and always have been—about sending homosexuals to prison, because I believe that can do definite damage to the other occupants. Sending hardened prostitutes to our overcrowded prisons—because they are overcrowded—will do the prostitutes themselves no good, and will he a source of great danger to the other occupants of the prison. I do not see what is going to be achieved by means of this step. I do not object to the fines for street annoyance. I think they are pretty "tough"; but having regard to the changed value of money and the recommendations of the Wolfenden Report, and the necessity to get some of the streets, particularly of this town, cleared up. I do not object to the increase in the lines. But I cannot for the life of me see what good imprisonment is going to do, and I genuinely believe that it may do considerable harm.
LORD SALTOUN: I should like to support the noble Baroness and her Amendment, for two important reasons. One is that for my sins or virtues—I do not know which—I spent quite a long time in Marienburg gaol, and the Germans had a practice of bringing in the prostitutes late at night. It was a terrible moment in the prison. They were all wildly hysterical, and it had a very bad effect throughout the prison. As anybody who knows anything about prisons will appreciate, hysteria is the one threatening cloud that hangs over every prison. That is the first reason. If the Government insist upon imprisonment, I hope they will accept the Amendment which will be moved by my noble friend Lord Arran.
There is another reason. If you consider what the life of a prostitute is—a life of intermittent, solitary association with one man after another, whose character she can only dimly grasp, and most of them much stronger than she—she is always exposed to the risks of robbery and murder. I know that in fact there are not a large number of prostitutes murdered, but when they are, the murderer is not very often brought to book. If we think of it, the only time a prostitute can practise her trade in security is when she is in a brothel or some sort of licensed house. I do not want to be taken to be advocating that. but I should like to point out that the dangers have been imposed upon her by the rather brutal virtue of the British public. It is a tough life, and if she is taken and put into prison I think she may well take to crime. I am told by the police, and by other people who know, that when women take to crime they are far worse than men. It is an extraordinary thing that prostitutes do not generally take to crime. They are generally a good-natured class. But if you put more pressure upon them and put them in prison, I think it is likely that the criminal classes will get a lot of recruits.
LORD HAWKE: I hope Her Majesty's Government will reject this Amendment. First of all, £25 in a trade of this nature, entirely tax free both to the woman and the man who collects the money, is nothing. If the Bill provides for a prison sentence I am perfectly certain that nobody will ever go to

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prison, because to start with the woman will not want to go and the man will have the greatest inducement to keep her out. Therefore, the fears of noble Lords who have spoken do not avail anything, because I do not believe there will be a single prison sentence. Nobody will risk it. On the other hand, if the Bill goes out with just a plain penalty of a fine, which is a meagre penalty in comparison with the big money involved in this trade, then the nuisance will still continue on our streets.
LORD SALTOUN: If the noble Lord will read the Bill he will see at line 14:
"… a fine not exceeding twenty-five pounds or imprisonment for a period not exceeding three months or both."
LORD CHESHAM: The purpose of this Amendment has been made very clear to us, and I do not think there is need for me to waste my time any more by talking about the extraction of teeth. It has been accepted that soliciting in the streets is a nuisance amounting at times to a scandal, and that it should be stopped. If we will the end we must will the means. The business of prostitution, as I have already said once, is profitable, and the advertisement by women on the streets can be stopped only if the penalties constitute a real deterrent.
I have been asked to state what are the Government's purposes in suggesting imprisonment, and I will now do so. The first purpose is to make it apparent to a girl on the threshold of a life on the streets that among the risks she takes is the possibility of eventual loss of liberty, and that if she goes on that loss may be repeated. The second purpose is to induce a woman to accept probation and the help which the probation officer will give her to abandon prostitution, by making it clear that she will probably end up in prison if she goes on with it. The third purpose is to enforce the law effectively against persistent offenders. I do not think it can be said properly that a monetary penalty alone is likely to be an effective deterrent. Women will tend to regard it as a form of tax and pass on as much as they can of it to the customer. This might have a good effect in reducing demand, but it might also have a corresponding, even outweighing, bad effect, that in order to re-coup herself
1100
of the fines she may start to solicit more actively in order to try to increase trade.
As I understand it, it was for these reasons that the Wolfenden Committee thought that increased and graduated fine; would be inadequate by themselves, and that imprisonment must be available in the last resort for the repeated offender. Paragraph 277 of the Wolfenden Report says:
"We believe that most of the prostitutes loitering in the streets are those who are well established in their habits, whom repeated fines have failed to deter. We therefore feel justified in recommending that deprivation of liberty, which would be particularly unwelcome to these offenders, should be available as a sanction when, in an individual case, monetary fines have failed."
That puts the point I am trying to put over in a well-defined nutshell. Deprivation of liberty is a penalty which a prostitute cannot pass on. Not only is it likely to be particularly distasteful to her personally (I understand that one of the reasons for which women are said to go into prostitution is their dislike of a regular. ordered life) but it will make it more difficult for her to carry on her trade. She is bound to suffer loss of income, and possibly through that loss of her business premises. It is these inconveniences, combined with the prospect that if she continues on the streets it may happen again, that should form a powerful deterrent. It has the merit—and this is the important point —of being something which the prostitute cannot effectively escape by accepting the help of an organisation, unless, of course, the organisation set her up as a call-girl, because while the organisation may pay fines for these women it certainly cannot go to prison for them.
Now I should like to deal with one or two points that were raised. The noble Lord, Lord Boothby, said that the prisons were overcrowded. I am sorry to say that they are not—sorry in the sense of having to contradict the noble Lord. The latest figures are that as at June 2 there were 736 prisoners in a total number of places in ordinary women's accommodation of 1,299. In Holloway in particular there were 323 people out of a total possibility of 695. So I think that that must be said to deal with the question of overcrowding.
LORD BOOTHBY: I am delighted to hear it.
LORD CHESHAM: The very interesting argument has come up once more about the question of contamination of other prisoners by prostitutes and vice versa. That is an argument against imprisonment generally and I cannot see why it should have any particular significance in relation to prostitutes. Segregation of them would be impracticable, because women who are prostitutes are sent to prison for other reasons at times. In certain cases, in certain parts of the country—notably in Edinburgh and Aberdeen, which I believe are not without their interest to the noble Lord, Lord Boothby the position is this. I quote again from the Wolfenden Report (paragraph 243):
"In Edinburgh, every prostitute or streetwalker who loiters about or importunes passengers for the purpose of prostitution is liable to a. penalty of ten pounds or alternatively to imprisonment for sixty days; and Aberdeen has a similar provision."
There are in some places quite a number of prostitutes who, for one reason or another, are in prison already, and I am certainly not aware that the prognostications that have been put forward are as serious as they are said to be. I can understand the general argument, but I certainly do not fully follow or, indeed, accept the specific one.
On the subject of reform, I am not contending, and the Wolfenden Committee did not expect, that three months' imprisonment—which means, subject to remission for good conduct, two months' effective detention—would in itself be reformative. The Committee thought that the existence of imprisonment in the background—and this is the important point which I hope the noble Lord, Lord Stonham, will bear in mind—might enable reformative influences to be effective at an earlier stage, because it is obviously desirable that they should be effective at as early a stage as possible, and it is Government policy to try to make them so. A short sentence of imprisonment is not necessarily to be condemned because it is not reformative. I would quote what the Advisory Council on the Treatment of Offenders said on alternatives to short terms of imprisonment. They said:
"In our view there is nothing to justify such sweeping condemnation."—
that is, of short terms of imprisonment.
"… There are many cases in which a sentence of imprisonment is inevitable but the
1102
nature and circumstances of the offence do not require a long sentence … Nor is there any reason why a short sentence should not he socially and penally useful in some circumstances."
I submit to your Lordships that the circumstances that we are talking about to-day are circumstances where a short sentence is socially and penally useful, both as a means of diverting women from prostitution and as a means of securing obedience to the law. Fines could not be equally effective for this purpose, and if we are in earnest about achieving the objects of this Bill I ask your Lordships not to accept the Amendment.
BARONESS WOOTTON OF ABINGER: I could not agree more with the noble Lord when he says that if we will the end we must also will the means, but I think the dispute between us is whether the means proposed will achieve the end. The noble Lord has expressed some doubts about the unfortunate results of imprisoning prostitutes. If he will refer to some statistics that were given in the debate on this topic in another place I think he will find some convincing evidence as to the recidivist effect of terms of imprisonment upon women in connection with prostitution. Let us remind ourselves that this Bill proposes to impose a term of three months' imprisonment upon a woman who solicits in the street. It does not propose to impose any term of imprisonment upon a woman who exhibits her card in a shop window, as described by my noble friend Lord Stonham last week, or the woman who makes her appointments by telephone. It discriminates solely against the woman who creates what is, after all, only a nuisance in the street.
I would add that not only is there no evidence that a short sentence of imprisonment has a deterrent effect, still less a reformative effect, in this context, but it does make it very much more difficult for a woman when she comes out of prison to enter upon a respectable occupation in that sense it gives a very strong inducement to follow the only occupation she knows and the only one that may be easily open to her.
As for the argument that a woman who has taken to life on the streets should accept probation, on that I am sure on

1103
all sides we are agreed. As the noble Lord, Lord Chesham, has said, the important thing is that these reformative measures, such as probation, should be put into operation at the earliest possible moment, and that moment is when the woman is brought before the court and convicted for the first time; not when she is faced with the alternative of imprisonment on the third conviction. Finally, it is not perhaps a major point, but the noble Lord, Lord Chesham, did not, I think, deal with my observation that the penalties proposed in this Bill go beyond those recommended by the Wolfenden Committee, inasmuch as the Wolfenden Committee recommended only alternatives of imprisonment or fines; and I notice that in the Scottish law which the noble Lord quoted again imprisonment and fines are alternative.
On Question, Amendment negatived.
BARONESS WOOTTON OF ABINGER BARONESS WOOTTON OF ABINGER moved, in subsection (2), after "pounds", where that word last occurs, to insert:
"Provided that on first and second convictions the court shall remand the offender for social and medical reports before determining sentence".
The noble Baroness said: I am very hopeful that this is an Amendment which will commend itself to noble Lords on all sides of the House. It has been repeatedly said in the course of this debate, and it is common ground among us all, that our first wish is to redeem women who may have embarked upon a life of prostitution, and particularly to use the provisions of this Bill to reform those who are convicted of soliciting in the streets.
The object of this Amendment is, I think, completely self-explanatory it is, that upon a first or second conviction for soliciting the court should be obliged to make a remand for the purpose of obtaining social and medical reports. The only criticism that I can think of that can be made of such a provision might relate to remand on a second conviction. I appreciate that a second conviction may, on occasion, follow quickly after a first conviction, and it might conceivably be argued that the report already received was sufficient. But in proposing this Amendment my noble friend and I had very much in mind that if a first conviction and the consequent
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penalty has failed, there ought to be a second opportunity for a probation officer and a medical officer not only to report on the woman's antecedents and the causes that have led her to take to a life of prostitution, but also to refer to or give reasons for their failure.
For that reason, we feel that it should be mandatory upon the court to ask for such reports, on the occasion both of a first and of a second conviction. Therefore I strongly commend this Amendment, or at least any alternative in the same sense that Her Majesty's Government might prefer. I strongly commend such an Amendment in order that we may fulfil the object which has repeatedly been said to be common to all sides of this House and is, I think, shared by every noble Lord who has spoken in this debate at any stage—namely, that our first object is to ascertain, if we can, why women have taken to a life of prostitution, and to give them every possible medical and social help in changing to a respectable career. I beg to move.
Amendment moved—
Page 1, line 14, at end insert the said proviso.—(Baroness Wootton of Abinger.)
3.53 p.m.
LORD STONHAM: In supporting the Amendment of my noble friend, I hope that this time the Government are going to live up to their observations in the discussions that we have had on earlier Amendments. The noble Lord, Lord Chesham, said in the previous discussion—these are not his exact words, but I think a fair paraphrase—that if prostitutes go to prison the sentence is not mainly reformative, but reformative influences are in the background and that the sooner that they can get to work the better. I would submit that this is precisely what this Amendment ensures: that they shall get to work at the earliest possible moment—namely, before sentence. If these reports are asked for they will come back to the magistrates, and on the basis of the reports a decision will be reached as to whether or not to send to prison.
Another thing that the acceptance of this Amendment will do in my view, is to provide greater uniformity by magistrates in their dealing with the prostitutes who come before them and who, having been charged three times, are thereby liable to imprisonment. It does

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not mean that they will not go to prison—the noble Lord, Lord Hawke, said earlier that he would be amazed if any prostitute went to prison under this Bill. It is surprising that the Government should have put the penalty of imprisonment in the Bill if nobody was to go to prison. But it is obvious that different magistrates will put different interpretations on the need to send a woman to prison. Therefore, we think it imperative, if there is any real seriousness about trying to reform these women, that it should be done when they come to their third conviction and there is a strong possibility of imprisonment.
We must have regard to the fact that nobody is coming to the court on this charge unless she is a confirmed prostitute. She will not be arrested unless, in the knowledge of the police officer, she is a common prostitute who has been seen many times. As the noble Lord, Lord Chesham, indicated or implied, many of these women, although they have been many times fined, have not been to prison, except in Aberdeen or Edinburgh, unless they have been convicted for something other than prostitution. So that here we have women who are confirmed prostitutes. It is the hope of every one of us that they can be put to some decent life. I believe that we all agree and admit that if they are sent to prison it is not going to help them to come to a decent way of life. But if there are these reports, and if the women will submit themselves genuinely to the kind of supervision and help which can be given to them, there is a chance of reform.
As my noble friend mentioned, we have said "on first and second convictions" because it is obviously going to be difficult for women of this kind to go straight. Many of them have never done any serious work; many of them have never led a regular kind of life. It is easy for them to fall down, even though they may try to improve. That is why we should like this remand on both the first and the second convictions. I remind the noble Lord that the Wolfenden Committee was in favour of the maximum use of remand for this purpose, and the right honourable gentleman the Home Secretary obviously had this in mind when, to use his words, he urged the exercise of "every art of
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redemption". He suggested that when a girl comes before the courts she should at that stage be given every available assistance. I would submit that "at that stage" must mean before sentence.
That is precisely what this Amendment seeks to achieve. We are entitled, I think, to ask that it should go into the Bill; that it should not be dependent upon Home Office circulars or statements by the Home Secretary of what he would hope to achieve, but that it should be there in the Bill, so that there should not be the inevitable disparity that otherwise there will be between sentences passed by different magistrates. If there is any serious intent in any part of this Bill towards reform, I submit that the Government should so arrange matters in this Bill before it becomes an Act that every possible course shall be tried before a prostitute is sent to prison. I think that they should accept this Amendment.
LORD BOOTHBY: I should like to suggest to my noble friend Lord Stonham that this Amendment is really consequential upon every single opinion that he has expressed throughout the passage of this Bill. He will really be carrying out his own intention completely if Her Majesty's Government accept all the things he has said in this Amendment. I have nothing to add except that, for his information, the number of prostitutes sent to prison in Aberdeen durine many years past has been absolutely negligible.
VISCOUNT MASSEREENE AND FERRARD: I should like to support the noble Baroness in this Amendment. It is easy for us here to condemn some of these prostitutes, but many of them have been brought up in the most hard and unhappy conditions, with broken homes and so on, and I think that everything should be tried before they are sent to prison. I personally cannot understand why the Wolfenden Committee never took the evidence of any prostitutes. I should have thought that if you were a Committee dealing with stockbrokers, the first people you would invite to give evidence would be stockbrokers. Here you have a Report on prostitution and nobody seems to have interviewed any of them. I cannot see how the Government can possibly object to this Amendment.
4.0 p.m.
LORD CHESHAM: The noble Lord, Lord Stonham, did his best to put me on the spot by saying I could not possibly resist this Amendment because it backed up entirely everything that I had said; and I certainly do not deny that those are my views and that: the noble Lord represented them perfectly correctly. I should like to make it absolutely clear —I believe I have already made it abundantly clear—that I have the greatest sympathy with the spirit behind this Amendment, and, if I may say so to the noble Baroness, Lady Wootton of Abinger, the boot has now changed on to the other foot, and if one has sympathy with the end (which I have) the difference between us lies in the means.
I can quite understand the spirit in which this Amendment was put down. I believe it stems—apart from the natural desire for early reformative action—from a slight misunderstanding which, if I remember correctly, was also made by the Church of England Moral Welfare Council. It was thought that the opinion of the Wolfenden Committee was that the law should specifically enjoin the courts to remand when dealing with early offenders. It is not very different, but it is a little different, and this is what the Wolfenden Committee said, in effect, in paragraph 280 of their Report: that they understood that some courts were reluctant to use their power of remand in relation to an offence for which that court could imhose only a fine and they recommended that courts should be given an explicit power to remand, in custody if need be, for not more than three weeks, any prostitute convicted for the first or second time—which would be the occasions on which she could be fined only. But the magistrates' courts already have power under Section 14 (3) and (4) and Section 105 of the Magistrates' Courts Act, 1952, to remand a convicted offender in custody for up to three weeks, if necessary, for the purpose of enabling inquiries to be made which may be of a social or a medical nature, or both, or of otherwise determining the most suitable method of dealing with the case.
In addition, in case any further clarity were required the case of Boaks v. Reece in 1956 established clearly that remand in custody could be ordered, even
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though the offence of which the offender had been convicted was one that did not carry a sentence of imprisonment or, in other words, carried only a fine. I thought it would be of interest to your Lordships to know what happens at Bow Street now and I have found out. It is impossible, of course, to give your Lordships a complete picture of what happens all over the country, but merely as an indication I can give an illustration of what I understand happens there now.
When a prostitute is convicted for the first time she is put back for an interview with the probation officer. If this interview indicates that she has no background that can be ascertained and that there is no certainty of her appearing again if she is remanded on bail, she is then remanded in custody for social and, if necessary, medical inquiries. If, either on the first interview with the probation officer or as a result of further inquiries while on remand, it appears that the girl is willing to abandon prostitution and take a job, she is then put on probation. At the moment it is not usual to remand a prostitute convicted of a second offence because the inquiries made after the first and any subsequent report by the probation officer are usually thought to give the courts sufficient indication of whether or not she is willing to be helped to give up prostitution.
Apart, however, from the existing powers, there are one or two other objections to the means which I fear I must put, the first of which is that I believe it is wrong in principle to confer on the courts a specific power for a particular purpose when they already have a general power which can be used for that purpose. Secondly, to require a court to remand unless it considers a remand would serve no useful purpose has one of two meanings: first, it means no more than the present law, which enables the court to remand if it is felt that to do so would serve a useful purpose; or secondly, it means something more: it would mean severely limiting the discretion of the court on a matter which it is eminently for the court to judge (guided by the results of the probation officer's interview, that is), and to decide on the best course. Thirdly, since remands for medical reports in particular are usually in custody, a provision that would require a court to remand in cases where it would not

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otherwise do so would surely result in an unjustifiable deprivation of personal liberty.
I hope, therefore, that with the powers which the courts already have and which I have just explained, and the results to be obtained by the proposed cautioning system under the Bill, such unfortunate women will have every chance they need; that the reformative action, which we are all agreed shall be applied as soon as possible will therefore be applied; and that, therefore, the result of the provisions of the Bill and the existing law is almost exactly the same as that which the noble Lady wishes to achieve and which is the spirit of her Amendment.
BARONESS WOOTTON OF ABINGER: In the course of this debate noble Lords opposite have performed some remarkable feats of agility in dodging backwards and forwards behind the Wolfenden Report, remembering it when it suits them and forgetting it when it does not. The noble Lord, Lord Chesham, in replying to this Amendment, made it the burden of his observations that there was some misunderstanding on the part of the movers of the Amendment as to the recommendations of the Wolfenden Committee. That it not so. This Amendment stands in its own right and is not based on any recommendation of the Wolfenden Committee.
The noble Lord, Lord Chesham, has remarked that the magistrates' courts already have power to remand for medical and social reports, not only in these but in other cases as well; and that, indeed, is so. He has described how this power is in fact exercised at Bow Street. But the purpose of the Amendment is not that the court should have that power but that it should be obligatory upon them to use it; and that is an entirely different thing. The noble Lord has pointed out that if the remand is always a remand in custody, with cases where the court would not otherwise have wished to remand in custody there might he an infringement of liberty. But I would point out that there is nothing in the Amendment which mentions custody. The Amendment requires that there will be a remand and such remands are possible, in magistrates' courts, even without custody. The long and the short of it is that if this Amendment fails we are faced
1110
with the position that in spite of everything that has been said about the earnest wish to give every opportunity of reform, a woman can legally be brought before a court and convicted and fined a first and a second time; and convicted a third time and sent to prison for a period of up to three months by a court which knows absolutely nothing whatever about her circumstances or how she came to take up the way of life into which she has fallen.
THE LORD CHANCELLOR: I want to say only one word. I think that the noble Baroness, who has given so much thought (for which we are all indebted) to these problems, has not paid sufficient attention, if she will allow me to say so, with the greatest respect, to the limiting of the discretion of the court. I should like her to consider that point again. I think it is a very important point. Our position is that we are very anxious for these remedial measures to succeed.
On the cautioning system, I have already spoken more than once, but I want the noble Baroness to consider that point. Here there is power to remand. It is then for the magistrate to consider whether in the case he will use it. There are grave difficulties, which, again, I should like her to consider, as to a remand that is not in custody. She will appreciate that in this case. I ask her between now and the Report stage—I promise that there will be a Report stage, whether Amendments are made or not—to consider the question of discretion. I think it is a very important one. I do not put this point in any argumentative way at all, but as something which I think has not really had sufficient consideration (I say it with all respect) by the mover of this Amendment.
4.12 p.m.
THE MARQUESS OF SALISBURY: I do not know whether I might say one word on this Amendment. I had not formed any view on it before I came to the House, and such view as I have formed has been entirely as a result of the discussion and, in great part, as a result of the speech of my noble friend Lord Chesham. He described the practice which I gather at present obtains in Bow Street with regard to first offenders; and he explained, as I understood it, that

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in practice first offenders are always remanded for a medical report, He said that this is the present practice—I believe those were his words, or something of that kind. It seems to me an admirable and humane practice for a first offender.
What I want to ask is whether it is the—perhaps the word "universal" is very strong, but the common practice at Bow Street and in other courts; and, if it is not, why not? Does my noble friend Lord Chesham think, and does my noble and learned friend the Lord Chancellor think, that a lack of uniformity in this matter is a good thing that if some lady happens to be brought up in Bow Street she gets one treatment, and if she happens to be brought up in another court, perhaps not far away, she gets a different treatment? It seems to me, after listening to my noble friend Lord Chesham, that the argument he used about Bow Street was in effect an argument for the Amendment so far as the first offender is concerned.
I see a difference between the first offender and the second offender—though I may be wrong—and I should have thought that the noble Baroness, Lady Wootton of Abinger, might quite possibly agree before the Report stage to reconsider that portion of her Amendment which relates to a second offence. But I should have thought that the Government might give further consideration to making what is apparently the practice at Bow Street the practice in these courts with regard to first offenders. I submit that point, very diffidently, for consideration.
LORD STONHAM: I wonder whether the noble and learned Viscount the Lord Chancellor could be persuaded to say another word arising out of what has been said by the noble Marquess, Lord Salisbury. Also, if I might say so, there is just one more point about the difficulty we are in. My noble friend and I, and I am sure all noble Lords, would sooner accept the substance of some kind of assurance or concession compared with the shadow of a Division that we shall probably lose. But when we mention first offenders in the context in which it was mentioned by the noble Lord, Lord Chesham—that is, a prostitute brought up the first time and then
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remanded—what we have to consider now is the common prostitute brought up for the first time under this Bill when it becomes an Act. An offence then, although it will be the first offence under this Bill, might well be the 101st offence for which the particular person has been brought up in that particular court. Her face may be as well known to the magistrate as it is to the officer who arrested her. Our Amendment would care for that kind of person who, it may be, as my noble friend Lady Wootton of Abinger said, has never had a chance or has never had someone to attempt to reform her.
Can the noble and learned Viscount tell us whether, in his consideration of this question of discretion that he has mentioned, he intends to have a look at that problem? And will he also have a look at the point of uniformity which the noble Marquess, Lord Salisbury, mentioned? There will not be many magistrates' courts concerned, but we think there should be uniform treatment of these women, and we think that our Amendment would secure it.
4.17 p.m.
THE LORD CHANCELLOR: First of all, on the question of uniformity, which my noble friend Lord Salisbury raised and which the noble Lord, Lord Stonham, has mentioned, the practice that my noble friend Lord Chesham described is the practice of which we were informed by the Chief Magistrate at Bow Street. I do not think either of us had any idea that it was confined to Sir Laurence Dunne. I understood that it is the practice of the stipendiary magistrates of London, who usually act together. I should like to verify that point, but that is certainly my understanding. I should think—though I do not know—that it is also the practice of the stipendiary magistrates in the big cities. Other benches of magistrates probably have their own ideas, but this is largely (as I think the noble Baroness, Lady Wootton of Abinger, will agree) a problem in places where there are stipendiaries, because it is largely a big city problem. But I should like to verify that point. On the first point, my noble friend Lord Salisbury may take it that, unless I communicate with him

1113
to the contrary, Sir Laurence Dunne was expressing the practice of the London courts.
On the more general point, it is important (and it is rather difficult when one is dealing with a specific point) to remember that we are now dealing with a Bill which depends on the cautioning procedure, if I may anticipate matters. My right honourable friend the Attorney General said in another place—and on the Second Reading my noble friend Lord Chesham quoted his words—that the cautioning procedure is a fender in front of the legal procedure in the Bill. It is a well-known fact that it has been the practice in London for the last seventy years for women to be given one caution before being charged with loitering and soliciting.
Now, as I said on Second Reading—and I explained to the House that my right honourable friend the Home Secretary had been given undertakings by the Chief Commissioner and by the heads of the biggest forces that this practice would be followed—we propose that the existing system should be made more effective as a means of diverting the newcomer by giving two cautions instead of one, and by linking the caution with a definite attempt to bring redemptive influences to hear. There, I think, we are following not only the Wolfenden Committee but also the general view of people who are anxious that redemptive influences should be brought to bear. So that is the first step in the procedure which we envisage after this Bill: that there will he two cautions; and the cautions will he administered in the way I described in detail in my speech on Second Reading, in order to give a chance for the woman to meet some moral welfare society or a probation officer who will put her in touch with helpful people.
Then, after the two cautions, assuming the woman goes on, she is arrested and is brought up: and, of course, she is then subject to a £10 fine. Now the issue on this Amendment is that it shall be compulsory and not discretionary that she should be remanded. I venture to ask the House to consider the danger of limiting a discretion in that way. I put it rather shortly to the noble Baroness, because she is very familiar with these problems; but there
1114
is a real difficulty in these cases of remanding on bail, because, in many cases, the woman in question has no solid social background or place where she can be kept in touch with. Therefore, if a remand must be ordered, it will, in most cases, be a remand in custody; and I think that that is a severe limitation to put on the magistrate. This is a very serious question, not from the point of view of a difference in views, but in trying to find out what is best to be done. That is why I asked the mover and seconder of the Amendment to consider whether, on reflection, they thought there was something in my point on limiting the discretion; and, if they did not think it was a good point, to put an Amendment down on Report, when we could consider it again.
The only reason I have intervened is that I was anxious to remind my noble friend Lord Salisbury of the importance that we attach to the preliminary, cautionary proceedings, before the girl comes to the courts at all. We hope that it will be possible to deal with her before she has been taken up; arid that is why we have the two cautions. Further, of course, as my noble friend Lord Salisbury will be aware, there is the procedure, introduced at the instance of Parliament, that she may complain about the caution in an appropriate case, and even go to the courts with it. As I say, I do not consider this as a controversial matter at all. I make the suggestion in the spirit of giving us the chance of reflection, and entirely without prejudice, of course, to the noble Baroness's right to return to the charge if she does not think there is much in my point. That is the suggestion that I beg to make at the moment.
LORD SILKIN: Before the noble Baroness replies, it does seem to me, as the result of the discussion we have had, that there is so little difference between the views expressed on the other side of the House and the views expressed on this side that there ought to be a possibility of some accommodation—unless the Government are determined to get this Bill through without amendment, whatever happens but, knowing the noble and learned Viscount the Lord Chancellor as I do, I do not believe that he would be a party to that. However,

1115
so far, of course, in spite of strong views that have been expressed in Committee, not a single Amendment has been accepted: nor has the noble and learned Viscount even offered to consider any of the Amendments that have been put forward. At any rate, whether the Bill is amended or not, we are to have a Report stage.
It strikes me that the real point the noble and learned Viscount the Lord Chancellor is asking my noble friend to consider is the question of the magistrate's discretion: otherwise, we are all agreed. He also says that in fact that discretion is exercised, so far as his information goes, in one way—in the way in which this Amendment is drawn: that is, that what we want done is almost invariably done. The exception he gave is that of the prostitute who has no fixed home and who, therefore, if allowed out on bail, would not be likely to return. I would say, in parenthesis., that in so far as that does happen, one of the objects of this Bill will have been achieved, because you will then have effectively cleared this woman off the streets; though, of course, if she has committed an offence, she has to be dealt with. I should not have thought that that in itself was a justification for rejecting the Amendment entirely. It may be that the Amendment could be revised so that the words "unless there are strong reasons to the contrary", or something of that kind, could be added. That would still leave some discretion to the magistrates, if they really had some strong reasons to the contrary: or we could even define the reasons—"if they have good reason to believe that the woman will not reappear", or something of that kind. But I do suggest that we ought to have something of this kind in the Bill; and if the noble and learned Viscount the Lord Chancellor would be prepared to consider a revised version of this Amendment, I am sure that my noble friend would be prepared to withdraw the Amendment on that understanding, and to come back again on the Report stage.
THE LORD CHANCELLOR: I am always prepared to consider it. I have not changed my view. I am a believer in the maintenance of discretion: but when I ask noble Lords and the noble
1116
Lady opposite to consider a matter, that naturally means that I am equally ready to consider their point of view. On the other hand, as I say, I am not convinced on the point of discretion. As always, I do not want to avoid a Division by false pretences, but I do promise consideration.
BARONESS WOOTTON OF ABINGER: In view of what the noble and learned Viscount the Lord Chancellor has said, and in the hope that discussions may produce some accommodation, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.29 p.m.
THE EARL OF ARRAN THE EARL OF ARRAN moved to add to subsection (2):
"Provided that a person sentenced to imprisonment under this subsection shall be confined in a place set apart for prisoners so sentenced, where she will not mix with prisoners confined for other offences."
The noble Earl said: I beg to move the Amendment standing in my name. This is intended to be a constructive Amendment. I am for the Bill—reluctantly and anxiously, like others of your Lordships, but still for it. My aim is simply to prevent the increase of wrongdoing among women by the segregation of our new London criminal, the prostitute—and indeed, of all prostitutes—from the other criminals; from what I may call the real criminals. We know that evil, particularly when it is attractive and profitable, begets evil; and I believe that, with the best of intentions, we may, as the noble Lord, Lord Boothby, has said, be about to breed more crime by a simple process of cross-fertilisation.
I wonder whether your Lordships knew, until to-day, of the happy situation in regard to female crime in this country. As the noble Lord has said, there are only about 700 women in prison in the United Kingdom as against 21,000 men. This is a proud record, and we may well be content to know that only one in every 30,000 British women is serving a sentence. We are always reading about bad things here is something good. Because the record is so good, should we not do everything we can not to spoil it?
Do we ever stop to think what goes on in prison? For most of us a prisoner is someone safely out of harm's way—by which we mean someone who cannot harm

1117
us; and we conveniently forget about him. But, of course, life goes on in prison, as it does everywhere else. One may assume that prisoners spend most of their spare time in talking, because they have little else to do. What do they talk about? Will they not discuss over and over again the crimes which brought them there, many of them defiantly and boastfully? Will not the pretty lady, with her talk of men and big money and smart clothes, be the idol and envy of all the others? Surely a greedy woman—and most of them are greedy women—will say to herself, "When I come out, I will give up shoplifting or forging cheques and walk the streets." Then, of course, there will be the other prisoner who will demonstrate the best way to use a cosh.
There is the positive side, too. I believe, as do other noble Lords, that there is a real chance of rehabilitating prostitutes, particularly young ones. if these women are kept in a place apart away from bad influences, clearly the chances will be greater. I do not propose to elaborate the point. I do not think that anyone would disagree with me. I hope that I have not over-stated either the dangers or the chances of redemption. Surely no one is going to deny that they exist and since they do exist, should we not do all we can to meet them? There is nothing revolutionary, or even new, in discriminating between prisoners. It goes on all the time. There are different prisons for different lengths of sentence. Prisoners sentenced to three years or more go to one of the central prisons; those with shorter sentences, to local prisons. Then there are regional prisons set aside for training purposes, and the famous "open" prisons, the prisons without bars. These practices are generally accepted and, indeed, taken for granted; so why not extend them just a little further? Administratively, the difficulties do not appear to be over whelming. At the present moment, there is a completely unoccupied wing at Holloway Prison. It might cost a little more to open it up and run it, but the expense will not be unduly great, for the number of prisoners, actual and potential, is small.
What, then, are the arguments against segregation? So far I have heard none which has greatly impressed me. The noble Lord, Lord Chesham, suggested on Second Reading that the segregation of
1118
prostitutes would create a "corps d'élite." He has not produced this argument today, I am glad to say; and surely it is unrealistic. No one would propose that prostitutes should be given preferential treatment over others, and prison is still a bad place to be in, in whichever wing you find yourself. The noble Lord has pointed out that a proportion of the prisoners sent to Holloway have also been prostitutes at some time in their lives, and it is the case that Holloway does contain prisoners sentenced for prostitution in the provinces. But I do not think that these facts are vital. The fact that things are bad is absolutely no reason to make them worse.
Finally, it has been argued that classification has to stop somewhere, and that if we segregate prostitutes, we should equally segregate blackmailers or burglars, which is clearly impracticable. There are two answers to that point. First, prostitution, unlike other crimes, is in itself a positively attractive thing and liable to make converts. The second is that, try as I may, I just cannot regard the prostitute as an ordinary criminal, though it has been administratively necessary to make her one. Depraved she may be: contemptible, offensive if you like; but not a criminal in the ordinary sense. For those two reasons, if for no others, I believe that she has a special claim to segregation.
I know that it is not easy. I know that if this proposal for segregation is adopted, as I earnestly hope it will be, either inside or outside the Bill—it does not matter which—it will cause much inconvenience to many busy people and will cost some money. But if, as a result, one prostitute does not turn thief, and one thief does not turn prostitute, then I believe that the inconvenience will have been worth while and the money well spent. I beg to move.
Amendment moved—
Page 1, line 14, at end insert the said proviso. —(The Earl of Arran.)
LORD CHESHAM: The noble Earl has moved his Amendment eloquently; but, as in most cases, there is another side to the matter. In presenting that other side to your Lordships, I feel some embarrassment. I hardly dare risk incurring the displeasure of the noble Baroness, Lady Wootton of Abinger, by quoting the Wolfenden Report, but I

1119
think that I had better be brave and do so. The Wolfenden Committee considered this suggestion and in paragraph 282 of their Report stated their views in clear and firm words. I apologise to your Lordships for the length of my quotation, but I think it is necessary for me to quote it for the sake of complete clarity. This is what the Committee said:
"It has been suggested to us that there might, with advantage, be a special system of punishment to include a period of detention in a special residential establishment, with a view to rehabilitation. We do not think that this would be desirable, practicable or equitable. In particular, we think that it would be undesirable to segregate prostitutes in a residential establishment. It is clear from the evidence we have received from witnesses experienced in dealing with prostitutes detained in establishments of various kinds that it would be very difficult, in any establishment with this particular population, to provide any programme of rehabilitation which would be at all likely to succeed; nor do we believe that a community composed entirely of prostitutes is at all an encouraging background for the restoration of any one of them to a more normal form of living. It is in any event doubtful whether a programme of rehabilitation would succeed against a background of compulsory detention; rehabilitation measures, in this as in other fields, depend to a large extent for their success on the willing co-operation of the person concerned".
The Government accept these arguments, which apply to imprisonment in a special establishment, or a separate part of an establishment, just as much as they do to the proposal that instead of imprisonment there should be a special sentence of detention.
It has been argued a little earlier this afternoon—and the noble Earl has renewed the argument by referring to the "cross-fertilisation of ideas"—that the committal of prostitutes to prison is likely to contaminate other inmates. Despite the eloquent words which he used to-day and on Second Reading, I simply cannot see and cannot accept the argument that prostitutes should be singled out, except for one thing that he said that personally he could not see a prostitute as any form of criminal. But surely that applies to a number of categories. I simply cannot see how we can accept that argument and why the prostitute should be singled out for this special treatment. As I said before, as a generality one can perhaps argue that it is undesirable to mix up
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any categories whatsoever if we are to avoid their teaching each other their own bad habits.
On Second Reading he said, if I may paraphrase the noble Earl's words, that in return for learning about violence, thieving and roguery in all its forms she will teach prostitution. I do not know that the opportunities are all that great, although obviously they exist. I cannot understand why she should wish to teach prostitution, particularly as she would, presumably, thereby create a considerable number of competitors at a later stage, if indeed she returns to the life. And, in any case, I should not have thought that her advocacy of this life—"The pretty lady", the noble Earl called her, "with the smart clothes"; she would not look like that in prison, I fear—would be particularly strong, in view of the fact that as a result of it she was in prison, anyway.
Again, I should have thought that, if we were to create a category which is to have what appears to be special or preferential treatment in the prisons, that would be more likely than anything else to encourage the particular thing the noble Earl does not want—namely, a sort of envy of the prostitute. I think we have dealt with the question of rehabilitation quite sufficiently, and in view of the fact that we know that it is unlikely in that time that anything worth while in that line can be carried out, I think it can be said to be better not to take any special notice of the convicted prostitute but to absorb her as anyone else into the ordinary life of the prison.
THE EARL OF ARRAN: I am aware of the paragraph in the Wolfenden Report referred to but frankly it struck me as being rather defeatist. As I said before, I think these things are at least worth trying; and the fact that there is a bad situation is no reason not to try to make it better. I still feel whatever the noble Lord, Lord Chesham, says that there is a difference between the prostitute and the ordinary criminal. We are putting the prostitute in prison not because we morally condemn her but because she is a nuisance and is offensive. I wonder whether I am not echoing other opinion in this House when I say that this is simply the case of a woman who is a public nuisance; and as a public

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nuisance she is not like the others. Birds which are not like each other are best kept apart. That is all I have to say. I am still not convinced and unless there is further argument against me I should like to press the Amendment.
On Question Amendment negatived.
4.45 p.m.
LORD MESTON LORD MESTON moved to leave out subsection (3). The noble Lord said On behalf of my noble friend Lord Grantchester, I beg to move the next Amendment. This, again, is purely a matter of opinion. It is submitted that subsection (3) of Clause 1 is far too robust and arbitrary. In the ordinary course of events, a constable would arrest after issue of a summons, and I submit that that is the procedure which should be followed in cases of this description.
Amendment moved—
Page 1, line 15, leave out subsection (3).—(Lord Meston.)
THE LORD CHANCELLOR: The question of powers of arrest was raised by my noble friend Lord Salisbury on Second Reading, and he asked me to look at that matter before the Committee stage. As I think I said on Second Reading—but I should like to clarify it if I did not make this matter clear—the provision in the Bill replaces earlier similar provisions of Section 54 of the Metropolitan Police Act, 1839, and Section 28 of the Town Police Clauses Act, 1847, and reproduces what is believed to he the effect of those provisions. I am sorry to inflict some legal learning on your Lordships, but as I was asked by my noble friend to look into this point, perhaps you will bear with me if I refer to the position.
It was held by the Court of Appeal in 1925 in the case of Isaacs v. Keech that the provision in Section 28 of the Town Police Clauses Act, 1847, which is similar to that in the Metropolitan Police Act, 1839, and provides that
" any constable … shall take into custody without warrant … any person who within his view commits any of the offences listed in the action "—
my noble friend will note that the words there were apparently different, because they said "commits any of the offences "—enabled the constable to arrest without warning a woman whom he had reason
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able cause to believe to be committing such an offence. There was a subsequent case in the .House of Lords called Barnard v. Gorman, where your Lordships, sitting judicially, held that the word "offender" in the Customs Act meant "somebody reasonably suspected to be an offender" on the wording of that Act; but the general question was left open because the case was being decided on the wording of the Customs Act, although there were some obiter dicta. So that as the law stands at the moment, the test has been that which is put in the Bill—namely, that the officer had reasonable cause to believe.
It has been the invariable practice since 1937 to confer a power of arrest without warrant in terms similar to those used in the Bill, and the subsection does not, as is sometimes suggested, confer any wide new powers on the police. That is the first point: that it has been the view of the law that there must be a power, and you should interpret a power to arrest where there are reasonable grounds to believe. As I told my noble friend in the Second Reading debate, the reasonable grounds must be objective grounds. They must be held by the court to exist in fact, and must not merely be subjective grounds in the mind of the person arresting. Again at the risk of wearying your Lordships, might I remind my noble friend that in an action for wrongful imprisonment the plaintiff has only to prove the imprisonment. It is then for the defendant to show that he had reasonable grounds which, as I say, must be objective grounds existing in fact.
I wish to make clear how the thing will work. I argued at great length on our last Sitting in the Committee stage that the effect of having the words "common prostitute" in the Bill will be to protect the innocent woman. Your Lordships heard my argument, and I am not going into that again. The other point I should like to underline is that of course the officer in question in this case must have reasonable grounds for believing not only that the woman in question was a common prostitute, but that she was loitering for the purposes of prostitution. If he cannot show that lie had reasonable cause to believe that, then on her acquittal he would be liable to an action for false imprisonment.

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Equally, it is part of the cautioning procedure that an officer will not arrest a woman unless he has good cause to believe that she has been cautioned twice. That will be the administrative role. If he is found to have made a mistake then, of course, it will be open to the station sergeant to refuse the charge if he so wishes. I am sorry to have been so tedious, but I was anxious to show my noble friend Lord Salisbury that I have carefully considered the matter, and I hope I have shown him so. I ask my noble friend Lord Meston, not to press the Amendment.
THE MARQUESS OF SALISBURY: I do not want to add anything to what I said on the last occasion. If I may say so, I was convinced by the arguments of my noble and learned friend, and that was why I supported the Government in retaining the words "common prostitute." I think that that provides some protection for an innocent person, and for that reason I feel it is justified. I therefore entirely accept the argument of my noble and learned friend.
LORD MESTON: I wish to thank the noble and learned Viscount for the great care with which he has answered this question, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD MESTON LORD MESTON moved, in subsection (4), to omit all words after "public". The noble Lord said On behalf of my noble friend Lord Grantchester, I beg to move this Amendment. It is submitted that the present definition of "street" is too wide. It should read as follows
"For the purposes of this section 'street' includes any bridge, road, lane, footway, subway, square, court, alley or passage, whether a thoroughfare or not, which is for the time being open to the public …"
I do not understand why the definition goes on to deal with doorways and entrances to premises, which are really private property and not part of the street at all. As I have said before, these things are matters of opinion, and it is for your Lordships to say what is best in the public interest. I beg to move.
Amendment moved—
Page 1, line 21, leave out from "public" to end of line 24.—(Lord Meston.)
THE LORD CHANCELLOR: The words that this Amendment proposes to delete provide that the doorways and entrances of premises abutting on a street (as defined in the subsection) and any ground adjoining and open to a street, shall be treated as forming part of the street. If these places are not expressly included, there is a risk that it will be possible for prostitutes to ply their trade from such places as the doorways of houses and blocks of flats (in which they themselves may live, or have rooms which they use for the purpose of prostitution) open arcades, bombed sites or other unfenced ground and similar places of that kind. In all such places they will be in full view of passers by, and will thus continue to create the nuisance at which the Bill is aimed. I think that to say that you have cleared the streets if you drive them on to bombed sites and doorways would be playing with words. The prostitutes would constitute almost as great a scandal to passers by, and equally as great a temptation to young men and incitement to young women as we have mentioned before.
The effect of the phrase, "street or public place" in subsection (1), coupled with the definition of "street" given in subsection (4), will be similar to the effect of the present law as it is administered in practice. I do not think that the Bill applies to places such as hotels or cinema foyers, to which the public have access. I think that they are on the other side of the line, and it is not intended that they should be included. I hope the noble Lord, Lord Meston, will be satisfied with that explanation, and will not press the Amendment.
LORD MESTON: As I said before, I am only a deputy in this matter. I thank the noble and learned Viscount for his clear reply, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2
Right of woman cautioned for loitering to apply to court
2.—(1) Where a woman is cautioned by a constable, in respect of her conduct in a street or public place, that if she persists in such conduct it may result in her being charged with an offence under section one of this Act, she may not later than fourteen clear days

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afterwards apply to a magistrates' court for an order directing that there is to be no entry made in respect of that caution in any record maintained by the police of those so cautioned and that any such entry already made is to be expunged; and the court shall make the order unless satisfied that on the occasion when she was cautioned she was loitering or soliciting in a street or public place for the purpose of prostitution.
(2) An application under this section shall he by way of complaint against the chief officer of police for the area in which the woman is cautioned or against such officer of police as he may designate for the purpose in relation to that area or any part of it; and, subject to any provision to the contrary in rules made under section fifteen of the Justices of the Peace Act, 1949, on the hearing of any such complaint the procedure shall be the same as if it were a complaint by the police officer against the woman, except that this shall not affect the operation of sections forty-seven to forty-nine of the Magistrates' Courts Act, 1952 (which relate to the nonattendance of the parties to a complaint).
(3) Unless the woman desires that the proceedings shall be conducted in public, an application under this section shall be heard and determined in camera.
(4) In this section references to a street shall be construed in accordance with subsection (4) of section one of this Act.
LORD DENNING: I do not intend to move Amendments Nos. 14 to 24 inclusive which are all consequential.
BARONESS RAVENSIDALE OF KEDLESTON: There are many people more learned than I am on this subject, but I would ask your Lordships to consider the words "his or her". In pressing for this, I know that we have already lost the point. I took the trouble the other night to walk from Leicester Square all the way down Piccadilly, past Rootes, which is one of the worst places frequented by the common prostitute. On Sunday night there were no women about at all; there was nobody but men. That is why I was so distressed that alteration of the words to "his or her" was not agreed to.
5.0 p.m.
LORD STONHAM LORD STONHAM moved to leave out Clause 2. The noble Lord said It may perhaps occasion some surprise that we are moving to delete this clause which deals with the right of a woman who is cautioned for loitering to apply to the court. But this clause is, as it were, an amelioration of subsection (3) of Clause 1, which the noble Lord, Lord Meston, has just moved to delete. In
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my view, and in the view of my noble friend—and, I hope, in the view of other noble Lords when I have put the points I have to make—this provision is both useless and a menace to innocent women. I am fully aware that the clause is to some extent supported by such weighty viewpoints as that put forward by the Church of England Moral Welfare Council, who are otherwise in many respects strongly opposed to the Bill. They apparently think that although the Bill itself is fundamentally wrong and grossly unfair, and perhaps dangerous, the giving of a caution is some amelioration. I know that that view is shared by other opponents of the Bill, but, with respect, I think that the view is held because the actual practical position has not been sufficiently considered.
I know that I have stressed this point before, but I would say again that we are dealing in this Bill with common prostitutes, people who are recognised and known, and therefore when a policeman sees one of these women whom he himself or others may have arrested scores of times there is absolutely no possibility that he can mistake her for someone else. In my view it is useless to talk of these cautions with a confirmed prostitute, a woman who may have had scores of convictions; the constable who knows her very well is just going up to her to utter a word and a day or two later to say the same thing before he arrests her. She is either going to give a false name and address or attempt to bribe the policeman. What I just cannot understand is why at no stage during Committee or on Second Reading has there been a reply to the question that I have repeatedly addressed to the Government that is, why has this matter not been dealt with by administrative means; why cannot it he dealt with by administrative means, in the same way that it has been dealt with successfully in places like Stepney or Paddington, when these women are known?
The Wolfenden Report refers to a well-behaved woman, and a well-behaved woman, of course, is not likely to be the subject of a caution from a policeman. But the difficulty is that with the elimination of the requirement to establish annoyance and with the provision that loitering without soliciting constitutes an offence any woman who, presumably in the

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opinion of the constable, is not dressed as a well-behaved woman should be or is not quite behaving as a well-behaved woman should behave is liable to be cautioned or perhaps arrested. Any lone woman, in fact, who is waiting for a friend in a street or any public place, who is window shopping, or out for a walk or sauntering along, is potentially in danger of caution or arrest; and if she—a decent woman—is cautioned, then she is subject, in my view, to the grossest indignity. It is, I think, a hideous danger that respectable and innocent women will suffer this shocking indignity of a caution. It will no longer be safe for them to stop or shop or saunter or ask the way in particular districts of the West End.
The provisions for application to a magistrate to have the record expunged arc in practice no protection at all. Just imagine a frightened young woman of 18 or 20, or even the average suburban housewife, facing the court with no means of rebuttal except her own good name. It is, I think, truly barbarous. We have only to think of our own wives and daughters, who could be put in such a position, to realise that we cannot allow this provision to remain in the Bill. That there is grave danger of mistakes we know from recent cases. Indeed, the Home Secretary obviously thinks there is a danger of mistakes being made, because it is for this reason that he has regarded it as necessary to keep the term "common prostitute" in the Bill. This means that he doubts the ability of the police to distinguish between the loiterer for prostitution and the loiterer for innocent purposes. Otherwise, why have the term "common prostitute" in the Bill?
In the established areas and with experienced policemen, I do not see any possibility of an experienced policeman mistaking a common prostitute whom he knows for anything other than she is. That is why it makes this whole Bill so farcical. But with a young policeman not so experienced and perhaps exceptionally zealous, it is possible—and he would be just the one, innocently, as it were—to submit an innocent woman to this indignity, a deep insult that she would never forget. I am extremely serious about this. I think that the whole Bill is indefensible at every point, and it has indeed been significant during the
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Committee stage this afternoon that the noble and learned Viscount, the Lord Chancellor, and the noble Lord, Lord Chesham, in replying to our Amendments have found it necessary to refer to a provision at a subsequent stage of the Bill, one thing leaning on the other; but all of the provisions, I think, will not stand up. If we retain this caution for the sake of a Bill which cannot be defended we are openly acknowledging the possibility that we are subjecting decent, innocent women to this particular indignity of having said to them in effect, "You are a prostitute. You are walking about, standing about, with the object of soliciting for the purposes of prostitution". That is a horrible thing to put in any Bill and a thing we ought not to contemplate.
I do not always find myself in agreement with the Sunday Express, but something that Mr. John Gordon wrote on this subject a month or two ago expresses my view perhaps better than I can myself. He wrote
" I hope the House of Lords—a more reliable defender of the liberties of the citizen these days than the House of Commons—will amend the Street Offences Bill or throw it out altogether. For it could prove perilous to respectable women.
" Under one of its clauses, a suspicious policeman may caution a woman for ' loitering' or ' soliciting '. He records the caution in his notebook and registers it at his station.
" What happens when the policeman makes a mistake? And policemen do make mistakes in these sex cases, as court records show. Then the woman has the right to go to the police station and try to exonerate herself.
" If she does not get satisfaction she can go to the Commissioner of Police. Should she get no satisfaction from him she may demand a judicial hearing.
" Can you imagine a terrified, respectable woman, distraught at such a horrifying allegation being made against her, taking the risk of making her plight worse?
" Yet if she does not do so, and receives at any time in the future a second caution, which may be equally ill-founded, she goes automatically on the register as a ' common prostitute ' and if arrested will face a heavy fine or imprisonment. She may even be `framed'. What blackmail possibilities that opens! "
I do not think that that is an overstatement in any way. I agree with every word, and I do not think it can or will be answered. Some noble Lords may have been thinking that these cautions make a bad Bill not so bad.

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In my view they make a bad Bill impossible, and I trust your Lordships will support the Amendment and throw out this clause. I beg to move.
Amendment moved—
Leave out Clause 2.—(Lord Stonhatn.)
LORD SALTOUN: I should like to ask a question of the Government in connection with this Amendment. On Second Reading, I think, I pointed out that women and girls who are accosted by kerb-crawlers are naturally terrified at this sort of situation. Men are not terrified about it. I should like to ask whether, in such a case as described by Lord Stonham, an action for damage would lie.
5.11 p.m.
LORD DENNING: May I say a word on this Amendment. For myself, I would suggest that this system of cautioning now statutorily recognised is a protection for the innocent woman. The caution gives the new recruit a chance before anything more is done. It gives a chance to the respectable woman in regard to whom there may have been a mistake, to recognise and to safeguard her reputation. But we must realise that the clause itself gives statutory recognition to the administrative practice of cautioning which has been in existence, in Glasgow for many years and in London here as to a single caution for many years. In effect, the fact that the practice is recognised in this Statute will mean that in every case which comes before the court it will be permissible for the prosecution to adduce before the magistrate evidence of these previous cautions, evidence that they have been registered in the police book. It will amount, in effect, to evidence against the woman of previous convictions—not, mark you, convictions by a magistrate, but by a police officer, recorded in his book and proved against her, that she has been bound over by the policeman to be of good behaviour.
That being the position, the point which has been raised by my noble and learned friend Lord McNair, who cannot be here to-day because he is at present at the European Court of Human Rights, is this: ought not any woman, when she is cautioned, to be told of her position; to he told that she can apply to the
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magistrate for this caution to be expunged? Will she know, if she is not told, of her legal rights? Will she have the money to make an application, or will she be able to instruct a solicitor to apply to set aside the caution which has been registered against her? Lord McNair tells me that he has asked my noble and learned friend the Lord Chancellor this question can he give an assurance that the facilities for legal assistance normally available in a magistrates' court, either under the Poor Persons' Defence Act or otherwise, will be made available to a woman cautioned by a constable in respect of her conduct, and indeed for the purpose of applying for an entry to be expunged? At the moment the occasions when anyone charged in the police court can obtain legal aid are strictly limited. The person has to be someone not having sufficient means, and the case must be one of exceptional gravity. A woman who is cautioned may well go away thinking "I cannot take it up." Lord McNair asks Ought there not to be some machinery to protect a woman, by telling her that she can get a caution expunged and by securing for her legal aid for that purpose? This is one additional safeguard for innocent women upon which I hope some assurance will be given us.
BARONESS WOOTTON OF ABINGERWe appreciate the reasons which led the Government to insert this clause in the Bill, but I think those reasons only illustrate how desperate are the straits to which the Government have been reduced in trying to patch over the worst places in what is fundamentally a bad Bill. If I may again quote the metaphor that was used in another place, and has been quoted here, this clause is intended, we understand, to be a kind of fender pushed in front of the engine of the law to prevent people from being caught in its machinery. That represents a view of the machinery of the law which I should have thought would be thoroughly shocking to the noble and learned Viscount and his colleagues opposite. And in view of the admonitions which the noble and learned Viscount addressed to me on an earlier Amendment, to beware of interfering with the discretion of the courts, I am greatly surprised to find that this clause commends itself to Her

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Majesty's Government, and I am naturally particularly glad to find myself now in the position of defending the functions of our courts against noble Lords opposite.
Surely the courts expect to establish guilt or innocence when a charge is laid. Under this clause we seem now so unsure that guilt or innocence will be established that we are going to dispense with the laying of a charge, and we are going to set up what amounts to a full trial, without any charge being made at all, merely on the basis of a police caution which, as the noble and learned Lord, Lord Denning has said, amounts to a police conviction. Moreover, this caution, though recognised in a very anomalous way in this clause, is still of an administrative nature. The giving or the non-giving of it is surely subject to ministerial discretion, and we appear to be drifting into a position which is surely a violation of our most fundamental constitutional rights—a position in which a Minister of the Crown gives dispensations against prosecution, or gives instructions that prosecutions shall or shall not be undertaken. For all these reasons it seems to us that. while we recognise the intention behind the clause, in effect it undermines the basic principles of justice, and it puts the police caution on a footing upon which it ought never to stand.
THE LORD CHANCELLOR: Although this Amendment is directed at an improvement in the cautioning procedure introduced in another place, it is directed at the cautioning procedure existing at all. I think that is a fair way to deal with it, because to remove a remedial part of the Bill is not something that amuses me. I propose to deal with the point on that general assumption. I have been asked about two specific matters with which I should like to deal before I come to that. The first was put by my noble friend Lord Saltoun, who asked whether, in the case of a kerb-crawler who puts a woman in fear, a civil action would lie. It is difficult to generalise about these matters without having a particular case in mind, but I hope that my noble and learned friend Lord Denning will agree that if the woman in question could prove that
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she had been put in fear, that would be grounds for civil action for assault, provided, in order to make it worth going on with, that she could show that she suffered some damage. I think that if those two constituents were there, an action would undoubtedly lie. In fact, damage would be imputed by trespass of person.
LORD SALTOUN: May I interrupt the noble and learned Viscount? I am sorry if I have explained myself badly, but what I meant was this supposing a respectable woman is stopped by a police constable and cautioned. That is a very damaging thing to her. Can she bring an action against him for damages?
THE LORD CHANCELLOR: I am sorry; I thought my noble friend was dealing with the question of the kerb-crawler. With regard to the question of a police officer, of course if there was somebody there who heard him say to an innocent woman the words which my noble friend. Lord Saltoun. mentioned"— You are a common prostitute "—and he did that without believing that was so, then I certainly think (although here again I am speaking very much in immediate answer) an action would lie; in these circumstances when he was doing his duty, evidence of malice would be required, meaning really that he did not believe what he was saying. I see that my noble and learned friend Lord Denning is good enough to nod agreement with me.
My noble and learned friend Lord Denning asked me about the question of legal assistance on the procedure in this clause. I went into that matter, and I had a letter from my noble and learned friend, Lord McNair. I believe that an amendment of the Legal Aid and Advice Act, 1949, would be required in order to bring that in, but obviously one of the matters which I must consider relatively soon in this regard is legal aid and advice on proceedings in the magistrates' courts, the quasi-judicial procedure of affiliation, and husband and wife; and I shall certainly consider this at the same time. I feel that it is a perfectly reasonable request, and while I cannot promise that there will be legislation, I can promise that it will be considered, and sympathetically considered, by me when I make these amendments.

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On the general point, I feel that there is a wide divergence between us. The noble Baroness, Lady Wootton of Abinger, has said that there is a reflection on the courts. Again, I am sorry that I cannot agree with her. She thought back into the days of King James II when, it is generally recognised, his use of the suspended powers was bad; but I do not think the noble Baroness can put it on that high constitutional plane, interesting though I found it. After all, the practice of cautioning is not confined to this sphere. It is used in respect of motoring offences, and generally I should have thought that responsible opinion regarded it as useful and common sense. As my right honourable and learned friend put it. it is the fender to the engine of justice. That is the a priori argument.
The inductive argument is that, as I have said, it has, in fact, been used for over seventy years in London and. I believe, in many of the larger cities, and if it has been used on the basis of one caution, I should have thought it was an improvement to use it on the basis of two cautions, as I described on Second Reading. There are certain worries in regard to that with which I should like to deal, and one that was inherent in the speeches—to which I listened with care—even though it was not mentioned, was will there be a national register of prostitutes which brands a woman for ever?
BARONESS WOOTTON OF ABINGER: Before the noble and learned Viscount goes on to that aspect, would he be good enough to deal with my point that what is new in the clause is that there can now be proceedings before a magistrate to expunge a caution, and that that really gives the caution the status of a charge?
THE LORD CHANCELLOR: I thought it was logical to deal with the caution first and cone on to the clause, but I will follow the noble Baroness with the greatest of pleasure. Broadly, the caution procedure was well received in another place, but there was a strong feeling there that, even though cautions were administrative and not statutory, there should be some provision for a woman who claimed she had been wrongly cautioned to challenge the caution and, if successful, to ensure that
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it was not recorded. It was in response to that that Her Majesty's Government, on the Report stage, moved Clause 2, which was accepted.
I believe I said on Second Reading that we very much hoped that in a high proportion of the few cases where there were mistakes it need not go as far as that, because, as I said, the Commissioner of the Metropolitan Police has given an assurance that he will be very ready to investigate any such complaint, as he does at present on the very rare occasions when a respectable woman is spoken to in error; and if it should happen that an officer was mistaken the Commissioner would make sure that the entry was expunged from the register of cautions. So that there is that safeguard at the moment. It was felt in another place, however, that that was insufficient and that reliance should not be placed on good will; that people and personalities change. Therefore, they asked, "Give us the right to apply to the courts", and that has been done.
I believe one then comes back to the question is cautioning a good or bad thing? I hope the noble Baroness will ask me to deal with any points which I may omit to deal with, as I am anxious to help as far as I can. It is important to consider the possibility of the prostitute being branded, and there has been some discussion as to whether there will be a national register of prostitutes. The answer is, "No". Registers will normally be kept in each police district although arrangements will vary from place to place according to need. In London, registers will be kept at each police station, but there will also be a central register for the Metropolitan Police District, since it is easy for prosstitutes to move from the area of one police division to another. The registers and other records will be police documents and no one other than the police will have access to them. In London, at any rate, the entries will be removed from the register after one year.
There is, therefore, no risk that once a woman has been cautioned her name will be entered on police registers all over the country and that for the rest of her life she will be subject to the risk that it will become known that she was cautioned for loitering or soliciting. The only documents that are likely to remain

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are perhaps the correspondence between the police and the moral welfare society, which will be kept for the ordinary time that correspondence is kept; but that is something which one cannot really deal with and is not, I think, a very serious matter. So I wanted to make it quite clear that the system does not include the central register and that in London the name will be removed after a year.
I have said that the essence of the caution is that it should not be formalised, and I want to make this clear because one is apt to get the position of the police wrongly out of proportion in debating a particular issue. The caution is in essence part of the preventive work which the police do in relation to young people who may be in trouble or in danger of getting into trouble of one kind or another, and that is not necessarily in relation to prostitution. I think it would be unfortunate if it went out that your Lordships' House did not approve of such action. Such action is designed to operate at the earliest possible stage and to divert a girl from prostitution before she has become committed to it and without getting her involved in the machinery of the courts, which might well result in the fact that she was on the edge of prostitution becoming known. That is a point which, again, I should like the noble Baroness, Lady Wootton of Abinger, to consider that this can be done quietly and without its becoming known, and it may be just that influence on the girl, at an impressionable time, which is worth giving.
So far as I know, the non-statutory cautioning system already operates without complaint, and we believe that much of its value would be lost if it were formalised. But it is only fair to the police to remind the Committee how much of that sort of work they do. The idea, as no one knows better than the noble Baroness, that all policemen are trying to get convictions for their own purposes is quite an unfair view of the modern police officer. The caution is part of their preventive work, and it is in that spirit that the police will try to carry it out.
I have tried to deal with the system of cautioning. Once we have the system of cautioning, then I agree with the majority of another place that something like this clause is a protection, and I think it would
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be very unfortunate not to have it in the Bill. Therefore, I shall ask the noble Baroness and the noble Lord, Lord Stonham, not to press this Amendment to-day.
LORD DENNING: May I ask my noble and learned friend the Lord Chancellor one question? When the police officer gives the caution will he—although I do not wish it to be formalised—tell the woman that she has a right to go to the magistrate to get it expunged from any record? Otherwise she may be quite ignorant of any right in the matter.
THE LORD CHANCELLOR: I do not think I could possibly tie the officer. I do not think it would be real to do it. There are an infinite variety of circumstances involved. I think we must take it with the defect and assume that it will not be possible to do it. I am not trying to gild it; I am trying to give as dispassionate an account of the system as I can, and I think that that is a fair answer to my noble and learned friend.
LORD SALTOUN: I am grateful to the noble and learned Viscount for his explanation. I think it is satisfactory.
LORD STONHAM: I, too, am grateful to the noble and learned Viscount for his detailed explanation, but I am not quite clear as to whether he thinks any Amendment would be acceptable in respect of the point raised by the noble and learned Lord, Lord Denning.
THE LORD CHANCELLOR: I do not think any Amendment is possible here, because it is part of the plan that the cautioning should not be statutory, not part of the Bill, in order that it is kept informal. If the cautioning system is not part of the Bill, then I do not see how we could put in the Amendment that my noble and learned friend suggested.
LORD STONHAM: It seems to me that when we consider the whole of the discussion this afternoon we realise that we have had reverse arguments put to us to convince us that our Amendments were not acceptable. On this point of cautions the noble and learned Viscount told us that we have already had the cautioning system, but it was necessary to put a special cautioning

1137
system in this Bill. When my noble friend raised earlier the point about remanding on first and second convictions, then we had the whole thing the other way round and we were told we should not put it particularly in this Bill; there was no special reason for it. I am bound to say I have found both arguments equally unconvincing. Nevertheless, we feel that the discussion has been useful and has clarified certain points of doubt. We are grateful for that and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Clause 3:
Punishment of offences in connection with night cafés
3.—(1) The following provisions of this section shall have effect in relation to the punishment of offences to which section twenty-six of the Licensing Act, 1949. applies (being certain offences in connection with refreshment houses, that is to say, houses, rooms, shops or buildings kept open for public refreshment, resort and entertainment between ten o'clock at night and five o'clock on the following morning. not being licensed for the sale of beer, cider, wine or spirits).
(2)The maximum fines which may be imposed by virtue of subsection (3) of the said section twenty-six for offences against sections eighteen and thirty-two of the Refreshment Houses Act, 1860 (which provide for penalties for obstructing the police from entering refreshment houses, for allowing unlawful gaming therein, for allowing prostitutes, thieves or disorderly or drunken persons to be therein and for permitting contraventions of licences under that Act), shall be—

(a) in the case of a person not previously convicted of an offence to which the said section twenty-six applies, twenty pounds (instead of five pounds); and

(b) in the case of a person previously con- victed as aforesaid, fifty pounds (instead of twenty pounds).

(3) In section nine of the said Act of 1860 (which imposes a penalty of twenty pounds for keeping an unlicensed refreshment house) for the words "shall forfeit a sum not exceeding twenty pounds" there shall be substituted the words "shall be liable on summary conviction to the penalties provided by section twenty-six of the Licensing Act, 1949", and subsection (3) of the said section twenty-six, as amended by subsection (2) of this section, shall apply, so far as it relates to fines, in relation to the said section nine as it applies in relation to sections eighteen and thirty-two of the said Act of 1860; and accordingly in subsection (1) of the said section twenty-six for the words "is adjudged liable to forfeit any sum" there shall be substituted the words "is convicted".
(4) The powers conferred by subsections (1) and (2) of the said section twenty-six to make on a person's conviction of an offence under the said section nine of the said Act of 1860 a disqualification order or an order for the forfeiture of a licence under the said Act of 1860, and the powers conferred by subsection (3) of the said section twenty-six to make such an order on a person's conviction of an offence under the said section eighteen or thirty-two of the said Act of 1860, shall be exercisable on a conviction, whether or not the person convicted has been previously convicted of an offence to which the said section twenty-six applies; and any power to make such an order under the said subsection (3) as so amended shall be exercisable also on a person's conviction of any of the other offences to which the said section twenty-six applies, that is to say, certain offences by a person keeping a refreshment house against section one hundred and twenty and subsection (3) of section one hundred and forty-nine of the Licensing Act, 1953 (which relate to the sale of intoxicating liquor without a licence, and to the consump- tion of intoxicating liquor at parties organised for gain).
(5) This section shall not have effect on a person's conviction of an offence committed before the commencement of this Act.
5.37 p.m.
LORD SALTOUN LORD SALTOUN moved to leave out Clause 3. The noble Lord said We were told at the commencement of the debate on Second Reading that this Bill was not a Bill to penalise the prostitute but a Bill to clear the streets; and as such I accept it right through. For that reason I am moving to delete Clause 3. I should not like the Committee to be under the impression that I think Clause 3 changes the actual law in any way; so far as I can see, it does not change the law at all. All it does is to increase the penalties under the Act of 1860 and other Acts concerning restaurants and bars and places where prostitutes might congregate.
I can quite understand how, when drafting this Bill, having drafted Clauses 1 and 2, the draftsmen naturally said, "Of course, if we are going to increase the penalties in the street we must increase the penalties for all these places under the Act of 1860", and so on, in order to make a nicely balanced Bill. But I should like to remind the Committee that equilibrium is a tendency not to move, which is not what we want, and if we are putting pressure on one place we should have less pressure in another; and if the object of the Bill is to clear the streets then Clause 3 cannot add to that effect in any way.
If this Bill were merely a preliminary of the Government to shelving the Wolfenden Report altogether; if this Bill had been brought in to placate the people who want something done about it, then I could understand its present form. But I do not understand the effect of Clause 3. I pointed out on the Second Reading of the Bill that the law was pretty quiescent between 1860 and 1895, and that it was only in 1896 that all the parish councils put their heads together and decided to have a concentrated drive, in the course of which they pitched all the prostitutes into the street. Then later on, at a time I do not remember—I was not taking much notice of it —they had a new drive and cleared places such as the Empire and the Alhambra and pitched the girls who were there into the street and turned them out to endure in the street the winters of over sixty years. Now, the very people who did this turn round and complain of the state of the streets and say, "We must clear the streets." Perhaps it was because I was young at the time, but I have never forgotten my horror as a young man at that virtuous action; and I think it was quite as big a crime as the ill-doing that formed the motive of the action. I am perfectly aware that, in the state of politics to-day, no Government can change the law in any material respect from what it is now; but the only thing I would suggest—and it is the best thing I can suggest—is that the law should be left as it is.
This is not really a new problem it comes up in all ages. When Henry VII obtained the throne he found in the little London of his own day no fewer than eighteen brothels on the South Bank alone. Being the man he was, he closed them all. The results were so unpleasant that before the end of his reign he had reopened twelve. He realised that it was much worse to have this evil in the streets than to have it under cover. The noble and learned Viscount who introduced this Bill on Second Reading seemed to think that it was a kind of Pied Piper's flute that was going to compel all the unpleasant denizens of our streets to follow him. To follow him where? Where are they going to be put? In the Thames? Even the Pied Piper had somewhere to put the rats and the children. I suggest that if this
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Bill is really intended to clear the streets it is very important to accept my Amendment, or something very like it.
Some of my friends have said to me, perfectly frankly, that they do not worry about that effect of the Bill as they put it, they are out to "harry the whore". I do not think that that is a good thing. One reason is a reason of a kind that I am very reluctant to put forward in your Lordships' House; but it is applicable in this case, and it meets a matter on which I have been challenged that is that we are, officially, at least, a Christian country. We have an Established Christian Church; and though I often have reservations about the pronouncements of that or any other Church on various subjects, I have no hesitation in accepting the example of the Founder of our religion. On many occasions He said very severe things about a great many people, but it will be noticed that He was uniformly courteous, considerate and gentle to women; even the worst women—even the type of woman we are dealing with now. Although I have never heard that pointed out by any clergyman—possibly because they think their flocks are only too ready to associate with prostitutes already—none the less, I think it might be remembered when we are legislating on this point in a Christian country.
My other reason seems to me to have very great social importance, and it is this. Can anybody say that over the last sixty years, during which every effort, and increasing effort, has been made to suppress this traffic, any of this effort has been successful? Have not things grown worse and worse? And have not the very efforts to suppress it made things worse? If what I am told goes on in our streets to-day and what I am told is the normal practice is true, it makes one long for what one might call the decent, honest prostitution of the beginning of the century. I cannot very well give examples; taboos which I respect prevent my going into those details. But I can at least say this that at the beginning of the century a girl who wished to leave her profession could do so without any let or hindrance; today she gets her face slashed. There is a very old tag which I think the noble and learned Viscount the Lord Chancellor

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will remember as well as I do, and that is, "Drive nature out with a fork, and it comes right back again"—and only the other day George Meredith caustically remarked that when it did return it generally returned bottom upwards. The most reverend Primate and the noble and learned Viscount the Lord Chancellor have themselves declared London the worst city in Europe; and I believe that to be true. It has become so and I do suggest that it would be better to try to control and regulate this business than to make greater efforts to suppress it. In that way one would be more likely, I think, to remedy the evil and to mend the reputation. I beg to move.
Amendment moved—
Leave out Clause 3.—(Lord Saltoun.)
5.47 p.m.
THE LORD CHANCELLOR: Everyone who sits in your Lordships' House acknowledges with respect—and, indeed, affection—the broad humanity which always inspires my noble friend Lord Saltoun in his approach to any social problem; and I think that was particularly apparent in his speech on Second Reading from the genuine pity and worry which he expressed with regard to the position of prostitutes. For that reason. I approach his Amendment in an attempt to recognise the spirit in which it is moved.
The difficulty is that Clause 3 does not arise out of the Wolfenden Report at all. It is not a question of going on with the purity campaigns which dealt with the well-known haunts that my noble friend Lord Saltoun has mentioned. This Clause 3 arose out of the cri du cæur from Stepney. We received so many complaints from Stepney, and elsewhere, about the proliferation of disreputable all-night cafés frequented by prostitutes that my right honourable friend had to consider the matter. The police and the local authorities consider that there are many more all-night cafés than are needed to meet the genuine demand for refreshment at late hours, and that they are a source of much trouble. They are recognised meeting places for thieves and other undesirables, as well as for prostitutes; though the presence of the latter tends to attract the former.
That was the situation with which we were faced that these cafés cause a considerable nuisance to respectable people
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in the neighbourhood, not only because of the noise but from the type of people; and I think I quoted on Second Reading the difficulty that certain mothers and fathers had in letting their boys and girls go to youth clubs because they had to pass these cafés in frequented streets. There they are, as an attraction just to the sort of person we are all thinking about: the girl who may be persuaded to become a prostitute, or the boy who may be tempted to go with a prostitute when they see them in these cafés. As my noble friend frankly and candidly said, it was for that reason that we felt it necessary to strengthen the hands of the police by. making the remedies more effective.
We think that the method we have taken, of increasing the penalties and enabling licences to be taken away at an earlier stage, is the fairest way of doing this without interfering unduly with the rights of many people who carry on legitimate businesses to meet a genuine need. My real answer is that these cafes in Stepney are not the same sort of places as the Hyde Park Rooms and the Empire Rooms which the noble Lord mentioned. I know that your Lordships will think it curious that I cannot remember anything this side of the Flood; but, though it may be strange, I am too young to remember the l-Iyde Park Rooms and the Empire Rooms, though I see from the records that these were places where people went who either wanted to find a woman for themselves or were not affronted by the presence of women who were catering for other people. This is quite a different problem. This is a problem of cafés in Stepney, and in some other places. that have become a nuisance. We have been trying to deal with them and I do not think that this discloses a general desire to harry. It is an attempt to deal with a specific problem which has been strongly represented to us.
I am sorry that I cannot be more helpful because, like all noble Lords, I was attracted by the spirit in which my noble friend put this Amendment before us. But I really think that it would be unfair to a district which has suffered quite a lot if we were to expunge this clause from the Bill.
LORD SALTOUN: When I came to move this Amendment, there were so many people outside who sympathised

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with the views I expressed that I felt I ought to divide your Lordships' House. The noble and learned Viscount's answer, however, has shaken me. I think that we are in the position now where one hopes that the authorities will act with a little common sense. I recently came up against a previous Act passed by Parliament and after a little talk came to the conclusion that a little common sense was all that was required. I hope that the same rule will be adopted in this case. In that hope. I beg your Lordships' leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4
Punishment for living on earnings of prostitution
4. The maximum term of imprisonment to which a person is liable if convicted on indictment of an offence under section thirty of the Sexual Offences Act, 1956 (man living on earnings of prostitution), or under section thirty-one of that Act (woman exercising control over prostitute) shall, for offences committed after the commencement of this Act, be seven years; and accordingly, for offences so committed, in the Second Schedule to that Act, in items 30 and 31, "seven years" shall be substituted for "two years" in the third column.
5.55 p.m.
LORD PETHICK-LAWRENCE LORD PETHICK-LAWRENCE moved to leave out Clause 4. The noble Lord said We have been talking in the previous Amendments of giving effect to the Wolfenden Report. On this occasion I am rising to point out that Clause 4 of the Bill is in direct contradiction to the recommendations of the majority of the Wolfenden Committee. The persons who would benefit by any change I am proposing are perhaps the most unpopular people in this country, and it may be thought rather odd that anyone in your Lordships' House should attempt to improve the position in their case, but the fact is that there is a great misunderstanding with regard to the people who are living on the earnings of prostitution.
There is a certain number who fill the picture which is generally represented with regard to them. They are ponces, either men or women, who use the trade in prostitution to make considerable sums of money, and they batten on the misbehaviour and the lust of men and women.
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But there are a number of persons who come under this category who are quite different people. They are men who are, in effect, the husband of one particular prostitute, and though that may he a very undesirable position and though they, in a sense, may be living on the earnings of prostitution, they are not persons whom we should pursue with a particularly vindictive attack. The Wolfenden Committee recognised this fact and, as I shall quote briefly later, definitely decided that the penalty with regard to certain ponces should be left where it was and not increased.
Before I come to that, I want to read a passage from a periodical called Encounter, of May of this year in which the author, Wayland Young, described this position. He says as follows
"The ponce—in London to-day: always with that reservation—is neither more nor less than the whore's husband. He provides stability for her, a bit of discipline, someone to listen to her adventures. He makes love to her as much for her sake as for his own, and takes trouble over it. He is also a gauge of her prestige. if she keeps him well"?
I need not read that passage—
"Economically. he corresponds to the wife of the normal citizen. But the fact that he is living on her earnings and not she on his is only of secondary importance to either of them."
That may be regarded as the opinion of one man who was writing a graphic description of what he found in regard to prostitution. But perhaps your Lordships will remember that on the Second Reading of this Bill the noble and learned Lord, Lord Merrivale, quoted an extract from the Wolfenden Report. In view of the late hour, I do not propose to quote the whole of that paragraph, but I should like to read this. To be quite fair, this is not a statement by the Wolfenden Committee; it is the repetition of a statement which reached them.
"… he"—
that is, the ponce—
" is frequently the only person in the world towards whom she feels affection and a sense of possession; he is usually her champion in disputes and her protector in a skirmish. He is deeply despised by the police and by the public outside his trade; but he may be nevertheless the one humanising element in the life of the woman on whom he lives."

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I have been quite fair to your Lordships. These are not the words of the Wolfenden Report. But in the concluding paragraph (307) of Chapter X, dealing with this question, the Report says
"It has been suggested to us that the present penalties provided by the law for living on the earnings of prostitution are inadequate and should be increased. We feel that the maximum of two years' imprisonment for which the law provides is adequate for this offence."
So that this Bill in putting in this clause is going directly contrary to the advice of the Wolfenden Committee.
I never try to mislead your Lordships, and I am not going to do so on this occasion. It is quite true that there was a Minority Report by the three women members of the Committee, who said that there were different kinds of persons living on the proceeds of prostitution, and the people to whom I have been referring are only one type. There is also the type that mentioned earlier in my speech, and those may be worthy of very severe penalties. The three women said that, in view of that, and in view of the fact that these were maximum penalties, they did not agree with the Majority Report, and they thought that the maximum penalty should be increased.
In the course of the next few minutes I propose to deal with the question of maximum penalty. It is true that where there is a maximum penalty the judge is not bound to inflict it on people who have been guilty of only a smaller offence than is contemplated in proposing the maximum. But I want to submit this to your Lordships. If this maximum penalty is available for the kind of person about whom I am speaking, you have to remember that he is rather a contemptible man; he is admittedly utterly unpopular with everybody; he is probably subject to an inferiority complex, which makes him bumptious and unpleasant; and he may very likely have had a quarrel with the woman on whose earnings he is living, and she may well give evidence in court. Therefore, the judge, facing all this, and feeling that the man has created a most unfortunate impression in court—as he probably will do, and probably with the judge himself—may be tempted to give him a larger sentence than the two years which the Wolfenden Committee recommend
I venture to think that society in this matter is really trying to find a scapegoat. I have met a number of people who like or do not like this Bill on the general terms, but they say "One thing with which I do agree is that these scoundrels who batten on the proceeds of prostitution ought to get it in the neck." That may be right in regard to those people of whom that description is correct. But I want to put it to your Lordships that it is not correct in regard to the people I have in mind. However despicable one may regard them, they have not committed a grave offence and they should not be liable to this very heavy sentence. It is a kind of posthumous case of a hypocritical nineteenth century trying to find a scapegoat for the sins of society.
I should like to see this clause amended so that it separates these two classes of persons who are covered at the present time by these provisions. Your Lordships may say to me "Why have you not put down an Amendment of that kind?" I think it would be a difficult Amendment for a person not in the Government to put down. It should take something of this shape. It should be a proviso to this clause that this increased penalty should not apply to the particular persons about whom I am talking. Therefore, before putting down an Amendment of that kind, I thought it would be much better to put down a general Amendment which would give an airing to the subject; and I thought that perhaps the noble and learned Viscount the Lord Chancellor would help me in the matter. I shall be guided as to the future position by what he says. I thought it desirable to tell him in advance exactly what I was driving at, and I hope that thereby I have given him a little time to think the matter over.
The noble and learned Viscount may say "I do not agree with this at all, but if you choose to put down an Amendment, that is your affair." Or he may say that the Government are prepared to consider making a distinction between these two kinds of offenders. If he is prepared to go as far as that, then I should be quite willing to put down an Amendment in any form which the Government might think suitable, or to support any Amendment which they themselves might care to put down

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which would make a distinction. I admit that a great many people covered by this clause are thorough scoundrels and the community is perfectly justified in giving them a thumping penalty—whether it will do any good or not is another matter. But, at the same time, I do not think it is right for people, however obnoxious they may be and however contrary they may go to public morality, who have not been guilty of any grave offence, to be liable to this severe penalty. I beg to move.
Amendment moved—
Leave out Clause 4.—(Lord PethickLawrence.)
LORD SALTOUN: I should like to say a word or two on this Amendment. I am not very versed in the history of this subject, although I have taken some trouble to find it out. So far as I can remember, for the first ten years after 1896 these people practically did not exist, but before the 1914 war they had come into being. The real danger of a prostitute's life has been pointed out, and how, there being no licensed houses in this country, and the laws being what they are, she is always in personal peril. However vile you may think this fellow, he does provide the only shadowy protection that she has got. For that reason, too, I think that what the noble Lord, Lord Pethick-Lawrence, has said deserves consideration.
LORD BALFOUR OF BURLEIGH: I should like in a sentence or two to support the noble Lord opposite. I think he has dealt with a difficult subject in an extremely wise way, and I hope the Lord Chancellor will do his best to provide for this real and necessary distinction between the classes of people who are hit at by this clause. I wish the Bill went much further than it does in making things unpleasant for the people who profit from prostitution in a third party way. By drawing attention to this matter the noble Lord, Lord PethickLawrence, has done a real service, and I hope the Lord Chancellor will be able to meet him in the way suggested.
LORD FARINGDON: I, too, should like to support my noble friend. As he has said, the class of people with whom we are dealing here is probably the most unpopular class in the whole country,
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but for that very reason I think we should be careful to see that no injustice is done. This is something about which a short time ago I should not have dreamed of addressing your Lordships but would have accepted the provisions in the Bill. Then I happened to read a book called Wotnen of the Streets and this opened up to me an entirely new view of a part of society with which I have had no close personal acquaintance. Since then I have also read the Encounter article, to which my noble friend referred, and in addition we have the recommendations of the Wolfenden Committee. The noble and learned Viscount the Lord Chancellor has repeatedly thrown up a defence of the Wolfenden Report. On this occasion he cannot hide behind the Wolfenden Report, and I hope that he will give further consideration to this matter. It is one about which I am quite sure any of your Lordships who read the book and articles to which I have referred would certainly find himself in doubt.
I think it can be said that these men do form, in the lives of these women, who are by nature rather unstable—indeed very unstable—the one stable element. For that reason, I feel that not only must we be very cautious, but we must not in any circumstances be influenced by our immediate and obvious reaction against them. I hope that the Government will see their way on this occasion to think again, and to assure us, as my noble friend has suggested, that they will help us to put down an Amendment which will catch the brutes whom we all desire to see punished as severely as possible, but not to penalise those who are in a sense the husbands of the prostitutes. I hope for a favourable answer.
6.12 p.m.
THE LORD CHANCELLOR: This is a difficult point, and it has been put most attractively by the noble Lord, Lord Pethick-Lawrence. I think it is right that I should refer your Lordships to the arguments in the Minority Report of the Wolfenden Committee, which the Government accepted in preference to that of the Majority. After saying that they do not agree, in paragraph 2 of the Fifth Reservation the three members say:
"As explained in paragraph 92 of the report, the law must, in prescribing maximum penalties, have regard to the worst case that

1149
could arise, and we feel that the present maximum of two years' imprisonment is quite inadequate to deal with a person who makes a business of exploiting prostitution on a large scale."
That view has found complete agreement with your Lordships. I do not think anyone would say that two years was enough to deal with a person who makes a business of exploiting prostitution on a large scale.
The Report goes on, in paragraph 3
"The possibility that the increased penalties for street offences might encourage closer organisation of the trade and result in new classes of middle men' also seems to us to call for increased penalties for living on the earnings of prostitution; and we think that increased penalties would counteract to some extent the dangers envisaged in paragraph 26 of the report.
"We accordingly recommend that the maximum penalty for the offence of living on the earnings of prostitution he increased to five }ears' imprisonment"
That was provided for in the Bill as first introduced. The increase was generally welcomed in another place, and it was suggested that the maximum penalty should be even higher. At the Committee stage the Government accepted an Amendment increasing it to seven years. The lady Members made it clear that one of their criticisms of the Bill, and, of course, of the recommendation of the whole Committee on which the Bill was based, was that it is likely to increase the organisation of prostitutes, to lead to greater organisation and to an increase in the activities of middlemen. Therefore I think there is no answer to the point of view which says that the penalties of middlemen working on a large scale should be increased.
Then one comes to the much more difficult position put to-day by the noble Lord. Lord Pethick-Lawrence. Can you find two categories? I think that it is a very difficult thing to do. How far are you to rely on what actually happens? How far are you to rely on intention? How far are you to take the qualities of treatment? The noble Lord, Lord Pethick-Lawrence, painted a picture—. and I do not say this in any critical way—of the man who was the stand-by of the woman. Of course, there is the other man who thrashes the woman and knocks her about. How far is that to be taken into account? I find it a very difficult problem.
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There is one factor which is not decisive, but which is helpful on this matter. Of course, the old law, under the Sexual Offences Act, as the noble Lord, Lord Pethick-Lawrence, will remember, provided for a sentence of six months on summary trial and two years on indictment. Of course, it is the two years on indictment which has been increased to seven years. I should have thought, from my own experience of police action, both at the Bar and as Home Secretary, that the type of case which we are worried about—the petty case; the squalid case where there is no organisation of vice—would be dealt with by the police in the ordinary way by the summary procedure in the magistrate's court. In that way there would be a practical distinction. I know that that is not an answer to the matter, because it leaves it subject to police discretion. I can only say that I think a wise Commissioner or chief constable, in preferring offences, would be inclined to draw the same sort of distinction as the noble Lord in his speech, and his case of squalidness would probably be dealt with summarily and the organised vice on indictment. That is, of course, taking each case as it comes and making up one's mind on the particular facts.
I know it is at the end of the day, but the noble Lord was good enough to give me notice of this matter. Frankly, at the moment I find it very difficult to draw the distinction. I remember the occasion when I was arguing a point in the Court of Appeal on the question of When does a difference of degree become a difference in kind? One is driven to the old answer that nobody can say how many grains make a heap, but everyone knows a heap when he sees it. I find here that to state criteria is extremely difficult. I will have a look at the matter, but I ought to warn the noble Lord—I always try to be frank with your Lordships when I see difficulties ahead—that I see difficulties here. All I can say is that I will consider it with my right honourable friend and my advisers at the Home Office; but, to be honest and frank, I cannot hold out great hopes.
I hope that the noble Lord, Lord Pethick-Lawrence, will not feel that I have dealt too superficially with a difficult point. I should like to assure him that I have a constitutional objection,

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which is nothing to do with Party, to sacrificing a ram caught in a thicket. It is too easy. There is just one other danger that one must always remember: I say, with great respect, that it is easy to vary from that into the position that you champion a disreputable cause because you know that very few other people will do it. The noble Lord, Lord Pethick-Lawrence, will acquit me of anything personal—there is nothing personal in it at all I am merely putting the dangers of the way the human mind works. I should like to say that his approach was so full of understanding of the difficulties of the people involved, no less than the difficulties of legislation, that I wish I could do more. I can only promise consideration without extending hope.
LORD FARINGDON: I wonder whether the noble and learned Viscount, the Lord Chancellor, would think, as a rough rule of thumb, that perhaps the more or less innocuous section of this community might be those who had relations only with one woman, whereas as soon as it was two I think most of us would agree that implies a degree of exploitation.
THE LORD CHANCELLOR: I will consider that.
VISCOUNT MASSEREENE AND FERRARD: Might I ask the Lord Chancellor whether, for instance, porters—not necessarily porters, but general touts who give the addresses of prostitutes for payment—would be liable for these penalties?
THE LORD CHANCELLOR: I hope that my noble friend, Lord Massereene and Ferrard, will not take this to the foot of the letter, because there is a considerable amount of law on this subject and I do not want, in addressing your Lordships at a Committee stage, to prejudice the development of the law in any way. As I understand it, the test is that a person has to be taking part in or encouraging the organisation of the prostitution or has to be drawing from the earnings of the prostitute. May I take the noble Viscount's case of the porter? A porter who merely supplies someone with information for a tip, expecting that he will get ten shillings or a pound from
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the man if he gives him the address of a prostitute, I should have thought would not he in great danger on this count. But if he drew a commission from the prostitute of so much a week for disseminating her address, then he would be in part living on the earnings of prostitution. That is the broad distinction.
In one of the leading cases it was a man who arranged for a motor car, got the women to live in his house, kept them and then himself took the money from the men who wanted the women. Curiously enough, all that he gave the prostitutes was a roof and food and entertainment; but he was convicted. Another man who let accommodation at an extortionate rate, knowing that he let it to prostitutes, was also convicted, although in the latter case it was argued very strongly that he was living on his own earnings and not on the earnings of the prostitute. But that did not "get by" the learned judge. I think I have given a generally correct definition to my noble friend Lord Massereene and Ferrard, although, as I say, I should not like him to take it to the foot of the letter, because this is a difficult subject.
LORD PETHICK-LAWRENCE: I am very grateful to the noble and learned Viscount the Lord Chancellor for considering this matter, and I am not altogether surprised that he has found a difficulty in phrasing any Amendment which would fully meet the case. I have tried myself, without much success. The Lord Chancellor knows so much more about it that he might have succeeded where I failed, but it has not altogether surprised me that he has had difficulty. At the same time, though I fully accept that he is not making any pledge of any kind that he will find anything, I shall be grateful if he will look at it and think it out, and possibly consult his right honourable friend the Home Secretary, who is of course primarily responsible for this Bill. If he will represent to him that there is a feeling that there is a danger that this penalty might be applied to people in respect of whom it would be quite inappropriate, if he could express that as far as he feels it himself, I feel that what I have done in raising this Amendment will have borne fruit. I will, of course, myself try to see whether there is any Amendment which would be appropriate, and possibly the

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noble and learned Viscount will be good enough, if he finds any form of words which would in any way improve the position, to inform me so that I may know where I stand. I realise the difficulty, and I hope that, because it is difficult—difficulties in the way of Cabinet Ministers are spurs to action—he may be able to find some help in this very tricky and difficult matter.
THE LORD CHANCELLOR: I will certainly bring the noble Lord's words to the attention of my right honourable friend the Home Secretary, and we will consider it again. Of course, I will write to the noble Lord on the result.
LORD PETHICK-LAWRENCE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Remaining clause and Schedule agreed to.
House resumed.

HUMBER BRIDGE BILL
Brought from the Commons; read 1a, and referred to the Examiners.
House adjourned at half past six o'clock.