Sitting of 7 July 1965

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

    Cattle (Market Prices)
    Mr. Hawkinsasked the Minister of Agriculture, Fisheries and Food whether, in view of the proportionately lower prices received for winter-yarded cattle sold in April as compared with grass-fed cattle sold in July, due to the changes in the seasonal scale of standard prices, he will take action to remedy the situation.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): For several years cattle marketings in April have tended to be much heavier than in July and market prices have been lower. The changes in the seasonal scale, which were foreshadowed at the 1964 Review, were made to encourage a better spread of marketings over the year and I see no reason to alter them.
    Mr. Hawkins: Is not the hon. Gentleman aware that yarded cattle are extremely expensive to produce, and that even before this alteration they left very little margin of profitability? Does he not feel that the only way to produce more beef is to give higher guaranteed prices, nearer to those being maintained on the Continent at present?
    Mr. Hoy: The standard price is still higher in April than in July, although the differential has been narrowed. The higher costs for winter-yarded cattle as opposed to grass-fed cattle are still reflected in the guaranteed price. I would once more remind the hon. Gentleman
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    that full notice of the proposed changes was given a year ago.

    Fish (Prices System)
    Mr. Wolrige-Gordonasked the Minister of Agriculture, Fisheries and Food whether he has yet agreed to a system of reserve prices for fish; and if he will make a statement.
    Mr. Bruce-Gardyneasked the Minister of Agriculture, Fisheries and Food whether he will now introduce a minimum pricing scheme for white fish.
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food if he will make a statement on the progress of negotiations for a statutory minimum prices scheme for white fish.
    Mr. Hoy: I would refer the hon. Members to the reply given by my right hon. Friend the Secretary of State for Scotland to the hon. Member for Aberdeen-shire, East (Mr. Wolrige-Gordon) on 26th May.
    Mr. Wolrige-Gordon: Does not the Parliamentary Secretary realise that there has now been considerable delay in the introduction of this scheme, and that there is a great deal of unanimity in the industry about its desirability? Will he seek to bring it in as quickly as possible?
    Mr. Hoy: Yes, Sir. We will bring it in as soon as possible, and negotiations are still going on.
    Mr. Bruce-Gardyne: Can the hon. Gentleman tell us whether the Treasury has intervened to tell him that he cannot introduce this scheme? Could he come clean about this? The discussion has been going on for a very long time, and there is really no reason why it should not have ceased by now.
    Mr. Hoy: Cleanliness is not in question. As I say, the negotiations are going on. If it interests the hon. Gentleman, I will be having a further meeting next week.
    Sir M. Redmayne: Is the Parliamentary Secretary aware that we look forward to a debate on this subject, and allied subjects, and that I hope that he will represent to the Leader of the House that it must be before the House rises for the Summer Recess?
    Mr. Hoy: As no one knows better than the right hon. Gentleman, that is a matter for the Leader of the House, but certain Orders will have to be laid, and a debate will take place.
    Mr. Wall: Does the hon. Gentleman agree that it is essential to reach a decision on this matter before the industry puts its case in the Restrictive Practices Court, and does not that severely limit the time he has to consider the matter? Will he guarantee to make a statement before the end of the Session?
    Mr. Hoy: Of course, the question of price fixing will come before the Restrictive Practices Court, but it will be for the Government to make their decision on this issue as soon as they possibly can.
    Mr. James Johnson: Whatever decision the Minister takes, will he bear in mind the need to increase consumption of fish at home? Without a guaranteed home market, the deep sea fishing fleets of ports like Hull will not flourish.
    Mr. Hoy: Fish consumption is increasing and, of course, it will always be our endeavour to see that it keeps on increasing.

    Milk (Prices)
    Mr. Evelyn Kingasked the Minister of Agriculture, Fisheries and Food what is the price per gallon currently paid to Dorset farmers for milk; and whether he will increase it.
    Mr. Gowerasked the Minister of Agriculture, Fisheries and Food what is the price now being paid for milk to farmers in Wales; and whether he will increase the price.
    Mr. Hoy: The price payable to Dorset milk producers for June is 27·86d. per gallon. For producers in North Wales, it is 27·65d.; in South Wales, 27·61d.; and in Monmouthshire, 27·94d. The prescription of regional monthly producers' prices is a matter for the Milk Marketing Board.
    Mr. King: Will the hon. Gentleman use his influence to see that this price is increased? Is it not a fact that 40 per cent. of the small farmers earn less than £12 a week and that although a 1d. or 2d. on a gallon would make an immense difference
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    to farmers, the difference in the cost of living would be only marginal?
    Mr. Hoy: We want to encourage farmers, and these figures show that they are getting a full 1d. extra, but these prices are fixed for areas by the Milk Marketing Board. I think that the hon. Member would be resentful if the Government attempted to interfere with that procedure.
    Mr. Wingfield Digby: Is the Minister aware that in Dorset, this traditional dairy county, at these prices dairies are still closing, particularly those associated with small farmers?
    Mr. Hoy: All I say in reply to that is that milk production continues to increase.
    Mr. Gower: On a point of order, Mr. Speaker. I have been here all the time and Question No. 56 is in my name.
    Mr. Speaker: I am very sorry, but I still find it desirable to maintain the rule I laid down until the House discusses this problem of Questions.

    Farming Areas, West Suffolk (Minister's Visit)
    Mr. Eldon Griffithsasked the Minister of Agriculture, Fisheries and Food what plans he has for visiting the farming areas of West Suffolk.
    The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): I or my Parliamentary Secretaries are hoping to have visited every county agricultural executive committee and seen something of each county including West Suffolk by the end of the autumn.
    Mr. Griffiths: Is the Minister aware that his Answer will be greeted with satisfaction in West Suffolk and that, although he ran into a boycott in East Suffolk, we are prepared to guarantee his safe conduct if he comes to West Suffolk? Will he face the fact that many farmers in West Suffolk are planning on the assumption of his Price Review costing a net reduction in income of £2 an acre and that if he comes to West Suffolk he will have to answer a very large number of questions?
    Mr. Peart: I am always anxious to meet farmers, as I have repeatedly said. The Joint Parliamentary Secretary

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    addressed the National Farmers' Union at Ipswich on 12th January this year. I am anxious to get round the country and I have done so. No one can say that I am afraid to meet farmers. If the hon. Member will give me the support he said he would give, I will welcome it.

    Pigs
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food how far the rise in the cost of pig food has affected the cost of pig production; whether he is satisfied with the present profit margins of pig keeping; and if he will make a statement.
    Mr. Peart: The feed formula arrangements under the Fatstock Guarantee Scheme provide for the guaranteed price to be adjusted automatically as feed costs change. The cost of the basic feed ration has been increasing, but under the feed formula arrangements, compensating increases in the guaranteed price have been made during the current fatstock year totalling 1s. per score.
    So far as profitability is concerned, all relevant factors were taken into account when the guaranteed price for pigs, and other features of the guarantee arrangements, were determined after the last Annual Review.
    Mr. Mills: Does the Minister realise the serious position in which small pig keepers are at the moment and that it is virtually impossible to make a profit out of pig keeping? Does he realise that this is hurting the small farmer who has been hurt in poultry keeping and now is hurt in pig keeping? Will the Minister look at this matter, particularly the questions of imports of pork meat and feed costs?
    Mr. Peart: As the hon. Member knows full well, the system of flexible guarantees has been approved by the industry. He must not complain that it works. In the 1965 Price Review we raised the middle band from 11¾ million to 12·8 million. It should also be remembered that the total subsidy for pigs last year was over £30 million. The purpose of the flexible guarantee is to prevent overproduction which would be bad for the country.
    Mr. Scott-Hopkins: Does not the Minister agree that the feed formula is out of date and needs revising? Will he
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    agree that many pig producers are finding it extremely difficult to make a living? Will he take extraordinary steps to deal with this problem and to see what can be done to increase productivity?
    Mr. Peart: As a former Minister the hon. Member will know that it was agreed that there should be a review at a certain date. We shall do that and honour the agreement; it is right that we should have a proper feed formula and a flexible system. Certainly we shall look at this and I always said that we would.
    Mr. H. Hynd: In considering all these demands for higher prices for farmers, will my right hon. Friend bear in mind the interests of consumers?
    Mr. Peart: Naturally I always bear those in mind; inevitably when considering an industry we have to bear in mind the production needed to meet demand, and we do this.

    Devon (Minister's Visit)
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food what official proposals were made to him by the Devon farmers during his visit to the Devon County Agricultural Show; and what action he is taking upon them.
    Mr. Peart: None, Sir. I visited the National Farmers' Union tent at the Devon County Agricultural Show quite informally, and had a short and pleasant chat with the county chairman and some of the members.
    Mr. Mills: While I am not allowed to disagree with the Minister, may I ask a question, as I think he was wrong on that? Did it not really reveal the genuine fears and dismay of the farming community in the South-West, and, to say the least, is not the situation explosive? Before the next Price Review, will the right hon. Gentleman think very carefully before he and the Socialist Party make such promises again to the farming community?
    Mr. Peart: As the hon. Member knows, my Price Review has been regarded as a very sensible and realistic review. As to my attendance at the Devon show, I have an impartial observer, John Winter of the Daily Mail who said:
    "Hostile 'Hello' Ends with a Round of Beer. Mr. Peart in the Lions' Den."

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    It was a friendly, informal meeting which I am sure was appreciated by the Devon farmers.
    Mr. Thorpe: Does the Minister agree that, although Devon farmers are somewhat robust by tradition, they are politically very broad-minded? Would he not agree that perhaps one of the most serious indictments they have brought against the right hon. Gentleman is that his last Price Review appears to have inherited all the restrictionist tendencies of the previous Tory Administration?
    Mr. Peart: I recognise that Devon farmers have a measure of political sophistication, but unfortunately they still return too many Conservative Members. However, I recognise that there are problems there. I hope very soon to be making a major announcement on long-term policy which I hope will benefit very much many small farmers all over the country, including Devon.
    Mr. Prior: Does the Minister remember the promises made by himself and the Prime Minister when the Devonshire farmers came to London and met the Minister in a Committee Room upstairs? Does he not think that he cuts a pretty poor figure when he goes down among them?
    Mr. Peart: Not at all. I remember not only the promises but my own statements. Our aim to have a long-term policy for the industry which is realistic and will make it more modern and efficient is a right one.

    Farmers (Comprehensive Sample Survey)
    Mr. Englishasked the Minister of Agriculture, Fisheries and Food what is the number of farmers in the United Kingdom, and its various parts, respectively, according to such definition of the word farmer as he may consider appropriate.
    Mr. Hoy: Of the 455,000 agricultural holdings in the United Kingdom in 1964, about 210,000 are believed to provide full-time work for one man or more, and of these, approximately 160,000 are in England and Wales, 26,000 in Scotland and 23,000 in Northern Ireland. These estimates are, however, open to a substantial margin of error since on many
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    holdings the amount of work provided cannot be assessed without inquiries on the spot. The Agricultural Departments are therefore proposing to undertake a comprehensive sample survey in the autumn of this year.
    Mr. English: I thank my hon. Friend for that reply. Is he aware of a graph published by the National Farmers' Union which purports to show that the rise in farmers' incomes was exceeded over recent years by that of other incomes? Is he aware that the National Farmers' Union has never published the number of farmers upon which such graph is based or even said whether it is consistent over the period? Would my hon. Friend, after this survey, take steps to re-publish the graph on a consistent basis?
    Mr. Hoy: I should not like to comment on all the graphs which are published in connection with agriculture, but I would give my hon. Friend the assurance that, when this survey is carried out, we will certainly take into consideration the request he has made.
    Sir M. Redmayne: What will be the size of the sample? This sample will not be of great value unless it is fairly widespread and has regard to the particularities of various areas. I hope that the sample will be on a sufficiently wide scale.
    Mr. Hoy: All this we have in mind. That is why I said in my Answer that it would be a comprehensive sample survey.

    Marginal Farmers
    Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food what assistance he is now considering to help marginal farmers.
    Mr. Peart: The Government's policy towards marginal farmers was given in the White Paper on this year's Annual Review. It is to tackle the fundamental problems of low income farmers by advice and assistance in improving their farm business, by voluntary improvement of farm structure, by special measures for the hills and uplands, and by improving agricultural co-operative and group activity.
    Mr. Kitson: Has not the Minister said on several occasions recently that he

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    recognises the very special problems of marginal farmers? Although hill farmers at the last Price Review came out rather better than they did on some previous occasions, the position of the marginal farmer is even more difficult than it was before the last Price Review. Will the Minister have another look at this and see what can be done to help small farmers?
    Mr. Peart: I am glad that the hon. Gentleman pays me the tribute of saying that my Price Review has helped hill farmers. I recognise that there is a problem here, not so much with what the hon. Gentleman terms marginal farmers. I think what the hon. Gentleman means is farmers who are on marginal land. The committees which I have set up to consider the long-term policy for agriculture affecting many of our small farmers in upland areas will take this into account.
    Mr. George Y. Mackie: Is the Minister aware that one of the main trends in efficient farming today is simplification and that many marginal grants—I am talking about winter keep—stipulate that a farmer may produce only a certain amount of his gross income from, say, milk or fat cattle? Will the Minister ensure that restrictions of this type, for instance, on the upland dairy farmer and on the producer of fat cattle, are considered very seriously with a view to allowing these people to streamline their production?
    Mr. Peart: The hon. Gentleman must be aware that we are trying to do this. Indeed, my hon. Friend the Joint Parliamentary Secretary reminds me of the announcement we have made in relation to the payment of a subsidy on a headage instead of on an acreage basis. We think that this was the right decision to make, certainly for England and Wales. The whole procedure of simplification is one that I am always studying. I agree with the hon. Gentleman that, if rationalisation can be achieved, so much the better. This is what my Department and the committees I have set up are examining.

    Agricultural Mortgage Corporation (Interest Rates)
    Mr. Eldon Griffithsasked the Minister of Agriculture, Fisheries and
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    Food what estimate he has made of the additional cost to the farming industry of the increase to 7¾ per cent. in the interest rates charged by the Agricultural Mortgage Corporation.
    Mr. Peart: The cost of the increase in the interest rate charged by the Agricultural Mortgage Corporation depends on the amount of new loans taken up by farmers at the increased rate and cannot be forecast.
    Mr. Griffiths: Is the Minister aware that that reply, which adds very little to the sum of existing knowledge, is not particularly helpful? Is he aware, further, that the Government's policies have added some £30 million to the costs of the farming industry? Against this background, does he recognise that the great majority of farmers will have been delighted to read of the results of the voting in the House of Commons last night and cannot wait—[Interruption.]
    Mr. Peart: I am certain that the worst thing the farming community would wish for would be the return of a Government who failed to provide a long-term policy for British agriculture. Hon. Members opposite, who also defend the National Farmers' Union, must know that in the main the criticism of the Union has been the trend of incomes under successive Conservative Administrations.
    Mr. Emrys Hughes: Is my right hon. Friend aware that many farmers will also wonder where the money for Price Review prices would come from if all the Amendments to the Finance Bill were carried?
    Mr. Scott-Hopkins: First, will the Minister put this to the test and recommend to the Prime Minister that he should go to the country? Secondly, will he answer the question asked by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths)? Has he no estimate of what the increased costs are? Cannot he tell the House how much the Government's policies have cost the industry this year—a figure which cannot be recouped until after the next Price Review, which will be done by a Conservative Government?
    Mr. Speaker: That part of the supplementary question concerned with whether the Prime Minister should go to the country was wholly out of order.
    Mr. Wingfield Digby: Is it not evident that the rate of interest referred to in the Question will discourage capital expenditure in the industry, at the very time when capital expenditure in the public sector is rising so fast?
    Mr. Peart: I cannot agree that there is any discouragement. I hope that hon. Members will not be so pessimistic about the future of this great industry.

    Price Review (Hill Sheep Subsidy)
    Mr. Stodartasked the Minister of Agriculture, Fisheries and Food how much of the 1965 Price Review award of between £10 million and £11 million consisted of a hill sheep subsidy.
    Mr. Joplingasked the Minister of Agriculture, Fisheries and Food why the 1965 Price Review Award includes the increased subsidy awarded to hill sheep, when this has not been common practice previously.
    Mr. Monroasked the Minister of Agriculture, Fisheries and Food why the 1965 Price Review included the hill ewe subsidy for the first time.
    Mr. Peart: The plus items in the award included about £2 million for the hill sheep subsidy. This figure was based on the difference between the average rate of subsidy over the past five years, 9s. 6d. per ewe, and the rate of 18s. determined at the 1965 Review.
    Hitherto the question of whether subsidy was payable was decided each year after an assessment of the prosperity of hill sheep farmers in the preceding year. The rate fluctuated widely and in some years no subsidy was paid. At the 1965 Price Review it was decided to put the subsidy on a flat-rate basis. It will be paid each year, at a rate sufficient to cover the normal variations in weather conditions from year to year. Accordingly, like the hill cow subsidy, it has been included in the Price Review.
    Mr. Stodart: Is not the Minister aware of the many occasions on which he has compared in the same sentence the £31 million Price Review award last year and the £10 million, or the so-called £10 million, award this year? If he is to talk on a strictly like-for-like basis, is not this a completely false comparison, in that
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    the £10 million is in fact only an £8 million award? Therefore, will he stop misleading the public into thinking that this is a slightly less miserable Price Review than it actually is?
    Mr. Peart: I cannot accept that. I hope that the hon. Gentleman, instead of making wild accusations like that, will recognise that the change in the basis of the subsidy was agreed with the three unions.
    Mr. Jopling: Is the Minister aware that on 17th March of this year, as appears from col. 1291 of HANSARD, he made a specific comparison between this Price Review and previous ones? Was not this wholly misleading the House and the farming community? Is not this something that he should withdraw and put properly on the record from now on?
    Mr. Peart: I certainly will not. The hon. Gentleman, who obviously has contacts because of his past experience with the farmers' unions, should consult responsible farming opinion. Farmers believe that it was a right decision to change the basis of the subsidy. Now the farmer will know what he will be paid each year. The uncertainty which existed under the previous Administration has been removed.
    Mr. Monro: The Minister is still misleading the House, because he is not in any way comparing like with like. The two Reviews were not comparable. The general public, the farmers and the House had the impression that he was comparing like with like.
    Mr. Peart: I can only repeat—I am sorry that I have to repeat it so that hon. Members can learn the facts of the industry—that the simple fact is that the industry agrees with my change. It will give greater security. It will enable the farmer to know what he is getting. There was no attempt to mislead anyone in assessing the global total at the Review.
    Mr. Shinwell: Is my right hon. Friend aware that, far from him misleading the House, the country, or the farming community, hon. Members opposite, who are demanding more and more subsidies, are bleeding the taxpayers? Can he say what would be the reduction in Income Tax if all these subsidies were abolished?
    Mr. Peart: My right hon. Friend is quite right. We have to bear in mind the position of the consumer. It is rather strange that hon. Members opposite, who pretend that they are defending the farmer, are going against decisions which were agreed and approved by responsible farmers' leaders and the farmers' unions. I have already mentioned the attitude of the three unions concerned.
    Mr. Scott-Hopkins: Is the right hon. Gentleman aware that whether or not the unions agreed is quite irrelevant to the question of comparing like with like? Is the right hon. Gentleman aware that in previous years the hill sheep subsidy has not been included in the annual Review out-turn, and that this year £2 million was included, thereby adding £2 million to the total out-turn of £10 million? The figure ought to be £8 million and not the £10 million which the Minister has in mind.
    Mr. Peart: The hon. Member knows that the Review award is a net figure. These are plus items totalling £38½ million, including the milk, cattle and calf subsidies. There is no question of trying to mislead the House. Hon. Members opposite are always trying to stir up trouble when it is not there.

    Imported Meat (Public Health Regulations)
    Mr. Geoffrey Lloydasked the Minister of Agriculture, Fisheries and Food what measures are taken by his Department if bacteriological examination of samples of imported meat reveals a source of infection.
    Mr. Peart: When such a finding is notified to my Department it is taken up with the responsible authority in the country of origin. Any history of such findings is borne in mind when a visit is made to a supplying country in connection with the arrangements under the Public Health (Imported Food) Regulations for the official health certification of meat and meat products exported to this country.
    Mr. Lloyd: Will the right hon. Gentleman bear in mind that my Question is designed to focus public opinion in a responsible way upon the anxieties felt by scientists who are in close touch with
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    this problem? Is the right hon. Gentleman satisfied with a system by which, in effect, meat can reach shops and consumers before the results of the bacteriological tests made at the ports are made known?
    Mr. Peart: I accept that one must have attention directed to this aspect and I am grateful to the right hon. Gentleman for doing so. I am considering the position to see if we can improve the situation by introducing new regulations. Consultations are taking place. However, I agree that this is very important and we try to take every precaution. In consultation with my right hon. Friend the Minister of Health I am having proposals examined by all the authorities concerned.
    Mr. Geoffrey Lloydasked the Minister of Agriculture, Fisheries and Food if he is satisfied that health officers have adequate opportunity to examine cargoes of imported meat, especially of meat intended for human consumption; and if he will make a statement.
    Mr. Peart: The Imported Food Regulations empower medical officers of health and their staffs to examine meat on importation and to sample it for special examination. My right hon. Friend the Minister of Health and I are consulting interested parties on proposals to revise the regulations to provide more specific powers for the detention of consignments while samples are examined.
    Mr. Lloyd: In the same spirit as my previous questions, may I ask the right hon. Gentleman whether in the course of his consultations he will bear in mind that half of the food poisoning cases in this country are due to meat and that about half of the samples of frozen boneless horsemeat imported as pet food have been shown to be contaminated with salmonella organisms and that there is a risk of meat intended for human consumption being contaminated?
    Mr. Peart: I accept that. The right hon. Gentleman is interested in this subject and I agree that it is a serious matter. Imported meat can be affected. That is why I have said that with my right hon. Friend the Minister of Health we are looking at the Regulations and discussing how best we can improve the situation.
    Mr. Wallace: Can my right hon. Friend give a definite assurance that meat imported for pet food, including kangaroo meat, is rigorously confined to pet food preparation and does not enter channels leading to the preparation of food for human consumption?
    Mr. Peart: I am anxious to see that all food which is imported, whether for pets or for human beings, is not infected or of bad quality.
    Mr. R. W. Elliott: Is it not most difficult, particularly with canned meat, for the medical officer of health at the port concerned to make adequate inspection? Will the Minister recall the Aberdeen outbreak and the associated scare in Newcastle-upon-Tyne which might have been avoided had there been adequate inspection at the canning source by officials of his own Ministry? Does he think that his inspectorate is adequate?
    Mr. Peart: I was not responsible at that period, but I assure the hon. Gentleman that since then we have strengthened our inspection overseas and more countries have been covered by our inspectorate service.

    Agricultural Credit
    Mr. Kenneth Lewisasked the Minister of Agriculture, Fisheries and Food whether he will take steps to arrange a specially reduced interest rate for farm borrowing up to a limited amount, in view of the present high interest rate of borrowing from the Mortgage Corporation and the banks.
    Mr. J. E. B. Hillasked the Minister of Agriculture, Fisheries and Food whether he will set up an Agricultural Credit Organisation, backed by the Treasury, which will have special responsibilities for providing medium-term credit at reasonable rates of interest for those farmers who find it difficult to raise enough capital.
    Mr. Peart: Agricultural credit is a very wide and complex question on which I am not yet ready to announce decisions.
    Mr. Lewis: Is the right hon. Gentleman aware that there is a proposal by the Government that there shall be
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    special rates for certain categories of house purchase? If and when this is announced, will he see that farmers are treated not less favourably and fight for them a little harder than he has done in the Price Review?
    Mr. Peart: Hon. Members will drag in the Price Review. No other industry has its income decided in this way, and I think that the Review is a good procedure. On the question of agricultural credit, there are many problems to be settled and I am carefully looking at this matter.
    Mr. Hill: Has not the Minister previously studied this problem? Otherwise, how could a specific pledge in terms of Question No. 20 have been included in the Labour Party's election statement? Surely there was some previous reconnaissance of the problem? In any event, since the election has not the farmers' need for raising extra capital and their difficulty in doing so been aggravated, among other things, by the prospective new burdens to be laid upon the industry by the Finance Bill, should it become law?
    Mr. Peart: The hon. Member is quite right to draw my attention to a statement of policy which was made not long ago by my hon. Friends. I accept that. I also look back to another policy statement. I have here the Agricultural Charter of the Conservative Party of 1948. [Interruption.] The hon. Member asked me whether I had looked back. In 1948 hon. Members opposite promised that steps would be taken on these lines and they did nothing about it when they were in power.
    Mr. Rankin: On a point of order. When hon. Members opposite intervene in these Questions, ought they not in fairness to the House to reveal their self-interests in the Questions that they ask?
    Mr. Speaker: Hon. Members are not under an obligation to reveal their interests in Questions.
    Sir H. Butcher: Could the right hon. Gentleman indicate why in 1965 the rates charged by the Agricultural Mortgage Corporation should be a full 1 per cent. more than the rates charged by building societies to urban owner-occupiers?
    Mr. Peart: I accept that. As I have said, and I repeat, this is a very difficult question—whether a special industry should be singled out. There are problems here. I recognise this, and I am carefully examining them.
    Mr. George Y. Mackie: Is the right hon. Gentleman aware that agriculture is now probably the most capital-intensive industry in the country? Are these problems political and economic or are they technical problems?
    Mr. Peart: There are technical problems and there is the wider political problem whether a special industry should be singled out. In my Price Review and in the White Paper I have announced some new arrangements which will help in providing medium-term credit for those farmers who find it difficult to raise enough capital, and there is now Treasury backing. We are actually providing up to £200,000 a year by way of guarantees against bad debts. This should support many million pounds of new lending.

    Wise Committee (Report)
    Mr. Ridsdaleasked the Minister of Agriculture, Fisheries and Food when he now estimates he will receive the report of the Wise Committee.
    Mr. Peart: As the hon. Member knows, I am looking forward to receiving an interim report before the end of the year.
    Mr. Ridsdale: Cannot the right hon. Gentleman publish even an interim report on this interim report so that he can deal with such vital problems as loans and amalgamations of county council smallholdings? Does not the Minister realise how hard the county council smallholdings have been hit by this Government since October?
    Mr. Peart: I am anxious that this shall be a full report. The rôle of smallholdings is very important. There are many arguments here, and I should like to see a full report and study it carefully. That is why I do not wish to rush the Committee.
    Sir D. Renton: Will the Minister think again about this matter? We have waited a long time for this report. Its findings are urgently required so that
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    smallholding committees can formulate their policy afresh. It is not good enough to have to wait till the end of the year before we even get an interim report.
    Mr. Peart: I hope the right hon. and learned Gentleman will realise that this is the first major review of smallholding policy since 1947 and it will benefit no one to hurry the Committee into reporting before it has given the subject all the consideration it deserves. I hope that hon. Members will be sensible and realistic.
    Mr. Ridsdale: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment.

    Bull Licensing
    Mr. Joplingasked the Minister of Agriculture, Fisheries and Food what advice his advisers on population genetics have given him with regard to the continuance of the bull licensing scheme.
    Mr. Hoy: From the advice he has received, my right hon. Friend is satisfied that it would be unwise to discontinue bull licensing until the selection of breeding stock by reference to records of performance is generally adopted in the livestock industry. Powers were taken in 1963 to refuse licences to bulls—and boars—which fail to conform to prescribed standards of suitability for breeding, and from 1st January, 1966, no bulls of the pure dairy breeds will be licensed in England and Wales without adequate ancestor performance records for lactation and butterfat.
    Mr. Jopling: Is the Joint Parliamentary Secretary aware that population genetics should be the most important consideration of all when dealing with animal breeding? Is he aware that of the two organisations which he says give him most advice on population genetics the senior member of one has been highly critical of the bull licensing scheme? Secondly, is he aware that a member of the other, the director of the Animal Breeding Research Association, says that all bull licensing is make-believe and that its contribution to genetics is negligible? [HON. MEMBERS: "Speech."] Will the hon. Gentleman stop taking out-dated advice?
    Mr. Hoy: I hope that in my original Answer I made clear that these recommendations deal with both bulls and boars, and that the population geneticists advise the Ministry. The Minister has to take all their advice into consideration. I cannot be asked to comment on the opinions of other people expressed in magazines and elsewhere.
    Mr. Buchanan-Smith: In view of the fact that the two organisations from which the Minister takes advice in these matters are both situated north of the Border, may I ask the hon. Gentleman whether he will take account of the opinion of progressive Scottish farmers that both the bull and boar licensing systems need urgent review?
    Mr. Hoy: That may well be so, and the fact that these opinions come from north of the Border perhaps carries a little more weight with me.

    Race Horses
    Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food why race horses entering Great Britain are treated for quarantine purposes differently from dogs and other animals.
    Mr. Hoy: Dogs and cats are quarantined because of the danger of introducing rabies, and ruminants because of foot-and-mouth disease. Race horses are extremely unlikely to introduce either of these diseases.

    Tenant Farmers (Rents)
    Mr. William Hamiltonasked the Minister of Agriculture, Fisheries and Food if he will initiate an inquiry into the reasons for the rising rents which are being demanded of tenant farmers.
    Mr. Peart: I see no reason for special inquiry in view of the arbitration machinery available for disputes between agricultural landlord and tenant.
    Mr. Hamilton: Does my hon. Friend realise that there have been quite outrageous increases in rents for tenant farmers whom we on this side of the House are very anxious to protect from the rapacious landowners? Can he produce any figures comparable to those produced in Scotland which show, for
    1578
    instance, that rents in the last three years have been quadrupled in some cases? If he can, will he advise my right hon. Friend the First Secretary to refer this matter to the National Board for Prices and Incomes? Unless and until tenant farmers get help in this respect from the landlords the taxpayer should not be asked to subsidise the landowner.
    Mr. Peart: I accept that my hon. Friend is anxious to protect tenant farmers against abuses. Figures affecting Scotland, in particular, are obviously a matter for my right hon. Friend the Secretary of State for Scotland. As to the future in relation to arbitration machinery, I shall be considering the rent provisions of the Agriculture Act, 1958, and the Agricultural Holdings Act, 1948, as part of my general review of agricultural landlord-tenant legislation. I know that the previous Administration did things in the 1958 Act which we quite rightly condemned.
    Mr. Peter Mills: Will the right hon. Gentleman bear in mind that there is another side to this coin? Is he aware that four or five years ago, particularly in the South-West, rents were so low that landlords could not carry out the improvements which the tenants demanded?
    Hon. Members: Answer.

    Cattle (Export)
    Mr. Harold Walkerasked the Minister of Agriculture, Fisheries and Food if he will take steps to control the export of subsidised British beef cattle.
    Mr. Stodartasked the Minister of Agriculture, Fisheries and Food how many clean cattle were exported to the European mainland between 1st January and 31st March this year, and from 1st April to the latest available date; and what were the figures for the corresponding periods last year.
    Mr. Peart: In the first quarter of this year just over 8,100 head of clean cattle were exported to the Continent compared with about 7,000 head over the same period last year. In April and May this year, the last month for which firm figures are available, a total of 26,500 head were exported compared with 12,500 head in the same two months of 1964.

    1579
    But I estimate that there has been a downward trend in exports in June and I expect this to continue as more grass-fed cattle come forward on the Continent. I can assure the House, however, that the situation will continue to be kept under the closest review.
    Mr. Walker: Is my right hon. Friend aware that his figures contrast sharply with those issued recently by the National Federation of Meat Traders, which pointed out that last year 300,000 live cattle were exported to the Continent and estimated that this rate would be doubled this year? Is he aware that these are cattle produced with the assistance of subsidies paid by the British taxpayer and that there is great and growing concern about the increasing shortage of meat turning into a famine, as forecast by the National Federation of Meat Traders? Is he aware that in the first five months of this year there has been a 13 per cent. decline in home consumption of beef and veal? Will he give careful consideration to giving the British taxpayer a due return on his money?
    Mr. Peart: My hon. Friend is right to stress this. It is an important matter. I have always said that I would carefully look at this and that if action was necessary I would act. I am not responsible for the figures mentioned by other people outside the House. As I have said, the figures which I have given were carefully checked. As for the future, I believe that there will be a decline. There is also another factor which should be borne in mind. Only clean cattle—normally the minority of exports—are eligible for the price guarantee and the majority of these cattle which are now being sent abroad have no guarantee attached to them. This is a difficult matter which we are carefully studying. It has to be borne in mind that if one interferes at one point one may disturb international trade.
    Mr. Stodart: Can the right hon. Gentleman put the matter in perspective and tell us what percentage of all the clean cattle certified in the last few months had been exported? Is he aware that it would reassure the House to know whether any subsidy has been paid on those clean cattle?
    Mr. Peart: As I have said, I do not now have all the figures but I will send
    1580
    them to the hon. Member. I have the month-by-month figures for clean and other cattle, but I do not have the percentage figures. I will send those to the hon. Gentleman. The figures I have confirm what I have said.
    Mr. Chichester-Clark: How much of this increase can be attributed to export rebate and what effect, if any, has this had on the Northern Ireland meat trade?
    Mr. Peart: None at all. The hon. Member must well know that there is a strong world demand for beef because of world factors which are known to everybody in the trade.
    Mr. George Y. Mackie: Is the right hon. Gentleman aware that the export of quality cattle and sheep at high prices to the Continent should be of great value not only to the agricultural industry in Scotland but also to the taxpayer?
    Mr. Peart: I accept that. This is one of the factors which we have to consider and I said this at the Royal Agricultural Show the other day. The emphasis there is on exports. We should like to export quality products to all parts of the world but we must balance home demand with demand elsewhere.

    Swine Fever
    Sir M. Redmayneasked the Minister of Agriculture, Fisheries and Food what have been the number of outbreaks of swine fever and the cost of compensation in each of the financial years since the beginning of the eradication policy; and whether he will make a statement on the latest progress in this campaign.
    Mr. Peart: The answer to the first part of the Question involves a considerable number of figures, and I will, therefore, with permission, circulate in the OFFICIAL REPORT a statement giving the details. This will show a marked decline in the incidence of swine fever since the introduction of the eradication policy in March, 1963. The success achieved to date is very encouraging, and I am confident that, with the continued co-operation of farmers and traders, the aim of eradication can be achieved. But I cannot emphasise too strongly that everyone owning or attending pigs should report at once any suspicion of swine fever, and that they should not send any ailing or unthrifty pigs to market.
    Following is the information:

    SWINE FEVER

    Incidence of Disease and Compensation paid since introduction of Eradication Policy on 11.3.63

    Period

    Number of Outbreaks

    Compensation Paid for Pigs Slaughtered

    £

    11.3.63–31.3.63

    …

    331*

    324,720

    1.4.63–31.3.64

    …

    973†

    3,630,994

    1.4.64–31.3.65

    …

    309

    1,280,820‡

    1.4.65–30.6.65

    …

    35

    226,315‡

    * Includes 167 outbreaks confirmed before 11.3.63 in which the herds were still under restrictions at that date.

    † Includes 2 outbreaks confirmed before 11.3.63 in which the herds were still under restrictions at that date.

    ‡ Provisional figures.

    Sir M. Redmayneasked the Minister of Agriculture, Fisheries and Food on how many farm premises there has been more than one outbreak of swine fever involving slaughter and the payment of compensation; and what is the shortest interval between two outbreaks on the same premises, where slaughter and compensation has been or may be authorised.
    Mr. Peart: There have been 78 instances of disease occurring more than once on the same premises out of 1,648 cases of swine fever involving slaughter and compensation.
    The shortest interval of time between two successive outbreaks was 26 days.
    Sir M. Redmayne: Seventy-eight out of well over 1,000 seems a fairly reassuring figure, but is the Minister satisfied that the somewhat disturbing stories one hears from time to time about dishonest practices which might arise out of this compensation scheme are not well founded and that the matter is adequately watched?
    Mr. Peart: Our veterinary people watch this carefully. Restocking is not permitted until 14 days after completion of disinfection. In addition, our own experimental work has shown that, even without disinfection, the swine fever virus does not usually survive for more than about 10 days.
    Mr. J. E. B. Hill: I appreciate the need to press on with this policy and take full precautions, but does the Minister realise that the closing of markets for even one case in the locality inflicts great
    1582
    hardship on the market operators, because their business is cut right off, and on those farmers who rely on getting rid of weaners and so on? If this policy is to go on a long time, will the right hon. Gentleman consider the possibility of giving help and, perhaps, compensation to those who suffer directly from the campaign?
    Mr. Peart: Hon. Members must be very careful here. I am continually pressed to do something about swine fever and the need to take precautions is urged upon me. Although hardship may be created, it would be very foolish to allow a policy to operate which would mean relaxation. It is a serious disease which causes great losses to the farming community. If some hardship is caused by the closing down of market activities for a short period, hon. Members must, I think, accept that this is right.

    Labelling of Food (Committee's Report)
    Mr. Longdenasked the Minister of Agriculture, Fisheries and Food whether he has now considered the representations submitted by the various interests concerned in respect of the 72 recommendations made in the Report of the Food Standards Committee, published in September, 1964, reviewing the provisions of the Labelling of Food Order, 1953; and if he will make a statement.
    Mr. Hoy: We are still dealing with the very large number of representations made on the Committee's Report and having discussions with the interested organisations as a preliminary to formulating proposals for new labelling regulations.
    Mr. Longden: Cannot the Government expedite this matter? We have been waiting an inordinate time. The Committee was originally set up in 1947, and the consumer is still waiting for the protection which descriptive labelling could give him. Cannot the matter be expedited?
    Mr. Hoy: I cannot accept responsibility for all the intervening years. The Report was not published until the end of September, 1964. The hon. Gentleman will be aware that we have then to give the parties concerned six months to consider what is to happen. When we

    1583
    receive representations, we have then to consider them, and, even after proposals are made, we have to issue these to the parties concerned before legislation can be introduced.

    Brucellosis
    Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food when he intends to introduce a scheme to eradicate brucellosis; and if he will make a statement.
    Mr. Peart: I regret that I cannot yet add to my reply to the hon. Member's Question of 19th May.
    Mr. Kitson: It was 12 months ago last week when the right hon. Gentleman called upon the then Government to introduce a brucellosis eradication scheme. Does he realise that, as every year passes, there are several people who suffer from undulant fever and never recover from it? Will he explain to the Chancellor of the Exchequer that it is not right to economise in this way and delay the introduction of an eradication scheme? Will he please get on with it?
    Mr. Peart: I am glad that the hon. Gentleman has raised this matter, and I accept that I urged previous Administrations to take action. I regard it as important. I made a statement about it in reply to one of his hon. Friends in the Welsh Grand Committee a week or two ago. The hon. Gentleman will appreciate that there are difficulties here. For instance, if we have an eradication scheme for brucellosis, it will involve a slaughter policy which would cost between £40 million and £50 million. I have to make a final decision on whether to do that immediately or whether to have a gradual approach. I am watching this very carefully. It involves questions of policy affecting the supply of staff and also the amount of money which would have to be used. I hope that the hon. Gentleman will be sensible.
    Mr. Gibson-Watt: The statement which the right hon. Gentleman made to me in the Welsh Grand Committee the other week was entirely empty and negative and he did not go any further from his previous position. Will he accept that this is an important problem and ask his officials and veterinary officers to consider
    1584
    whether a start could be made with a new eradication scheme, starting it in Wales as was done with tuberculosis?
    Mr. Peart: I am considering whether we should make a start in a small area with a pilot scheme of the kind mentioned, but before making that final decision one has to be quite sure about the estimates of how much it will cost the community. My reply to the hon. Gentleman in the Welsh Grand Committee was not an empty one indicating a negative approach. I gave him—courteously, I thought—the figure of £40 million which would be the cost of a slaughter policy.

    Strawberries (Import from Republic of Ireland)
    Mr. Derek Pageasked the Minister of Agriculture, Fisheries and Food what is the price of Irish strawberries offered for export to Britain; and what volume of imports he expects from Ireland.
    Mr. Hoy: Fresh strawberries imported from the Irish Republic are normally sold on commission. I have no reason to think that the volume of such imports this season will greatly exceed last year's figure, which was nine tons.
    Mr. Page: Does my hon. Friend agree that the figures he has given would not give any reason for the depression of British prices, but, on the other hand, will he bear in mind that we are well capable of growing all we need?
    Mr. Hoy: Indeed we are, but my hon. Friend will remember that in none of the last four years have imports of fresh strawberries been more than about 20 tons. About 640 tons of pulp, on average, are imported annually. Our own production is roughly 30,000 tons, half going for fresh consumption and the remainder for jam. We are well able to deal with this, and it does not provide a reason for prohibiting this import from another source.
    Sir H. Legge-Bourke: The Minister says that we can grow all the strawberries we want. Will he bear in mind that imports of pulp from the Iron Curtain countries have a severe effect on the market?
    Mr. Hoy: All I was saying was that total imports are not all that great in comparison with our own production, and

    1585
    they have not had the effect that the hon. and gallant Gentleman suggests. I have not received any representations from the interests concerned.
    Mr. Rankin: Will my hon. Friend assure us that we are able to grow all the strawberries we can pay for?
    Sir Knox Cunningham: Is the hon. Gentleman aware that some very excellent strawberries are grown in my constituency of South Antrim, but they are so good that, generally, they are all consumed in Ulster?
    Mr. Hoy: It is a matter for regret that they are retained there. I should be happy to sample them personally.
    Sir Knox Cunningham: I shall send some over to the hon. Gentleman.

    Carrots (Imports from the United States)
    Mr. Norwoodasked the Minister of Agriculture, Fisheries and Food if he is aware that imported United States carrots in packages retail at about 1s. 4d. per lb., and that the British carrot producer receives about 1d. per lb.; and why imparts of United States carrots into this country are permitted.
    Mr. Hoy: The very small quantities of carrots imported from the United States command relatively high prices because they are generally of a type not available from home-grown sources at the time they arrive. I know of no grounds on which such imports should be prohibited.
    Mr. Norwood: Does the Minister agree that the only distinction between United States carrots and those grown here is basically one of size? Would he further bear in mind that many producers of carrots in this country find great difficulty in disposing of their crop even at ruling prices? Would he, therefore, look at all imports of carrots with the greatest strictness?
    Mr. Hoy: Yes, indeed. May I remind my hon. Friend and the House that these carrots imported from America sell at a much higher price than do our home-produced carrots. The total imports for 1964 from America were about 3,400 tons and from all sources they amounted to about 26,500 tons, whereas our own home
    1586
    production reached between 300,000 and half-a-million tons per annum.
    Mr. Eldon Griffiths: Is it not a fact that during the period when British carrots are coming on to the market there is considerable protection against imported carrots whether from America or anywhere else? Does not the hon. Gentleman agree that, unfortunately, one of the reasons why British carrots fail to compete is that they are not always as well packed as those which are imported from California?
    Mr. Hoy: Packaging has a considerable amount to do with sales. It is true that there is an import duty of £1 per cwt. in May and June, and throughout the rest of the year there is a 10 per cent. ad valorem duty.

R.A.F. AIRCRAFT (ACCIDENT, THE BALDONS)
Mr. Hay(by Private Notice) asked the Secretary of State for Defence whether he will make a statement about the accident to a Hastings aircraft of the Royal Air Force at The Baldons, Oxfordshire, on 6th July, in which over 40 Service men were killed.
The Secretary of State for Defence (Mr. Denis Healey): Shortly after four o'clock yesterday afternoon, a Hastings from the R.A.F. Station, Abingdon, crashed near Dorchester, about three miles from the airfield. The aircraft, which carried Army and Royal Air Force passengers, some of whom were to undertake practice parachute jumps, had taken off a few minutes before. The captain had reported control difficulties and the aircraft was returning to the airfield.
All six Royal Air Force members of the crew and the 35 passengers of the Army and Royal Air Force lost their lives. Two were members of the Territorial Army undergoing training.
A board of inquiry has been convened and assembled this morning.
I know that the House will join with me in expressing our deep sympathy with the bereaved.
Hon. Members: Hear, hear.
Mr. Hay: Is the right hon. Gentleman aware that my right hon. and hon. Friends

1587
and myself wish to be associated with his expression of sympathy to the relatives of those who lost their lives in what I read is the worst accident which has ever befallen the Royal Air Force?
The right hon. Gentleman said that a board of inquiry has been convened. Since the Hastings aircraft is in very general service and cannot be said to be a fighting aircraft, will he consider, in this case, waiving the customary rule that the proceedings of such boards of inquiry for Service aircraft are in private and on this occasion, bearing in mind the very great loss of life and the natural anxiety which everyone has to find out the causes of the accident, holding the inquiry in public?
Mr. Healey: I am grateful to the hon. Member for his early remarks.
I have considered the question of the inquiry carefully, but there are juridical obstacles about holding a board of inquiry in public, as I think he will remember. In view of the very deep public concern about this matter, I undertake to the House that I will make the fullest possible statement about the findings of the inquiry as soon as I possibly can.
Mr. Shinwell: May I, on behalf of the back-bench Members on this side of the House, associate myself with the expression of sympathy to the relatives of those who lost their lives? May I ask my right hon. Friend to convey to the officers and men of the Royal Air Force our respectful sympathy?
Mr. Healey: I am grateful to my right hon. Friend and I will certainly do as he suggests.
Mr. Neave: As the paratroop training instructors who were killed were my constituents, would the Minister not like to record now the fine performance of the paratroop training school at Abingdon, in spite of this terrible disaster, and his hope that it will continue its great work in training?
In response to the question of my hon. Friend the Member for Henley (Mr. Hay), will he say that he will give a full report to the House when the time comes?
Mr. Healey: Yes, Sir. I will certainly do both of those things.
Mr. Crawshaw: I appreciate this opportunity of adding a few words of humble tribute to those which have been expressed. I hope that the House will allow me to pay a special tribute to the members of the Territorial Army who lost their lives. These men not only give unstintingly of their services to the country, but they are prepared at such times to make the final sacrifice. Not only the House but the whole country is concerned about the future of the Territorial Army. I know that whatever the decision may be, the House would like to go on record the great appreciation which we owe to these people.
Mr. Soames: We are grateful to the right hon. Gentleman for his assurance that he will make as full a statement as possible to the House. In the meanwhile, will he confirm that the accident, on the face of it, and before the inquiry, seems almost inexplicable, since the Hastings has an excellent low-accident rate up to the present?
Mr. Healey: Yes. I think that it is worth saying that over the last five years the Hastings has a fatal accident rate only half as high as that of most aircraft in the R.A.F. In the last four years it has suffered no major accident.
Mr. Lubbock: May I, on behalf of my right hon. and hon. Friends, associate myself with the expressions of sympathy to the relatives of those who died in this tragedy? Is the Secretary of State satisfied that pending the results of the inquiry the Hastings should be allowed to continue flying, irrespective of the fact that, as he said, it has a very low accident record, for it has been in service for a considerable time?
Mr. Healey: Yes, Sir. I have considered the matter. In view of the fact that the pilot reported control difficulties shortly before the crash took place, I have instructed that all other Hastings should be examined and should have their control systems checked before they carry out further flights.

ESTATE AGENTS
3.39 p.m.
Mr. R. E. Winterbottom: I beg to move,
That leave be given to introduce a Bill to make provision with respect to persons and local authorities who negotiate for or otherwise act in relation to the acquisition or disposal by others of estates, interests, or rights in or over land; and for purposes connected therewith.
The purpose of the Bill I seek leave to introduce is described on the Order Paper. I hope that hon. Members can hear me. A considerable exodus is taking place.
Mr. Speaker: Order. Hon. Members should remember that they may need a parallel indulgence themselves one day.
Mr. Winterbottom: The reason for the Bill can be found in the columns of the Sheffield Telegraph over the past few months. The paper has been running a campaign against the get-rich-quick merchants who have been masquerading as estate agents. In Sheffield, during the past six months, people have lost thousands of pounds in lost deposits to these bogus operators.
The Sheffield Telegraph, true, I believe, to the best traditions of the British Press, without fear and without favour, has exposed these tricksters, and I want, first, to pay my tribute to the paper and to say that the cases it has mentioned have promoted the whole of my arguments this afternoon.
According to the letters I have received, since it became known that I would seek leave to introduce the Bill, I gather that the Sheffield experience is repeated in almost every other part of the country. Some of these merchants, these tricksters, gain thousands of pounds from people who pay them deposits on houses which they can never get. If any hon. Members doubt whether or not the time has come when such a Bill should be introduced into this House all they have to do is to read the accounts of the actual cases in the Sheffield paper when I feel that they would be convinced, with me, of the justice of such a Measure as I have the honour to ask leave to introduce this afternoon.
There are several ideas in the proposed Bill on which I wish to comment. First, I want to express my gratitude to the
1590
hon. Member for the Isle of Ely (Sir H. Legge-Bourke) who, in 1962, introduced a Bill for the registration of estate agents. I want to thank him for permission to use almost the whole of the contents of that Bill. But with respect to him I want to say that that Bill did not go far enough, because it really ensured professional monopoly and business security for those who are in the professional organisations of estate agents.
The hon. Gentleman's Bill has been extended so that estate agents of experience who are conducting their business with honour and with credit over the years but who are not part and parcel of any professional organisation could be brought within the fold of registration and have provision made for them in the national council which it is proposed to set up.
I have made provision—and this is controversial—for the right of municipalities and local authorities to act as estate agents and to carry out all those functions in competition with the existing agents who will be registered. Moreover, municipalities will have some control over those estate agents and in the central offices of those authorities there will be lists of all the properties which are for sale, for the guidance, knowledge and help of any people who seek their assistance.
The Bill would provide for a national council and for that council to set up a finance committee, a disciplinary committee, and a committee to regulate an indemnity fund—long overdue in this country. The indemnity fund would be contributed to by the estate agents who would be registered under the terms of the Bill. That fund is one of the principal provisions in the proposed Bill, because even if we have registration and the recognition of estate agents by means of legislation we still have no guarantee of their honesty. So there has to be a fund to cover even the registered estate agent who may default on his obligations to the general public.
All I have said will readily be agreed to by estate agents, with perhaps the single exception of the proposed provision for local authorities to act as estate agents.
There is another controversial proposal in the Bill, and that is to institute a legal maximum commission above

1591
which estate agents would not be allowed to charge. That amount of commission is put at 2½ per cent., to include all expenses, including advertising. Moreover, there is a provision that an estate agent would be able to charge either the vendor or the purchaser only and not both. It is common practice to charge both the vendor and the purchaser for the same services in dealing with one unit of property. I believe that the time has come, even among solicitors, when that practice should be discontinued by law.
I have a letter here from a well-known, very honourable, very distinguished estate agent, who has built up a first-class business over the years. He charges 2 per cent., including all his expenses, for any transaction involving a sum less than £1,000, and there are reductions of that 2 per cent. for a transaction over £1,000 and he charges 1½ per cent. with corresponding reductions to old-age pensioners and widows. That man, who has built up an honourable business, is, I feel, the type of man who ought to succeed in that type of business.
I have great pleasure in asking the leave of the House to introduce the Bill. The gravity of the situation throughout the country has provided the earnest of my intentions. This is a nettle which is stinging the general public. It is a nettle which should be grasped, and it can only be grasped by legislation by Parliament.
3.48 p.m.
Mr. Paul Hawkins: I should, as a chartered surveyor and a chartered auctioneer, declare an interest in the Bill. I wholly agree with the majority of the provisions which the hon. Gentleman the Member for Sheffield, Brightside (Mr. Winterbottom) has outlined, in so far as they are the same as those which were in the Bill of my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke). I was very sorry to see that that Bill was not passed last Session.
As I say, I agree with the majority of the provisions, but till one sees the proposals in the Bill it is very difficult to tell whether one can agree or not with some of the others. For instance, the provision for municipalities acting as estate agents,
1592
once all the estate agents are registered, seems to be an unnecessary burden on the rates. In view of the very great shortage of trained and skilled valuers, and people who can truly assess the value and the structural conditions of houses, I think that this staffing of municipality offices would be extremely difficult.
As to the commission, I would say that in the suburbs of many big towns this is a most cut-throat business and I would think that many charges are less than 2 per cent. I act in country districts where we sell not many houses, but I have never heard there of charging both the vendor and the purchaser commission. That is a very bad practice, and it is one which I certainly have never heard of in my district.
I would only say that if the Bill—if it is introduced—is modified the hon. Member will gain the support of the vast majority of the professional organisations and the vast majority—
Mr. Speaker: Order. At that point, then, I must ask the hon. Member if he is opposing the Motion.
Mr. Hawkins: I am opposed to the Bill, Sir, because of the proposed setting up of municipal authorities as estate agents.
If one is selling houses on the outskirts of a big town where one may be dealing with 100 houses built at about the same time and to the same specification, it is hardly necessary to inspect them all, but when one is working in the country, and dealing with old rectories, old halls, and cottages, one has to examine them very carefully indeed.
I repeat that I am opposed to the Bill because of the proposal to set up estate agent offices in council offices.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business), and agreed to.
Bill ordered to be brought in by Mr. Winterbottom, Mr. George Craddock, Mr. David Griffiths, Mr. Gregory, Mr. Lipton, Mr. Frank Allaun, Mr. William Hamilton, Mr. Owen, Mr. Varley, Mr. Harold Walker, and Mr. Thorpe.

ESTATE AGENTS
Bill to make provision with respect to persons and local authorities who negotiate for or otherwise act in relation to the acquisition or disposal by others of estates, interests, or rights in or over land; and for purposes connected therewith, presented accordingly and read the First time; to be read a Second time upon Friday, 16th July, and to be printed. [Bill 184.]

"except that, in the case of licences taken out after the said 6th April and before 1st September 1965, for the reference in subsection (1) of this section to Parts II and III of that Schedule there shall be substituted a reference to those Parts as modified by Part VI of that Schedule.

5

(6) The holder of a licence current on 1st September 1965 on which duty was chargeable under the said Part II or III modified as aforesaid who makes application before the expiration of twelve months beginning with that date to the council with which the vehicle is for the time being registered shall be entitled to a refund of duty, in respect of any period after the end of August 1965 during which the licence has been or (on the assumption that it is not surrendered) will have been current, of an amount equal to one-twelfth for each complete month in the said period of the difference between—

10

(a) the annual rate of duty chargeable in respect of that vehicle under the said Part II or III modified as aforesaid, and

15

(b) the annual rate of duty appropriate to that vehicle under the said Part II or III without such modification.

20

(7) On the surrender after the end of August 1965 of any such licence as is mentioned in subsection (6) of this section, the rebate of duty payable under section 9 of the said Act of 1962 shall be computed as if the rate of duty on the licence had been the appropriate rate specified in the said Part II or III without such modification as is mentioned in that subsection.

Mr. Speaker, would it be convenient for the House to discuss this Amendment with the other ones dealing with the revisions of vehicle excise duty, namely, Amendments Nos. 2 to 6 inclusive, No. 9, and No. 117?
Mr. Speaker: Yes, if the House so pleases, and may I say that we ought to discuss with this Amendment the proposed Amendment in the name of the right hon. Member for Rushcliffe (Sir M. Redmayne), in line 9, leave out "end of August" and insert "6th April". I shall call that Amendment for a Division if required.
Mr. Edward Heath: That is quite agreeable to us, Mr. Speaker.
Mr. MacDermot: I am obliged to you, Mr. Speaker, and to the right hon. Member for Bexley (Mr. Heath).
This group of Amendments has been tabled to honour the undertaking which we gave during our debates in Committee to look again at the proposed increases in vehicle excise duty as they affected

ORDERS OF THE DAY
  FINANCE (No. 2) BILL
  As amended, further considered.
  FINANCE (No. 2) BILL

    Clause 5.—(VEHICLES EXCISE DUTY: INCREASES AND ALTERATIONS.)
    3.53 p.m.
    The Financial Secretary to the Treasury (Mr. Niall MacDermot): I beg to move Amendment No. 1 in page 4, line 19, at the end to add:
    showmen's vehicles and farmers' goods vehicles.
    I can deal with the position of showmen's vehicles quite briefly. It was put to us by hon. Gentlemen opposite that the increase for showmen's vehicles should be reduced from a 50 per cent. increase to a 25 per cent. one. I indicated at the time that we were sympathetic to this, but I wanted to have inquiries made to check the figures put forward by the Guild of Showmen, on which the proposal was based. That has been done, and I am satisfied that the case is made out. These are vehicles which have very little road use indeed, and it would, I think, impose a quite unfair burden on them if we were to keep a full 50 per cent. increase. Quite simply, what the Amendments do is to make the increase one of 25 per cent. instead of 50 per cent.
    The position with regard to farmers' goods vehicles is a little more involved. I promised to consider further especially the case of the small farmer with the

    1595
    relatively small vehicle which may be used a good deal on the farm, but also has a certain road use, but which is quite different in its use from regular hauliers' vehicles, or, indeed, from certain larger haulage vehicles used by farmers mainly for road use.
    I offered to discuss the matter further and receive any further representations from the interested organisations, and, as I said yesterday, I had a most helpful discussion with a deputation from the N.F.U. They stressed particularly their concern with the dual purpose vehicle, nearly all of which are under 30 cwt.—the Land Rover type of vehicle—and, in particular, when these vehicles are being used on a road to tow a trailer. Hon. Members will remember that the effect of the provision in the Bill was to make a very substantial increase for these vehicles.
    What we are proposing in the Amendments is a new scale of rates, first, for farmers' goods vehicles. That is quite generally covering the whole field of farmers' goods vehicles, including the dual purpose ones. We are proposing an increase rising on a graduated scale from a 25 per cent. increase at the bottom, to a 50 per cent. increase at about the 4-ton mark. Any figure that one chooses is in a sense arbitrary, but that is the figure which we have chosen as indicating the difference between the smaller type of vehicle which I undertook to try to help, and the larger one.
    I would remind the House that a farmer already has a considerable concession compared with other road users. For example, for a 4-tonner he will pay £32 duty compared with the £90 paid by a general haulier. The cost of reducing the rate of increase for these vehicles will be about £200,000 out of an increase of £500,000 which would have been caused by the proposals as they stand in the Bill, so the effect of the concession is to reduce the increase on the whole farming community from £500,000 to £300,000.
    The second thing that we propose is a reduction in the increases in the extra trailer duty for small goods vehicles. This will include the dual purpose vehicles. The benefit of this concession applies not only to farmers, but to a much wider range of small businesses, including the
    1596
    builder, the decorator, the plumber, the sweep, and some retailers such as greengrocers who, on occasion, use a trailer hitched behind a van or other small goods vehicles.
    Perhaps I could give one or two examples to show the extent of the benefits provided by the Amendments. Let us consider, first, the Land Rover type of vehicle without a trailer. A 25-cwt. vehicle before the Budget paid £15 duty. Under the Budget proposals it would have paid £21 10s. Under the Amendments it will pay £18. With a 30-cwt. vehicle the equivalent figures are £15, £22 5s., and now £19. I think that the House will agree that this modest increase compares favourably with the private car increase from £15 to £17 10s.
    Let us consider next the same vehicles which are being used with trailers. Before the Budget the 25-cwt. vehicle would have paid £26 5s. The increase which was so much objected to under the Budget would have been to £39 10s. Under the Amendment it will be £30. The equivalent figures for a 30-cwt. vehicle are £26 15s., £40 5s. and £31. The maximum cost of this concession on trailer duties has been estimated at £150,000 a year. It can only be a general estimate, of which it is thought about £100,000 will be for farmers' vehicles, and this will accrue to the benefit of the farming community. As a result of the Amendment farmers will benefit by a reduction of about £300,000 in the increases which have been imposed.
    4.0 p.m.
    There remains the question of the operative date. If it were practicable we would have liked to make this concession operate retrospectively, back to the date of the Budget, because under the Provisional Collection of Taxes Act the new duties imposed by the Bill are already being collected at the rates laid down in the Bill, and have been as from Budget day. I have looked into the question whether it would be practicable to make refunds of the difference. I would have liked to do so if it had been.
    I know that the House always views with scepticism any suggestion that a desirable measure is not practicable administratively. I have borne that in mind in reaching my decision. I must tell the House that if we had sought to

    1597
    make this provision retrospective we would have imposed a very grave burden on local authorities, who are the collectors of this duty. From the notes with which I have been provided I have worked it out that there would have been about seven different categories of licence to consider. I ask the House to bear with me while I read the administrative provisions referring to one category, to illustrate my difficulty. They are as follows:
    "Where, owing to a change in vehicle condition or use, extra duty became payable by virtue of Section 10 of the Act on a licence taken out on or after 7th April, 1965, the repayment would be an amount equal to the sum of one-twelfth of the difference between the annual rate proposed in the Budget and the new annual rate appropriate to the former condition of use for each complete month of currency of the licence prior to the change in condition or use, and one-twelfth of the difference between the annual rate proposed in the Budget and the new annual rate appropriate to the present condition or use for each month of the currency of the licence following the change in condition or use, including the month in which that change took place."
    No doubt hon. Members would consider that to be simplicity itself—if I may borrow a phrase—but I did not feel that it would be right to inflict that kind of simplicity sevenfold upon local authority officials who have to administer these duties.
    Mr. James Scott-Hopkins: I want to deal with the Government Amendment before I refer to the Opposition Amendment to it. It would be very ungenerous of me not to thank the Financial Secretary for the concessions which have been wrung out of him following exchanges which took place in Committee, especially in reference to farmers' goods vehicles and showmen's vehicles.
    I appreciate what the Financial Secretary has done in respect of farmers' goods vehicles, after consultations with the N.F.U. Nevertheless, we are a little disappointed at the fact that the Government have not been able to go a little further, especially in the case of the small farmer and horticulturist. The hon. and learned Gentleman must get it quite clear—because this point will occur later, in our discussions on various other Amendments—that we are still dealing with horticulturists' goods vehicles and forestry goods vehicles if used on a private forestry
    1598
    estate. They are all in exactly the same category as farmers' goods vehicles.
    As for the dual-purpose vehicle, this is an important concession, because it was the action of the Government in bringing in the various increases which change the situation in which it had been more expensive to have a private goods vehicle licence than a farmers' goods vehicle licence. The action of the Government changed that situation, and by this Amendment the Government are seeking to restore it—although there is still an increase.
    This is to be welcomed. As the Financial Secretary pointed out, the farming industry stands to benefit by having to pay £300,000 less, although it will still have to bear a considerable increase in costs because of these increases in excise duty. As the House knows, there is no way of getting repayment of these increased costs until some problematical time next year, at the Price Review. Nevertheless, we welcome these improvements and the fact that dual-purpose vehicles and trailer vehicles have been included in these categories.
    I now turn to the Amendment to the proposed Amendment. This seeks to change the date from August to 6th April. As I expected, the hon. and learned Gentleman based his case entirely upon administrative difficulty. This is extraordinary, because it is entirely through the action of the Government that the situation and muddle arose. In April of this year the increased vehicle duty was imposed and the Government, having had second thoughts about the matter and realising the injustice that is being perpetrated against the farming community, are properly reducing the amount of excise duty required. But those farmers who had to take out licences between Budget day and 1st August have had to pay an increased rate which will never really be brought into effect. This is grossly unfair.
    Through the Government's own mess and muddle—that is all it is; they did not exercise enough forethought, or have consultations with the interested people—a proportion of our farming community is having to pay an increased rate which even the Financial Secretary has referred to as being very excessive in respect of some categories of farm vehicle.

    1599
    A great deal of confusion has been caused by these Government actions. Many farmers have gone to their local authorities and N.F.U. county headquarters to ask why they cannot have their licences at the new rates—because these rates were published as soon as the Government put down these Amendments. The Financial Secretary has said that the only reason why this cannot be done—he admits the justice of the case—is that it is administratively difficult. If he will study his own Amendment he will see that it refers to calculations involving one-twelfth of the duty paid. Those calculations will still have to be made by local authorities, and all that they will be asked to do if the Opposition's Amendment to the proposed Amendment is accepted is one further small calculation.
    I suspect that the hon. and learned Gentleman can put before the House many other examples of the complexity of this matter, and its administrative difficulties. Nevertheless, since the Government are responsible for creating this situation it is up to them to find a way out of it. I see no reason why we should penalise farmers simply because of the muddle caused by the incompetence of the Government over this change in the rates. I hope that the House will be able to persuade the Financial Secretary that although there may be administrative difficulties it would be right to change the date to 6th April. If he will do that he will correct an injustice which has been done to many farmers.
    Mr. Norman Cole: In all fairness, I must thank the Financial Secretary for his concessions to the farmers. I made a speech in somewhat violent terms in Committee about this matter. However, like my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), I find the explanation of the administrative difficulty most unconvincing. If this were true, we should never change the old-age pensions, because that means an operation one hundred times more difficult than this and, I understand, involves 60 or 70 different rates and takes seven weeks to carry out. A Government which can do that and a State which can implement the various complicated Income Tax, Surtax, Capital Gains Tax and Corporation
    1600
    Tax provisions should find this kind of thing child's play.
    I could almost work out in my head, without any paper, the example which the hon. Gentleman gave. That is not good enough. On a legal point, what happens to those who wish to license their vehicles, possibly new ones, between now and the coming into law of the Bill? Is that covered by the Provisional Collection of Taxes Act meanwhile, or do they pay the rate when we pass this Amendment, or do they have to pay the old rate and wait till the Bill becomes law at the beginning of August and then get the concession? The whole thing is quite complicated. Maybe there is a simple answer under the Provisional Collection of Taxes Act. I do not know.
    How many cases are involved in this very complicated administrative working-out? Is it thousands? Is it a few hundreds? If it is not a monumental number, I will undertake to do this for the Government and I will not be wrong in more than 5 per cent. of the cases. This is not a question of the amount of the increase so much, though that is of some consequence to farmers, especially small farmers; it is the principle that something which was brought before the House on 6th April in the Budget and on which we passed a Resolution is now, about three months later, being countermanded. What of the unlucky people who, in the meantime, thought that the first rate would be law, despite the fact that we were fighting to get it changed, and who are now facing a burden? Singling out one section of the farming community who happen to have acted quickly in this is unfair. I ask the Government to take action.
    4.15 p.m.
    Mr. John M. Temple: I had the privilege in Committee of moving an Amendment on behalf of the Showmen's Guild of Great Britain. Naturally, I want to thank the Financial Secretary for the new Schedules which he has put down to meet the special case of showmen's vehicles. Would he convey to the Chancellor a personal message from me, to assure his right hon. Friend that I am not a showman, that I am not in show business and that I have no intention whatsoever of entering show business?

    1601
    Perhaps I might say that I have accepted hospitality from the Showmen's Guild of Great Britain and have enjoyed a banquet with them, at which the smoked salmon was very good indeed. There were more members of the Labour Party at that banquet than of the Conservative Party. I cannot be accused of having any personal interest in the Amendment which I moved in Committee.
    Sir Douglas Glover: Is it not obvious that hon. Members on the other side of the House take more interest in the showmen's banquets than they do in the Finance Bill?
    Mr. Temple: That may be true.
    I thank the hon. Gentleman for the reduction in vehicle duties for showmen's vehicles which makes the increased tax on showmen's vehicles 25 per cent. instead of the general increase of 50 per cent. I am glad that the Financial Secretary recognised the powerful case put forward by the Showmen's Guild on the basis of the extraordinarily limited mileage which showmen's vehicles go in any year.
    However, the increase in vehicle charges for showmen's vehicles will be 25 per cent. In 1961, my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), then Chancellor of the Exchequer, increased the general vehicle charges—including the charges for showmen's vehicles—by 20 per cent. The Labour Party, then in opposition, took the view that a 20 per cent. increase was far too great and that the increase should have been halved and should have been an increase of only about 10 per cent. I should like to record the fact that, under the Schedule, the increase will be two and a half times as great as the increase which the Labour Party thought was a fair increase in 1961. I believe that these vehicles charges increases will put up prices throughout the economy. I record this because I know that it is the policy of the party opposite to keep down prices. We must welcome decreases in the increases which were proposed where these are made. Nevertheless, any increase in vehicle duties is a severe increase in the cost of any operation.
    I should like, once again, to thank the Financial Secretary on behalf of the Showmen's Guild of Great Britain and
    1602
    say that they will regard this as a precedent and a happy omen if these vehicle charges are increased once again.
    Mr. Eldon Griffiths: My hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) welcomed the concessions which the Government make by this Amendment. I welcome them, too, but with no sense of satisfaction, though possibly with a certain amount of minor relief. In respect of the small farmer and the concessions which the Minister mentioned, I would ask him to put his mind to the case of a farm of 30 or 40 acres with a very small income and one Morris truck.
    I am thinking of a particular example. The Ministry may feel that, in raising the duty on the small farmer's Morris truck from £15 to £18, he is raising it very little. I can assure him that, on the farm of which I am thinking—I believe it to be typical—this extra money is extremely hard to find at a time when farmers' incomes are depressed. There will be no outbreak of joy unbounded on the farms at the concession which he appears to have made.
    I should like to turn to the Government's inability to make the concession retrospective to the Budget date. I must agree with my hon. Friend the Member for Bedfordshire, South (Mr. Cole) that this is an extraordinary statement. Surely, rebates on motor licence fees are often paid to those who wish to give up their motor licences and put their car in the garage for some months. Why cannot this be applied in this case? The Government seem to feel that it is anybody's fault but theirs. But surely, in the case of those farmers and small businessmen who have already paid the extra licence money which the Government now tell they they need not have paid, it is hardly their fault that they should have had to put up this extra cash.
    The Minister says that it would be extremely complicated for the local authorities; but it is not the local authorities' fault that this difficulty should have arisen: it is the Government's fault. I would ask him to look at how this will work on the ground. I can imagine that, in the local council offices, clerks have been charging at one rate for the past few weeks and are now told that they were wrong. They will be told by a number of

    1603
    farmers who have paid that they have no business charging them that rate. Now comes a fiat from Whitehall which says that it is all changed. Many local government officers will imagine, as I imagine, that the people in Whitehall do not know what they are doing. This confusion is bound to arise at the local level.
    I hope that the hon. and learned Gentleman will look at this matter and bear in mind that, however complicated it may be, it is his responsibility that this complication has arisen. It is his responsibility that people have been made to pay money which some can ill-afford and the Government now say, "We did not really intend that they should pay it at all." Surely it is the task of the Government—and no one else—to make restitution to those people who have been mulcted, apparently against the intention of the Government as now expressed, and to put that money back into the pockets of those from whom it was taken.
    Sir D. Glover: From this side of the House there have been many congratulations to right hon. Gentlemen opposite on the concessions which they have made. That shows how quickly one can get used to punishment, because, even with these concessions, we have a 25 per cent. increase. Even with the concessions which we have obtained from our bitter battles in Committee, I am not certain that the showmen and farmers will be as pleased as has been suggested, because they will still have to pay a 25 per cent. increase, which is a very heavy addition to their costs and adds to the rising spiral of prices.
    It would have been unreasonable for the Chancellor not to have accepted the arguments put forward by my hon. Friend the Member for the City of Chester (Mr. Temple) who, I thought, made one of the most able speeches which have been made during the long debates on the Bill in Committee. After listening to those arguments the Chancellor could not have refused to make the concession. The arguments in respect of agricultural vehicles are overwhelming.
    It is right that in some degree we should be grateful for the concessions, but I did not like the Minister's comment that it is not administratively possible to back-date this concession. That
    1604
    is always the argument when we are discussing a decrease. I have never noticed the Treasury say, when they are dealing with my Income Tax or Surtax, that it would be administratively inconvenient to collect it and therefore they will not do so. They always seem to overcome the administrative difficulties in that respect, but they do not overcome them when there has been a concession.
    If the hon. and learned Gentleman has listened to the arguments, then even at this late stage he must realise that the administrative difficulties are not nearly as great as he suggested. There are thousands of motorists who take out a licence, then decide to get rid of their cars, and then get a draw-back on their licence. The administrative machinery must exist in the taxation offices. If it can be done for those motorists, why cannot it be done in respect of this concession? The concession relates only to showmen's and agricultural vehicles. The number involved must be manageable.
    I hope that even at this late stage the Financial Secretary will agree to look at the matter again. If he does not, he will create not only hardship but dissatisfaction and a sense of unfairness among those who have already paid the increased charges.
    Mr. MacDermot: With your leave, Mr. Deputy-Speaker, and that of the House, may I reply to the debate? Hon. Members are being wise after the event and are complaining that we have not shown greater understanding of these problems before, have not entered into more consultation with the interested parties and did not originally put down the proposals in their present form.
    In commenting on any suggested lack of foresight, I can only say that we followed the precedent which was set for us by the previous Government, because they established a percentage benefit for certain types of showmen and for farmers—a percentage reduction in the vehicle excise duty compared with that paid by the ordinary road user. When applying a general increase to the vehicle excise duties we gave the same percentage reduction in respect of showmen's and farmers' goods vehicles as the previous Government had established and had followed when they made their increases.

    1605
    What we have now done is to make an even more favourable concession to showmen and to farmers than that which they enjoyed under the previous Government.
    The hon. Member for the City of Chester (Mr. Temple) is right to say that when there was a general increase in duties last time we urged that it would operate unfairly to showmen and that the increase for these classes should be only half that for the general run of vehicles. But that argument fell on deaf ears.
    We have done precisely what we then suggested. We have accepted the argument put forward by the hon. Member for the City of Chester; we have not followed the general rate of increase, but have provided a lower increase so that these showmen have not only the benefit of a lower rate of duty, but, in addition, have the benefit of a lower percentage increase. The same comment applies about the farmers' goods vehicles. Proportionately the concession is greater than it was in the past as a result of proposing a lower percentage increase on certain categories of vehicles.
    Mr. Scott-Hopkins: But the Government have changed the categories of farmers' vehicles, too.
    Mr. MacDermot: Yes, but except in certain minor ways the effect is not to the disadvantage of the farmers.
    I was asked why we cannot make it retrospective. The major objection is administrative. If we had felt able to make it retrospective, Amendments could have been devised to meet the purpose. They would have been exceedingly complicated and lengthy provisions. It is said that the present Amendment would operate unfairly because it would apply only to the people who still had a licence at 1st September. If a farmer took out a four months' licence in April he would not get a refund from the Amendment because the licence would have expired on 31st July and would not be current on 1st September, 1965. That would also apply to someone who surrendered a 12 months' licence before 1st September.
    There are other cases, it is true, in which a motorist can get a refund on surrendering a licence, but this involves a simple calculation and presents no great administrative complications. As a result of these Amendments we are throwing
    1606
    a considerable burden on local authorities, because people will be able to claim refunds in respect of any period after 1st September. If people have taken out licences at the rate laid down in the Budget Resolutions—which, incidentally, were not opposed by hon. Members opposite—and if those licences are still current on 1st September, they will be able to claim a refund for any unexpired portion of the validity of the licence after 1st September.
    This in itself will be a fairly complicated matter, but nothing like the complications which, we are advised, would have been involved in trying to make the refund retrospective to 6th April. If the House wishes I can weary them with a detailed account of those administrative complications. I gave an extract from my brief on the matter. I ask the House to accept my assurance that if we had felt that the benefit resulting would have been commensurate with the work involved, we should have brought forward the necessary Amendment.
    Mr. Cole: I appreciate that the hon. and learned Gentleman may not have the figures with him, but could he tell us how many vehicles are involved in this matter? Secondly, what would happen to anybody taking out a licence between now and the date when the Bill becomes law?
    4.30 p.m.
    Mr. MacDermot: The position is that anyone taking out a licence up to 1st September will have to pay the licence at the rate laid down in the Budget Resolutions. For any period after 1st September covered by such a licence, he will be entitled to a refund. As to the number of vehicles involved, I am certain that it is far in excess of 25,000. I will try to let the hon. Gentleman have an approximate figure.
    There is, perhaps, one point which I should correct. At the beginning of my remarks, when moving this series of Amendments, I suggested that it would be convenient to take certain other Amendments together. In error, I suggested that we also take Amendment No. 9 when I meant Amendment No. 7.
    Mr. Deputy-Speaker (Dr. Horace King): The House will have taken note of that.
    Amendment agreed to.

    Fifth Schedule.—(VEHICLES EXCISE DUTY)

    Further Amendments made: In page 53, columns 4 and 5, leave out lines 38 to 41 and insert:

    37

    10

    0

    —

    45

    0

    0

    —

    52

    10

    0

    —

    52

    10

    0

    7

    10

    0

    In page 54, leave out lines 18 to 24 and insert:

    1. Farmers' goods vehicles

    —

    12 cwt.

    15

    0

    0

    —

    12 cwt.

    16 cwt.

    16

    0

    0

    —

    16 cwt.

    1 ton

    17

    0

    0

    —

    1 ton

    1¼ tons

    18

    0

    0

    —

    1¼ tons

    2½ tons

    18

    0

    0

    1

    0

    0

    2½ tons

    4¼ tons

    23

    0

    0

    1

    10

    0

    4¼ tons

    —

    33

    10

    0

    15

    0

    1A. Showmen's goods vehicles

    —

    12 cwt.

    15

    0

    0

    —

    12 cwt.

    16 cwt.

    16

    10

    0

    —

    16 cwt.

    1 ton

    18

    0

    0

    —

    1 ton

    3 tons

    18

    0

    0

    1

    10

    0

    3 tons

    4 tons

    30

    0

    0

    1

    15

    0

    4 tons

    7 tons

    37

    0

    0

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    10

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    7 tons

    8 tons

    55

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    0

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    —

    62

    0

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    10

    0

    In line 25, leave out "Showmen's goods vehicles".
    In line 29, after "vehicles", insert "or showmen's goods vehicles".
    In page 55, leave out lines 9 to 15 and insert:

    1. Showmen's goods vehicles

    —

    —

    15

    0

    0

    2. Electrically propelled goods vehicles (other than farmers' goods vehicles and showmen's goods vehicles); tower wagons

    —

    1½ tons

    12

    0

    0

    1½ tons

    —

    18

    0

    0

    3. Other goods vehicles

    —

    1½ tons

    12

    0

    0

    1½ tons

    2½ tons

    18

    0

    0

    2½ tons

    4 tons

    27

    0

    0

    4 tons

    —

    36

    0

    0

    In page 56, line 5, at end insert:

    PART VI

    TRANSITORY RATES FOR CERTAIN VEHICLES

    Part II of this Schedule, for paragraph 2 there shall be substituted the following paragraph—

    2. Haulage vehicles, being showmen's vehicles

    —

    7¼ tons

    45

    0

    0

    —

    7¼ tons

    8 tons

    54

    0

    0

    —

    8 tons

    10 tons

    63

    0

    0

    —

    10 tons

    —

    63

    0

    0

    9

    0

    0

    In Part III of this Schedule, in Table A, for paragraphs 1, 1A and 2 there shall be substituted the following paragraphs—

    1. Farners' goods vehicles

    …

    …

    …

    —

    12 cwt.

    18

    0

    0

    —

    12 cwt.

    16 cwt.

    19

    5

    0

    —

    16 cwt.

    1 ton

    20

    5

    0

    —

    1 ton

    1¼ tons

    21

    10

    0

    —

    1¼ tons

    2 tons

    21

    10

    0

    15

    0

    2 tons

    3½ tons

    23

    15

    0

    1

    5

    0

    3½ tons

    —

    31

    5

    0

    15

    0

    2. Showmen's goods vehicles; electrically propelled goods vehicles (other than farmers' goods vehicles); tower wagons.

    —

    12 cwt.

    18

    0

    0

    —

    12 cwt.

    16 cwt.

    19

    15

    0

    —

    16 cwt.

    1 ton

    21

    10

    0

    —

    1 ton

    2 tons

    21

    10

    0

    1

    15

    0

    2 tons

    3 tons

    28

    10

    0

    2

    0

    0

    3 tons

    4 tons

    36

    10

    0

    1

    15

    0

    4 tons

    6 tons

    43

    10

    0

    2

    0

    0

    6 tons

    8 tons

    59

    10

    0

    1

    15

    0

    8 tons

    —

    73

    10

    0

    2

    0

    0

    In Part III of this Schedule, in Table B, for paragraphs 1, 2 and 3 there shall be substituted the following paragraphs—

    1. Showmen's goods vehicles; electrically propelled goods vehicles (other than farmers' goods vehicles); tower wagons.

    —

    —

    18

    0

    0

    2. Other goods vehicles

    …

    …

    …

    …

    …

    —

    2½ tons

    18

    0

    0

    2½ tons

    4 tons

    27

    0

    0

    4 tons

    —

    36

    0

    0

    —[Mr. MacDermot.]

    Clause 10.—(ALTERATIONS IN RELIEFS.)
    Mr. MacDermot: I beg to move, Amendment No. 8, in page 7, line 4, at the end to insert:
    (7) Where a person is a registered blind person within the meaning of section 9 of the Finance Act 1962 (relief for blind persons) during part only of the year of assessment. that person, or, as the case may be, that person's husband, shall be entitled to relief under subsection (1) or (2) of that section in any case in which he would have been entitled to such relief if that person had been such a registered blind person throughout the year, but the amount of relief granted by virtue of this subsection shall be calculated in accordance with subsection (8) below.
    (8) For the purpose of calculating the said amount, the said section 9 shall have effect as if—

    (a) for references in subsections (1) and (2) of that section to the amounts of any tax-free disability payments receivable by a person in the year of assessment there were substituted references to the amounts of any such payments receivable by him in the part of the year during which he was a registered blind person within the meaning of that section; and

    (b) for references in the said subsection (1) to £100 (relief for one blind person) there were substituted references to that proportion of £100 which the period in the year of assessment during which the person in question was such a registered blind person hears to one year; and

    1610

    (c) for references in the said subsection (2) to £200 (relief for blind couple) there were substituted references to that proportion of £200 which the sum of the periods in the year of assessment during which each of the persons in question was such a registered blind person bears to two years.

    This Amendment gives effect to an undertaking which I gave during our debates on the new Clauses in Committee, when I accepted in principle a proposal put forward by the hon. Member for Somerset, North (Mr. Dean), which found widespread support, that a registered blind person should not have to wait until, in effect, the second year after he became registered before he would be able to claim the benefit of the tax allowance.
    As the law stands at present, he can claim the allowance only in respect of the year in which he had been registered for the whole of the year. The Amendment provides that the allowance should be available where a registered person is registered for part of the tax year. This will apply not only in respect of the first year in which he is registered, but also in the case of a person who, through one of the wonderful operations which is done nowadays, recovers from his blindness and, therefore, is registered for only a

    1611
    part of the year. He will also be able to claim a proportionate part of the allowance in respect of the terminal year as well.
    Mr. Scott-Hopkins: I thank the Financial Secretary for tabling the Amendment. It is in line with the powerful arguments which were adduced by my hon. Friends in Committee. The concession will benefit a very small number of people who are in great need, as was well illustrated by my hon. Friends.
    The Financial Secretary will be aware that I am particularly anxious about one class of case. Will registered blind people who were registered for a part of the year previous to the passing of the Bill be included in this concession? Very few people can be involved in this class of case, but they may be in the unfortunate position of losing a year's allowance, in regard to the 1962 concession. If the hon. and learned Gentleman cannot give me an answer immediately, I trust that he will look into the matter and perhaps let me know in writing. I thank him once again for the concession.
    Mr. Paul Dean: I, too, thank the Financial Secretary very much indeed for the concession which is made in the Amendment and which fulfils 100 per cent. the undertaking the hon. and learned Gentleman gave in Committee. On that occasion he undertook to extend the special tax relief which is available for blind people. I am sure that all hon. Members and the public generally will be extremely grateful to him for this concession. He has, by the Amendment, crowned the special relief for blind people which was introduced in the 1962 Act. I am sincerely grateful to him for having met his undertaking 100 per cent.
    Mr. MacDermot: The answer to the question posed by the hon. Member for Cornwall, North (Mr. Scott-Hopkins) is that the Amendment will have effect in the tax year 1965–66 and subsequent years of assessment. It will not operate retrospectively. As the House knows, it is our general principle not to make retrospective alterations in the tax laws. That applies both in the case of reliefs and impositions of taxation. It applies also in cases like this, where there are not,
    1612
    as has been pointed out, a great many people involved.
    The House may remember a case which is familiar to lawyers and which arose some years ago. A husband and wife were killed simultaneously in a car crash. Because one was deemed by the then law to have pre-deceased the other and there was a double liability to Estate Duty, in the subsequent Finance Bill the law was altered. The same question was raised and argued as the hon. Gentleman has raised, but the pleas for retrospection were rejected. That was done in the 1958 Finance Act and, even in the case itself which gave rise to the change in the legislation, the old law had to run its course.
    There are various reasons for this. One is that any past date that is chosen would inevitably appear arbitrary. It could be argued here that as the allowance itself was imposed in the 1962 Finance Act, one could make it retrospective to that date. It sounds attractive, but it is still arbitrary. Whatever date in the past one chose there would still be people in the year before. They could still say, "Why should not we have the benefit of this?"
    There are other reasons, too, but I regret that we have felt it right to adhere to the precedents and make it operate from the current year.
    Amendment agreed to.

    Clause 12.—(SURTAX ON INCOME UNDER CERTAIN SETTLEMENTS, 1952 C. 10.)
    Mr. Deputy-Speaker: The next Amendment, No. 228, in the name of the hon. Member for Nottinghamshire, South (Mr. William Clark) in line 14, at end insert:
    Provided that for the purposes of this section any scheme or arrangement whereby the individuals carrying on a business or profession in partnership pay any pension or annuity to an individual who has retired from the partnership or to the widow or widower of an individual who has been a partner shall not be treated as a settlement if the Commissioners of Inland Revenue are satisfied—

    (a) that such pension or annuity first becomes payable on attainment by such individual of the age of 65 or any greater age or on earlier retirement through incapacity or on death of such individual; and

    (b) that the aggregate value of any benefits afforded by such a scheme or arrangement is reasonably comparable to the value of the benefits usually afforded by statutory

    1613
    superannuation schemes in similar circumstances or by such a scheme as would be approved by the Commissioners if the partnership was a company; and

    (c) that such pensions and annuities are not assignable or commutable in whole or in part; and

    (d) that in the case of any pension or annuity payable to such individual who shall retire at the age of 65 years of any greater age such individual was on 1st April 1956 over 50 years of age; and

    (e) no service of such individual otherwise than as sole proprietor of or as a partner in the business or profession shall be taken into account for the purposes of paragraph (b) of this proviso.

    is not selected for separate debate, but may be discussed with Amendment No. 305.
    Mr. MacDermot: I beg to move Amendment No. 305, in Page 7, line 25, at the end to insert:
    "(3) Notwithstanding subsection (1) of this section, subsection (1) of the said section 415 shall not apply to income consisting of annual payments made—

    (a) under a partnership agreement, by a member of a partnership to or for the benefit of a person, or, if he is dead, the widow or dependants of a person, who has ceased to be a member of the partnership by retirement or death; or

    (b) by any person, in connection with the acquisition by him of the whole or part of a business, to or for the benefit of the person from whom it is acquired or, if he is dead, his widow or dependants;

    being, in either case, payments made under a liability incurred for full consideration, or to income arising under a settlement made by one party to a marriage by way of provision for the other after the dissolution or annulment of the marriage or while they are separated under an order of a court or under a separation agreement, being income payable to or applicable for the benefit of that other party."
    This Amendment gives effect to an undertaking which I gave in Committee in our debate on Clause 12 when dealing with covenanted annual payments by the continuing members of a partnership to a retired partner. I pointed out at the time that if a concession was to be made—and I indicated that we were favourable to the idea—in logic, it should also be made to apply to payments by the purchaser of a business to the vendor and payments by a separated or divorced husband to his former wife.
    The main purpose of Clause 12 is to deny Surtax relief to individuals who make payments under convenant to other
    1614
    individuals by way of bounty. It is not intended that the Clause should apply to annual payments which are in the nature of bona fide commercial payments made for full consideration in connection with a business on a partner's retirement, or the sale of a firm. Equally, similar considerations apply in the class of covenant between husband and wife to which I have referred. All three classes are covered by the Amendments which we are considering.
    Mr. John H. Osborn: I thank the Financial Secretary for an Amendment, which will go a long way and have a great effect, though admittedly on very few people, and I refer, in particular, to professional people. It was for them that I moved an Amendment in Committee. I wrote to the Financial Secretary because there were various types of partnerships involving those on retirement or widows, and I find those concerns that were incorporated were able to make adequate "top-hat" provisions. Those that were not incorporated, particularly members of the Law Society, chartered accountants, surveyors, auctioneers and valuers, were at a disadvantage. This concession will go a long way to meet the problems of dependants of professional people.
    I would be grateful if the Financial Secretary would endeavour to clarify certain specific points. In paragraph (a) the words "under a partnership agreement" are referred to. Lawyers with whom I have discussed it would like to delete the words "partnership agreement" and insert "partnership agreement or arrangement". They have stressed that in a professional partnership there is no question of full consideration applying, but there is a moral arrangement between partners with those who have retired, and widows and dependants of partners. I presume it is not the intention in the case of a partnership that that sort of arrangement should be formally written into a deed of partnership.
    The assurance I ask for is: would the Board of Inland Revenue be satisfied with a loose arrangement of the kind I have tried to apply—a type of moral obligation which partners have accepted for those who retire? Perhaps the Financial Secretary would look at this again, because it is possible that there has been

    1615
    a slight misprint. I should have thought there were three sections here: (a) dealing with a partnership agreement, (b) dealing with the acquisition of a business, and (c) concerned with marriages. I would have liked item (c) inserted before "or to" in line 8 of the Amendment. All I would ask is: where does full consideration come into dealings with widows and dependants?
    4.45 p.m.
    My third point is that new subsection (3) is a negative one. It cancels Section 415 of the 1952 Income Tax Act, which is also a negative one. Do payments to retired partners or their widows and dependants have to be for seven years or more under a deed of covenant? Can they be for a shorter period, and do they have to be subject to a deed of covenant at all for this exemption?
    My fourth point is: has the position been made adequately clear about the capital value of annuities purchased, particularly so far as Estate Duty is concerned? The Financial Secretary did write to me about this. He quoted the case of re Miller's Agreement, Uniacke v. Attorney-General, and he said, at the end of his letter:
    "This case is generally followed, and unless the agreement were so worded as to give the widow an enforceable interest—which would not normally happen—as the law stands no question of estate duty would arise."
    He has given me that assurance in writing to satisfy a number of uncertainties, and I would be grateful if he could confirm it.
    On the question of renewals of existing seven-year covenants, there is some need for legal clarification. There is no such thing as a partnership agreement with a widow or a dependant, as I understand it, and, as I have mentioned before, there is no question of full consideration.
    I would like to quote an example. Partners A, B and C have an arrangement to look after the dependants or the widow of any one of them who is unfortunate. Partner C dies and, as I see it, it could well be that partners A, B and X agree to look after widow C. Eventually, one could get a situation where partners X, Y and Z looked after widow C. Can a new partnership deed provide for the continuation of the annuity to the retired person or widow?
    1616
    One specific question which I was asked when I discussed this Amendment with those involved was this. Partners do accept a moral obligation to look after the widows of those who have retired and died. It is sometimes necessary to increase the annuity, particularly in the case of a widow of a partner who died many years ago. Is it in order, under this type of arrangement, to obtain Surtax relief on this increase?
    I appreciate that these are searching questions, but this is the sort of clarification that will be required, and I shall be very grateful if the Financial Secretary will go as far as he can to let us know what is in his mind. It is a great concession, and has been welcomed. These are points of detail, and as much clarification as possible will be appreciated.
    Mr. Graham Page: May I, too, express satisfaction at the Financial Secretary having given this very important concession to a case which was so strongly argued from this side in an earlier stage of the Bill. Had it not been conceded, as the Bill stood there would have been very considerable hardship in that the payments described in this Amendment would have been the income of the payers for the purpose of Surtax. In the previous debate, the Financial Secretary admitted that there was a case for the three types of payments mentioned in the Amendment to be restored to the exceptions in Section 415 of the Income Tax Act, 1952. The arguments had been directed towards the two types of payments in paragraphs (a) and (b) of the Amendment; that is to say, payments in respect of partnership agreements, and payments in respect of the acquisition of a business.
    I am sure that the Financial Secretary would wish to acknowledge the assistance coming not only from hon. Members on this side, but also from the professions outside—particularly the Law Society—which made representations to him. On that previous occasion, the hon. and learned Gentleman produced, out of the blue it seemed, the third type of payment which appears in the Amendment, and I think that he will acknowledge the representations made to him by the Law Society in that respect, too.
    Although my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn)

    1617
    has referred to a number of points of drafting, I should have thought that the Amendment covered the subject adequately, and it is a great satisfaction to us that this concession has been made to arguments so strongly put from this side.
    Mr. Charles Fletcher-Cooke: I should like to reinforce what has been said about "full consideration" as applied to widows or dependants. There may be no provision here, but if we have what way be regarded as a non-contributory pension—and particularly a non-contributory pension paid to a widow or dependant—it seems to me that there might be some danger in saying that it is not under a liability incurred for full consideration, and that there is an element of "bounty" in it—which was the word used by the Financial Secretary as being objectionable for reasons which we follow. If there is an element of bounty here—and I think that there is—we should not like the purpose to be vitiated by it.
    If the hon. and learned Gentleman is to speak again, perhaps he will pay particular attention to what in this context the words "full consideration" mean, and what the word "bounty" means.
    Mr. MacDermot: If I have the leave of the House to speak again, I can say that we have considered the points raised by hon. Members, and by the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) and the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) in particular. Perhaps I might deal with their remarks first.
    As the hon. and learned Member surmised, the distinction we draw is between covenants that are in the nature of a bounty and covenants that are of the nature of business or commercial transactions. For that reason, we do not think it possible to extend the relief in the case of annual payments that are made ex gratia or for less than full consideration to the retiring partner or the dependants of a deceased partner.
    I hasten to stress that this does not mean that the widow of a partner is left out of these provisions. She is included, provided she is provided for in the original agreement. If no provision is
    1618
    made, say, at the time of the retirement of a partner that the covenant shall inure to the benefit of the widow, and he then dies, and the surviving partners decide, in effect, out of their bounty, which is what it is, to make provision for the widow, it does not fall within the class of case with which we are concerned.
    The reason for our preserving the distinction is that it would not be possible for us to make a concession in this type of case wthout undermining the Clause in other cases. It could then extend to ex gratia payments made not only to a former partner or his widow, but to other persons who might have been connected with him—an instance is a former servant. It could be extended also, and could be abused in various ways. One can imagine the difficulties that would flow, for example, in the not infrequent case where a father and son go into partnership together. A lack of the distinction would open up an easy way in such a case for the son to get a Surtax reduction for an annuity paid to his father ex gratia which, in the normal way, would be disallowable for Surtax purposes. We must, therefore, preserve the distinction that is contained in the present wording of the Amendment.
    The effect is that renewals of seven-year covenants, as such, will not apply and, again, there is no need to do so, because it is a perfectly normal provision in such covenants to make them run for life if that is what is desired. If the partners do not agree to that, but only to a covenant for a limited period and there is a renewal later, that is bounty. It is an ex gratia payment.
    I confirm the passage which the hon. Member for Hallam read from my letter to him that that is our view of the Estate Duty position, and the Revenue will act accordingly. I may not have covered one or two points in the numerous questions that the hon. Gentleman put to me, but perhaps he will allow me to study carefully what he said. I can reply then with more accuracy than I think I could now. I thank the hon. Member for Crosby (Mr. Graham Page) for what he said about the Amendment, and gladly respond to his invitation to acknowledge our debt to the assistance we have had in these matters from the Law Society and other professional bodies.
    Mr. William Clark: It would be churlish for anyone on this side of the House not to welcome this Amendment, but I know that the Financial Secretary will agree that it was sparked off by the assiduous work of my right hon. and hon. Friends—
    Mr. MacDermot: And the Law Society.
    Mr. Clark: In addition to that of the Law Society. The spirit and principle of the Amendment was raised by us in Committee. Even for the Committee stage the Chancellor put down well over 260 Amendments and has put down well over 200 Amendments for the Report stage. Amendments have littered the Notice Paper because of the initiative shown on this side.
    I am sure that the Financial Secretary will agree that when, in a partnership agreement, provision is made for the dependants or the widow of a retiring partner, it is essential for the partners to cover every eventuality. I am sure that I am right—and perhaps the hon. and

    (8) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment, except that it shall not by virtue of this subsection apply in relation to the provision for any person of a gift consisting of an article incorporating a conspicuous advertisement for the donor, being an article—

    (a) which is not food, drink, tobacco or a token or voucher exchangeable for goods; and

    b) the cost of which to the donor, taken together with the cost to him of any other such articles given by him to that person in the same year, does not exceed £1.

    and also the Opposition Amendment to Amendment No. 315 in line 8, at end add "exclusive of purchase tax".
    Mr. Deputy-Speaker: If the House has no objection.
    Mr. Diamond: The purpose of the Amendment and Amendment No. 315 is to provide exemption from the restriction upon which the Bill at present insists in regard to entertainment expenses. The Committee decided that entertainment expenses shall not be allowed except so far as entertainment of foreign buyers is concerned, but it was, of course, always understood that normal advertising expenditure in the ordinary way would be an allowable expense. However, there is a field between normal advertising expenditure and entertainment expenditure which requires to be defined.
    There was a discussion in Committee when it was sought that gifts up to £3 in value should be allowed for Income
    1620
    learned Gentleman will confirm by a nod that I am—in believing that if, in the original partnership agreement for the retired partner, there is provision that the income can go for as many years, or for the life of the widow, it can be varied upwards. That, I think, would take it out of the definition of bounty.
    We acknowledge the justice that is now being done, particularly to professional partnerships, but I must again remind the House that this concession was squeezed out of the Government by hon. Members on this side.
    Amendment agreed to.
    5.0 p.m.
    The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move Amendment No. 9, in page 9, line 29, to leave out "and gifts".
    Perhaps it would be convenient to discuss with this Amendment the Government's Amendment No. 315, in page 10, line 13, at end insert:
    Tax purposes, but it was demonstrated that that could be an alternative way of providing entertainment expenditure in the form of bottles of whisky and so on. We did not want to stop trade advertising in the various ways in which it is pursued so long as it did not conflict with what is normally allowed for entertainment expenses.
    The effect of these Amendments is to provide an exception to the general disallowance where the gift consists of advertising material for the donor other than, food, drink, tobacco or a token or voucher exchangeable for goods subject to the condition that the aggregate value of the gifts made by any donor should not exceed £1.
    This would mean that gifts of calendars, trays, diaries and the like, stamped with the name of the donor and being clear advertisements and not of such value that added to another gift of the same donee would amount to more than £1, would

    1621
    be allowable for tax purposes. The Opposition Amendment to Amendment No. 315 requires that the £1 should be regarded as exclusive of Purchase Tax. This the Government would not be able to recommend to the House because it would introduce a complication which is much too difficult and unnecessary in these circumstances.
    The tax rates, in most cases, will be 25 per cent. Corkscrews conjure up an acceptable form of advertising gift not quite entertainment expenditure, but not wholly irrelevant thereto, and on them the rate of tax would be 10 per cent. It would be very difficult for those involved in this business to know what rate of tax is involved or to cope with a situation if the rate of tax was altered, as it might be from time to time. If the amount of £1 were inclusive of Purchase Tax, this would be the right way to deal with the altered situation.
    After full consideration with the two main trade associations concerned, the Government decided that it was right and it would be quite convenient for £1 inclusive of Purchase Tax to be the limit. Diaries and calendars are normally of a maximum price of 15s. and the other items are of small value. The figure of £1 is not unduly restrictive but the complication of making this free of Purchase Tax would be difficult. I hope that the Amendment I have moved, associated with Amendment No. 315, will be acceptable to the House.
    Mr. William Clark: As the Chief Secretary said, this matter was raised in Committee and was given a very full hearing. The object of the Bill originally was to exclude all sorts of gifts. We now have an extraordinarily complicated position which should be brought to the attention of the House. First, the Government say in their original Bill that no gift should be allowable. Then the Chancellor, after certain representations and following the debate in Committee, tabled an Amendment excluding calendars and diaries. I believe that that Amendment was tabled last Thursday. On Friday, the Opposition tabled an Amendment to the Amendment cutting out calendars and diaries and asking that the whole range of gifts used in an advertising sense should be excluded from the imposition on entertainment expenses.
    1622
    On Tuesday this week, the Government had a third thought and tabled Amendment No. 315. I understand that for one reason or another various things happened yesterday, and that but for that it would have been possible to have reached this Clause yesterday, or in the early hours of this morning. I shall not go into the reasons why we did not go so far as Clause 14. The Government thought once and were wrong. They then listened to my hon. Friends putting forward powerful arguments and very valid points.
    The Government thought again and excluded calendars and diaries. Then they had another think and yesterday put down their Amendment so that the Opposition are precluded from tabling an Amendment which could have been debated in other circumstances yesterday. Short of moving a manuscript Amendment, the Opposition are deprived of putting forward another Amendment on this question.
    The Amendment to Amendment No. 315 is a starred Amendment. It is tabled to draw attention to the fact that in this whole matter the Government have acted in a hasty and ill-considered manner. One difference between our Amendment to the Chancellor's first Amendment and Amendment No. 315 is that the Chancellor now says that if in one year the various gifts made to customers or potential customers are added together the value must not exceed £1. A second difference is the exclusion of Purchase Tax. Obviously, there is a complication if one excludes Purchase Tax, but I do not think it a valid argument to say that it is so complicated that it cannot be accepted.
    On the question whether the amount should be £1 or not per year, we should compare what other countries do. Other countries have similar restrictions in their fiscal legislation about entertainment gifts. In America, one is entitled to provide a gift of up to 4 dollars, which is well above £1. In Germany, one is able to make gifts in an advertising sense of up to £9 a year. In this country, the Government say it must be £1. If there were so much complication the Chancellor could have made the amount 22s. 6d. to cover Purchase Tax. The whole of this Bill in Committee and on Report has shown that time and time again the Government make three or four attempts at

    1623
    the same point and never until they are pressed by my hon. Friends do they seem to see sense.
    Of course, we welcome half a loaf as being better than no bread, but the Government are being typically niggardly about this matter. It is typical of the niggardliness of the Socialist Government that the Chief Secretary says proudly, "You can now give a corkscrew as a gift" and that he is taking away the bottle. This is typical Socialism. "You can have the good things in life, but not today; we shall show you how to open them but we will not give you anything to open". If the Chief Secretary speaks again, I am sure that he will pay tribute to the work put into this problem by my hon. Friends and will admit that the Government have again yielded to pressure and constructive criticism from this side of the House.
    Mr. Norman Miscampbell: One can at least welcome this Amendment. We have had two or three goes at this problem. It seems incredible in view of what would have been suffered under the original ideas put forward by the Government that a change was not made long before. Now, at last, those employed in a considerable industry in my constituency will be relieved of what appeared to be a heavy burden. May I briefly show how important the Amendment is. I can give some figures relating to a firm in my constituency called Starline Business Gifts. Eighty per cent. of its business would have been affected by the Government's original proposals. The first Amendment relieved about 20 per cent. of its business. Of the remaining business, 50 per cent. is now relieved of the impost because of the Government's change of mind and the decision to allow any form of gift advertising.
    The giving of ashtrays and ballpoint pens with the names of the donors on them is perhaps the most effective way of making the small trader remember the donor's name. It is as though he was given a card which he had to use and see every day. As such, this is the most legitimate form of advertising.
    I did not know until I looked into the matter that almost 100 per cent. of the holders of motor vehicle licences which are stuck on car windscreens are produced
    1624
    in Blackpool. All of these holders carry the name of the person or firm who sells the car to the purchaser. This is also a very legitimate form of advertising, and a very effective one.
    On behalf of the 190 people employed in the Blackpool firm I welcome the Amendment. It appears that common sense has at last triumphed. However, I wonder whether the term "common sense" can be applied to the last two lines of the Amendment. I can understand the Government's desire to limit the gift to £1. If the House seeks to pass legislation which is enforceable, it is not practicable to say, "But you may give them only £1 worth of goods in any one year".
    In practice, gifts of this sort are handed out by tradesmen moving round the town or the county. It will be almost impossible for them to say, "You had an ashtray last week. You are not entitled to a ballpoint pen next week". In any case, it would be sufficient if the total value of the gift were limited to under £1. There is a limit to the average human being's appetite for ballpoint pens, ashtrays, and holders for motor vehicle tax certificates. With these cautionary words, the Amendment is to be welcomed.
    Mr. Donald Box: I seem to remember that when we discussed this subject in Committee the Chief Secretary had some difficulty in distinguishing between a bottle of whisky and a diary. This was no doubt due to the late hour at which we discussed the matter. Like my hon. Friend the Member for Blackpool, North (Mr. Miscampbell), I welcome the Amendment, because it seems that in some corners of the Government at any rate common sense sometimes prevails. However, I have reservations, because I want to take up one word in the Amendment as proposed.
    I refer to the word "conspicuous" qualifying the word "advertisement". We are entitled to ask the Chief Secretary what he means by "conspicuous". It is obviously the Government's intention that the advertiser's name should appear on the gift, but it can appear in various sizes and various degrees of prominence.
    May I show the House an example which I produced at about 4.30 in the morning in Committee and which did not

    1625
    cause much stir then? I do not think many people would dispute that what I now hold in my hand is a prominent advertisement and it would, therefore, seem to fall within the terms of the Amendment. I now hold in my hand a diary on which there is a very discreet advertisement. I have here a case designed to contain a cheque book; it has on it the name of one of the Big Five banks which is even more difficult to discern. In fact, the name can hardly be seen.
    This will be a difficult Amendment for inspectors of taxes to interpret. One of the fears I have about the Bill is that far too much discretion is being placed in the hands of inspectors of taxes. It is not fair to them, nor is it fair on taxpayers, that they should be placed at the mercy of the discretion of inspectors of taxes in various parts of the country whose views may differ considerably.
    That is all I want to say, except to express the rather pious hope that in regard to the word "conspicuous" the Chief Secretary will allow common sense to prevail once more and give us his interpretation of how this part of the Amendment will apply in practice.
    5.15 p.m.
    Mr. Geoffrey Hirst: As the Member who moved the Amendment in Committee which gave rise to this discussion, I want to say something about it. I made two speeches on the subject in Committee, so I will not go into the merits of the argument again, because they are well known.
    I agree with my hon. Friend the Member for Nottingham, South (Mr. William Clark) that the Government think many times about some things. However, there are times when they do not think at all. This matter started by the Government not thinking at all, but it ended by them thinking many times in a rather confusing way. The Amendment I moved in Committee was tabled by my hon. Friend the Member for Barry (Mr. Gower). I took it on late at night without having had much notice. I managed to put my case over rather better than the Government have done, though they have had several weeks' notice. The Government could have had this discussion with the trade earlier—I know that to a certain extent they did have it—and thereby have saved themselves a good deal of trouble.
    1626
    The Government now argue that if the figure was stipulated to be exclusive of Purchase Tax the matter would be made very difficult, because of the varying rates. They argue that the right way to go about it would be to set a limit on the gift of 25s. They could at that stage have done all the thrice thinking which they have been doing since, more or less huffing themselves at a Treasury game of halma.
    It is very niggardly of the Government to start arguing about the Purchase Tax question at this stage, when we cannot do much about it. I said in my concluding speech in Committee, with that graciousness which comes to me at four o'clock in the morning, that the Government would look incredibly stupid if they did not do something before Report. My prognostication has brought off a double. The Government have managed to be incredibly stupid and they have done something before Report. I did not expect that when I made that remark.
    The Government have done something, even if they have got the House into a muddle on this matter. However, it will be a considerable help to the trades concerned. I cannot think that the Chief Secretary will expect too much praise—only a little; I am giving a little today—in a matter like this, which could have been cleared up in about half an hour's conversation with the trade. After I spoke to my hon. Friend the Member for Barry, I spent three minutes making a trunk call and waking somebody in the middle of the night. On S.T.D.—it worked on that occasion—I got the answer in about three minutes, which I thought was rather good. Armed with that answer, I made two substantial speeches in Committee. Therefore, I feel that the Government might have done more about it.
    I still think that in one way or another they should meet the case we seek to make on the starred Amendment to their Amendment. I do not know how it can be done at this stage. That is one of the difficulties we face on Finance Bills. They should think the matter out properly and not table one Amendment after another and then oppose an Opposition Amendment with the minimum of consultation. That is a peculiar way of going on. Although they have substantially

    1627
    met the point, they will not get more than five marks out of 10 from me on this occasion.
    Mr. J. H. Osborn: I have in my constituency a firm which manufactures gifts such as calendars, and this Amendment will make a vast difference to its business. This Clause could have wiped out a perfectly legitimate business of making gifts.
    There is sentiment in business, and, but for this Amendment, the Clause would have wiped out a lot of sentiment which counts for much. I have here a pen bearing the name of an American company on it. I visited that company 18 months ago, with an inadequate pen. That company is a customer of mine. This is the sort of gift which will register in my mind, as it will register in the minds of hundreds of people. It is the type of gift that counts. Those who have to decide what gifts to give and when to give them can get a headache if they also have to decide whether these gifts are part of an advertising campaign or whether they are designed to cement friendship.
    These gifts are not only for top executives. I have a typical gift here. It has my name on it, and, in fact, I have an interest in it. It is the sort of gift which goes to the man on the shop floor. It is a ruler. It is a form of legitimate advertising. Whether the name on it is conspicuous or not is another matter. The same might apply to a pocket knife. This is the sort of gift which is acceptable by people on the shop floor. It is reasonable that this Amendment should be accepted for it permits this sort of article to be given and it cements a friendship between the seller and the man who uses industrial products.
    The only question that I raise is whether the value of these gifts is sufficiently high. At this point I am moving from the shop floor to the higher levels. Yesterday someone who is much concerned with the home trade pointed out that those who try to invade our home market by importing from overseas or exporting from overseas into this country usually have to be in the position of entertaining and giving gifts which have considerably greater impact than our own
    1628
    home salesmen can give. A person who is trying to serve the home market may well find that gifts and advertising gimmicks from overseas are so much better than our own, and it is regrettable that the proposal to extend the value of such gifts was not accepted. The present figure is much too low, but no doubt we can deal with that point on some future occasion.
    Mr. Raymond Gower: This matter has had a most astonishing history. When, together with my hon. Friends, I put down the original Amendment which referred merely to diaries and calendars, I recalled the despondency expressed by so many people connected with the printing and preparation of these articles. Indeed, Dr. King, the Government, by their attitude and their unwillingness at that stage to accept that narrow Amendment, gave the impression that they were opposed to the whole idea. As these diaries and calendars are printed so long in advance, tremendous anxiety was created in the printing works and in the firms which place orders for these articles a long way ahead. Dr. King, I can reveal that even among the employees in one or two firms which I consulted there was a good deal of anxiety about this matter—
    Mr. Deputy-Speaker (Dr. King): Order. The hon. Member has been in the House for a long time. He must know that we are not in Committee, and he must address the Chair properly.
    Mr. Gower: I apologise, Mr. Deputy-Speaker, for addressing you incorrectly.
    As I was saying, there was a good deal of anxiety among the employees. In due course a new Clause was put down by the Government and we moved an Amendment to extend it to certain other named articles, and again we received no intimation that this was at all acceptable to the Government. The ridiculous nature of the proposal at that time was that it would have permitted a calendar or a diary but it would not have permitted an address book or an engagement book or something of similar size and value.
    Mr. Hirst: Nor an ashtray.
    Mr. Gower: As my hon. Friend the Member for Shipley (Mr. Hirst) points

    1629
    out, it would not have permitted an ashtray—nor a ballpoint pen. Apparently yesterday the Government decided that they were prepared to put down a reasonable Amendment. However, I join with my hon. Friend the Member for Cardiff, North (Mr. Box) in drawing attention to the word "conspicuous". I do not think it should be included. Surely one does not expect the name of the advertiser on an advertising diary to be particularly conspicuous. One expects the advertising to be done in a rather dignified manner. Dignity rather than prominence is usually the feature for which we look. A conspicuous advertisement might be most undignified and reflect discredit on the person who prepared it. Therefore, I hope the Chief Secretary in replying will define this term "conspicuous", or, if possible, move a manuscript Amendment to delete it.
    In addition, I hope the right hon. Gentleman will address himself to this further point. As my hon. Friend the Member for Blackpool, North (Mr. Miscampbell) observed, this wording is ridiculously tight in that it cannot reasonably be applied. With the greatest care nobody could ensure that two of these articles might not from inadvertence go to the same donee, and the wording therefore seems unnecessary.
    Mr. Diamond: With your leave, Mr. Deputy-Speaker, and that of the House, I should like to reply. I have been asked by two lawyers to say what is the meaning of the word "conspicuous". I am advised that the meaning is conspicuous. A business man seeking to give an advertising gift would not wish the name to be so discreetly hidden as incapable of being read except by turning the article upside down and using a magnifying glass. Therefore, it is perfectly reasonable that the word "conspicuous" should be in the Clause to make clear that what we are talking about are advertising gifts and not gifts.
    Therefore, as every hon. Member has in his own way welcomed the Clause and as, in particular, I have been given something which I never thought I should live to receive—five marks out of 10 from the hon. Member for Shipley (Mr. Hirst)—I call this my day of days.
    Amendment agreed to.
    Further Amendment made: In page 10, line 13, at end insert:
    (8) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment, except that it shall not by virtue of this subsection apply in relation to the provision for any person of a gift consisting of an article incorporating a conspicuous advertisement for the donor, being an article—

    (a) which is not food, drink, tobacco or a token or voucher exchangeable for goods; and

    (b) the cost of which to the donor, taken together with the cost to him of any other such articles given by him to that person in in the same year, does not exceed £1.—[Mr. Diamond.]

    Clause 16.—(AMENDMENTS OF CASE VII OF SCHEDULE D.)
    5.30 p.m.
    Mr. MacDermot: I beg to move, Amendment No. 12, in page 11, line 30, at the end to insert:
    (5) A gain shall be exempt from tax chargeable under Case VII if accruing from the acquisition and disposal by any person of a decoration awarded for valour or gallant conduct which he acquired otherwise than for consideration in money or money's worth.
    This is an Amendment which we have put down in response to an undertaking given in a short debate raised in Committee by the hon. Member for Ormskirk (Sir D. Glover), who suggested that it would be desirable, if we could, to exempt from liability to Capital Gains Tax decorations awarded for valour or gallant conduct. This was apparently stimulated by the recent sale of a Victoria Cross for over £1,000. Occasions when such a chattel could give rise to a liability must be rare indeed, but I think the House was impressed with the argument that if we could exempt this, in particular where the medal was being disposed of either by the original recipient or a member of his family, it was desirable to do so.
    We undertook to look at this. I hope that we shall have at least five marks out of ten on this occasion, because we are not only doing what we were asked to do but we are taking the matter a little wider, because we thought that rather than limit it to disposal by the recipient or a member of his family we should cover also any disposal by someone other than a person who had acquired it by purchase. This would eliminate any speculative dealings in such medals from

    1631
    the exemption and I am sure that this would appeal to the House. This Amendment exempts from liability to short-term tax. There is a later Amendment proposing similar exemption from long-term tax.
    Mr. John Hall: I respond with the greatest pleasure to the Financial Secretary's invitation to give him five marks out of ten. He deserves them for getting this right on the second attempt, but the direct crib was given by my hon. Friend the Member for Ormskirk (Sir D. Glover), who I am sorry is not here to take a bow for persuading the Government to move this very necessary Amendment. We welcome it, and we might consider giving the Financial Secretary an extra half mark for taking the matter further than was originally suggested. I sit down pleased with the progress of our pupils and hoping that they make further progress as we go on.
    Amendment agreed to.
    Mr. Deputy-Speaker: We come now to Amendment No. 13, with which it is proposed that we take Amendment No. 282, in page 28, line 29, at end insert:
    (4) British Government securities shall not be chargeable assets.
    and Mr. Speaker would allow a Division on Amendment No. 282 if asked for.
    Mr. Diamond: On a point of order. Would it be convenient, Mr. Deputy-Speaker, to you and the Opposition if in addition to these Amendments we consider at the same time the related Amendments? They are Amendment No. 57, in page 28, line 25, at end insert:
    (2A) If the adjusted sale price and adjusted purchase price to be taken into account under Schedule 6 to this Act in computing the amount of a gain accruing on a disposal of securities of one of the descriptions in Schedule (Capital gains: Government securities issued at a discount) to this Act are both within the exempt price range specified in that Schedule for those securities a gain accruing on that disposal shall not be a chargeable gain (and a loss so accruing shall not be an allowable loss) and if the range between those prices overlaps that exempt price range a proportion of a gain so accruing shall not be a chargeable gain, which shall be the proportion which the part of the range between those prices which overlaps that exempt price range bears to the whole of the range between those prices (and correspondingly a part of a loss so accruing shall not be an allowable loss).
    1632
    In this subsection "adjusted sale price" means the amount of the consideration for the disposal and "adjusted purchase price" means the amount of the consideration for the acquisition (that is the acquisition by the person making the disposal), both adjusted, where the nominal amount of the securities being disposed of is not one hundred pounds, to represent a price for a nominal amount of one hundred pounds.
    Amendment No. 95, in page 77, line 38, at end insert:
    (2) If in consequence of a conversion on their redemption date of securities of one of the descriptions in Schedule (Capital gains; Government securities issued at a discount) to this Act any securities of that description and a new holding of Government securities are, under paragraph 4(2) of this Schedule as applied by this paragraph, to be treated as the same asset acquired as the converted securities were acquired, and the adjusted purchase price (as defined in section 26(2A) of this Act) of the converted securities is less than one hundred pounds then, in computing under Schedule 6 to this Act the gain accruing on the acquisition and disposal of the new holding, or any part of the new holding, there shall be added to the amount of the expenditure which is allowable as a deduction the amount of the gain which would have been exempted from being a chargeable gain by virtue of the said section 26(2A) if the converted securities, or as the case may be the corresponding part of them, had been disposed of at the time of their redemption for a consideration equal to their nominal value.
    Amendment No. 118, which is the new relevant Schedule:

    SCHEDULE

      CAPITAL GAINS: GOVERNMENT SECURITIES ISSUED AT A DISCOUNT
      Description of Government securities

      Exempt price range (for £100 nominal of Stock)

      from

      to

      5½% Exchequer Stock 1966

      99½

      100

      5% Exchequer Stock 1967

      96½

      100

      4% Exchequer Stock 1968

      98

      100

      3½% Conversion Stock 1969

      99

      100

      3% Funding Stock 1959/69

      98

      100

      British Electricity 4½% Guaranteed Stock 1967/69

      98½

      100

      5% Conversion Stock 1971

      98½

      100

      British Gas 3½% Guaranteed Stock 1969/71

      98

      100

      6% Conversion Stock 1972

      97½

      100

      British Gas 4% Guaranteed Stock 1969/72

      98

      100

      British Transport 3% Stock 1968/73

      73⅛

      100

      5¼% Conversion Stock 1974

      97½

      100

      4% Victory Bonds

      85

      100

      British Electricity 3% Guaranteed Stock 1974/77

      99½

      100

      British Transport 4% Stock 1972/77

      95½

      100

      5% Exchequer Stock 1976/78

      96

      100

      Mr. Nigel Birch: That would be quite convenient.
      Mr. Deputy-Speaker: The Chair has no objections, since both sides of the House concur, but it helps the Chair if it is informed in advance of these things. The Chair has to protect the rights of single Members who might be affected in some way.
      Mr. Diamond: I am grateful to you, Mr. Deputy-Speaker, particularly since apparently you have not received notice that these Amendments were related to one another.
      I beg to move, Amendment No. 13, in page 11, line 40, at the end to insert:
      (6) If the adjusted sale price and adjusted purchase price to be taken into account in computing the amount of a gain accruing from an acquisition and disposal of securities of one of the descriptions in Schedule (Capital gains: Government securities issued at a discount) to this Act are both within the exempt price range specified in that Schedule for those securities a gain accruing on that disposal shall be exempt from tax chargeable under Case VII (and a loss so accruing shall not be an allowable loss) and if the range between those prices overlaps that exempt price range a proportion of a gain so accruing shall be so exempt, which shall be the proportion which the part of the range between those prices which overlaps that exempt price range bears to the whole of the range between those prices (and correspondingly a part of a loss so accruing shall not be an allowable loss).
      1634
      In this and the next following subsection "adjusted sale price" means the amount of the consideration for the disposal and "adjusted purchase price" means the amount of the consideration for the acquisition (that is the acquisition by the person making the disposal), both adjusted, where the nominal amount of the securities being disposed of is not one hundred pounds, to represent a price for a nominal amount of one hundred pounds.
      (7) If in consequence of a conversion on their redemption date of securities of one of the descriptions in the said Schedule any securities of that description and a new holding of Government securities are, under paragraph 10(2) of Schedule 9 to the Finance Act 1962 as applied by paragraph 11 of that Schedule, to be treated as the same asset acquired as the converted securities were acquired, and the adjusted purchase price of the converted securities is less than one hundred pounds then, in computing the gain accruing on an acquisition and disposal of the new holding, or any part of the new holding, there shall be added to the amount of the expenditure which is allowable as a deduction the amount of the gain which would have been exempted by virtue of the last foregoing subsection if the converted securities, or as the case may be the corresponding part of them, had been disposed of at the time of their redemption for a consideration equal to their nominal value.
      The Amendment and the related ones, together with the new Schedule, give effect to the concession relating to gilt-edged stocks issued before Budget day which my right hon. Friend announced during the Committee stage debate on 26th May. The first Amendment relates to the short-term gains tax. Amendments Nos. 57 and 95 relate to the long-term Capital Gains Tax, and Amendment No. 118, which is the new Schedule, is common to both of them. When my right hon. Friend announced this concession he referred to the difference between the price of issue of a Government or Government-guaranteed stock and its redemption price and he said that that difference should not be subject to Capital Gains Tax.
      My right hon. Friend's words were:
      "The concession, therefore, that I propose to recommend to the Committee will apply to past issues made at a price below par of British Government or Government-guaranteed dated stocks. It would not extend to issues after Budget day.—[OFFICIAL REPORT, 26th May, 1965; Vol. 713, c. 761.]
      Essentially, therefore, the concession contained here is a simple one.
      Where stocks were issued at a discount before Budget day—and the relevant stocks are set out in the new Schedule

      1635
      which we are now discussing—there will be what I could perhaps call a neutral zone, or what the Amendment describes as an exempt price range, within which gains will not be chargeable, and the corollary of that is that losses will not be allowable. The exempt price range is essentially the difference between the issue price of the stock and its redemption price. Gains between those two points will be outside the scope of Capital Gains Tax and of the short-term tax. For example, if a person bought a stock at issue at 95 and sold it on redemption at 100 he is not to be charged a Capital Gains Tax for the gain of five, because that five is wholly within the exempt price range.
      Problems of overlapping are dealt with in the Amendments in the way described when the concession was referred to earlier. I could detail that to the House, but I think that the Amendment speaks for itself and there is a reference in the concluding paragraph of subsection (6) of Amendment No. 13 to the adjusted sale price and the adjusted purchase price. This is necessary because a Government security can be bought and sold in amounts of any size and purely as a matter of mechanics it is necessary to operate a concession to provide an adjustment to a £100 unit to which the figures in the Schedule would apply.
      The only further point is the situation where the stock is not redeemed but is converted and where one has a conversion of this kind in the ordinary way the tax is deferred until the sale of the conversion stock which is issued to replace the original one. Where one has the sale of stock which is included in the Schedule the tax-free element is added on to the notional stock price of the second stock so that the profit, if any, on the second stock is reduced thereby. Therefore, full effect to the principles of both postponement and the tax-free element is given.
      I think that I have dealt with the main purposes of the Amendment. The background is well-known to the House. The principle is well-known, and the Government have accepted what has been pleaded on many occasions in the House and outside that there was an implicit Government promise that where a stock was issued at a given figure with a redemption at a higher figure that was
      1636
      to be tax-free because the price had been calculated accordingly. My right hon. Friend felt that this was a claim which he did not fully accept but that the British Government ought to be fully, if I may say so, on the far side of honourable in their treatment of stockholders and those buying Government funds and, therefore, ought to meet the point even though it was not fully established and allow this part of any profit made by holders of Government gilt-edged to be tax-free.
      I think that it would probably be more convenient to the House if I were to listen to arguments advanced on Amendment No. 282 before attempting to reply to them. I hope that I shall have the leave of the House to speak again should that be necessary.
      Mr. Birch: The right hon. Gentleman the Chief Secretary has blushingly received almost as many bouquets as Mme. Callas on a bad night. Obviously, we cannot vote against any reduction in taxation—that would be a very wrong thing to do—but I can award the right hon. Gentleman no marks whatever. I award him minus 5 or omega minus.
      The Government's argument is really the "housemaid's baby" argument in extremely elaborate form. I am sure that the right hon. Gentleman is familiar with that argument. The unfortunate housemaid who had had an illegitimate baby said, "After all, it is only a little one". It has never been held by the sterner moralists that her excuse was in any way convincing. What the Government have done is not at all what anyone wanted them to do. They say, "We admit we have acted dishonourably, but we shall endeavour to mitigate the dishonour by acting in this way. We shall exempt some gilt-edged securities wholly from Capital Gains Tax. Some of them we shall tax in full. Some of them will be spotted dogs, bits of them being taxed and bits not". I do not imagine that one would have any sympathy for a housemaid who put up that argument, and I have no sympathy whatever for the Government. They have acted dishonourably, and this makes it worse.
      May I illustrate some of the nonsense which will occur? Take two stocks issued at the same price on exactly the same day,

      1637
      Transport 3 per cent. 1968–73 and Electricity 3 per cent. 1968–73. The Electricity Stock is subject in full to Capital Gains Tax, but the Transport Stock, owing to the accident that a small amount of it was subsequently issued at 73⅛, is not subject to Capital Gains Tax at all. For a great many years these two stocks have been dealt in completely interchangeably. The security was the same, the rate of interest was the same, the date was the same. They were regarded as being exactly the same. Who could conceivably have thought that something would suddenly alter this? It is really quite dishonest.
      The Government's argument appears to be that the nominal issue price of a stock is the price which is relevant. But this is not so. Except in a few cases of very short-dated bonds, it is the rarest thing in the world for any Government stock to be subscribed on the day. In fact, the issue department of the Bank of England takes the stocks into its holding and peddles them out gradually, as the occasion arises. There are a few cases of stocks sold at over the issue price, but the vast majority, certainly at the present time, have been sold at well under the nominal issue price. For example, Funding 3½ per cent. 1999–2004 was sold by the Government at down to 17 points below the nominal issue price. Here, the Government were selling a stock 17 points below the nominal issue price, but they intend to mulct the whole 17 points from any person who bought at that price. He never would have bought at that price if he had had the slightest idea that this tax would be imposed. As I said before, this is retrospection in its most odious form.
      5.45 p.m.
      Let us consider some of the other things which are happening to the market as a result of the tax. We were told that one of the objects of the Finance Bill was simplification. One of the reasons why people hold gilt-edged securities is simplicity. One can deal in them simply. One would know that one was about, one would know what the rate of interest was, when the stock would be redeemed, at what price, and so on. Now, a person wanting to buy or sell a gilt-edged security has to work out permutations and combinations of extraordinary complexity.
      1638
      He has to take account of the market price first, then the book value at which he originally acquired the stock; then he has to bear in mind the original issue price of the stock. He has to take account of the redemption price and of the price on Budget day.
      It is very difficult to work out all these things. Even a man of the intellectual capacity of the Minister of Technology would have great difficulty working them out, and even if he got the right answer it still would not help very much. One may have to sell stock for business reasons at any time during its passage towards redemption date, and no one can really know where he is unless he knows whether the conversion stock which will be offered when the stock becomes redeemable is one which is suitable for him to hold or one issued at the right price. He knows that he can take cash but he will be mulcted of tax, but he does not know, if he takes conversion stock, whether the conversion stock will be worth the price at which it is offered to him. So, however clever he is, there is really no way of knowing where he stands.
      It would be something if someone was happy about this, and one might have hoped that Mr. Kaldor would be happy about it. But he is not, because the whole point of his paper in the Minority Report of the Royal Commission was that there ought to be Capital Gains Tax on redeemable Government securities because otherwise Surtax payers might make some tax-free profit, a horrible possibility, in his view. But under this provision they can still make a tax-free capital profit. If they take Transport 3 per cent. stock they have a completely free run. I was told the other day that the Hugarian Ambassador told a friend of mine that there were some good economists in Hungary. I have been wondering whether some au pair arrangement could possibly be come to.
      The damage done by what the Government are doing is considerable, and one can see it already. It was all predicted in our last debate. We have had two issues simultaneously of Government securities, both very short, both issued at 100 and both carrying interest at 6½ per cent., an unprecedently high rate. We predicted that if this were done

      1639
      one would have to have a very high coupon rate, one would have to issue at par, and one would have to give a conversion offer as well as a cash offer. All these things have duly had to be done, and it has been pretty damaging to the market. Though the Bank rate unexpectedly was suddenly reduced by a full 1 per cent., at the long end of the market it has made no difference at all. There has been absolutely no recovery of any sort.
      The market, apart from being burdened by the provisions of the Capital Gains Tax, is also burdened by the effect of Corporation Tax, because it means that it is very difficult and expensive for companies to finance themselves other than by debenture issues. I predicted when we last debated this that though a flood of debenture issues had not yet started, it would start, and it has, in fact, now started. A large number are being made at high coupon rates—7¼, 7½ and so on—with good security. These are directly competitive with the gilt-edged market.
      One of the reasons why in former times people were willing to take an appreciably lower rate of interest on Government securities than on debentures was the plus value they incurred through the ability to switch because of the very high marketability of the securities and the fact that in the long run they could probably improve their position slightly by switching from one security to another. So one had fluidity of the market, which was more attractive for the holding of these stocks.
      The effect of Capital Gains Tax applied in this capricious way means that switching will be immensely cut down. In fact, no institution can afford to sell stock until it reaches its book price. Most of the stock is locked in. So the turnover at the long end of the gilt-edged market has gone down by 50 per cent., and it is likely to go down a good deal more.
      All these things are important, because the Government have to raise a great deal of money. I think that £743 million is the correct figure of their real borrowing requirement, and there are £1,700 million of maturities, and since Budget day the potential deficit has been swollen not only by the very large wage increases
      1640
      in the public sector but by things which I think are absolutely ghastly, like subsidising London Transport and granting a £32 million above-the-line subsidy to the National Coal Board.
      That money has to be printed. I suppose it is another victory by the First Secretary over the Chancellor of the Exchequer. But how anyone who took the preservation of the £ seriously could stand for that I do not know. At the moment the Government are managing the gilt-edged market for one reason only, that they are not having to raise any very large sums of money either by Treasury Bills or through the market because, as the Chief Secretary knows, we get the money by borrowing from the I.M.F., by the sale of our reserves and by printing notes, which we are doing on a very large scale. They were very prophetic words by Mr. Cecil Harmsworth King on joining the Court of the Bank of England. He said, "I think that my knowledge of printing should be of great value to the Court." It is.
      But the Government have to sell sooner or later. Let us suppose that the £ does recover. We shall have to borrow on a very large scale if we are to contain inflation. I do not believe that the Government will ever get the market right if they put this Capital Gains Tax on it. They will never get the fluidity of the market. I ask the Chief Secretary to consider why anyone should buy gilt-edged securities at the moment. It is not as if they were having a good time. They are not having too good a time. The cost of living will rise. It is very likely that interest rates will rise further. In other countries, it is possible to have different treatment for taxation on Government and municipal securities from that meted out to other people. The Chief Secretary will know that many municipal bonds in America are free from Income Tax. I believe that the Government would be very wise indeed to accept our Amendment. I believe that honour demands it. I do not believe this business of the "spotted dog" arrangement, doing the right thing by one stock and the wrong thing by most of the stocks. I do not see how that can be held to redeem the honour of the Government. Their honour and their interest are involved.
      If the gilt-edged market goes on like this, the whole of our financial system will

      1641
      become gradually unmanageable. Now we are left in the position where the only real operator in the market is the Government through the Government broker. That is a most dangerous position to be in. I hope that even now the Government will think again and appreciate that they have made a mistake and that they have not earned more than minus 5 marks.
      Mr. Diamond: There is difficulty in replying to the right hon. Member for Flint, West (Mr. Birch), if I may do so by leave of the House, because he did not address himself at great length to the Amendment in the names of his right hon. Friends and himself as to freeing Government securities as a whole.
      The right hon. Gentleman disliked the "spotted dog" arrangement, and went on to criticise a number of things connected with Government financial policy and I do not wish to reply to those remarks and widen the debate in that way. I can only say with regard to what the Government have done that it was precisely asked for by a number of persons in and outside the House. We have debated the matter—
      Mr. Birch: Nobody asked for this dotty arrangement. No one conceives that anyone would be such a fool.
      Mr. Diamond: If the right hon. Gentleman will look at the debate that we had last time he will see the exact references that I quoted in HANSARD where it was asked for. My right hon. Friend felt that this was in response to a request which was reasonably made. If the right hon. Gentleman wants now to go into a debate exactly similar to the one that we had last time, I can only refer him to the remarks of my right hon. Friend in the OFFICIAL REPORT of 26th May, where he said:
      "I will address my remarks to the general proposition that some of the gains in gilt-edged transactions should be exempt from tax. That proposition is open to the basic objection that to exempt one large class of gains would drive a coach and horses through the tax. I do not think that the exemption could stop … at the Government-issued and Government guaranteed stocks. The claims of Commonwealth and Colonial stocks would be pressed as well as those of local authorities. There are even advocates of exemption for gains realised on all fixed-interest securities."—[OFFICIAL REPORT, 26th May, 1965; Vol. 713, c. 759.]
      Mr. Birch: The right hon. Gentleman will notice that the Chancellor has done exactly that. He has given certain concessions on gilt-edged securities but not on colonial or municipal stocks. So I do not think the right hon. Gentleman can argue like that.
      Mr. Diamond: My right hon. Friend was saying in regard to the general exemption of stocks that it would not have been possible to hold it at any particular line, and it would have had to go all the way through to fixed-interest stocks. But there is no question of including fixed-interest stocks or, indeed, colonial stocks in the concession which my right hon. Friend granted, because there could not possibly be held to have been a promise between the Government as issuer of the stock and the purchaser of the stock on the prospectus which was issued at that time that the balance between the issued price and the redemption price would be one which was free of any new tax which might be raised.
      6.0 p.m.
      In what the right hon. Gentleman has said he has directed his remarks not to Capital Gains Tax but purely to the taxation of gilt-edged stock. Every argument that he used would have been used with equal force when gilt-edged stock was first issued and was subjected to Income Tax. We have had all these arguments before. As the principle on which my right hon. Friend is relying has been adumbrated by no less a person than Mr. Gladstone, perhaps I could quote quite shortly the debate which took place on 25th April, 1884, in col. 686 of HANSARD. Mr. Gladstone said:
      "Has the right hon. Gentleman considered the conditions under which this country contracted its loans? When it contracted those loans it gave the most solemn pledge to those who lent money that their money should not be made the subject of taxation."
      Mr. Hubbard intervened to say:
      "Quite so. How have you taxed it?"
      Mr. Gladstone replied:
      "How has Mr. Pitt and how has Sir Robert Peel dealt with that? By this doctrine, that they laid the tax equally on every subject without reference to the sources from which the income was derived. It has been in that way and in that way alone that those great men believed they maintained the public faith."
      And we believe exactly the same thing.
      Mr. Box: This Amendment implements the statement which the Chancellor of the Exchequer made at a rather late hour on 26th May, which, as we all know to our cost, was followed by the rather disastrous and certainly momentous events which resulted in the gilt-edged market being closed for several hours on the following day for the first time within living memory. There is no doubt that the repercussions of that closure would have been far greater if it had not by accident coincided with a holiday on the international bourses of the world.
      My complaint is that the Chancellor's method of helping some sections of the gilt-edged market to be free of Capital Gains Tax is unnecessarily complicated. It seems to me that to have a neutral zone which is free of tax, and yet other prices which are outside that neutral zone are subject either to capital gains or capital losses, makes the position unnecessarily complicated. The right hon. Gentleman the Chancellor told us during his speech on 26th May:
      "It would not be a sensible policy unduly to damage it"—
      he was referring to the gilt-edged market—
      "or indeed to damage it at all. One should try to build it up."—[OFFICIAL REPORT, 26th May, 1965; Vol. 713, c. 758.]
      Quite honestly, this is a very poor way of trying to build up the gilt-edged market at present.
      My right hon. Friend the Member for Flint, West (Mr. Birch) referred to two stocks which are affected, 3 per cent. Transport 1968–73, and 3 per cent. Electricity 1968–73. As he told us, the prices of those two stocks were almost identical before the announcement by the Chancellor. The following day, as a result of what the Chancellor said on 26th May, 3 per cent. Transport 1968–73 immediately appreciated to a figure of 81, a rise of 3⅛ per cent., whereas 3 per cent. Electricity 1968–73 rose very slightly to 78¼, and the prices of those two stocks, up to yesterday at any rate, were only very slightly higher than they were on 27th May, despite the fact that Bank Rate has been reduced by a full 1 per cent. So it is not apparent that the measures announced by the right hon. Gentleman have been very successful in helping the gilt-edged market to any material degree
      1644
      so far. Perhaps we might have expected a bigger gap between these two stocks as a result of the proposals of the Chancellor, but it seems by the narrow margin—it is something under three points—between the two at the present time that the vast majority of investors in the country were not over-impressed with the Chancellor's attempts to help the gilt-edged market.
      We feel that this Amendment, put forward by the Government is a grudging concession, one which the Chancellor is putting forward because he felt he was obliged to because he and the Government were being accused of committing an act of bad faith against investors in gilt-edged securities.
      Many investors, I think, would believe that it is not wise to purchase stock which is going to be free of tax under the Chancellor's proposals, because the redemption date is far enough ahead to offer considerable scope for a change to some sensible Government by that time. The one and only way to improve the market in gilt-edged stocks at present is to make them relatively more attractive than other stocks, like the debenture stocks to which my right hon. Friend referred. It therefore seems that the wise move by the Government would be to accept our Amendment, which we are discussing in conjunction with theirs, because if it were accepted then there would be no doubt that we would greatly increase the attraction of Government stocks in relation to other stocks in the market. This, I think, would make the funding, which we know is required, a very much easier matter for the Government.
      I urge the Chief Secretary to give the closest possible consideration, even at this late stage, to changing his mind.
      Mr. Geoffrey Lloyd: I rise only to make a brief comment, not because I have any special expert knowledge of the gilt-edge market, for I have not, but because everybody in this House and in the country attaches the greatest importance to British Government credit. I do so also as somebody who has listened throughout all the debates on the Finance Bill, and I say that I have never heard the Chief Secretary less happy either in Committee, or so far on Report, than he has been this afternoon. My right

      1645
      hon. Friend the Member for Flint, West (Mr. Birch) clearly spoke with great knowledge and great authority, and we have had a quite pathetic reply from the Chief Secretary. He did not attempt to deal with the question of the damage which has actually been inflicted by the Government's proposals on the gilt-edged market. I say that it is an unhappy day for British credit.
      Mr. Peter Walker: I would certainly support the view which has been expressed by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) as to the manner in which the Chief Secretary replied to this very important debate. One would have thought that the Chief Secretary would have had in mind the very serious problems the Government must be facing concerning the gilt-edged market, and one would have expected from him a careful, reasoned reply to the views expressed by my right hon. Friend the Member for Flint, West (Mr. Birch). Instead, the arguments propounded by my right hon. Friend were dismissed as not being arguments upon the Amendment; they were dismissed as being arguments on the general economic situation. In view of this, I intend to repeat, if I may, some of the questions raised by my right hon. Friend. I am quite certain that the House will give permission for the Chief Secretary, who, obviously, missed these points when they were last made, to get up and reply to them, because this is a matter of such seriousness and such importance to our economy that really the Chief Secretary cannot be allowed to reply to this debate in the manner in which he decided to do it.
      First of all, my right hon. Friend raised quite clearly the point that the Government have discriminated in the manner of their concession, and they have not fully met the argument of meeting the Government's obligations. They have met them so far as some stocks are concerned and they have not met them so far as others are concerned, and it is really impossible, purely on the ground of the obligation of the Government to meet the understanding they had with those people who purchased stocks, to say that the Amendment fully meets this point.
      The right hon. Gentleman did not deal with the question asked by my right hon.
      1646
      Friend, namely, are those stocks first retained by the Issue Department of the Bank of England, and thereafter issued through the Government Broker? The right hon. Gentleman did not comment on that.
      Next, my right hon. Friend raised the point about the working of this market depending on it being a simple market in which people are able to invest. The Chief Secretary must be aware that his Amendment will complicate the market. He must be aware that many people who previously invested in this market will now hesitate to do so because of the complications introduced by the Amendment. This matter, too, was completely ignored by the right hon. Gentleman.
      The general economics of the situation, which for some remarkable reason were dismissed by the Chief Secretary as being almost dissociated from this debate, are fundamental to it. The Government are in a position where they will have to borrow considerable sums of money. The gilt-edged market is very unhappy as a result of Government action. The Government are faced with the situation that the main investors in the long end of the market, the life offices and superannuation funds, will be handicapped by the Government refusing to allow any form of switching other than switching subject to Corporation Gains Tax. For all these reasons, the gilt-edged market is in a position in which it will find great difficulty in continuing with any firmness at all.
      My right hon. Friend also made the point that the Government's policy will result in a considerable number of debenture stocks being issued in competition with the gilt-edged market, once more attracting money away from that market and further weakening it. The Chief Secretary had the audacity to dismiss the whole argument in five minutes without dealing with any of these vital points. He quoted as his one authority in defence of his action what Mr. Gladstone said in the 19th century. There was one other happening in the 19th century similar to what has happened under this Government, and that was the closing of the gilt-edged market. In that case it was due to the Battle of Waterloo.
      Gladstone's authority is hardly appropriate to this argument. His policies did

      1647
      not require so much Government borrowing. The National Debt was of rather different proportions in his time, and although Mr. Gladstone introduced a lot of things of which I would not have approved, he did not introduce a Capital Gains Tax further to distort the market. I think that the House must demand of the Chief Secretary a much more detailed reply than we have so far received to the many points made by my right hon. Friend.
      Mr. Diamond: With your leave, Mr. Speaker, and that of the House, I am ready to respond shortly and deal with the three points by demonstrating that they have already been answered.
      The first point is that the Government have not met their full obligations. This was dealt with fully in the previous debate. A distinction is drawn between stocks issued under a prospectus, and stocks bought as it were off the shelf. I made the point that the Government could not accept that they were in any sense honour bound to those who had bought off the shelf. We cannot have regard to the terms of a bargain between a buyer and a seller in the way that we have regard to the prospectus of issue by a public company.
      I underlined my argument by drawing attention to stock which had been sold by the middle man. That stock had not been sold on a prospectus, but was sold down to 17 points below the nominal prospectus price. I have no doubt that it was sold at various stages down to 17 points. I made it clear that this was not a transaction between the Government and the investor, the purchase of the stock. This was a transaction in which people were buying off the shelf at the market price at the time, and therefore the Government did not feel themselves in any sense honour bound at that point.
      6.15 p.m.
      Mr. Birch: It is all very well talking about buying off the shelf, but who put the goods on the shelf? The answer is the Government. They never would have been sold at the price they were sold at if anyone had the faintest idea that a Capital Gains Tax would be imposed on them. The argument is the same as that for stock sold on a prospectus. There is no moral difference of any sort.
      Mr. Diamond: The right hon. Gentleman says that the argument is the same, but I deny that. When a company goes to the market, a prospectus is issued, and on the precise terms of that prospectus people subscribe to the shares. There is a bargain between those who sign the prospectus, the directors and so on, and the purchasers of the shares. The shares are then quoted, and people buy them on the Stock Exchange. They are then not dealing with them according to the original bargain. The bargain is no longer between the issuing house, or those who issued the prospectus, and the purchasers, and it is the same in this case. As the right hon. Gentleman made it clear, here was a stock quoted at various prices going below the issue price. It went to 17 points below. This might be an argument for freeing all Government stocks from Capital Gains Tax, but that is a separate argument.
      It was then said that there was an advantage in having simplicity in the market, and that Capital Gains Tax would introduce complications. It was never as simple as all that. It has always been argued that it was simple, but the fact is that the return had to take into account a basic unalterable standard rate of Income Tax, and, secondly, a standard rate of Surtax or Supertax in terms of the owner. Both these things had to be taken into account to find out the return to the owner, and they still have to be. It was not a simple straightforward argument before, and it is not now. These matters have to be taken into account, and the further matters which have to be taken into account are of negligible complexity by comparison with those which have always had to be considered, and this was dealt with in our previous debate.
      Mr. Peter Walker: Would not the right hon. Gentleman agree that the biggest investors in the long end of the market are the life offices who pay a fixed rate of Income Tax, agreed to by the Government?
      Mr. Diamond: That illustrates my point. They had a fixed rate because, if they did not, as tax went up their calculations would have been falsified. Therefore, one has to take into account the rate of tax. The life offices found

      1649
      themselves incapable of continuing when the tax exceeded a certain figure, and the Government of the day therefore agreed a maximum figure. That is how one gets this relationship between the Government and life insurance offices.
      I was then asked why I did not deal with all the points raised by the right hon. Gentleman in relation to the operation of the gilt-edged market generally. This was fully dealt with in our previous debate. The answer is that we want to help the gilt-edged market. We want to help it a little more helpfully than the speech of the right hon. Gentleman. I should have thought that his was not a classic of speeches in aid of the gilt-edged market. The difficulty is that when anybody stands at this Box and answers a debate, as happened after the last debate, the right hon. Gentleman says, "How dare you say nasty things like that?". We are trying to get a Finance Bill through the House of Commons. We are expected to take everything that comes at us, and give nothing in return.
      To those who are not satisfied with the fullness of my reply I say, "Read the debate that we had on this identical topic, and you will find the full reply there". Shortly, the position is that we are anxious to help the gilt-edged market, but it does not follow that the only way to help it is to pick a particular new tax and say that it shall apply to everybody, but shall not apply to owners of gilt-edged stock.
      That is not the way to help the gilt-edged market. It is the way to break faith with the public and, in identical circumstances, Mr. Pitt, Sir Robert Peel and Mr. Gladstone all relied upon the same principle as that which I am relying upon, and which I thought would have had some weight in this House. It is in that way alone that those great men believed that they maintained the public faith, and we are continuing to do that.
      Amendment agreed to.
      Mr. MacDermot: I beg to move Amendment No. 147, in page 12, line 18, at the end to insert:
      "in Section 12(5) of that Act (persons acting as nominees, etc.) for the words '(or for two or more persons jointly so entitled)' there shall be substituted the words 'or for another person who would be so entitled but for being an infant or other person under disability (or for two or more persons who are or would be
      1650
      jointly so entitled)' and in the proviso to Section 12(6) of that Act (residence of trustees) for the words 'body corporate' there shall be substituted the word 'person'".
      Mr. Speaker: It might be convenient if, with this Amendment, the House discussed Amendments Nos. 148 and 149. I do not know whether that would be acceptable.
      Mr. Heath: That is quite agreeable to the Opposition, Mr. Speaker.
      Mr. MacDermot: We shall be very content with that, Mr. Speaker. I am obliged to the right hon. Member for Bexley (Mr. Heath).
      The Amendment raises a somewhat technical point. It deals with the short-term effect of the Capital Gains Tax on this point, while the other two Amendments deal with the long-term effect. Section 12(5) of the Finance Act, 1962, provides that an infant or other person under a disability who would be absolutely entitled to property as against trustees but for this legal disability should be treated as if he were absolutely entitled for the purposes of the tax. The House will remember that in the case of trust property generally the liability for Capital Gains Tax rests on the trustees, and that there is no looking beyond them to the beneficiaries. That rule does not apply where trustees hold property for persons absolutely entitled to it as against the trustees. The reality of the situation is that the trustee is little more than a nominee, holding on behalf of the beneficiaries.
      In representations that we have received, especially from the Landowners' Association—and I was surprised to find it raising such a technical point; it is a very good one—we have had our attention drawn to the fact that in the case of a trust for a widowed mother, with the remainder going to her son absolutely, if the mother dies while the son is under 21 the infant would not be absolutely entitled, as against the trustees. In that situation it clearly would be unfair if, as a result of that somewhat artificial legal position, there were to be one charge to capital gains when the widow died and the life interest came to an end, and another charge when the son attained the age of 21 and thereby became beneficially entitled, as against the trustees.

      1651
      The proper course is to make it clear beyond all doubt that the mere fact of infancy does not prevent a person being regarded as absolutely entitled if the trusts of a settlement are at an end. The same arguments can be applied to persons of unsound mind who succeed to property on the termination of a prior interest. The Amendment is, therefore, couched in general terms, to cover all forms of legal disability. The real importance arises in relation to the long-term tax, but it is clearly appropriate to make some Amendment in respect of the short-term tax.
      Mr. Scott-Hopkins: I am grateful to the Financial Secretary for bringing the Amendment forward. This is the case of a trustee of an estate, where, under the existing Capital Gains Tax legislation, a considerable degree of hardship could be incurred by a minor. As I understand from what the Financial Secretary has said, this liability will now be removed. I was a little foxed by the word "infant". I was not certain of its meaning, and whether it included a minor under the age of 21.
      Mr. MacDermot Mr. MacDermot indicated assent.
      Mr. Scott-Hopkins: That takes another worry from my mind. As I understand it, there could be an assessment after each 10 years in respect of the trustees, where the minor is entitled absolutely later on. I should like to know whether these provisions exclude that necessarily having to be done. Further, when the minor inherits absolutely at the end of the trust period, will there have to be an assessment at that time? I understand that these Amendments would obviate that.
      Mr. MacDermot Mr. MacDermot indicated assent.
      Mr. Scott-Hopkins: Do I take it that this is so?
      Mr. MacDermot: I did not quite follow the hon. Member's point about the 10-year period. In future it will be a 15-year period which is the minimum period which must elapse before there can be a second charge to tax upon the trustees. That situation is not affected by the Amendment.
      On the other points—in law an infant is a person up to the age of 21, and the
      1652
      effect of the Amendment is that once the infant is the sole person entitled, and the settlement is therefore at an end, there will not be a second charge when he comes of age and is entitled to have the moneys paid over to him.
      Mr. Scott-Hopkins: I am grateful to the Financial Secretary for intervening. He has answered the points that were raised in Committee, which caused a great deal of anxiety, especially as to the position of trustees and minors.
      Amendment agreed to.
      Mr. MacDermot: I beg to move Amendment No. 312, in page 12, line 42, at the end to insert:
      (f) at the beginning of paragraph 20(4) (definition of connected persons) there shall be inserted the words "Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements".
      Mr. Speaker: I wonder if it will be for the convenience of the House to consider at the same time Amendment No. 276.
      Mr. MacDermot: Yes, Mr. Speaker. They both raise exactly the same point. The Amendment has been put down as a result of our making a take-over bid for Amendment No. 276. This point was raised by the hon. Member for Crosby (Mr. Graham Page) and we think that the Amendment is worth making. Under the 1962 Finance Act connected persons are so defined as to include partners, a husband or wife, or relatives of a partner. That definition has been imported into the Bill through the provisions of the Seventh Schedule.
      For the purpose of Capital Gains Tax transactions between connected persons are treated as transactions which take place otherwise than by a bargain at arm's length. In consequence, when an asset is disposed of between such persons it is deemed to be transferred at market value. This is a necessary anti-avoidance provision, but its application has given rise to considerable worry among certain professional bodies, in which it is now a practice that when a firm takes in a new partner it does not require him to pay for the full value of his share of the partnership, and particularly of the goodwill in the partnership.

      1653
      6.30 p.m.
      In these circumstances, it was pointed out, it would be harsh to charge Capital Gains Tax on a notional sum which was not related to something which was a genuine commercial transaction. I would make it clear that it has always been the intention of the Revenue to interpret these provisions in such a way as to give effect to and to follow actual commercial arrangements between the members of the partnership. This is an anti-avoidance provision and would not be intended to interfere with proper commercial operations. The hon. Member for Crosby put down an Amendment to the Seventh Schedule which would write into the Bill this rule, in reference to which the Revenue would, in practice, have governed itself, beginning with this kind of case. We find the Amendment perfectly acceptable. It will help to reassure the bodies concerned. In consequence, we have also put down the Amendment to Clause 16.
      Mr. Peter Walker: I am grateful to the Financial Secretary for this Amendment. I am pleased that my hon. Friend the Member for Crosby (Mr. Graham Page) originally raised it. People will always prefer to see matters like this as part of the Bill instead of left to the discretion of the Revenue. As a result of that, people sometimes receive advice which, although in practice it turns out to be wrong, in theory is correct. I think that it was right to make this part of the Bill.
      Amendment agreed to.
      Mr. MacDermot: I beg to move Amendment No. 15, in page 13, line 3, at the beginning to insert "The foregoing provisions of".
      Mr. Speaker: Perhaps it would be for the convenience of the House to discuss with this Amendment the next one, No. 16.
      Mr. MacDermot: I think that that would be convenient, Mr. Speaker.
      These two Amendments have been put down in response to a request that I should look further into the question of the disposals of land acquired before Budget day and disposed of more than 12 months and less than three years after
      1654
      the acquisition. This question was raised by the hon. Member for Barkston Ash (Mr. Alison) in Committee. It arises, of course—with the alteration which we have made of the Bill—as a result of the period affecting land for which land may be held in order to escape liability to the short-term tax. Previously it was three years in future it will be 12 months.
      The question which arose was what should be done in the case of people who have bought land before Budget day and, at the time they bought it, knew that they would have to hold it for three years if they were to dispose of it without incurring a liability to the short-term gains tax. Should they continue to be governed by the old Act, or should they enjoy the benefit of the new provisions? Clearly, there are here three classes of land which was bought before Budget day. First would be land bought before Budget day and sold within 12 months. Clearly, that remains still liable to both Income Tax and, if applicable, Surtax, as a short-term gain. At the other end, there is the case where the land bought before Budget day is not sold until after three years. That escapes the short-term tax and the liability there, under the new provisions, is to the long-term Capital Gains Tax on the gain since Budget day.
      The problem arises with the intermediate class, that is to say, land sold between one and three years after the acquisition. As I have pointed out, as the old law stood, at the time of acquisition the purchaser knew that he would be liable to a short-term tax. It was for that reason that we proposed in the Bill that he should remain liable in the same way as in all cases of property other than land, where he could dispose of it after six months, and escape liability to the short-term tax. We have allowed that position to stand and did not seek to apply to him the longer period of 12 months. It was argued that the provisions affecting land would be unfair compared with post-Budget day acquisitions, which would pay only at the long-term rate if disposed of after 12 months. It was also argued that it would artificially lead to such land being held back from the market. I find that argument not very persuasive, because it was the 1962 Act which achieved this result, and not anything in the Bill.

      1655
      However, on reflection, we agreed that it would be fair to grant some concession here. We did not think that it should be done by exempting all pre-Budget day gains on which the owner fully expected to pay tax at the short-term rate if he disposed of it within three years. We propose in these Amendments that he should be liable by making the whole of the gain taxable, but taxable at the long-term rate of 30 per cent. or, if he can take advantage of it, on the alternative basis of charge. In this way, he benefits and is put in the same position in relation to his holding as someone would be who was to acquire land now and sell it between one and three years after acquisition.
      Mr. Michael Alison: I am very grateful to the Financial Secretary for going over the arguments which were used at that time for making this concession, which will be greatly welcomed by a number of people who have been caught, quite fortuitously, by the new provisions introduced in the Bill. As he said, the substance has now been granted in this respect, in that categories of persons who acquired land before the Budget and after it are now treated in a uniform way. We are very grateful to him for that.
      Mr. Peter Walker: I should like to add my thanks to the Financial Secretary for acceding to this. This is another case of this side of the House having improved the Bill. I should like particularly to congratulate my hon. Friend the Member for Barkston Ash (Mr. Alison). On reference to the earlier debate, I find that the Financial Secretary paid tribute to the logical and cogent way in which this was argued. One saw that respect for the arguments of my hon. Friend when, during the debate in Committee, he used such phrases as, "Therefore, although this is a reasonable point … although … perhaps … just on balance …" and other similar arguments. When one sees a Treasury Minister happily wobbling in this way, one always has hopes that, by the time Report is reached, the Government will have been converted to sensible arguments like those propounded by my hon. Friend. Certainly, in this case these arguments have
      1656
      been respected and the Bill has been improved in this way.
      Amendment agreed to.
      Further Amendment made: In page 13, line 9, at end insert:
      (12) Income tax shall not be charged by virtue of section 10 of the Finance Act 1962 in respect of an acquisition and disposal of land where—

      (a) either the acquisition or the disposal, whichever is the earlier, occurs on or before 6th April, 1965, but the disposal or acquisition, whichever is the later, occurs after 6th April, 1965, and

      (b) the disposal or acquisition, whichever is the later, occurs more than twelve months after the acquisition or disposal (but not more than three years after),

      but in the case of a gain of any amount exempted by the foregoing provisions of this subsection, the gain shall be treated for the purposes of Part III of this Act as if it were a chargeable gain, as defined in Part III of this Act, and any loss so accruing shall be brought into account accordingly; and for those purposes the question whether any and, if so what, gain or loss so accrues shall accordingly be determined in accordance with the provisions applicable to income tax chargeable under Case VII of Schedule D and not in accordance with the provisions of Part III of this Act.
      This subsection shall apply to an option or other right to acquire or dispose of land as it applies to land—[Mr. MacDermot.]

      Clause 17.—(AMENDMENTS OF CASE VII OF SCHEDULE D: CHATTELS SOLD FOR £1,000 OR LESS.)
      Mr. MacDermot: I beg to move Amendment No. 17, in page 13, line 30, to leave out "forming" and to insert "which have formed".
      Mr. Speaker: Perhaps it would be for the convenience of the House if we were to discuss with this Amendments Nos. 18, 19, 20 and, in page 4268, Nos. 64 to 67 inclusive to Clause 29.
      Mr. MacDermot: These numerous Amendments deal with a relatively small point. The first three Amendments to Clause 17 provide that the rule about two or more assets forming part of a set of assets is to apply only if the assets form part of a set of articles of any description all owned at one and the same time by one and the same person. This point was raised in Committee. It was never the intention to try to apply the set provision in a case in which the articles had not all been in common ownership, and my hon. and learned

      1657
      Friend the Solicitor-General undertook in Committee to look at this matter and to see whether provisions could be written, into the Bill to make it clear.
      This the Amendments do. The first three Amendments to Clause 29 achieve the same result. The fourth Amendment to each of these Clauses deals with an essentially drafting point to spell out the original intentions and to avoid any possible misinterpretation. They have the effect that if there is a disposal of a right or interest in or over a chattel, for example if a person leases an interest in a chattel which he owns, then the value of what remains undisposed of—the value of the rights which he retains in the chattel—is to be added to the consideration received for the disposal in determining whether the chattel is chargeable on the gain or loss which has emerged from the transaction.
      The provisions as they stood have been criticised as being open to a possible misinterpretation so as to result in an undue liability to charge. That was not the intention, and I think that the drafting of these provisions makes it clear that it is solely for the purpose of calculating the true gain that one must have regard to the valuation of all the interests in the chattel.
      Amendment agreed to.
      Further Amendments made: In page 13, line 31, after "description", insert:
      "all owned at one time by one person".
      In page 13, line 31 leave out "the same"and insert "that".
      In page 13, line 43, leave out from "property" to end of line 45 and insert:

      (a) in the first instance those subsections shall be applied in relation to the asset as a whole, taking the consideration as including the market value of what remains undisposed of, in addition to the actual consideration,

      (b) where the sum of the actual consideration and that market value exceeds one thousand pounds, the limitation on the amount of income tax (including surtax) in subsection (1) shall be to half the difference between that sum and one thousand pounds multiplied by the fraction equal to the actual consideration divided by the said sum, and

      (c) where that sum is less than one thousand pounds any loss shall be restricted under subsection (2) of this section by deeming the actual consideration to be the actual consideration plus the said fraction of the difference between the said sum and one thousand pounds.—[Mr. MacDermot.]

    Clause 19.—(CAPITAL GAINS TAX.)
    6.45 p.m.
    Mr. Peter Walker: I beg to move Amendment No. 21, in page 15, line 10, at the end to insert:
    "less three-tenths of one per cent. for each one per cent. that the Index of Retail Prices, prepared by the Ministry of Labour, has risen in the period between the date that the chargeable asset was acquired and the date at which the disposal of the chargeable asset took place; or, in the event of assets acquired prior to 5th April, 1965, less three-tenths of one per cent. for each one per cent. that the Index of Retail Prices has risen in the period between 5th April, 1965, and the date at which the disposal of the chargeable asset took place".
    The Amendment, which stands in the names of my right hon. Friends and myself, is perhaps one of the most important Amendments concerning the Capital Gains Tax provisions of the Bill. It is designed to protect persons from paying tax upon the enhancement of the value of their property resulting from inflation. The House will see that we have endeavoured to relate this to the Ministry of Labour retail price index. Although this is not the most perfect instrument for certain items, it is the only available instrument which could be used to ascertain month by month the degree of inflation which has taken place within the economy.
    The Amendment is of particular importance during the present time when we are suffering from considerable inflation in the economy. To give an illustration, in the short time that the Government have been in power there has been a rise in the retail price index of 4 per cent. This means that had there been a Capital Gains Tax of the dimensions suggested in the Bill, and had some person purchased property on the day the Government came into power and disposed of it at the present time, then 4 per cent. of that value would have been subject to Capital Gains Tax, although in terms of purchasing power the realisation of those goods would not have been more satisfactory to the person concerned than had they been sold at the original price on the day of the General Election.
    This is very important in many spheres. It is important in terms of the general provisions of the Bill in respect of chattels, for over the decades we have seen the value of many articles increase because of the general inflation. We suggest that

    1659
    if over a period of 20 or 30 years general inflation is to the extent, for example, of 100 per cent., then it is absurd that if a person disposes of property at the end of that period he should have a deduction of 30 per cent., or whatever is the appropriate rate, from what has been an enhancement only in paper terms and certainly not an enhancement in general purchasing power.
    Various formulae are used throughout the world to protect persons, where a Capital Gains Tax has been applied, from the ravages of inflation. Hon. Members opposite frequently quote the economic position in Sweden and the various taxation methods which are used there. In Sweden, where Capital Gains Tax applies, the percentage of the Capital Gains Tax decreases over a period of time. It is true that in Sweden it is not directly related to any inflationary position, but it is generally assumed that over a period of years one can in any case expect an enhancement of value and that it is wrong to tax that enhancement.
    I hope that hon. Members on both sides of the House will agree that the purpose of the Capital Gains Tax is to tax those persons who make a genuine profit out of a capital transaction and not, for example, to tax a person who perhaps owns two or three houses for the purpose of obtaining an income. We all know of the example of a widow relying on an income from the rent of two or three houses. We also know that over a period of years the value of those houses has increased. If for some reason, perhaps because of a decision to move to some other part of the country, the widow decided to sell those houses after 20 years, and to buy three identical houses providing a similar rent in another part of the country, it is almost a certainty that there would be a considerable difference in the capital value of her properties between the original date on which they were purchased and the date on which they were sold 30 years later. Yet, in undertaking what in this case is a transfer of assets, that person would have a Capital Gains Tax imposed of 30 per cent., or whatever is the appropriate rate for her, of that transaction.
    I would emphasise that the Amendment is important only to the long-term
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    investor. It is of no importance to the speculator, because the speculator who makes a capital profit over a short time is hardly affected by the provisions of the Amendment.
    Surely no hon. Member can argue that a person who, over a period of 30 years, sees the enhancement of a piece of property from £1,000 to £1,500 should be treated in exactly the same way for taxation purposes as a person who receives an enhancement of property from £1,000 to £1,500 over 18 months. But under the Bill the position will be that if a person buys a property in 1965 for £1,000 and sells it 20 years later for £1,500, he will be taxed at exactly the same rate as a person who made a similar transaction 18 months prior to the selling of the property. It means that people who are investing to provide for their retirement—shopkeepers and others who are self-employed, many of whom invest to provide for their later years—would find themselves heavily penalised by the taxation which would be imposed not on any trading transaction which had taken place, but because of inflationary tendencies in the economy.
    If the Government are claiming that they are endeavouring to stop inflation—if they now believe that as a result of recent happenings their incomes policy is succeeding—they should admit that the Amendment would not cost them a penny; that is, as long as they believe that their policies can check inflation. The only possible reason for the Government not accepting the Amendment is that they expect inflation to take place during their period in office. I agree that there is every sign that that expectation will be realised. Indeed, they are doing exceedingly well in the first few months of their term of office to see that it is realised. As I say, if they are genuine in their belief that inflation can be checked, the Amendment should appeal to them, particularly since acceptance of it would not cost any money.
    The Amendment is drafted to have a direct relationship to inflationary trends and it is concerned particularly with small investors, people who invest in various types of security, such as life assurance. It is well known that one of the ways in which the life offices have appealed to the public over the years is that their with-profit policies provide a hedge against

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    inflation. The success of their investment policies is such that they are able to pay out, at the end of a 20- or 30-year period, a far greater sum than the premiums paid. It is through these offices that the majority of families make provivision, by means of life assurance, for later years.
    Under the Bill as drafted these life funds will be subject to the full blast of the Capital Gains Tax. It may well be that after the new Clause which was accepted last night the Government will decide to reduce the rate of tax on life funds to 30 per cent. That would, to some extent, help to lessen the ravages which the Government's taxation measures will have on life funds.
    Many of the investments of life assurance companies are in dated gilt-edged stocks. If inflation took place in the 10 to 20 years prior to the date of redemption of those stocks, the gain would probably be tax-free as a result of the exemption provided by the Amendment, if it is accepted. Its acceptance would, therefore, go some way towards relieving the damage that will be done to the attractiveness of life policies as a result of the imposition of the Capital Gains Tax. I strongly commend the Amendment to the House. It would mean that the tax would apply only to genuine gains and not to artificial gains.
    Mr. Terence L. Higgins: I strongly support the Amendment and the remarks of my hon. Friend the Member for Worcester (Mr. Peter Walker) because this is indeed one of the most important Amendments affecting the capital gains aspects of the Bill. I regret that the algebraic formula which was suggested in Committee to make allowance for the effect of inflation was not accepted by the Government. I hope, however, that they will accept the Amendment because it is perfectly clear, from an analytical point of view, that it should be accepted.
    In considering this matter hon. Gentlemen opposite have allowed their political prejudicies to overcome their analysis of the problem. There is a genuine difference in analysis between the two sides and it is to this aspect that I will primarily address my remarks. In other words, I will try to persuade impartial hon. and right hon. Members, such as yourself, Mr. Speaker—for if the Opposition do rather
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    worse than they did last night you may have a casting vote on this matter—of the importance of accepting the Amendment.
    When we consider a Capital Gains Tax we must surely consider taxing gains in real terms. It is wrong to tax not only gains in real terms but gains which merely reflect a change in the value of money. I suggest that we must first consider the important fact that the yield which the Government will get from this form of taxation—if the Amendment is not accepted—will depend on the rate of inflation which they allow to happen. This is the crucial point. The Government will collect more in taxation from people who happen to own capital if inflation goes on unchecked than if the Government adopt a responsible attitude and restrict the rate of inflation or attempt to try to halt it.
    This is a totally wrong position for any responsible Government to put themselves in. Suppose, as a result in inflation, an asset which was originally worth £100 goes up in money value to £200, then the Government will collect twice as much in taxation as if the rate of inflation had only been such as to increase the money value of the asset to £150. I suggest, therefore, that we must consider the matter in real not money terms. For if we do not amend the Bill in the way suggested by my hon. Friend the tax will be charged not on capital gains but on anyone who happens to own real assets. It is because they will not think in real terms that the analysis of hon. Gentlemen opposite has gone awry.
    Secondly, as my hon. Friend the Member for Worcester explained in some detail, it may happen that someone makes a capital gain over a short period, when the value of money has scarcely changed at all—and, say, the value of his assets has gone up from £100 to £120. He will be charged precisely the same tax as someone whose assets have appreciated from £100 to £120 over a much longer period, during which time the value of money has changed considerably. It is surely evident that that is totally unfair because, on the one hand, we have someone who has made a large real increase in the value of his assets and, on the other hand, we have someone who has made a very small increase in the real value of his assets—and the rest simply reflects a change in the value of money. Are

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    both to be charged the same amount in taxtion? On common-sense grounds it must be inequitable to do so. Indeed, I cannot understand why hon. Gentlemen opposite have adopted the view they have on this matter. Their point of view was clearly expressed in Committee when the Financial Secretary said:
    "I am referring to spending power as between different sections of the community, judged, in terms of money. If people increase their money incomes, whether they do so in the form of wages or capital gains, they have an increase in spending power."—[OFFICIAL REPORT, 25th May, 1965; Vol. 713, c. 319.]
    This is simply not so. In terms of spending power expressed as one must express it—in terms of command over the goods one can get by spending—this is not true. Hon. Gentlemen opposite have extended the principle that one should tax people who happen to make real capital gains to the principle that people should be taxed on their capital whether or not they make real capital gains. That is absurd.
    The Financial Secretary got himself tied up when in the Committee stage of the Bill, in column 322, he spoke about the redistributive effects of inflation on various kinds of income receivers. The argument he spelt out then is fairly complicated. He said that people who hold equity shares will gain at the expense of those who hold fixed-income securities, and he also suggests they will gain at the expense of wage earners. The important thing is the timing aspect of this, and I would commend to him certain works of Professor Phelps-Brown, of the London School of Economics. Frequently we may find that wage earners are gaining on those who hold different types of assets. But at other times we may not, and it would be quite wrong for him to pursue the kind of argument we find in column 322 of the OFFICIAL REPORT of 25th May, and suggest, therefore, that we must extend this tax to cover money gains as well as real gains.
    7.0 p.m.
    Finally, I want to turn to the underlying analysis of this whole question. I can see that hon. Gentlemen on the other side genuinely believe they are right about this, but I want if I may to persuade hon. Gentlemen that the basis of their argument is false.
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    It is most cogently expressed on page 366 of the Minority Report of the Royal Commission on Taxation of Profits and Income, one of the authors of which was Dr. Kaldor. The argument he sets out in paragraph 37 has a logical fallacy in it, which is fairly unusual in an analytical matter of this kind. His opening words are:
    "We do not deny that the rise in capital values that occurs in the course of an inflation does not increase the taxable capacity of the recipients in the same way as a rise in capital values during the period of steady prices. But we cannot regard this as a justification for excluding capital gains from taxation within the general framework of a tax system which sets out to tax income and not consumption."
    The point I want to make is that the Report says that this is not a reason for not taxing capital gains, but it does not says it is not a reason for not making an allowance for inflation when computing capital gains. I would suggest that in reading this, the hon. Gentlemen opposite, looking at it from their own basic assumptions, have misunderstood what the author of that Minority Report was advocating.
    He goes on to say:
    "If the proceeds of the gain are spent the recipient derives the same benefit as he does in spending taxed income."
    That is the crux of the matter. If the value of money changes, as I have already said, the owners of the asset gains nothing in real terms. The gain which he has made is purely a monetary gain and not a real gain. Therefore, I, would suggest it would be wrong to tax him on an increase in money terms. It is not right to say that he should be taxed because all other income receivers are also only gaining in money terms. The person who has the asset in the first place has already paid tax when he acquired that asset, because he has bought it out of taxed income. I see some hesitation on the faces of the hon. Gentlemen opposite. If one has already paid tax before one buys an asset and then it appreciates purely in money terms and not in real terms, it would be wrong for the owner to pay tax again when he uses some part of the value of that asset. Unless the Amendment is accepted, there will be a double taxation. The equitable thing to do would therefore be to make an allowance in computing the capital gain for the effect of inflation.

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    The argument which has been put forward in paragraph 37 of the Minority Report, which underlies the whole case that has come from the other side, is fallacious, because what the person who liquidates a paper gain on a capital asset is doing is using up part of his asset. It would be much the same to say that if I were to have £100 and I spent £10 out of that, I ought to be taxed on the £10 because I derive the same benefit as someone who spends £10 out of taxed income. That is quite absurd. If we do not accept the Amendment, on this kind of capital gain we shall have both Income Tax on the money used to acquire the asset and an expenditure tax if part of the capital is used to buy something.
    I do not think there is a hole in this argument. I believe that the case put forward on behalf of the Government is wrong, and unless we accept the Amendment we shall have, on people who happen to have acquired real assets in an inflationary situation, both a tax when they have acquired money to buy the asset and a tax when they have used part of the asset to buy something else.
    Mr. Robert Sheldon: Would not the hon. Gentleman accept that when purchasing his asset, the money with which the asset is purchased is also taxed?
    Mr. Higgins: Yes. That is precisely my argument; but he is taxed a second time when he spends it or liquidates what is purely a paper gain.
    I am convinced that there should be an allowance made for the effect of inflation in computing capital gains. Unless we do that, what the hon. Gentlemen opposite are saying—and they ought to come out in the open and say it—is that anyone who happens to have an asset and who happens to live in an inflationary society must have part of it taxed away. This has nothing to do with a capital gain at all. This is a wealth tax.
    Mr. Joel Barnett: The hon. Gentleman the Member for Worthing (Mr. Higgins) showed his customary logical approach to the subject, but he did not allow himself to go far enough. I cannot allot five marks out of ten to the hon. Gentlemen, unlike the hon. Member for Shipley (Mr. Hirst) when he allotted five out of ten to my
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    right hon. Friend the Chief Secretary because they have presented a very poor case for their own Amendment. Whether we like it or not, inflation is an economic fact of life, and, of course, one can make political capital out of whichever party happens to be in power at a particular time. But one has to recognise in effecting a reasonable and equitable tax system that the inflationary situation that we have is not made any better by the sneers one hears from hon. Gentlemen opposite at attempts to do something about an incomes and prices policy. Neither is it made any better by the genuine disbelievers who have nothing else to offer than reverting back to the system we have had over the previous thirteen years.
    Sir D. Glover: I think that there are very few Members on this side who are members of the Transport and General Workers Union.
    Mr. Barnett: The hon. and gallant Gentleman is doing his best, in his usual way, and adds strength to the point I was making. One can make political capital out of one particular Government having during its course of life a certain degree of inflation, but I would have thought that all hon. and right hon. Gentlemen would have a vested interest in seeing that we had an incomes and prices policy that was effective to some degree. However, it may be that I am wrong about that.
    I would say to the hon. and right hon. Gentlemen who support this Amendment, why have they never put down an Amendment for the reduction of Income Tax on allow for inflation? The right hon. Gentleman the Member for Bexley (Mr. Heath) shakes his head, but it is equally logical. There is precisely the same logic in that as in the Amendment, and I am afraid the hon. Gentleman the Member for Worthing did not make his case at all. The fact that we tax inflationary increases in income means that it falls much harder on a person with no capital at all. There is no real increase in a wage when that increase is only equal to the amount of inflation, yet we still tax it at the same standard rate or, perhaps, reduced rates of tax.
    Mr. Fletcher-Cooke: The hon. Gentleman has said that nothing was done about the Income Tax as it affected an

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    increase in wages that might have been due to inflation. That is not true. Year after year the personal and other allowances were raised precisely to make sure that the amount of tax extracted was not increased by the factor of inflation. That was done over the last 13 years.
    Mr. Barnett: One can give all sorts of reasons now why a particular personal allowance is given. [Interruption.] If hon. Members opposite want to make speeches, let them do so in their own time. I intend to make my own speech now.
    To be logical, if one wants to give some assistance to taxpayers who suffer by inflation one should put forward suggestions that will equally affect those who are subject to Income Tax, because their only source of revenue is their income, and the increase in their income. The crux of the matter is that right hon. and hon. Members opposite do not accept our contention that increases in capital should be taxed in precisely the same way as increases in income. If they do not accept that premise, they will find all sorts of methods of trying to alleviate the effects of the Capital Gains Tax—
    Mr. Higgins: I thank the hon. Gentleman for giving way, because I know that we are all trying to find the right answer. Would he not agree that if his argument is carried to its logical conclusion we ought to have a Capital Gains Tax on capital and make some allowances on income, but there are people with capital who are also subject to progressive Income Tax on the dividends that are paid? The purpose of the tax is not to adjust inequities due to inflation; that is something the Government should do, for example, with old-age non-pensioners.
    Mr. Barnett: I am sure that the hon. Gentleman would want to see as equitable a tax system as possible. Once we accept the basic point that one taxes increases in capital similarly to increases in income, I say that we should have a tax affecting both in a like way. If, as is suggested in the Amendment, we have relief in advance because there might be inflation in the future, then, in equity, we must allow it all round. Hon. Members opposite know that if we were to give relief in this way a given Chancellor in a given year, knowing that he had
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    certain revenue from Capital Gains Tax or Income Tax, Surtax, or Corporation Tax, and knowing that it was in some way reduced because of the inflationary spiral, all that would happen, assuming one had the same level of Government expenditure, would be that he would slightly increase the standard rate, as it were, to allow for the small amount given as a concession, or he would reduce public expenditure. That cannot be disputed.
    I believe that the supporters of the Amendment have put forward a foolish point and a purely political one. The Amendment could be harmful by giving to taxpayers the completely false impression that it would help them. It would do nothing of the sort.
    7.15 p.m.
    Mr. Hirst: The Government really must be in a jam over this Amendment when we find the hon. Member for Heywood and Royton (Mr. Barnett), who usually argues so closely, setting up so many hares that he does not know what course he is on. When we discussed this point in Committee, I remember being rather cross with the Financial Secretary for giving an idea of the Government's intentions before we had deployed our arguments on the appropriate part of the Bill. I hope that the delay we have so far had will have given him some opportunity to think again, because there is considerable feeling over this question.
    I agree that we have had inflation for a long time. In Committee, I went back in that respect to Queen Anne, though I do not propose to do so now. What makes us on this side more careful is that we cannot forget that inflation went on at about 6 per cent. per annum when the Labour Party was in power, fell very considerably when the Conservative Party was in power and is now running at the rate of 8 per cent. a year. If, as every sign indicates, inflation continues at the same rate in the second half of this Government's year as in the first, the result will be a great inroad into the value of assets in money terms.
    If, in a few years, an asset worth £1,000 is reduced to an effective £400, it means that the Government are not only embarking on a policy of capital gains but are, on top, pursuing a policy of capital levy. There is talk of an expenditure tax. I do not mind what the label is, but with

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    the fall in the value of money the Government are not only taxing personal capital gains but gradually eroding the country's capital. This does not just apply to a few rich people. It applies to lots of people who have their little parcels of savings. It applies to trade unions, who have great sums in equities.
    It is important in these discussions to try to get behind the Government's mind. I do not know whether the Financial Secretary represented the Government's mind on the subject when he said in Committee on 25th May:
    "We have heard a lot about the position of the investor who makes a gain in money terms which does not reflect the real gain in terms of purchasing power. To put it the other way round, there is not a real gain in purchasing power because it is posited"—
    What dreadful terms one picks up from the Treasury!:
    "that the monetary gain is only sufficient to maintain the value in terms of purchasing power of the original investment."
    This is meant to be a clarification!:
    "But in that situation, which is one of inflation, one must also look at the position of investors who do not make gains, investors who have invested in other forms of investment where they do not make gains."—[OFFICIAL REPORT, 25th May, 1963; Vol. 713, c. 370.]
    What does that mean—apart from the hon. and learned Gentleman's longwinded terms?
    What the Financial Secretary meant was that there was something wrong, something immoral, in a person endeavouring to maintain capital for his business or family. He meant that there was something positively wrong there, and that it had to bear not only a Capital Gains Tax but a capital levy; that some people were so foolish, so unwise, so unbusinesslike that they did not know how to go about things, so they should not be allowed to protect the value of their money in real terms. If that is still the policy of the Government—and I have spoken to expose this because it ought to be exposed—let us have it made clear. Then the country can learn what it is. If it is not the policy of the Government, then without a shadow of doubt the Amendment moved by my hon. Friend ought to be accepted forthwith.
    Mr. Harold Lever: We are all grateful to the hon. Member who raised this point and to the
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    Opposition in relation to this matter. I hope that my hon. and learned Friend the Financial Secretary will not mind my saying that the Opposition are doing their best to enlighten the House and to help to improve the Bill. Look at what they did yesterday to effect what, after all, was a minor improvement, unless it was something to atone for the unjust action taken in relation to the Chancellor of the Exchequer earlier.
    I acquit the Opposition of any fractious, foolish action in raising this point. In raising the point about Capital Gains Tax they have not debased the currency by talking of double tax. Double tax, so far as it has a useful meaning, is when there is applied to the same corpus of profit the same tax more than once. It is not at all the same to say that indirectly or directly money bears tax more than once. This has been happening for centuries inevitably and inescapably and without injustice. If I buy a motor car I buy it from my taxed income. If that income bears Surtax it is too bad, but I am using my taxed money to buy a taxed article just the same as when I buy petrol in order to run that car.
    This talk about double tax is beside the point but under a cocoon of bad argument there is a real grievance. It is that tax is levied not on the real but on the paper profits. Here not only have the Opposition a case but they have an unanswerable case. The only trouble about the unanswerable case is that it is an utterly useless one to the House. It is unanswerable and it is unremediable at the same time. If we were to attempt to remedy the grievance, which is a grievance inevitable in our lives and since the Battle of Waterloo our currency has been depreciating, it is inevitable that there should be an exactly unremediable injustice arising from the currency.
    A man may start a business with £10,000 as a leather merchant and at the end of the year he has £10,500. The £500 represents his profit and he is duly taxed. No one says that we should apply a logarithmic table to what he has earned and that there has been an addition of 5 per cent. to his net capital so that therefore, instead of 10s. in the £ of his paper profit being taken, he should be given a reduction on last year's tax. No one suggests that. The trouble about the

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    case of the Opposition is that it is an excellent theoretical case, but it is unanswerable. My hon. Friends are unwise to attempt to answer an unanswerable case. The real difficulty is that we all wish we had a currency which did not alter, but, having one which alters in an unpredictable way at unpredictable rates, we have to do the best we can in our tax arrangements. The tax on the paper profit, that is, in terms of currency, is the only one which can be used by the tax gatherer in deciding our affairs.
    Therefore, we pay the capital profit on precisely the same basis as the income profit. Many a man, for example, holds Government stock which produces an income profit, which has always been taxed even under the benign, intelligent, flexible Conservative government. None of these remedies was applied to the unfortunate chap who had Government stock in that period and then found the capital value declining or the buying power rate of the £ declining. That was not a case in which Conservative Chancellors were moved to rebate tax on income. We have to act in a sensible and fair manner. One of the things we have to do in deciding the rate of Income Tax and Capital Gains Tax is to take that factor into account.
    It is not a silly argument which the Opposition make but one which cannot be exactly remedied in any sensible way. The sensible thing to do in fixing the rates of these taxes is to remember that we are dealing with a currency which changes in value. That is what the Chancellor has done. Whether he has succeeded to the satisfaction of every hon. Member is a matter for argument, but a different argument from that put forward by this Amendment, which cannot be acceptable to any Chancellor with any opinion about this tax or any other.
    Mr. David Price: The hon. Member for Manchester, Cheetham (Mr. Harold Lever) is not quite up to his best form tonight because if he had studied the method of raising Capital Gains Tax in other countries he would have found that the proposal made by the Chancellor is unique. Other countries have a descending rate of capital gains tax. That is one way of meeting this problem
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    and the other way is that proposed by the Amendment.
    In support of my hon. Friend the Member for Shipley (Mr. Hirst) and my hon. Friend the Member for Worthing (Mr. Higgins) I will give the House one illustration of the extent to which there is an element of capital levy in what is presented to us as a capital gains tax. It has never been presented honestly by the Chancellor as a capital levy. The longer the asset is held and the higher the rate of inflation during the term of the asset, the greater will be the element of capital levy in the taxable charge.
    If this tax at the rate proposed by the Government had been in force in 1914 and continued unamended to the present day, we would have the situation that an asset worth £1,000 in 1914 if sold in 1964, 50 years later, would realise £4,930. That would have been the mystery change in the paper value to maintain its real value. There would be a gain of £3,930, which works out at a tax of £1,179, leaving £3,751. If that were scaled down with the depreciating value of money according to the Treasury Index, we find that in 1914 terms the person would be left not with £1,000 but with £761. That is an element of capital levy of somewhere between 23 per cent. and 24 per cent. over 50 years I hope that that simple illustration will show—[An hon. Member: "Nonsense."] There is no nonsense about it. These figures are taken from the Treasury Index. If the hon. Member for Westhoughton (Mr. J. T. Price) suggests that my arithmetic is wrong, let him say so.
    Mr. J. T. Price: I did not say it was nonsense. Someone else may have used that description, but I did not. I was not saying that it was nonsense but I was disagreeing because the hon. Member has not presented all the factors in the argument. If he is dealing with a physical asset he knows from his business experience, which is considerable, that one has to deal with items of depreciation. One cannot discount the fact that the asset is wearing out.
    Mr. David Price: The hon. Member for Westhoughton, with his normal understanding of these matters, is adding to my argument. I have tried to illustrate how much the element of capital levy

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    there is in this so-called Capital Gains Tax. It would be much straighter of the Government to say that there is an element of capital levy in this and let us have that on the record. Let us also remember that this tax is chargeable not only on the living but on the dead. A famous English poet once wrote:
    "Oh grave! where is thy victory?
    Oh death! where is thy sting?"
    I can only observe that Alexander Pope had certainly never met Dr. Kaldor or his sidekick, the present Chancellor of the Exchequer.
    7.30 p.m.
    Mr. H. P. G. Channon: Most hon. Members on this side would agree with the first half of the proposition advanced by the hon. Member for Manchester, Cheetham (Mr. Harold Lever), namely, that the Opposition have an unanswerable case. I am glad to have the hon. Gentleman's support on that. However, I do not think that our case is irremediable, as the hon. Gentleman went on to argue. I was particularly interested in the hon. Gentleman's reference to the Battle of Waterloo, because I was trying to calculate—it is an impossible task to calculate—what would have happened to an asset worth, say, £1,000 at the time of the Battle of Waterloo. Capital Gains Tax at 30 per cent., taking this rate, would probably have been paid on it about three or four times during the course of the 150 years which have since elapsed. I should not think that there would be anything left of the asset.
    I agree with the remark made by my hon. Friend the Member for Worcester (Mr. Peter Walker), both in Committee and today, that the subject of this debate is the most important aspect of the Capital Gains Tax. If this country is to operate a Capital Gains Tax, which is something which I do not oppose, it must be a Capital Gains Tax which is equitable and fair. I am sorry that my definition of "equitable and fair" does not meet with the approval of the Government. I maintain that, if it is sought to introduce a tax on capital gains, it is totally unfair to levy it, not on real capital gains, but on notional capital gains. I am certain that as time passes no Government would ever be able to go on supporting this tax as at present conceived.
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    As the years pass, the full force of what is proposed will become clear, and I do not think it will be possible for the tax to last for long.
    What will happen after 50 years of the operation of this tax, if it remains totally unamended? My hon. Friend the Member for Eastleigh (Mr. David Price) pointed out how the value of any asset held over the past 50 years would have been reduced by as much as one-quarter had this tax been in force during that period. I see no reason for assuming that the rate of inflation over the next 50 years will be smaller than that which obtained over the last 50 years. At the present rate it will be much greater. What would happen to an investment worth £100 today which does not appreciate at all in real terms but on which Capital Gains Tax is paid in 15 years' time?
    My hon. Friend the Member for Shipley (Mr. Hirst) reminded the House of some remarks made in Committee by the Financial Secretary about people whose investments have made no net gain. I ask the House to consider someone whose investments have made no real gain, someone who has been unfortunate, unskilful or unlucky enough to invest in a company whose assets have not in the past 10 years made any real gain and which will not in the next 10 years make any real gain. Such a person will be penalised to an enormous extent when he has to pay Capital Gains Tax. If the tax were to be levied at a rate much lower than 30 per cent., it would be possible to argue that this provision would not matter very much. It is totally inequitable and unfair to fix the rate at 30 per cent. but to make no allowance whatsoever for the fall in the value of money.
    That is the only point I wish to make today. I support the idea of a Capital Gains Tax, but I do not support this Capital Gains Tax. Any capital gains tax introduced in this country must be one which taxes real capital gains. If such a tax were introduced, I, for one, would not oppose it. I hope that we shall fight to the bitter end in opposing this unfair tax.
    Mr. MacDermot: This subject is one which a number of hon. Members said is a very important one in relation to the Capital Gains Tax. I would not disagree with that proposition. It is one

    1675
    which we discussed at some length in Committee. Hon. Members opposite have tabled a no doubt carefully considered Amendment raising the same question in a different form here again on Report. The arguments which we have heard today in support of the Amendment are, with one exception, the same as those which we heard in Committee. The one exception is the rather remarkable argument adduced by the hon. Member for Worthing (Mr. Higgins) which went slightly wide of the Amendment and suggested, indeed, that the whole of Capital Gains Tax was a form of double taxation. My hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), in his usual cogent way, disposed of that argument. If the argument were logical and right, it would, for example, mean that all forms of direct taxation would be forms of double taxation.
    Mr. Higgins: I entirely accept the terminological point made by the hon. Member for Manchester, Cheetham (Mr. Harold Lever) about double taxation, but I do not think that the fact that I used that term loosely to cover the point I was making affects the argument. The hon. Member for Cheetham merely made a terminological amendment to my argument.
    Mr. MacDermot: Then the hon. Gentleman's argument is another form of the same argument, which is that one should build into the Capital Gains Tax a hedge against inflation. It is quite right that many people deliberately, when they are considering investment, rather than seeking from their investment to get a substantial addition to their income, seek a form of investment the primary object of which is to provide a hedge against inflation. An Amendment of this character, if carried, would benefit, in particular, people who have invested their money either in land or in equities.
    The arguments which have been adduced in support of the Amendment gave us examples of the widow living on the rent from two small houses. We are used to hearing from hon. Members opposite the illustration of the widow in support of their arguments. They naturally do not support their arguments by deploying the case of the property dealer, for example, who would be the
    1676
    chief beneficiary from an exemption of this kind. If the concern of hon. Members opposite is with the widow, I must point out that their Amendment would not help the widow. [Interruption.] The hon. Member for Eastleigh (Mr. David Price) had not arrived in the Chamber when the Amendment was moved by the hon. Member for Worcester (Mr. Peter Walker), who supported his argument by quoting the example of the widow with two small houses.
    I am merely pointing out to hon. Members opposite that the lady in question would not benefit from the Amendment, unless she were a Surtax payer or somebody very near to the Surtax class. The Amendment would benefit only those who would pay Capital Gains Tax at the flat rate of 30 per cent. What hon. Members opposite seem to forget, or choose not to remember, is that the flat rate of 30 per cent. is one which by and large will apply only to the Surtax payer. The vast majority of ordinary taxpayers, if called upon to pay Capital Gains Tax, would benefit from the alternative basis of charge.
    If the Amendment were carried, the result would be that the person whose marginal rate of tax is the ordinary standard rate of Income Tax would pay Capital Gains Tax at just over 20 per cent. If the marginal rate were at the reduced rate of tax, which a very large proportion of taxpayers are paying, it would be lower still. None of those people is to be protected under the Opposition's Amendment. Their Amendment is one whose sole effect would be to assist the Surtax payer who is paying tax on his capital gains at the flat rate of 30 per cent.
    The arguments have been stated very fully before. I never sought to deny in our debates in Committee that there can be an inflationary element in a capital gain. It is one of the deplorable effects of inflation—something which we all seek to cure. I respond to the invitation of my hon. Friend the Member for Cheetham to concede that fact, and I concede it as I did in Committee. I also entirely agree with him that the right way and the only practical way to give recognition to this factor in relation to a Capital Gains Tax is to take it into account and give proper weight to it when determining the

    1677
    rate of tax. This again is a point which I made, and indeed it is the first point which I made when we were discussing this matter in Committee.
    In our debate on the rate of tax I was weighing up and showing the various factors which have got to be taken into consideration in determining a proper rate of tax. One of them is that in a time of inflation there will be this somewhat artificial inflationary element in the gain. Hon. Members know that, generally speaking, our starting point is that capital gains, insofar as they represent an increase in wealth, should be subject to taxation as much as income. If matters stood there and no other factors were taken into account, one would aim at fixing the Capital Gains Tax at a comparable rate to Income Tax and Surtax. That has been done in some countries which have imposed a capital gains tax.
    However, there are other factors, and this is one of them. Giving effect to it is one of the reasons why my right hon. Friend has fixed the rate much lower than the rate of tax on income—as I say, 30 per cent. for the Surtax payer, 20 per cent. for the standard rate Income Tax payer, and lower rates than that for the person on the reduced rate.
    Mr. Heath: Could the Financial Secretary address his mind to the one point to which I have never had an answer from the other side of the House? It is this. If out of one's savings one buys an article which is on a level which is subject to Capital Gains Tax—if, for example, one buys a grand piano and the money value of this increases with the rate of inflation, which is roughly what has happened since 1945 with these articles, and one wants to sell it and buy a similar article, one is subject to the rate. This means that one cannot get a comparable article. It does not matter what adjustments are made about the rates; it does not alter this fact.
    Mr. Brian Walden: Bad luck.
    Mr. Heath: The hon. Gentleman who is a distinguished economist and a Parliamentary Private Secretary says "Bad luck". I believe it is worse than that. It is a bad tax.
    Mr. MacDermot: As I said to the right hon. Gentleman before, and as I said in Committee, the answer is that if one is to seek to build into the tax system a built-in hedge against inflation, the place to start is not with the investor in land and the owner of equity capital. That is, broadly speaking, the people for whose benefit this Amendment is designed. Looking at it from the capital point of view, the people who are really hardest hit in a period of inflation are not the equity owners. Part of the passage in which I dealt with this matter in Committee has been quoted. The fact is that during a period of inflation the inflation itself enhances the gain of the equity owner compared with other owners of property. It is the person who is living on a small fixed income who suffers most from inflation. There is no suggestion of a special form of tax rebate to assist the person who is living on a small fixed income derived from capital. These are the people who suffer most.
    It is an impossible task to write into the taxation system hedges against inflation. One country has tried it but abandoned the attempt. If one is to attempt to do it, the place to start is not the place which hon. Members opposite have chosen in their Amendment. The argument which has already been used is perfectly sound, namely, that inflation affects not only the person who makes capital gains but the wage-earner as well. The wage-earner whose wages increase, even if the increase is such that it does not bring him into a higher marginal rate of tax, still on average will be paying a higher rate.
    7.45 p.m.
    Take the case of a wage-earner who has had an increase in his wages, which exactly keep pace with the increase in the cost of living, and nothing more. Because the proportion of his earnings taxed at the marginal rate increases, the effect is that his average rate of tax over his whole earnings will increase. There is no built-in protection against that. So the argument can continue. This is a fact that affects people throughout our taxation system.
    The other argument that was put forward boldly by the hon. Member for Eastleigh was that there was no other country that had introduced a capital

    1679
    gains tax that had not got some built-in provision against inflation. I think he suggested they all had an abatement system, as it is called, providing for a gradual reduction in the rate of tax depending on the length of time for which the asset is held. The hon. Gentleman is mistaken. The country which has a capital gains tax nearest in type to the one that we are introducing is America. America tried the abatement system in the 1920s. It has been abandoned there. They found in American that it did not work, that it did not produce justice, and they got rid of it.
    We were given the example of Sweden. Sweden, like many other countries which have introduced the abatement system, did so in relation to an entirely different kind of capital gain tax. They did so starting with a tax comparable to our short-term tax, where the whole of the gains are added to the income and are liable to their equivalent of Income Tax and Surtax, a higher rate of tax. If one does that, one must provide for abatement provisions. But, as I said in Committee, I understand that there has been much criticism of these provisions in Sweden, and the Swedish Government have appointed a Committee to look into the question of a capital gains tax.
    Mr. John Hall: The hon. and learned Gentleman mentioned America. Would he tell the House the rate at which the capital gains tax is charged in America and the point in income at which it impinges on the individual?
    Mr. MacDermot: I think I am right in saying that the rate is 25 per cent. Our proposed rate is 30 per cent. for the Surtax payer and 20 per cent. for the ordinary taxpayer. I do not know what comfort the hon. Gentleman gets from that. He is presumably talking about the federal taxes. There are also the State taxes. If I may remind hon. Members of of "MacDermot's Law", is they want to compare the rate of one tax in America with ours, they must also compare the rate of other taxes in order to draw a true comparison.
    Mr. Julian Ridsdale: Does not the rate begin at £10,000 a year there?
    Mr. MacDermot: I do not know if it is correct—
    Mr. Harold Lever: It is not relevant.
    Mr. MacDermot: —but if it is correct, as my hon. Friend says, it is not relevant to the argument at all. What we are concerned with here is whether there ought to be a built-in provision for hedging against inflation. The Amendment proposes such an abatement for Surtax payers. What difference does it make if the tax with which we are concerned in America begins with people receiving £10,000 a year?
    Mr. Peter Walker: If I may take up the point about this being a large Surtax payer, if the only objection that the hon. and learned Gentleman has to the Amendment is that it will apply only to those on the 30 per cent. rate I must tell him that we obviously meant it to apply in proportion to the lower rate as well. I want to make it quite clear to the House that we would welcome any further Amendment needed to ensure that this applies to the lower rate.
    Mr. MacDermot: As this is the Report stage of the Bill and one has no opportunity to amend them, I can only address my argument to the Amendments which are moved; but, for the reasons which I have given, we would not in any event find acceptable any provision which attempted to build in a hedge against inflation.
    Mr. John Hall: I should like to take up the point raised by my hon. Friend the Member for Worcester (Mr. Peter Walker) in trying to correct the apparently false impression which the Minister has of the effect of our Amendment. It was intended to cover the whole range of people likely to be affected by Capital Gains Tax. It is not our intention to confine it to people in the upper ranges of tax. The Financial Secretary knows that we had an extremely good Amendment, with an extremely good formula in it, debated in Committee. We were driven off that one and, for reasons which the hon. and learned Gentleman understands, we could not table the same Amendment again.
    It is clear that over the whole of our debates on the Capital Gains Tax our discussions have been coloured by what

    1681
    I would describe as the "Kaldor culture". Hon. Members will remember two couplets by Pope and by Sir John Squire which deal with Newton and Einstein. These can be adapted to the economic thinking and policies of the present Government, I suggest, in this way:
    "Economics and economic laws lay hid in night:
    God said, Let Keynes be! and all was light.
    It did not last: the Devil howling, 'Ho!
    Let Kaldor be ! restored the status quo."
    That is what has been happening in these debates.
    My hon. Friend the Member for Worcester, supported by my hon. Friend the Member for Worthing (Mr. Higgins), pointed out that the Government had a vested interest in inflation under this form of Capital Gains Tax. Indeed, my hon. Friend the Member for Worthing expounded this with his outstanding analysis of what underlay Government thought, if "thought" is the right word. I am sorry that the hon. Member for Heywood and Royton (Mr. Barnett) is not here. In his intervention he stated that no account was taken of inflation in Income Tax. The Financial Secretary repeated this, but it is not true.
    It is true that inflation forces incomes up into higher tax brackets and that if nothing is done to reduce the starting point of tax and to adjust allowances no account is taken of inflation in our Income Tax system. But the fact is that the starting point of taxation is reduced and allowances are adjusted to take account of inflation and therefore there is some provision to take account of inflation in our Income Tax system, although I do not suppose that any of us would necessarily agree that sufficient account is taken of it. It would be wrong, however, to say that no account at all is taken of it.
    Mr. Harold Lever: How is the effect of inflation taken into account in taxing the profits of the company to which I referred where the profits are an additional asset during the year? Will the hon. Gentleman tell the House also how inflation is taken into account in the case of those who invest in gilt-edged, even under a Conservative Government, when their income is taxed and inflation all the time is lessening their capital by considerably
    1682
    more than the income which they receive?
    Mr. Hall: We are covering a great deal of previous debates in this matter and I am sure that the hon. Member would not wish me to go into a long discussion of inflation and the Income Tax system, nor would I suggest that the system takes full account of inflation in every case. I accept that it does not, but the fact that it does not take sufficient account is no reason for introducing another form of tax which ignores inflation.
    The Financial Secretary made a great mistake in trying to answer what the hon. Member for Manchester, Cheetham (Mr. Harold Lever) described as an unanswerable case. It is unanswerable and there is no point in the Financial Secretary trying to answer it. The hon. Gentleman should say that the Government's intention is to introduce a tax not only on capital gains but on capital. Let us be clear that that is their intention. Why not say so? Why try to evolve elaborate arguments to justify the unjustifiable and to answer the unanswerable?
    Mr. Harold Lever: The irremediable.
    Mr. Hall: We do not take such a pessimistic view on this side of the House. Nothing will be irremediable to my right hon. Friends when they return to office. Why not make clear exactly what the Government are trying to do? They are trying in the long run to destroy capital. It is as simple as that. Let us be frank about this and not try to produce arguments which convince no one.
    I am happy to say that, not for the first time, we are at one with members of the Liberal Party and I was interested to read again the contribution to the Committee stage by the hon. Member for Orpington (Mr. Lubbock) when he said:
    "I do not think that the Financial Secretary or the Chief Secretary or any member of the Labour Party appreciates how seriously the question of inflation is taken in relation to the Capital Gains Tax outside the Committee in the country as a whole. They must address their minds to this great objection to the Capital Gains Tax in its present form which many people who are sympathetic to the idea of the Capital Gains Tax hold."—[OFFICIAL REPORT, 25th May, 1965; Vol. 713, c. 360.]
    Let us be clear that we on this side of the House are not opposing a Capital Gains Tax. What we are opposing, and

    1683
    I think the Liberal Party is opposing, is a capital tax, which is quite different.
    In view of the fact that the spirit of the Amendment has the support in principle of both Opposition parties who together represent the majority of the electorate, and in view of the extremely unsatisfactory answer given by the Financial
    Secretary who completely failed to answer our unanswerable case, I would advise my hon. and right hon. Friends to divide the House on the Amendment.
    Question put, That those words be there inserted in the Bill:—
    The House divided: Ayes 273, Noes 276.

    Division No. 241.]

    AYES

    [7.58 p.m.

    Agnew, Commander Sir Peter

    Dance, James

    Iremonger, T. L.

    Alison, Michael (Barkston Ash)

    Davies, Dr. Wyndham (Perry Barr)

    Irvine, Bryant Godman (Rye)

    Allan, Robert (Paddington, S.)

    d'Avigdor-Goldsmid, Sir Henry

    Jenkin, Patrick (Woodford)

    Allason, James (Hemel Hempstead)

    Dean, Paul

    Jennings, J. C.

    Amery, Rt. Hn. Julian

    Digby, Simon Wingfield

    Jones, Arthur (Northants, S.)

    Anstruther-Gray, Rt. Hn. Sir W.

    Dodds-Parker, Douglas

    Jopling, Michael

    Astor, John

    Doughty, Charles

    Joseph, Rt. Hn. Sir Keith

    Atkins, Humphrey

    Douglas-Home, Rt. Hn. Sir Alec

    Kaberry, Sir Donald

    Awdry, Daniel

    Drayson, G. B.

    Kerby, Capt. Henry

    Baker, W. H. K.

    du Cann, Rt. Hn. Edward

    Kerr, Sir Hamilton (Cambridge)

    Balniel, Lord

    Eden, Sir John

    Kilfedder, James A.

    Barber, Rt. Hn. Anthony

    Elliot, Capt. Walter (Carshalton)

    Kimball, Marcus

    Barlow, Sir John

    Elliott, R. W. (N'c'tle-upon-Tyne, N.)

    King, Evelyn (Dorset, S.)

    Batsford, Brian

    Emery, Peter

    Kirk, Peter

    Bell, Ronald

    Eyre, Reginald

    Kitson, Timothy

    Bennett, Sir Frederic (Torquay)

    Farr, John

    Lagden, Godfrey

    Berkeley, Humphry

    Fell, Anthony

    Lambton, Viscount

    Berry, Hn. Anthony

    Fisher, Nigel

    Lancaster, Col. C. G.

    Biffen, John

    Fletcher-Cooke, Charles (Darwen)

    Langford-Holt, Sir John

    Biggs-Davison, John

    Fletcher-Cooke, Sir John (S'pton)

    Legge-Bourke, Sir Harry

    Birch, Rt. Hn. Nigel

    Foster, Sir John

    Lewis, Kenneth (Rutland)

    Black, Sir Cyril

    Fraser, Rt. Hn. Hugh (St'fford & Stone)

    Litchfield, Capt. John

    Blaker, Peter

    Fraser, Ian (Plymouth, Sutton)

    Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

    Bossom, Hn. Clive

    Galbraith, Hn. T. G. D.

    Lloyd, Ian (P'tsm'th, Langstone)

    Bowen, Roderic (Cardigan)

    Gammans, Lady

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Box, Donald

    Gibson-Watt, David

    Longden, Gilbert

    Boyd-Carpenter, Rt. Hn. J.

    Giles, Rear-Admiral Morgan

    Loveys, Walter H.

    Boyle, Rt. Hn. Sir Edward

    Gilmour, Ian (Norfolk, Central)

    Lubbock, Eric

    Braine, Bernard

    Gilmour, sir John (East Fife)

    McAdden, Sir Stephen

    Brewis, John

    Glover, Sir Douglas

    Mackenzie, Alasdair (Ross & Crom'ty)

    Brinton, Sir Tatton

    Godber, Rt. Hn. J. B.

    Mackie, George Y. (C'ness & S'land)

    Brooke, Rt. Hn. Henry

    Goodhart, Philip

    McLaren, Martin

    Brown, Sir Edward (Bath)

    Gower, Raymond

    Maclean, Sir Fitzroy

    Bruce-Gardyne, J.

    Grant, Anthony

    Macleod, Rt. Hn. Iain

    Bryan, Paul

    Grant-Ferris, R.

    McMaster, Stanley

    Buchanan-Smith, Alick

    Gresham Cooke, R.

    McNair, Wilson, Patrick

    Buck, Antony

    Grieve, Percy

    Maginnis, John E.

    Bullus, Sir Eric

    Griffiths, Eldon (Bury St. Edmunds)

    Maitland, Sir John

    Burden, F. A.

    Griffiths, Peter (Smethwick)

    Marten, Neil

    Butcher, Sir Herbert

    Grimond, Rt. Hn. J.

    Mathew, Robert

    Buxton, Ronald

    Gurden, Harold

    Maude, Angus

    Campbell, Gordon

    Hall, John (Wycombe)

    Maudling, Rt. Hn. Reginald

    Carlisle, Mark

    Hall-Davis, A. G. F.

    Mawby, Ray

    Carr, Rt. Hn. Robert

    Hamilton, Marquess of (Fermanagh)

    Maxwell-Hyslop, R. J.

    Cary, Sir Robert

    Hamilton, M. (Salisbury)

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

    Channon, H. P. G.

    Harris, Frederic (Croydon, N.W.)

    Meyer, Sir Anthony

    Chataway, Christopher

    Harris, Reader (Heston)

    Mills, Peter (Torrington)

    Chichester-Clark, R.

    Harrison, Brian (Maldon)

    Mills, Stratton (Belfast, N.)

    Clark, Henry (Antrim, N.)

    Harvey, Sir Arthur Vere (Macclesf'd)

    Miscampbell, Norman

    Clark, William (Nottingham, S.)

    Harvey, John (Walthamstow, E.)

    Mitchell, David

    Harvie Anderson, Miss

    Monro, Hector

    Clarke, Brig. Terence (Portsmth, W.)

    Hastings, Stephen

    More, Jasper

    Cole, Norman

    Hawkins, Paul

    Morrison, Charles (Devizes)

    Cooke, Robert

    Hay, John

    Mott-Radclyffe, Sir Charles

    Cooper, A. E.

    Heald, Rt. Hn. Sir Lionel

    Munro-Lucas-Tooth, Sir Hugh

    Cooper-Key, Sir Neill

    Heath, Rt. Hn. Edward

    Murton, Oscar

    Cordle, John

    Hendry, Forbes

    Neave, Airey

    Corfield, F. V.

    Higgins, Terence L.

    Nicholson, Sir Godfrey

    Costain, A. P.

    Hill, J. E. B. (S. Norfolk)

    Noble, Rt. Hn. Michael

    Courtney, Cdr. Anthony

    Hirst, Geoffrey

    Nugent, Rt. Hn. Sir Richard

    Craddock, Sir Beresford (Spelthorne)

    Hobson, Rt. Hn. Sir John

    Onslow, Cranley

    Crawley, Aidan

    Hooson, H. E.

    Orr, Capt. L. P. S.

    Crosthwaite-Eyre, Col. Sir Oliver

    Hopkins, Alan

    Osborn, John (Hallam)

    Crowder, F. P.

    Hordern, Peter

    Osborne, Sir Cyril (Louth)

    Cunningham, Sir Knox

    Hornby, Richard

    Page, John (Harrow, W.)

    Curran, Charles

    Hornsby-Smith, Rt. Hn. Dame P.

    Page, R. Graham (Crosby)

    Currie, G. B. H.

    Hunt, John (Bromley)

    Pearson, Sir Frank (Clitheroe)

    Dalkeith, Earl of

    Hutchison, Michael Clark

    Peel, John

    Percival, Ian

    Smith, Dudley (Br'ntf'd & Chiswick)

    Walder, David (High Peak)

    Peyton, John

    Smyth, Rt. Hn. Brig. Sir John

    Walker, Peter (Worcester)

    Pickthorn, Rt. Hn. Sir Kenneth

    Soames, Rt. Hn. Christopher

    Walker-Smith, Rt. Hn. Sir Derek

    Pike, Miss Mervyn

    Spearman, Sir Alexander

    Wall, Patrick

    Pitt, Dame Edith

    Speir, Sir Rupert

    Walters, Dennis

    Pounder, Rafton

    Stainton, Keith

    Ward, Dame Irene

    Powell, Rt. Hn. J. Enoch

    Stanley, Hn. Richard

    Weatherill, Bernard

    Price, David (Eastleigh)

    Steel, David (Roxburgh)

    Webster, David

    Prior, J. M. L.

    Studholme, Sir Henry

    Wells, John (Maidstone)

    Pym, Francis

    Talbot, John E.

    Whitelaw, William

    Quennell, Miss J. M.

    Taylor, Sir Charles (Eastbourne)

    Williams, Sir Rolf Dudley (Exeter)

    Ramsden, Rt. Hn. James

    Taylor, Edward M. (G'gow, Cathcart)

    Wills, Sir Gerald (Bridgwater)

    Redmayne, Rt. Hn. Sir Martin

    Teeling, Sir William

    Wilson, Geoffrey (Truro)

    Rees-Davies, W. R.

    Temple, John M.

    Wise, A. R.

    Renton, Rt. Hn. Sir David

    Thatcher, Mrs. Margaret

    Wolrige-Gordon, Patrick

    Ridley, Hn. Nicholas

    Thomas, Sir Leslie (Canterbury)

    Wood, Rt. Hn. Richard

    Ridsdale, Julian

    Thompson, Sir Richard (Croydon, S.)

    Woodhouse, Hn. Christopher

    Roberts, Sir Peter (Heeley)

    Thorpe, Jeremy

    Wylie, N. R.

    Rodgers, Sir John (Sevenoaks)

    Tiley, Arthur (Bradford, W.)

    Yates, William (The Wrekin)

    Roots, William

    Tilney, John (Wavertree)

    Younger, Hn. George

    St. John-Stevas, Norman

    Turton, Rt. Hn. R. H.

    Sandys, Rt. Hn. D.

    Tweedsmuir, Lady

    TELLERS FOR THE AYES:

    Scott-Hopkins, James

    van Straubenzee, W. R.

    Mr. Ian MacArthur and

    Sharples, Richard

    Vaughan-Morgan, Rt. Hn. Sir John

    Mr. Geoffrey Johnson Smith.

    Sinclair, Sir George

    Vickers, Dame Joan

    NOES

    Abse, Leo

    Edwards, Robert (Bilston)

    Hunter, A. E. (Feltham)

    Albu, Austen

    English, Michael

    Hynd, H. (Accrington)

    Allaun, Frank (Salford, E.)

    Ennals, David

    Irving, Sydney (Dartford)

    Alldritt, Walter

    Ensor, David

    Jackson, Colin

    Atkinson, Norman

    Evans, Albert (Islington, S.W.)

    Janner, Sir Barnett

    Bacon, Miss Alice

    Evans, Ioan (Birmingham, Yardley)

    Jay, Rt. Hn. Douglas

    Bagier, Gordon A. T.

    Fernyhough, E.

    Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

    Barnett, Joel

    Finch, Harold (Bedwellty)

    Jenkins, Hugh (Putney)

    Baxter, William

    Fitch Alan (Wigan)

    Johnson, Carol (Lewisham, S.)

    Bence, Cyril

    Fletcher, Sir Eric (Islington, E.)

    Johnson, James (K'ston-on-Tull, W.)

    Bennett, J. (Glasgow, Bridgeton)

    Fletcher, Ted (Darlington)

    Jones, Dan (Burnley)

    Binns, John

    Fletcher, Raymond (Ilkeston)

    Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

    Bishop, E. S.

    Floud, Bernard

    Jones, J. Idwal (Wrexham)

    Blackburn, F.

    Foley, Maurice

    Jones, T. W. (Merioneth)

    Blenkinsop, Arthur

    Foot, Sir Dingle (Ipswich)

    Kelley, Richard

    Boardman, H.

    Foot, Michael (Ebbw Vale)

    Kenyon, Clifford

    Boston, T. G.

    Ford, Ben

    Kerr, Mrs. Anne (R'ter & Chatham)

    Bottomley, Rt. Hn. Arthur

    Freeson, Reginald

    Kerr, Dr. David (W'worth, Central)

    Bowden, Rt. Hn. H. W. (Leics S.W.)

    Galpern, Sir Myer

    Leadbitter, Ted

    Boyden, James

    Garrett, W. E.

    Ledger, Ron

    Braddock, Mrs. E. M.

    George, Lady Megan Lloyd

    Lee, Rt. Hn. Frederick (Newton)

    Bradley, Tom

    Ginsburg, David

    Lee, Miss Jennie (Cannock)

    Bray, Dr. Jeremy

    Gourlay, Harry

    Lever, Harold (Cheetham)

    Broughton, Dr. A. D. D.

    Greenwood, Rt. Hn. Anthony

    Lever, L. M. (Ardwick)

    Brown, Rt. Hn. George (Belper)

    Gregory, Arnold

    Lewis, Arthur (West Ham, N.)

    Brown, Hugh D. (Glasgow, Provan)

    Griffiths, David (Rother Valley)

    Lewis, Ron (Carlisle)

    Buchan, Norman (Renfrewshire, W.)

    Griffiths, Rt. Hn. James (Llanelly)

    Lipton, Marcus

    Buchanan, Richard

    Griffiths, Will (M'chester, Exchange)

    Mabon, Dr. J. Dickson

    Butler, Herbert (Hackney, C.)

    Gunter, Rt. Hn. R. J.

    McBride, Neil

    Butler, Mrs. Joyce (Wood Green)

    Hale, Leslie

    McCann, J.

    Callaghan, Rt. Hn. James

    Hamilton, James (Bothwell)

    MacColl, James

    Carmichael, Neil

    Hamilton, William (West Fife)

    MacDermot, Niall

    Chapman, Donald

    Hamling, William (Woolwich, W.)

    McGuire, Michael

    Coleman, Donald

    Hannan, William

    Mclnnes, James

    Conlan, Bernard

    Harper, Joseph

    McKay, Mrs. Margaret

    Corbet, Mrs. Freda

    Harrison, Walker (Wakefield)

    Mackenzie, Gregor (Rutherglen)

    Craddock, George (Bradford, S.)

    Hart, Mrs. Judith

    Mackie, John (Enfield, E.)

    Crawshaw, Richard

    Hattersley, Roy

    McLeavy, Frank

    Crosland, Rt. Hn. Anthony

    Hazell, Bert

    Mahon, Peter (Preston, S.)

    Crossman, Rt. Hn. R. H. S.

    Healey, Rt. Hn. Denis

    Mahon, Simon (Bootle)

    Cullen, Mrs. Alice

    Heffer, Eric S.

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

    Dalyell, Tam

    Henderson, Rt. Hn. Arthur

    Manuel, Archie

    Darling, George

    Herbison, Rt. Hn. Margaret

    Mapp, Charles

    Davies, Ifor (Gower)

    Hobden, Dennis (Brighton, K'town)

    Marsh, Richard

    Davies, S. O. (Merthyr)

    Holman, Percy

    Mason, Roy

    Delargy, Hugh

    Horner, John

    Maxwell, Robert

    Dell, Edmund

    Houghton, Rt. Hn. Douglas

    Mayhew, Christopher

    Dempsey, James

    Howarth, Harry (Wellingborough)

    Mellish, Robert

    Diamond, Rt. Hn. John

    Howarth, Robert L. (Bolton, E.)

    Mendelson, J. J.

    Dodds, Norman

    Howell, Denis (Small Heath)

    Mikardo, Ian

    Doig, Peter

    Howie, W.

    Millan, Bruce

    Driberg, Tom

    Hoy, James

    Miller, Dr. M. S.

    Duffy, Dr. A. E. P.

    Hughes, Cledwyn (Anglesey)

    Milne, Edward (Blyth)

    Dunn, James A.

    Hughes, Emrys (S. Ayrshire)

    Molloy, William

    Dunnett, Jack

    Hughes, Hector (Aberdeen, N.)

    Monslow, Walter

    Edelman, Maurice

    Hunter, Adam (Dunfermline)

    Morris, Alfred (Wythenshawe)

    1686

    1687

    Morris, Charles (Openshaw)

    Rees, Merlyn

    Taylor, Bernard (Mansfield)

    Morris, John (Aberavon)

    Rhodes, Geoffrey

    Thomas, George (Cardiff, W.)

    Mulley, Rt. Hn. Frederick (Sheffield Pk)

    Richard, Ivor

    Thomas, Iorwerth (Rhondda, W.)

    Murray, Albert

    Roberts, Albert (Normanton)

    Thomson, George (Dundee, E.)

    Neal, Harold

    Roberts, Goronwy (Caernarvon)

    Thornton, Ernest

    Newens, Stan

    Robertson, John (Paisley)

    Tinn, James

    Noel-Baker, Francis (Swindon)

    Robinson, Rt. Hn. K. (St. Pancras, N.)

    Tomney, Frank

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

    Rodgers, William (Stockton)

    Tuck, Raphael

    Norwood, Christopher

    Rogers, George (Kensington, N.)

    Urwin, T. W.

    Oakes, Gordon

    Rose, Paul B.

    Varley, Eric G.

    Ogden, Eric

    Ross, Rt. Hn. William

    Wainwright, Edwin

    O'Malley, Brian

    Rowland, Christopher

    Walden, Brian (All Saints)

    Oram, Albert E. (E. Ham, S.)

    Sheldon, Robert

    Walker, Harold (Doncaster)

    Orbach, Maurice

    Shinwell, Rt. Hn. E.

    Wallace, George

    Orme, Stanley

    Shore, Peter (Stepney)

    Watkins, Tudor

    Oswald, Thomas

    Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

    Weitzman, David

    Owen, Will

    Short, Mrs. Renée (W'hampton, N. E.)

    Wells, William (Walsall, N.)

    Page, Derek (King's Lynn)

    Silkin, John (Deptford)

    White, Mrs. Eirene

    Paget, R. T.

    Silkin, S.C. (Camberwell, Dulwich)

    Whitlock, William

    Palmer, Arthur

    Silverman, Julius (Aston)

    Wigg, Rt. Hn. George

    Pannell, Rt. Hn. Charles

    Silverman, Sydney (Nelson)

    Wilkins, W. A.

    Pargiter, G. A.

    Skeffington, Arthur

    Willey, Rt. Hn. Frederick

    Park, Trevor (Derbyshire, S.E.)

    Slater, Mrs. Harriet (Stoke, N.)

    Williams, Alan (Swansea, W.)

    Parkin, B. T.

    Small, William

    Williams, Clifford (Abertillery)

    Pavitt, Laurence

    Snow, Julian

    Williams, Mrs. Shirley (Hitchin)

    Pearson, Arthur (Pontypridd)

    Soskice, Rt. Hn. Sir Frank

    Williams, W. T. (Warrington)

    Peart, Rt. Hn. Fred

    Spriggs, Leslie

    Willis, George (Edinburgh, E.)

    Pentland, Norman

    Steele, Thomas (Dunbartonshire, W.)

    Wilson, Rt. Hn. Harold (Huyton)

    Perry, Ernest G.

    Stewart, Rt. Hn. Michael

    Wilson, William (Coventry, S.)

    Popplewell, Ernest

    Stonehouse, John

    Winterbottom, R. E.

    Prentice, R. E.

    Stones, William

    Woof, Robert

    Price, J. T. (Westhoughton)

    Strauss, Rt. Hn. G. R. (Vauxhall)

    Wyatt, Woodrow

    Probert, Arthur

    Summerskill, Hn. Dr. Shirley

    Yates, Victor (Ladywood)

    Pursey, Cmdr. Harry

    Swain, Thomas

    Zilliacus, K.

    Randall, Harry

    Swingler, Stephen

    Rankin, John

    Symonds, J. B.

    TELLERS FOR THE NOES:

    Redhead, Edward

    Taverne, Dick

    Mr. Charles Grey and

    Mr. George Lawson.

    Mr. Marcus Kimball: I beg to move Amendment No. 321, in page 15, line 13, after "deducting", to insert:
    "the cost of any valuation necessary to determine the amount of chargeable gain so accruing".
    The object of the Amendment is to deal with the problem of valuation expenses, which seems much more serious than the Chancellor or the Financial Secretary has ever given credit for during the course of the Bill. The problem is the same old one that we mentioned in the Committee, that of a beneficiary who receives a small amount of capital from a trust and by receiving it creates a liability to capital gains. It is grossly unfair that such a beneficiary should have to pay large bills, amounting even to hundreds or perhaps thousands of pounds, for the valuation of real property held in a trust.
    Under the Bill the trustees of a settlement are not liable for the Capital Gains Tax. The liability for it falls upon the beneficiary. The trustees could very well argue that they had no power to have these necessary valuations made at the expense of the trust fund. If the tax were payable by the trustees and not the beneficiary, I am advised that
    1688
    the provisions of the 1925 Trust Act would give them adequate power and, what is more important, adequate protection to enable them to pay and employ agents to make the valuation.
    I have made the case very briefly. It is a perfectly simple and straightforward one. The proposed words represent an essential alteration to the Bill if trustees and others are to be protected. I sincerely trust that the Financial Secretary will accept the Amendment.
    Mr. MacDermot: The hon. Member for Gainsborough (Mr. Kimball) referred to the application of the Amendment particularly in relation to trusts. The Amendment itself is drawn in wider terms and not limited to this problem, and I do not follow completely the particular problem which the hon. Member has in mind.
    I would say generally that, as I understand it, the Amendment is probably unnecessary unless there is a particular point which has been overlooked. It proposes to insert words to make it clear that before chargeable gains become taxable there has to be deducted from them the cost of any valuation necessary to determine the amount of such gains. As a matter of form, expenses such as those

    1689
    of valuation are not a deduction from chargeable gains but are a deduction in computing the chargeable gains. For this reason, the matter of deductible expenses is dealt with in Schedule 6, in paragraphs 4 and 5, which deal with the computation of gains. Paragraph 4(2,b) provides that the incidental cost of the acquisition or disposal may be deducted in arriving at the amount of the chargeable gains and to be included are:
    "costs reasonably incurred in making any valuation or apportionment required for the purposes of the computation under this Schedule".
    Therefore, the purpose of the Amendment, as we understand it, appears to be met to the extent anyway that it relates to the valuations which are necessary because they will be required by the Bill.
    I give an assurance to the House that in practice it is the intention of the Revenue to interpret this requirement as meaning that the cost of any valuation which was actually used in the computation of the chargeable gains would be allowable as a deduction. I hope that meets the hon. Member's point.
    Mr. Kimball: In view of the assurance given by the Financial Secretary, I beg to ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.

    Clause 20.—(CAPITAL GAINS ACCRUING TO AN INDIVIDUAL: ALTERNATIVE CHARGE TO TAX.)
    8.15 p.m.
    Mr. MacDermot: I beg to move Amendment No. 22, in page 16, line 12, to leave out from the beginning to "the" and to insert "(a) where".
    Mr. Deputy-Speaker (Sir Samuel Storey): It will be for the convenience of the Committee to consider at the same time Amendment No. 23, in the name of the right hon. Member for Bexley (Mr. Heath), in line 12, leave out from "equal" to end of line 14 and insert:
    ", in the case of an individual not falling within the charge to surtax in the relevant year of assessment, to one-half of the amount on which he would have been chargeable to capital gains tax for that year under the last foregoing section and in every other case to two-thirds of the said amount".
    Mr. MacDermot: Might we also consider at the same time, Mr. Deputy-Speaker,
    1690
    Government Amendment No. 24, in line 14, at end insert:
    "does not exceed five thousand pounds, on a sum equal to one-half of that amount, and
    (b) where that amount exceeds five thousand pounds, on a sum equal to two thousand five hundred pounds, plus the excess of that amount ever five thousand pounds".
    Mr. Deputy-Speaker: Yes.
    Mr. MacDermot: The two Government Amendments deal with the same point. Clause 20 as it stands provides that if it is to the advantage of the individual he can claim the alternative rate of charge by having the gain added to the top slice of his income. The Government Amendments are the two that I referred to just now which will reduce the fraction of the gain if added to the individual's income for the purpose of the alternative basis of charge from two-thirds to a half, but they also provide that the half rate shall not apply to more than £5,000 of the gain. If in one year an individual realises more than £5,000 in gain, the excess is to be taxed pound for pound as the top slice of his income.
    The consequence of this is that on the first £5,000 of his gains it will be to the individual's advantage to have the alternative basis provided, but the benefit which accrues in that way will rapidly be withdrawn on any excess of gains over £5,000 until he reaches a point at which overall it would be to his advantage instead to have his gains taxed at the flat rate of 30 per cent.
    I said when we were discussing this question in Committee that we had considered the possibility of making one half of the gain taxable and providing a cutoff, but we envisaged then a tapering provision which would have been exceedingly complicated, and I rejected it for that reason. But the solution which we have now arrived at, and which I hope will commend itself to the House, is one which administratively will be much easier to work. I think it will achieve the object which we all want, which is designed to help the small man, and will ensure an appreciable reduction in the rate of charge for people who are not paying Income Tax at higher than the standard rate. In this way the solution is one which does not extend and carry right up the scale in a way that would have eroded the basis of the tax.

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    The Amendment tabled by the Opposition proposes that for individuals who are not liable to Surtax the protection in Clause 20 of the Bill should be a half and that for individuals who are liable to Surtax the fraction should be two-thirds. I imagine that that was intended to be more favourable to the taxpayer, but I do not know. We shall hear, no doubt, whether hon. Members opposite had time to consider the Government Amendments at the time when they framed their Amendment. Perhaps I can just say at this stage that we take the view that the Government Amendments would, in fact, be more favourable to the taxpayer. I can let hon. Gentlemen opposite have some tables to illustrate the point if that would assist them, but perhaps they will accept it in general terms from me. Certainly the Government Amendments would be easier to operate.
    Mr. Peter Walker: Of the many improvements which we on this side have been able to make to this Bill this is probably one of the most important. When, in Committee, we moved a somewhat similar Amendment to this, though I agree it had certain provisions which we ourselves have altered now in the Amendment we have put down, it was in opposition to the Government's attitude then that the major concession they were willing to give was that a person at the standard rate of Income Tax would have the rate reduced to 37½ per cent.
    Due to very considerable pressures by us on this side, pointing out how very high and penal a rate of 30 per cent. would be, and the need for some concession to those with smaller incomes, the Government have taken this action, and we are pleased that they have, to reduce the rate to a person at the standard rate of Income Tax to something just over 20 per cent. I would point out that in comparison to what applies in other countries this is not a very generous concession. The rate in the United States is nearer to 11 per cent., and there the concessions are granted on what is already a lower rate of Capital Gains Tax.
    However, this is certainly an important improvement, although it is one, I would point out, which creates an even wider gap between taxation upon the individual investing in life assurance funds, unit trust
    1692
    funds, investment trust funds, and that upon the individual investing directly into the market. Now we have a situation where, for example, the person saving through the medium of life assurance, because life funds will be taxed, will be taxed at the rate of 35 per cent., whereas a person at the standard rate of Income Tax will be taxed at the rate of 20 per cent. As far as unit trusts are concerned, the Clause which we so successfully moved at a late hour last night will go some way to narrow the gap, but I think that perhaps if we had fully recognised the effects of this Amendment we would have moved 20 per cent. in that Clause rather than the figure of 30.
    However, we welcome this Amendment and are gratified that our hard debates in Committee, in which the Financial Secretary pointed out the administrative difficulties in doing this type of thing, are bearing fruit, and those administrative difficulties have disappeared, and that the Government have decided to give the concession we outlined in Committee.
    Amendment agreed to.
    Further Amendment made: In page 16, line 14, at end insert:
    "does not exceed five thousand pounds, on a sum equal to one-half of that amount, and
    (b) where that amount exceeds five thousand pounds, on a sum equal to two thousand five hundred pounds plus the excess of that amount over five thousand pounds."—[Mr. MacDermot.]
    Mr. MacDermot: I beg to move, Amendment No. 25, in page 17, line 31, to leave out from "D" to "the" in line 32 and to insert "(i) where".
    This is purely consequential upon the Amendment we were just discussing.
    Amendment agreed to.
    Mr. MacDermot: I beg to move, Amendment No. 26, in page 17, line 34, after "section" to insert:
    "does not exceed five thousand pounds, on a sum equal to one-half of that amount, and
    (ii) where that aggregate amount exceeds five thousand pounds, on a sum equal to two thousand five hundred pounds plus the excess of that aggregate amount over five thousand pounds."
    The same applies to this Amendment. I should, perhaps, have said in one sentence that these two Amendments substitute the more favourable rate we have just been discussing in the case where

    1693
    both husband and wife are chargeable on their gains.
    Amendment agreed to.

    Clause 21.—(DISPOSAL OF ASSETS AND COMPUTATION OF GAINS.)
    Mr. Harold Lever: I beg to move Amendment No. 134, in page 18, line 37, to leave out "and" and to insert "but".
    Mr. Deputy-Speaker: We can discuss with this, the hon. Member's Amendments No. 135, in page 18, line 38, leave out "applies in particular" and insert "does not apply", and Amendment No. 136, in page 19, leave out lines 1 to 5.
    Mr. Lever: I confess that the Amendments have been somewhat lazily drafted because for the sake of simplicity I have knocked out some of the wording, which might be useful or not, in relation to matters which I do not propose to discuss. The substance of my Amendments is this. Clause 21(3) provides that when a person receives compensation for the loss of an asset destroyed or partially destroyed or when a person receives payment under an insurance policy in respect of an asset lost, damaged or destroyed those receipts of compensation whether by an insurance policy or otherwise should be deemed to be receipts exactly as if they had been received in the case of the ordinary disposal of the asset. The effect is this, that if one has a piece of furniture which one bought for, say, £1,000, and years later it becomes worth £10,000, and it catches fire and is totally destroyed, and one receives £10,000, its value under the insurance policy, one is said, or deemed for the purpose of the Bill, to have made a capital gain of £9,000. This will be taxable. In its original form the Bill had it taxable, as I understand it, and there was an end of it, but there was a Government Amendment to Schedule 8 and the effect of that will be that, if the asset is replaced one is relieved of the tax.
    It is my submission that this Clause must be amended in the way I suggest and that the principle adopted by the Chancellor in the Bill at present is wrong. The first point I wish to bring to the attention of the House is that what it is proposed to tax is not a profit upon the realisation of an asset. I am going throughout to use the argument of the
    1694
    insurance policy because it is the strongest point I have to make, and I can make some comment on the other aspects afterwards. The argument is that when one receives money upon one's insurance policy in respect of the destruction or loss of the asset this is just the same as if one receives the money on the sale or disposal of the asset and it should be so treated for the purpose of capital gains.
    The first thing that we have to ascertain is, has there been any capital gain when a man has his property destroyed and he receives payment under an insurance policy? Let us forget the insurance policy, and get down to the reality of the matter. If I have a valuable piece of furniture and it is destroyed by fire, or if I have a valuable piece of silver and it is stolen by a burglar and not recovered, I have not made any capital gain. I have simply lost the asset in question by theft or destruction. Thus, until the question of payment under an insurance policy comes into the picture, even the pedant persuasiveness of the Inland Revenue cannot allege that anything in the nature of a capital gain has occurred.
    8.30 p.m.
    I am bound to criticise the processes of thought behind the Clause, but I want to make it quite plain that I do not want to discourage or denigrate the zeal of the officials of the Inland Revenue. They have an unrewarding task to perform, and I recognise that they compare very favourably with those in other countries who have a similarly unrewarding task to carry out, but this professional zeal, although entirely admirable, must be subjected to the processes of more general logic than that which prevails in Somerset House. It is inevitable that a certain narrow professionalism of approach is bound to occur because of the zeal of those who discharge this difficult task of organising our revenue purposes, so if I criticise their logic it must not be supposed that I hold them responsible for the form in which the Clause is drafted. Still less do I attribute to Mr. Kaldor any of these processes of logic. I think that when history comes to be written he will emerge as a figure of moderation in the professionalism of Somerset House in that he lived most

    1695
    of his life outside this perhaps over-professional area.
    To come back to my argument, the Clause proposes to tax as a profit something which, in fact, is a loss. Before the insurance payment comes into the picture, there is no capital gain in respect of the asset itself or the realisation of it. It therefore becomes clear that once we bring into account the insurance policy, the supposed, hypothetical, statutory or deemed gain is a capital gain arising out of the insurance policy. This is no more to do with the realisation of the asset than my bet on the favourite in the Derby, when that horse is good enough to win, has to do with the realisation of the horse or the capital gain on the horse.
    The insurance policy, in the way that my bet is related to the horse, is related to the value of the asset, but were it not for our rules of insurance there would be nothing to stop a man insuring the same asset 10 times with 10 different companies, provided that they were prepared to pay up on the policy. It is not an inherent impossibility of so doing that makes a man not collect 10 times the value of the asset. It is simply that insurance companies find that when a man insures an asset for 10 times its value it is far more inflammable than it is supposed to be by the law of averages. But that is my argument, that a man might recover 10 times the value of the asset if the insurance companies were prepared to insure it for 10 times the premium.
    It is not my right hon. Friend's intention to tax the capital gain on the asset, but rather the receipt of the money from the insurance of the asset. This is clear when one contrasts the position of a man who has insured his assets with that of a man who has not. Nobody suggests that a man who has lost his asset has made a capital gain, but it is suggested that it is a capital gain when he gets an insurance repayment in respect of the loss, which is different from getting the asset back.
    One can show that it is the proceeds of insurance and not the proceeds of any realisation at all by showing what really happens, by showing what a man gets back when he pays the risk premiums. When a man insures his property against
    1696
    theft or fire, he joins a club of people exposed to this risk. They club together and pay a premium, and out of the pool premium those who are unlucky enough to catch fire at a mathematically disadvantageous time in relation to the odds about catching fire get compensated before those who are rather more fortunate in the sequence of inflammability.
    Let us assume that it is 100 to 1 against a man's house catching fire and being destroyed. He pays a premium of 1 per cent., the assumption being that in 100 years the insurance company will break even, because his house will catch fire once in 100 years and that will be that. The difficulty is that if a person is unlucky it catches fire in the first year, whereas somebody else's house may not catch fire at all, or not until 99 years afterwards. What we do when we take out an insurance policy is to collect together and provide that out of the premiums that we pay those who are unlucky in the matter of their houses catching fire will get not only their own premiums but the premiums of those who are more fortunate enough in this respect, less expenses. That is the so-called capital gain which the Inland Revenue is to tax, under the mistaken notion that a man who receives money from an insurance policy is getting money from a capital gain on his asset.
    He has got nothing in terms of his capital asset. It has been blown up, or burgled, or is in the hands of some robber who is far off. He is merely getting his own and others' premiums back. The Inland Revenue do not even allow, against the so-called profit, what a person has paid by way of premiums in respect of the chattel which is burnt or stolen, although that is the source of the fund from which the supposed capital gain comes. The Inland Revenue does not allow this, because if it did it would draw attention to the utter illogicality of taxing this so-called capital gain. It would then be clear that it was taxing the insurance receipts which originated in the premiums.
    In insurance a person pays a sum against a hazard. He gets compensation for the loss that occurs in the event of that hazard occurring. It is the compensation that is then paid that is to be treated as a gain. Let us take the case of my house and its 100 to 1 chance of

    1697
    being burnt down. If I pay premiums for 100 years and it then burns down I come out exactly square. I get my compensation and I have paid an equivalent sum in premiums. But the Inland Revenue says, "You have made a capital gain amounting to the difference between what you have been paid and the original cost of the house", leaving out of account the fact that the whole of the compensation derives from my insurance premiums.
    The Inland Revenue could put forward an arguable case if it said, "If you receive a capital sum from an insurance policy it looks exactly like money yol get from any receipt. Therefore, you are taxable on it." If a person buys a chattel for £1,000 and sells it for £10,000 he is assessed on his £9,000 capital gain. If he buys a chattel for £1,000 and it is burnt or stolen, and he collects £10,000 in insurance, the Inland Revenue says that he is £9,000 better off and that he must therefore pay Capital Gains Tax.
    So far this argument, although not very reputable, in logic has a certain feasibility. But the moment that the Inland Revenue says, "You have a capital gain unless you replace the asset", it is departing from the original position.
    Mr. Donald Chapman: My hon. Friend will have to take this argument into the realm of exempting from Capital Gains Tax every involuntary realisation.
    Mr. Lever: I am not going to cover every involuntary realisation.
    Mr. Chapman: My hon. Friend will have to.
    Mr. Lever: My hon. Friend says that I will have to. That does not necessarily follow. If it is the purpose of the State to say that when a man dies and his asset passes on to somebody else, that somebody receives an asset and is therefore deemed to have gained by it, although that is not a very attractive argument, because of the rate of Estate Duty, it is not an unreasonable thing to say.
    In that case the asset passes from one hand to another, but in the case that I am putting forward the asset has been blown up, destroyed, burgled or carried off overseas. In certain circumstances, one
    1698
    can, without illogicality, artificially deem an involuntary disposal to be a realisation. It is accepted, even in death, that it is an artificial deeming of disposal. There is no actual disposal there either. Some people would argue that it is unjust. It is a point of whether one thinks that a particular involuntary disposal is suitable to be regarded as a disposal or whether another one is. What is being taxed here is not the proceeds of the asset or the value of the asset. We are taxing the proceeds of a fund of which one becomes a beneficiary in the event of the loss of an asset. Since one is not allowed to set off the premiums against such receipt, it is quite wrong. It would be as if one taxed a man's betting profits but did not allow him to count the stake which he had laid in deciding how much profit he had made.
    Mr. Gower: Does the hon. Gentleman consider that this proposition, the realisation of the receipt of insurance money, would be acceptable if allowance were made for the premiums paid?
    Mr. Lever: I would not do so, because I am not in favour of taxing insurance policy proceeds. If I were, I would tax them in the manner that the hon. Member for Barry (Mr. Gower) indicates. Since neither I nor the Government are in favour of taxing insurance proceeds, I am not in favour of allowing that against it, because it is not relevant. The Government say that they are not taxing insurance proceeds but that they should be treated as proceeds of a realisation. The Government now propose to say, in a later Schedule, that if one replaces the asset, whatever that may mean, one will not be taxed. I do not know whether it is relevant to make more than a passing reference to the Schedule, but the point is that nobody knowns what "replacement of the asset" means. If I have an absolutely priceless painting, it is odd that, because it is irreplaceable, I should be taxed, because I cannot replace it in this manner.
    The point which I seek to make is that when one starts with lack of logic, one ends with even greater lack of logic. The Government do not merely say that it is a disposal. They say that if the citizen suffers a fire or theft and collects his insurance policy he should pay a large sum of tax, but this should depend on

    1699
    whether he replaces the asset or not. I would ask my right hon. Friend, what business is it of his? When I have a fire and I lose an asset and am paid under my insurance policy, why should I buy a similar asset? Why not any asset I please with the money? What has it got to do with the Inland Revenue? How can one make taxability dependent on replacement of an asset?
    The Inland Revenue is placed in the impossible position of saying to the citizen, "If you replace the asset I will not tax you; if you do not replace it I will tax you." This strange proceeding was justified in Committee by saying that it would be inequitable to do otherwise. That is only an assertion. We are given to understand that if one man who sells his assets can get £9,000 and is taxed and his neighbour has the good fortune to have a fire for which he is insured and pays no tax on the insurance policy, the gentleman who pays tax will suffer a paroxysm of envy at the man who had his house burned down or burgled. This is not an argument for introducing this tax.
    I do not want to take too long on this—[Interruption.] This is a very important point and a very important principle. I can understand that it is exceedingly unpalatable to my hon. Friend that what I consider to be the misplaced pedantry of the Inland Revenue is, for the first time, brought under proper scrutiny in the House. In Committee the inadequate scrutiny devoted to this very important matter was lamentable. This matter of principle affects many citizens and will affect them for years to come.
    8.45 p.m.
    I make no apology, if the House will be tolerant, for enlarging upon this matter in some detail for the first time. Now that it has been indicated that I have been too long for the interest of the Treasury bench to be maintained, it is worth mentioning that these complicated tax provisions, which affect every citizen, are going through the House in a manner which means that they are not subjected to the proper scrutiny. They ought to have been discussed upstairs in a totally different manner. Hon. Members with whom I have discussed these matters have told me that they did not even know that
    1700
    what they now regard as a ludicrous provision of this kind had ever been passed through the Committee. It has not been adequately debated. As far as I can adequately debate it, it will be adequately debated now.
    I can illustrate the lack of logic of this provision by drawing attention to a situation of partial damage. I know that my hon. and learned Friend wishes to be brief, but I should like him to dwell on the point at length and to explain to the House the mathematical intricacies which face a man who suffers partial loss to an article which is damaged. What happens if he has a valuable painting, if a corner of it is burned but he wishes to retain the painting after it has been restored, which he does by means of part of the insurance company's payment? He receives a large sum in compensation for the damage to his assets. I shall not complain if my hon. and learned Friend explains this at length to the House. Indeed, I should be extremely amused and pleased to head the details of how partial compensation is to be deemed to be a partial realisation and how a man must spend the partial compensation in order to replace the asset which he still retains by a hypothetical asset which is no longer available. All this will cause me considerable pleasure. I shall listen with the greatest of patience and without intervention to anything which my hon. and learned Friend says on that subject.
    I beg my hon. and learned Friend to have in mind the original purpose of the Capital Gains Tax—a purpose and motivation which I support without any hesitation or qualification. As has been said over and over again, we are trying to equalise the position as far as we can of those who pay every penny of tax under P.A.Y.E. and who have it automatically collected from their incomes and those who get tax-free capital gains. I heartily endorse the Chancellor's motivation in introducing a tax which recognises capital accretions and gains in assessing a man's fiscal strength and in assessing the burden which he ought to bear.
    But what has that to do with this persistent pedantry, this obstinate defence of an untenable position, in order to pursue academic objectives which would be repugnant to the common sense of 999 men in every 1,000? Why must the

    1701
    House be troubled with this? Why cannot my hon. and learned Friend rise and say, "We have made a mistake"? The House is always very generous in such circumstances. He can admit that the Treasury Bench has been trapped in the tortuous logic and the labyrinthine ways which prevail at Somerset House, and which very properly prevail there in their efforts, with great zeal, propriety and devotion, to collect our taxes and to make the whole system work well. My hon. and learned Friend could add, "But it has all been a mistake. Let us drop it. Let us go back to the realities". I suspect that that would meet the approval of nine people out of ten who are in favour of a Capital Gains Tax.
    Mr. MacDermot: I am sorry if I betrayed same impatience when listening to my hon. Friend. I always listen to him with pleasure when he deploys his arguments with such clarity once, twice and sometimes even the third time. However, when he deploys them for a greater number of times I tend to find them, even though adduced by my hon. Friend, slightly tedious. I should have learned my lesson by now and have realised that any betrayal of impatience on the part of a Treasury Minister tends to prolong rather than shorten the case being put. I promise not to do it again.
    My hon. Friend concentrated on the point of a realisation on a loss through an insurance payment. However, his Amendments are much wider than that and, if accepted, would drive the traditional coach and horses through the Capital Gains Tax because they would eliminate liability on a part disposal of an asset. Without a provision for taxing gains on part disposals, the tax could be completely circumvented by people selling their assets piece by piece instead of by one transaction.
    Mr. Harold Lever Mr. Harold Lever rose—
    Mr. MacDermot: I trust that my hon. Friend will show a little of that patience which he urges Ministers to show.
    Mr. Lever: I, too, regret if I betrayed some impatience, particularly since my hon. and learned Friend is always exceedingly courteous and helpful, as he has been throughout our discussion of the Bill. It might help if I say that I am
    1702
    not proposing to do anything of the sort he suggested. I did not even know that that would be the consequence of my suggestion. However, it might save the time of the House if I say that if my hon. and learned Friend concedes the insurance point I will not press the other matter.
    Mr. MacDermot: I was coming to my hon. Friend's argument concerning insurance. He says that if there is a loss and a man is then paid out by his insurance company for that loss and chooses not to replace the asset and we tax any element of gain in the money the man gets we are taxing a loss. That is not right. We are not taxing a loss. If the man has a loss and is uninsured and, therefore, does not get any payment, then he suffers a loss and, of course, that capital loss he can set off against future gains. It is recognised for what it is and it is treated as such. If, however, he is insured—and the purpose of insurance is to provide against a loss in the circumstances covered by the policy; fire, accident or whatever it may be—then if he does not suffer a loss but realises the value of his asset and chooses not to replace it, what he has done is realised the value of his asset. If there is an element of capital gain in that decision it is right that he should be taxed for it.
    Let us consider my hon. Friend's example. The figures do not matter. Assume that a valuable picture originally cost £1,000 and assume that it has appreciated in value to £10,000. Assume that it is not destroyed but that the man decides to sell it. He gets £10,000, makes a £9,000 gain and is taxed on it. Suppose, instead, that the picture is burgled—although we will come to burglary in a moment—or destroyed and he then is paid out £10,000 by his insurance company. He can decide, the choice is his, to do one of two things. Either he is content to take this opportunity to realise his gain, because that is what it is—he realises the capital value of his asset—or he decides to replace it, and we will consider the question of replacement when we come to the Schedule.
    Assume that it is not a work of art but something that is completely, utterly and wholly replaceable. Then what he has done is to choose, of his own decision, not to replace the asset but to realise his gain.
    Mr. Peter Walker rose—
    Mr. MacDermot: I hope that the House will allow me to complete my explanation.
    We next come to my hon. Friend's argument, when he says, "But the gain the man has made there is not a realisation of his asset but the realisation of the premiums which he has paid—and you do not even propose to allow under the Bill the payment of those premiums in some way to be set off against the gain". Certainly not. The reason is that the premiums are a payment made by way of maintenance of his asset or maintenance of the value of it. [HON. MEMBERS: "Oh."] Of course they are. If the asset is held for a trade or business purpose, those premiums are allowed as an expenditure for purposes of Income Tax. That shows their true nature.
    For purposes of a capital gains tax, if a man has invested in a building other than his own personal residence and he pays for the maintenance of it, those maintenance payments cannot be set off against the amount of his gain when he realises it by reselling the building. An insurance payment is rightly regarded by everyone as being of that nature. As the result of having taken out an insurance policy, what happens is that when an accident occurs or a fire occurs and he is paid the full value of his asset there has been an occasion of realisation.
    Mr. Harold Lever: Would my hon. and learned Friend deal with one point? Dealing with the instance I gave, he said he had received £10,000, just the same as the man who sold had received £10,000. Supposing his compassionate Aunt Mary learned of the uninsured loss of his asset and sent him a cheque for £10,000? Would that be equally a receipt which should be taxed under the Capital Gains Tax, and, if not, why not?
    Mr. MacDermot: Because the payment from his beloved Aunt Mary is a gift free of tax which does not attract tax. He would still have suffered the loss, and he would still be able to set off the loss against his future gains. He has suffered the loss, and it is nothing whatever to do with the Revenue if at that moment his aunt decides to make him a present of £10,000.
    1704
    I was asked to explain the position if he decides to replace the asset. If he replaces the asset, he does not escape liability to tax. He merely defers it. By virtue of replacing the asset, he replaces in the new asset the gain the old asset had already acquired. When he comes to dispose of the new asset, that will be the occasion of realisation and tax will be paid on the full gain that had already occurred in the old asset plus the additional gain in the new one.
    Mr. Gower: There is one narrow point which comes out of the hon. and learned Gentleman's argument. If, for some reason, the man is unable to replace his asset within a short time, the very payment of the tax may make it impossible or diminish his ability to replace the asset in the longer term.
    Mr. MacDermot: That is not the argument at the moment. The argument is whether moneys realised through an insurance policy are a realisation of the gain and are the subject of charge. That is why some criminally disposed people have been known to set fire to their houses to claim insurance money. They want to realise the value of their assets at the expense of insurance companies. That shows what the nature of the transaction is.
    The same thing happens when a fire occurs involuntarily. It makes no difference to the fact that the man has realised his asset. He has suffered a pecuniary loss. He has lost his building, and he has acquired its capital value in money terms. If he decides to replace, there is no charge to tax, but if he decides to accept that realisation and pocket the gain, he does not thereby escape his liability to tax.
    9.0 p.m.
    Mr. J. Grimond: I fear that long association with the Bill is in danger of driving the Financial Secretary crazy. He is out of this world. I really think that he may be in danger of serious physical injury. I want to see him going up to someone who has been bashed over the head by burglars and had all his silver stolen and saying to him, "I must congratulate you—you have disposed of your assets. This is splendid. You should make a contribution to the social services and welfare through the Capital Gains Tax." I suppose, on the same basis, a man whose

    1705
    factory has been burnt out is to be congratulated on having made a capital gain.
    I must say something briefly in support of the hon. Member for Cheetham (Mr. Harold Lever), who has already enlivened our proceedings by the one very memorable statement that this will be the only country in the world in which death will in future be treated as a form of tax evasion. Principle has been the watchword of the party opposite. The principle now is that if one is lucky enough to be burgled, and injured in the process, it is the disposal of an asset and liable to Capital Gains Tax—
    Mr. Harold Lever: The right hon. Gentleman will realise, of course, that the logic of all this is that to take precautions against burglary will also be a form of tax avoidance.
    Mr. Grimond: Of course. When it suits the Treasury it has flexible views of principles. One of the principles of this tax is that one has to dispose of an asset, but a trust that does not dispose of assets still becomes liable to tax every ten years. This matter of principle, therefore, is very flexible, and the Treasury departs from it when it suits the Department to do so. The Treasury have said, "You cannot tax betting winnings because there is no asset," but if a man's factory is burnt out, or his picture is stolen, there is no asset.
    This is not the first time we have had odd remarks. In Committee in the small hours of the morning the Minister without Portfolio said:
    "On reflection, the hon. Member will see that it is not unfair … One has to take the rough with the smooth"—
    My Heavens, one does!
    "To ensure a state of equity between those who have and those who have not insured, it must follow that if a person loses something either through his own negligence or otherwise and thereby receives a capital sum, he is in precisely the same position with regard to other comparable taxpayers as if he had sold it."—[OFFICIAL REPORT, 25th May, 1965; Vol. 713, c. 482.]
    "Through the Looking Glass" has nothing like that.
    Insurance is designed to put one in a similar position, if one's factory is burnt, or assets destroyed, as one would be in had one retained it. It is not an analogy to say that insurance is the same
    1706
    as a sale or a gift. I am not prepared to comment on the drafting of this Amendment. The hon. Member is a learned, legal man but his drafting has taken a rather broad sweep in the later stages of the Bill. We have throughout that Order Paper a scattering of short notes saying "Delete this" and "delete that". I am sure the Bill would have a very different shape if it were under the control of the hon. and learned Gentleman. But like him I am concerned with insurance and its liability to Capital Gains Tax.
    I want to ask the Treasury Bench some questions. This is something that will matter to a lot of people—if I may have the attention of the Government spokesman. We are dealing here with people, we are not in the rarified atmosphere of some recess in the Inland Revenue. Someone will ultimately suffer severely. Perhaps I could have the attention of an hon. and learned Gentleman. I do not ask for both. Supposing the asset is underinsured—
    Mr. MacDermot: I apologise to the right hon. Gentleman. I merely thought that his argument should be retailed to my right hon. Friend the Chief Secretary.
    Mr. Grimond: At some other time, if you do not mind.
    Mr. MacDermot: I had, perhaps mistakenly, thought that the right hon. Gentleman was not likely to improve on the quality of his first argument—
    Mr. Grimond: Indeed I am. I am only just getting under way. You can take the Chief Secretary for a long holiday in August and tell him all the jokes in the Bill.
    Mr. Deputy Speaker: Order. I am not going to take the Chief Secretary for a holiday.
    Mr. Grimond: I am sorry. I very much appreciate that you, Mr. Deputy-Speaker, would be most unwilling to do that.
    Look at the ordinary insurance policy. Suppose that a man is not fully insured and he loses an asset which, if he had sold it, might have been worth £12,000. He gets in insurance £8,000. If he had spent £4,000 when he bought the asset he would be chargeable for capital gain,

    1707
    whereas he now has a capital loss. Many people are under-insured.
    What about the average clause in an insurance policy? What about policies which insure the contents of a whole building and limit the claims on any one asset to a proportion of the total insured by the policy? There is not liability to Capital Gains Tax on assets of under £1,000, but suppose that anyone is liable to certain gains on an asset on which an average clause has to be taken into account. Maybe later in discussion on the Bill we shall have a chance to go into this. The difficulties are enormous and so far have not been appreciated by the Government Front Bench.
    It has been suggested to me that if instead of taking the policy one disposes of the policy one will not be liable. I do not know whether that is so, but it is suggested that one could dispose of a policy and take the cash and then be liable to Capital Gains Tax. This is a peculiar situation.
    Mr. MacDermot: By "dispose of the policy", does the right hon. Member mean assign the rights under the policy? Is he envisaging assigning for a consideration or not for a consideration?
    Mr. Grimond: Dispose for cash. It is seriously suggested that if the policy is disposed of by the insured for a cash sum there is no disposal of an asset for the purpose of this Bill. It would be worth while for the Government to look into this. It is a criminal offence to burn down a house. Does the Financial Secretary seriously suggest that arson would break out all over the country if insurance policies were not liable to the Capital Gains Tax. This is out of this world. The idea that the whole of London will wake up one morning in flames unless Capital Gains Tax is imposed on insurance policies is the most extraordinary thing I have heard in the House of Commons.
    Mr. MacDermot: Will the right hon. Member give way?
    Mr. Grimond: I will give way in a moment. Of course people cheat in all sorts of ways, as the Financial Secretary knows or he would not be in employment as a barrister. Is it a serious proposition
    1708
    that if you do not impose this tax arson will break out? I ask you!
    Mr. MacDermot: I wondered who the right hon. Member was asking, whether he was asking Mr. Deputy-Speaker. Who does he suggest deployed an argument to the effect that if there was not a liability to Capital Gains Tax there would be arson? If he thinks that is what I said, I urge him to read HANSARD tomorrow.
    Mr. Grimond: I am relieved that this is not an attempt to stop tax evasion. I am pleased to hear the Financial Secretary does not think that people will not begin slashing pictures, putting their silver spoons down drains, and burning houses to evade tax. I am glad to have established that point. I cannot believe that any great damage will have been done to the general principle of taxing capital gains if people who suffer the unfortunate disaster of having a fire or a burglary are exempted from Capital Gains Tax on an insurance policy designed to cover just that eventuality. I very much hope that in the name of common sense, ordinary business prudence, humanity and everything else that the House will accept this proposal.
    Mr. Peter Walker: May I add a few words in support of the hon. Member for Manchester, Cheetham (Mr. Harold Lever) and the right hon. Gentleman the Leader of the Liberal Party? There have been few debates in which we have heard such complete nonsense from the Treasury Bench as we have heard this evening on this issue. It is a remarkable thing that the Treasury Bench, which throughout the proceedings on the Bill has argued that certain things should be kept separate on principle, has completely failed to separate the insurance aspect of this from the asset.
    I ask hon. Members to consider the case of someone who has paid a premium of £1 on an asset worth £1,000. Within a week the asset is destroyed and £1,000 is paid out. It could be argued that in fact there has been a £999 profit on the insurance premium and that perhaps could be taxed. If it was taxed, all the premiums would have to be set against it. However, that would be one logical argument. To say that the capital gain on the asset is to be taxed, a gain which arises not

    1709
    because of the asset being destroyed but because of the insurance policy being in existence, is nonsense. What should be done logically is to say that, although perhaps there has been a capital gain as a result of the existence of the insurance policy, there has been a capital loss as a result of the asset being destroyed. The policy is paid out, but the asset has gone. Therefore, the whole loss of the asset in its entirety should be set off against the money received from the insurance company. On that basis, there cannot possibly be any capital gain on the insurance policy.
    Mr. MacDermot: If this argument is right, when there is the sale of an article the loss of the article should be set off against the gain from the purchase price.
    Mr. Walker: I am staggered at the Financial Secretary's attitude. The proceeds received from the sale are not as a result of money provided by the person who has paid it year after year in order to pay out on that sale. The equivalent would be if I were to sell the Financial Secretary an article for £1,000 and I paid him £100 for 10 years and he then paid me the £1,000. He would argue, on his logic, that this was myself acquiring £1,000 upon which I should be taxed, whereas I should have given him the £1,000 which he would be paying to me. The joint premiums paid by all the people holding policies provide the thousands of £s which are paid out. The Financial Secretary has produced no argument on this. He is completely
    wrong, and I think he is now beginning to realise that he is wrong. He should accept the Amendments.
    Mr. Robert Maxwell: I rise to support, unusually, the hon. Member for Worcester (Mr. Peter Walker). This is the first time I have done so in these debates. I hope that my hon. and learned Friend the Financial Secretary will recognise that a person receiving money under an insurance policy in respect of an asset which is lost merely by virtue of an accident should receive that money as income from an insurance policy and it should not be treated as a capital gain. I hope that my hon. and learned Friend will give in on this issue, because it is a matter of equity and justice.
    Mr. Deputy-Speaker: The Question is—
    Mr. Harold Lever: I beg to ask leave—
    Hon. Members: No.
    Mr. Harold Lever: On a point of order. Am I entitled to speak again on the Amendment?
    Mr. Deputy-Speaker: Only by leave of the House.
    Hon. Members: No.
    Question put, That "and" stand part of the Bill:—
    The House divided: Ayes 275, Noes 271.

    Division No. 242.]

    AYES

    [9.14 p.m.

    Abse, Leo

    Brown, Hugh D. (Glasgow, Provan)

    Driberg, Tom

    Albu, Austen

    Buchan, Norman (Renfrewshire, W.)

    Duffy, Dr. A. E. P.

    Allaun, Frank (Salford, E.)

    Buchanan, Richard

    Dunn, James A.

    Alldritt, Walter

    Butler, Herbert (Hackney, C.)

    Dunnett, Jack

    Atkinson, Norman

    Butler, Mrs. Joyce (Wood Green)

    Edelman, Maurice

    Bacon, Miss Alice

    Callaghan, Rt. Hn. James

    Edwards, Robert (Bilston)

    Bagier, Gordon A. T.

    Carmichael, Neil

    English, Michael

    Barnett, Joel

    Chapman, Donald

    Ennals, David

    Baxter, William

    Coleman, Donald

    Ensor, David

    Bence, Cyril

    Conlan, Bernard

    Evans, Albert (Islington, S. W.)

    Bennett, J. (Glasgow, Bridgeton)

    Corbet, Mrs. Freda

    Evans, Ioan (Birmingham, Yardley)

    Binns, John

    Craddock, George (Bradford, S.)

    Fernyhough, E.

    Bishop, E. S.

    Crawshaw, Richard

    Finch, Harold (Bedwellty)

    Blackburn, F.

    Crosland, Rt. Hn. Anthony

    Fitch, Alan (Wigan)

    Blenkinsop, Arthur

    Crossman, Rt. Hn. R. H. S.

    Fletcher, Sir Eric (Islington, E.)

    Boardman, H.

    Dalyell, Tam

    Fletcher, Ted (Darlington)

    Boston, T. G.

    Darling, George

    Fletcher, Raymond (Ilkeston)

    Bottomley, Rt. Hn. Arthur

    Davies, Ifor (Gower)

    Floud, Bernard

    Bowden, Rt. Hn. H. W. (Leics S. W.)

    Davies, S. O. (Merthyr)

    Foley, Maurice

    Boyden, James

    Delargy, Hugh

    Foot, Michael (Ebbw Vale)

    Braddock, Mrs. E. M.

    Dell, Edmund

    Ford, Ben

    Bradley, Tom

    Dempsey, James

    Fraser, Rt. Hn. Tom (Hamilton)

    Bray, Dr. Jeremy

    Diamond, Rt. Hn. John

    Freeson, Reginald

    Broughton, Dr. A. D. D.

    Dodds, Norman

    Galpern, Sir Myer

    Brown, Rt. Hn. George (Belper)

    Doig, Peter

    Garrett, W. E.

    George, Lady Megan Lloyd

    MacDermot, Niall

    Robinson, Rt. Hn. K. (St. Pancras, N.)

    Ginsburg, David

    McGuire, Michael

    Rodgers, William (Stockton)

    Greenwood, Rt. Hn. Anthony

    Mclnnes, James

    Rogers, George (Kensington, N.)

    Gregory, Arnold

    McKay, Mrs. Margaret

    Rose, Paul B.

    Grey, Charles

    Mackenzie, Gregor (Rutherglen)

    Ross, Rt. Hn. William

    Griffiths, David (Rother Valley)

    McLeavy, Frank

    Rowland, Christopher

    Griffiths, Rt. Hn. James (Llanelly)

    Mahon, Peter (Preston, S.)

    Sheldon, Robert

    Griffiths, Will (M'chester, Exchange)

    Mahon, Simon (Bootle)

    Shinwell, Rt. Hn. E.

    Gunter, Rt. Hn. R. J.

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

    Shore, Peter (Stepney)

    Hale, Leslie

    Manuel, Archie

    Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

    Hamilton, James (Bothwell)

    Mapp, Charles

    Short, Mrs. Renée (W'hampton, N. E.)

    Hamilton, William (West Fife)

    Marsh, Richard

    Silkin, John (Deptford)

    Hamling, William (Woolwich, W.)

    Mason, Roy

    Silkin, S. C. (Camberwell, Dulwich)

    Hannan, William

    Maxwell, Robert

    Silverman, Julius (Aston)

    Harrison, Walter (Wakefield)

    Mayhew, Christopher

    Silverman, Sydney (Nelson)

    Hart, Mrs. Judith

    Mellish, Robert

    Skeffington, Arthur

    Hattersley, Roy

    Mendelson, J. J.

    Slater, Mrs. Harriet (Stoke, N.)

    Hazell, Bert

    Mikardo, Ian

    Small, William

    Healey, Rt. Hn. Denis

    Millan, Bruce

    Snow, Julian

    Heffer, Eric S.

    Miller, Dr. M. S.

    Soskice, Rt. Hn. Sir Frank

    Henderson, Rt. Hn. Arthur

    Milne, Edward (Blyth)

    Spriggs, Leslie

    Herbison, Rt. Hn. Margaret

    Molloy, William

    Steele, Thomas (Dunbartonshire, W.)

    Hobden, Dennis (Brighton, K'town)

    Monslow, Walter

    Stewart, Rt. Hn. Michael

    Holman, Percy

    Morris, Alfred (Wythenshawe)

    Stonehouse, John

    Horner, John

    Morris, Charles (Openshaw)

    Stones, William

    Houghton, Rt. Hn. Douglas

    Morris, John (Aberavon)

    Strauss, Rt. Hn. G. R. (Vauxhall)

    Howarth, Harry (Wellingborough)

    Mulley, Rt. Hn. Frederick (Sheffield Pk)

    Swain, Thomas

    Howarth, Robert L. (Bolton, E.)

    Murray, Albert

    Swingler, Stephen

    Howell, Denis (Small Heath)

    Neal, Harold

    Symonds, J. B.

    Howie, W.

    Newens, Stan

    Taverne, Dick

    Hoy, James

    Noel-Baker, Francis (Swindon)

    Taylor, Bernard (Mansfield)

    Hughes, Cledwyn (Anglesey)

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

    Thomas, George (Cardiff, W.)

    Hughes, Emrys (S. Ayrshire)

    Norwood, Christopher

    Thomas, Iorwerth (Rhondda, W.)

    Hughes, Hector (Aberdeen, N.)

    Oakes, Gordon

    Thomson, George (Dundee, E.)

    Hunter, Adam (Dunfermline)

    Ogden, Eric

    Thornton, Ernest

    Hunter, A. E. (Feltham)

    O'Malley, Brian

    Tinn, James

    Hynd, H. (Accrington)

    Oram, Albert E. (E. Ham, S.)

    Tomney, Frank

    Irving, Sydney (Dartford)

    Orbach, Maurice

    Tuck, Raphael

    Jackson, Colin

    Orme, Stanley

    Urwin, T. W.

    Janner, Sir Barnett

    Oswald, Thomas

    Varley, Eric G.

    Jay, Rt. Hn. Douglas

    Owen, Will

    Wainwright, Edwin

    Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

    Walden, Brian (All Saints)

    Jenkins, Hugh (Putney)

    Page, Derek (King's Lynn)

    Walker, Harold (Doncaster)

    Johnson, Carol (Lewisham, S.)

    Paget, R. T.

    Wallace, George

    Johnson, James (K'ston-on-Hull, W.)

    Palmer, Arthur

    Watkins, Tudor

    Jones, Dan (Burnley)

    Pannell, Rt. Hn. Charles

    Weitzman, David

    Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

    Pargiter, G. A.

    Wells, William (Walsall, N.)

    Jones, J. Idwal (Wrexham)

    Park, Trevor (Derbyshire, S. E.)

    White, Mrs. Eirene

    Jones, T. W. (Merioneth)

    Parkin, B. T.

    Whitlock, William

    Kelley, Richard

    Pavitt, Laurence

    Wigg, Rt. Hn. George

    Kenyon, Clifford

    Pearson, Arthur (Pontypridd)

    Wilkins, W. A.

    Kerr, Mrs. Anne (R'ter & Chatham)

    Peart, Rt. Hn. Fred

    Willey, Rt. Hn. Frederick

    Kerr, Dr. David (W'worth, Central)

    Pentland, Norman

    Williams, Alan (Swansea, W.)

    Lawson, George

    Perry, Ernest G.

    Williams, Clifford (Abertillery)

    Leadbitter, Ted

    Popplewell, Ernest

    Williams, Mrs. Shirley (Hitchin)

    Ledger, Ron

    Prentice, R. E.

    Williams, W. T. (Warrington)

    Lee, Rt. Hn. Frederick (Newton)

    Price, J. T. (Westhoughton)

    Willis, George (Edinburgh, E.)

    Lee, Miss Jennie (Cannock)

    Probert, Arthur

    Wilson, Rt. Hn. Harold (Huyton)

    Lever, Harold (Cheetham)

    Pursey, Cmdr. Harry

    Wilson, William (Coventry, S.)

    Lever, L. M. (Ardwick)

    Randall, Harry

    Winterbottom, R. E.

    Lewis, Arthur (West Ham, N.)

    Rankin, John

    Woodburn, Rt. Hn. A.

    Lewis, Ron (Carlisle)

    Redhead, Edward

    Woof, Robert

    Lipton, Marcus

    Rees, Merlyn

    Wyatt, Woodrow

    Loughlin, Charles

    Rhodes, Geoffrey

    Yates, Victor (Ladywood)

    Mabon, Dr. J. Dickson

    Richard, Ivor

    Zilliacus, K.

    McBride, Neil

    Roberts, Albert (Normanton)

    McCann, J.

    Roberts, Goronwy (Caernarvon)

    TELLERS FOR THE AYES:

    MacColl, James

    Robertson, John (Paisley)

    Mr. Gourlay and Mr. Harper.

    NOES

    Agnew, Commander Sir Peter

    Batsford, Brian

    Boyd-Carpenter, Rt. Hn. J.

    Alison, Michael (Barkston Ash)

    Bell, Ronald

    Boyle, Rt. Hn. Sir Edward

    Allan, Robert (Paddington, S.)

    Bennett, Sir Frederic (Torquay)

    Braine, Bernard

    Allason, James (Hemel Hempstead)

    Berkeley, Humphry

    Brewis, John

    Amery, Rt. Hon. Julian

    Berry, Hn. Anthony

    Brinton, Sir Tatton

    Anstruther-Gray, Rt. Hn. Sir W.

    Biffen, John

    Brooke, Rt. Hn. Henry

    Astor, John

    Biggs-Davison, John

    Brown, Sir Edward (Bath)

    Atkins, Humphrey

    Birch, Rt. Hn. Nigel

    Bruce-Gardyne, J.

    Awdry, Daniel

    Black, Sir Cyril

    Bryan, Paul

    Baker, W. H. K.

    Blaker, Peter

    Buchanan-Smith, Alick

    Balniel, Lord

    Bossom, Hn. Clive

    Buck, Antony

    Barber, Rt. Hn. Anthony

    Bowen, Roderic (Cardigan)

    Bullus, Sir Eric

    Barlow, Sir John

    Box, Donald

    Burden, F. A.

    1712

    1713

    Butcher, Sir Herbert

    Hay, John

    Page, John (Harrow, W.)

    Buxton, Ronald

    Heald, Rt. Hn. Sir Lionel

    Page, R. Graham (Crosby)

    Campbell, Gordon

    Heath, Rt. Hn. Edward

    Pearson, Sir Frank (Clitheroe)

    Carlisle, Mark

    Hendry, Forbes

    Peel, John

    Carr, Rt. Hn. Robert

    Higgins, Terence L.

    Percival, Ian

    Cary, Sir Robert

    Hill, J. E. B. (S. Norfolk)

    Peyton, John

    Channon, H. P. G.

    Hirst, Geoffrey

    Pickthorn, Rt. Hn. Sir Kenneth

    Chataway, Christopher

    Hobson, Rt. Hn. Sir John

    Pike, Miss Mervyn

    Chichester-Clark, R.

    Hooson, H. E.

    Pitt, Dame Edith

    Clark, Henry (Antrim, N.)

    Hopkins, Alan

    Pounder, Rafton

    Clark, William (Nottingham, S.)

    Hordern, Peter

    Powell, Rt. Hn. J. Enoch

    Clarke, Brig. Terence (Portsmth, W.)

    Hornby, Richard

    Price, David (Eastleigh)

    Cole, Norman

    Hornsby-Smith, Rt. Hn. Dame P.

    Prior, J. M. L.

    Cooke, Robert

    Hunt, John (Bromley)

    Pym, Francis

    Cooper, A. E.

    Hutchison, Michael Clark

    Quennell, Miss J. M.

    Cooper-Key, Sir Neill

    Iremonger, T. L.

    Ramsden, Rt. Hn. James

    Cordle, John

    Irvine, Bryant Godman (Rye)

    Redmayne, Rt. Hn. Sir Martin

    Corfield, F. V.

    Jenkin, Patrick (Woodford)

    Rees-Davies, W. R.

    Costain, A. P.

    Jennings, J. C.

    Renton, Rt. Hn. Sir David

    Courtney, Cdr. Anthony

    Jones, Arthur (Northants, S.)

    Ridley, Hn. Nicholas

    Craddock, Sir Beresford (Spelthorne)

    Jopling, Michael

    Ridsdale, Julian

    Crawley, Aidan

    Joseph, Rt. Hn. Sir Keith

    Roberts, Sir Peter (Heeley)

    Crosthwaite-Eyre, Col. Sir Oliver

    Kaberry, Sir Donald

    Rodgers, Sir John (Sevenoaks)

    Crowder, F. P.

    Kerby, Capt. Henry

    Roots, William

    Cunningham, Sir Knox

    Kerr, Sir Hamilton (Cambridge)

    Royle, Anthony

    Curran, Charles

    Kilfedder, James A.

    St. John-Stevas, Norman

    Currie, G. B. H.

    Kimball, Marcus

    Sandys, Rt. Hn. D.

    Dalkeith, Earl of

    King, Evelyn (Dorset, S.)

    Scott-Hopkins, James

    Dance, James

    Kirk, Peter

    Sharples, Richard

    Davies, Dr. Wyndham (Perry Barr)

    Kitson, Timothy

    Sinclair, Sir George

    d'Avigdor-Goldsmid, Sir Henry

    Lagden, Godfrey

    Smith, Dudley (Br'ntf'd & Chiswick)

    Dean, Paul

    Lambton, Viscount

    Smyth, Rt. Hn. Brig. Sir John

    Digby, Simon Wingfield

    Lancaster, Col. C. G.

    Soames, Rt. Hn. Christopher

    Dodds-Parker, Douglas

    Langford-Holt, Sir John

    Spearman, Sir Alexander

    Doughty, Charles

    Legge-Bourke, Sir Harry

    Speir, Sir Rupert

    Drayson, G. B.

    Lewis, Kenneth (Rutland)

    Stainton, Keith

    du Cann, Rt. Hn. Edward

    Litchfield, Capt. John

    Stanley, Hn. Richard

    Eden, Sir John

    Lloyd, Ian (P'tsm'th, Langstone)

    Steel, David (Roxburgh)

    Elliot, Capt. Walter (Carshalton)

    Lloyd, Rt. Hn. Selwyn (Wirral)

    Stodart, Anthony

    Emery, Peter

    Longden, Gilbert

    Studholme, Sir Henry

    Eyre, Reginald

    Loveys, Walter H.

    Talbot, John E.

    Farr, John

    Lubbock, Eric

    Taylor, Sir Charles (Eastbourne)

    Fell, Anthony

    McAdden, Sir Stephen

    Taylor, Edward M. (G'gow, Cathcart)

    Fisher, Nigel

    MacArthur, Ian

    Teeling, Sir William

    Fletcher-Cooke, Charles (Darwen)

    Mackenzie, Alasdair (Ross & Crom'ty)

    Temple, John M.

    Fletcher-Cooke, Sir John (S'pton)

    McLaren, Martin

    Thatcher, Mrs. Margaret

    Foster, Sir John

    Maclean, Sir Fitzroy

    Thomas, Sir Leslie (Canterbury)

    Fraser, Rt. Hn. Hugh (St'fford & Stone)

    Macleod, Rt. Hn. Iain

    Thompson, Sir Richard (Croydon, S.)

    Fraser, Ian (Plymouth, Sutton)

    McMaster, Stanley

    Tiley, Arthur (Bradford, W.)

    Galbraith, Hn. T. G. D.

    McNair-Wilson, Patrick

    Tilney, John (Wavertree)

    Gammans, Lady

    Maginnis, John E.

    Turton, Rt. Hn. R. H.

    Gibson-Watt, David

    Maitland, Sir John

    van Straubenzee, W. R.

    Giles, Rear-Admiral Morgan

    Marples, Rt. Hn. Ernest

    Vaughan-Morgan, Rt. Hn. Sir John

    Gilmour, Ian (Norfolk, Central)

    Marten, Neil

    Vickers, Dame Joan

    Gilmour, Sir John (East Fife)

    Mathew, Robert

    Walder, David (High Peak)

    Glover, Sir Douglas

    Maude, Angus

    Walker, Peter (Worcester)

    Godber, Rt. Hn. J. B.

    Maudling, Rt. Hn. Reginald

    Walker-Smith, Rt. Hn. Sir Derek

    Goodhart, Philip

    Mawby, Ray

    Wall, Patrick

    Gower, Raymond

    Maxwell-Hyslop, R. J.

    Walters, Dennis

    Grant, Anthony

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

    Ward, Dame Irene

    Grant-Ferris, R.

    Meyer, Sir Anthony

    Weatherill, Bernard

    Gresham Cooke, R.

    Mills, Peter (Torrington)

    Webster, David

    Grieve, Percy

    Mills, Stratton (Belfast, N.)

    Wells, John (Maidstone)

    Griffiths, Eldon (Bury St. Edmunds)

    Miscampbell, Norman

    Whitelaw, William

    Griffiths, Peter (Smethwick)

    Mitchell, David

    Williams, Sir Rolf Dudley (Exeter)

    Grimond, Rt. Hn. J.

    Monro, Hector

    Wills, Sir Gerald (Bridgwater)

    Gurden, Harold

    More, Jasper

    Wilson, Geoffrey (Truro)

    Hall, John (Wycombe)

    Morrison, Charles (Devizes)

    Wise, A. R.

    Hall-Davis, A. G. F.

    Mott-Radclyffe, Sir Charles

    Wolrige-Gordon, Patrick

    Hamilton, Marquess of (Fermanagh)

    Munro-Lucas-Tooth, Sir Hugh

    Wood, Rt. Hn. Richard

    Hamilton, M. (Salisbury)

    Murton, Oscar

    Woodhouse, Hn. Christopher

    Harris, Frederic (Croydon, N. W.)

    Neave, Airey

    Wylie, N. R.

    Harris, Reader (Heston)

    Nicholson, Sir Godfrey

    Yates, William (The Wrekin)

    Harrison, Brian (Maldon)

    Noble, Rt. Hn. Michael

    Younger, Hn. George

    Harvey, Sir Arthur Vere (Macclesf'd)

    Nugent, Rt. Hn. Sir Richard

    Harvey, John (Walthamstow, E.)

    Onslow, Cranley

    TELLERS FOR THE NOES:

    Harvie Anderson, Miss

    Orr, Capt. L. P. S.

    Mr. R. W. Elliott and

    Hastings, Stephen

    Osborn, John (Hallam)

    Mr. Geoffrey Johnson Smith.

    Hawkins, Paul

    Osborne, Sir Cyril (Louth)

    Mr. MacDermot: I beg to move Amendment No. 27, in page 18, line 41, at the beginning to insert "loss".
    1714
    In Committee, the hon. and learned Member for Northwich (Sir J. Foster) raised the question, as a drafting point,

    1715
    whether the Clause covered burglary. We have looked into the matter and, to put it beyond doubt, we propose this Amendment to insert the word "loss", which will cover loss by burglary.
    Amendment agreed to.
    Further Amendments made: In page 19, line 27, after "trustee", insert:
    "or for any person who would be so entitled but for being an infant or other person under disability".
    In page 19, line 27, after "persons," insert:
    "who are or would be".—[Mr. MacDermot.]

    Clause 22.—(LOSSES.)
    Amendment made: In page 20, line 40, after "entire", insert "loss".—[Mr. MacDermot.]
    Mr. MacDermot: I beg to move Amendment No. 29, in page 21, line 11, after "structure" to insert:
    "(including in the site any land occupied for purposes ancillary to the use of the building or structure)".
    This is largely a drafting Amendment to make clear that, when a building is destroyed, the restriction on the loss which may be claimed due to increase in the site value is not limited to the area actually covered by the building but includes any land occupied for use with the building. It is a clarifying Amendment to express more clearly the original intention, and it is to the advantage of the taxpayer.
    Amendment agreed to.
    Mr. MacDermot: I beg to move Amendment No. 30, in page 21, line 13, to leave out subsection (6).
    Would it be convenient, Mr. Speaker—I am sorry I did not give you notice of this—to discuss at the same time Amendment No. 83, dealing with the same topic, in Schedule 6?
    Mr. Speaker: I do not know. If the House pleases, so be it.
    9.30 p.m.
    Mr. MacDermot: I am obliged, Mr. Speaker. During the Committee stage hon. Members were concerned to ensure that the Bill made provision for compensation payments for damage to be excluded from the scope of the Capital
    1716
    Gains Tax to the extent that they were ploughed back into the replacement or restoration of the asset in question. This is a matter to which my hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) referred a moment ago. Of the two Amendments, the first does no more than delete the existing subsection (6) of Clause 22, which lays down a special rule for insurance cases where the insurance is not sufficient to cover the cost of the asset which has been destroyed or damaged.
    Mr. Peter Walker: On a point of order, Mr. Speaker. The Financial Secretary asked if two Amendments could be taken together. We had not had any notice of this or an opportunity to look at the Amendments. However, on looking at them we prefer that the second one should not be debated at the present moment.
    Mr. Speaker: Then let them not be taken together. The House will now deal with Amendment No. 30 only.
    Mr. MacDermot: In that case, Mr. Speaker, all I would say is that this is a paving Amendment for Amendment No. 83, the substantive one, which is to make provision for dealing with the situation where compensation moneys are used for the replacement or restoration of an asset.
    Amendment agreed to.
    Mr. MacDermot: I beg to move Amendment No. 31, in page 21, line 36, to leave out "subsection (5) of".
    This is also a paving Amendment. It is a drafting point. The Amendment is a paving Amendment for Amendments Nos. 35 and 36 which are for the benefit of the taxpayer.
    Amendment agreed to.

    Clause 23.—(DEATH.)
    Mr. MacDermot: I beg to move Amendment No. 32, in page 22, line 5, at the beginning to insert:
    "Subject to section ('transfer of business on retirement') of this Act."
    This is a drafting Amendment which is consequential on the decision of the House to accept the new Clause on the transfer of business on retirement.
    Amendment agreed to.
    Mr. MacDermot: I beg to move Amendment No. 33, in page 22, line 35, to leave out "two" and to insert "three".
    May we discuss this Amendment and the next one at the same time, Mr. Speaker? The two go together and deal with the same point.
    Mr. Speaker: If the House so pleases. I see gestures of assent.
    Mr. MacDermot: I am much obliged, Mr. Speaker. These are the two Amendments to which I referred a moment ago. As Clause 23(5) stands, it provides that allowable losses which accrue to an individual in the year of assessment in which he dies may, in so far as they cannot be deducted from gains accruing in that year, be carried back for the two preceding years. It has been represented to us that this two-year carry-back period is unduly restrictive and ought to be extended. I think that some representations suggested that it should be allowed to be carried back without limit in point of time. We cannot accept that proposition, which would involve reopening assessments for a long period back, but we think that there is force in the representations and propose to the House to increase the carry-back period from two years to three. This is done by Amendment No. 33, and Amendment No. 34 is a consequential drafting Amendment.
    Mr. Peter Walker: Although we accept the improvement that has taken place as a result of the Amendment, we still think that in logic it would be correct to go right back and allow past years for an unlimited period. We do not really accept the administrative argument on this, because it is one which works against the taxpayer. Nevertheless, we are pleased that, as a result of the representations we made during the Committee stage, at least some improvement has been made.
    Amendment agreed to.
    Further Amendment made: In page 22, line 36, leave out from "gains" to end of line 37 and insert:
    "accruing in a later year before those accruing in an earlier year".—[Mr. MacDermot.]
    Mr. MacDermot: I beg to move, Amendment No. 35, in page 23, line 6, at the end to insert:
    (8) Allowable losses which accrue to the personal representatives of a deceased person in
    1718
    the period of three years from the death, may, so far as they cannot otherwise be deducted from chargeable gains, be deducted from chargeable gains accruing to the deceased in the year of assessment in which the death occurs, or in the preceding three years of assessment, taking chargeable gains accruing in a later year before those accruing in an earlier year.
    May I point out to the hon. Gentleman the Member for Worcester (Mr. Peter Walker) that this Amendment is one which arises as a result of a point which was raised in Committee, unlike the last Amendment, the subject of which was not, I think, discussed in Committee. This, however, arose on a point raised by the hon. Member himself, and in Committee we gave an undertaking to look into it.
    Briefly, the Amendment provides that allowable losses which accrue to the personal representatives of the deceased in the three years following the death and which cannot be set off otherwise against chargeable gains also accruing to the personal representatives may be set against gains which accrued to the deceased in the year of his death or in the three preceding years of assessment. In short, net losses accruing to the personal representatives in the three-year period following the death are treated for this purpose precisely as if they were net losses accruing to the deceased person at his death. It is a point similar to that in the Amendment the House has just accepted.
    Mr. Peter Walker: We are delighted that, as the result of this process of constant capitulation by the Treasury Bench, they are gradually accepting our proposals. As the Financial Secretary is well aware, this could have been a very major point, because there could have been considerable sums involved in respect of certain estates. We welcome this Amendment.
    Amendment agreed to.
    Mr. MacDermot: I beg to move, Amendment No. 36, in page 23, line 20, to leave out "twelve months" and to insert "two years".
    This is a somewhat similar Amendment in favour of the taxpayer, dealing with the situation where there has been a deed of family arrangement after the death in effect altering the provisions of the will. The effect of the Amendment is to extend from one year to two years the period in which the deed of family arrangement

    1719
    can be made so as to be treated as if it had been a disposal by the deceased and thereby avoid a second occasion to charge.
    Amendment agreed to.

    Clause 24.—(SETTLED PROPERTY.)
    Mr. MacDermot: I beg to move, Amendment No. 37, in page 23, line 39, to leave out "body corporate" and to insert "person".
    This Amendment makes a small alteration to the provisions of the long-term tax regarding residence of trustees. It deals with a point which was raised by the hon. Member for Crosby (Mr. Graham Page). Indeed, he has an Amendment down, No. 274, which treats of the same point and which I think will be unnecessary if the House accepts this Amendment.
    The general rule is that the residence of trustees is determined in this way, that they are ordinarily resident in the United Kingdom, unless the trust is administered outside the United Kingdom and the trustees, or a majority of them, are non-resident. The proviso to Clause 24(1) provides that a body corporate which is carrying on business which consists of, or includes, the management of trusts, and is acting as trustee of the trusts, in the course of that business shall be treated as not resident if the whole of the settled property consists of or derives from property provided by a person not at the time domiciled, resident or ordinarily resident in the United Kingdom. That is the existing position.
    Since the publication of the Bill it has been represented to us, in particular by the Law Society, that the benefit of the proviso to which I have referred ought not to be restricted to corporate bodies which carry on the management of trusts, but ought equally to be available to individuals, for example solicitors, who practise, not as companies, but as individuals or in partnership, and manage trusts in the course of their business. This point appears to us to be a valid one, and is met by substituting the word "person" for the words "body corporate".
    Mr. Charles Fletcher-Cooke: May I, on behalf of my hon. Friend
    1720
    the Member for Crosby (Mr. Graham Page) thank the Financial Secretary for this Amendment? It seems extraordinary that there should have been any distinction between a body corporate and an individual person in this connection. One cannot understand how the discrepancy ever crept in. However, now that we have got what we want, it may be ungrateful to say more about that, and I shall therefore restrict myself to thanking the Government for putting the matter right at this late hour.
    Amendment agreed to.
    Mr. Peter Walker: I beg to move Amendment No. 229, in page 24, line 15, to leave out:
    "forming part of the settled property"
    and to insert:
    "in respect of which the life interest has been determined".
    If I was on the other side of the House I would describe this as a drafting Amendment, and I would expect the House quickly to accept it. This is an attempt to give a more specific definition to what we consider to be intended by the Bill, and I hope that it will be accepted in that spirit.
    Mr. MacDermot: I have known Members of the Treasury Bench suggest that matters are drafting matters and get away with it, but I have not previously heard this ploy tried by the Opposition Front Bench.
    This is far more than a drafting Amendment. It would make a considerable change, one which at first sight, I readily admit, would appear to have attractions; and I do not mind telling the House that when we were originally considering the scope of the Bill and framing it I raised the question whether it would not be right to deal with the matter in the way suggested by the Amendment. However, I was convinced by the arguments that were advanced that it would not be a useful or practical way of dealing with it, for reasons which I shall try to explain to the House.
    The Amendment, in effect, proposes that when a life interest in a trust terminates, the trustees should be chargeable only on that fraction of the property of the trust to which the life tenancy which is terminated relates. We assume that that is the intention. If a life tenant

    1721
    has a fractional interest in the interest on the property he will normally have an interest in all the assets. It is not clear that the Amendment will make any difference in such a case, but I shall argue to what I assume to be the intention underlying the Amendment, which is that in such a case, in effect, it is only tax on a proportionate fraction that should be payable.
    9.45 p.m.
    A fractional charge on the assets of a trust may appear reasonable, but it would be extremely difficult to operate, not least for the trustees. It would lead to great complications for everyone concerned. It would not be possible to select certain assets of the trust to the value, for example, of a quarter of the total value if the deceased life tenant had a quarter life interest in the income, and to leave those assets to be disposed of by the trustees. Apart from the fact that the life tenant's interest would normally have been a fractional interest in all the assets, there would be no rational basis for making a selection of the assets in question. If the matter were left to the trustees they would choose all the assets which happened to have shown a loss.
    The only practicable course would be to provide that the relevant proportion of all the gains on all the assets should be chargeable. This would be an immensely complicated procedure. It would require, first, that the amount of all the assets should be calculated, as is provided in the Clause at present, and then the relevant portion of those gains would have to be charged on Capital Gains Tax. After that, the notional acquisition cost of all the assets would have to be adjusted to an artificial value which reflected neither their true cost to the trust nor their actual market value when the so-called relevant life interest came to an end. There would be immense complication in the bookkeeping and recording necessary to ensure that the charge was properly and fairly enforced. One has to look to the interests of other beneficiaries under the trust.
    We considered this proposal, but came to the conclusion—as much in the interests of the trustees as in the interests of the Inland Revenue—that it would not be advisable. It is for that reason that the course proposed in the Bill has been
    1722
    chosen. It represents what we believe to be the only possible one to adopt.
    Mr. Fletcher-Cooke: When I heard the Financial Secretary speak I wondered whether we were really discussing Amendment No. 229, which I imagined to be the one moved by my hon. Friend the Member for Worcester (Mr. Peter Walker). The Financial Secretary pretended that it was in the best interests of the trusts and trustees that this Amendment should be rejected, which is totally contrary to the facts. The facts are that, largely through Estate Duty law, the monstrous principle has crept into taxation law that unless one is careful, every time a life interest passes the whole property is subject to tax—not merely the life interest, or the slice of the assets representing the life interest, but the whole corpus. I have always thought that this was unfair. It may be avoided with great skill in the Estate Duty world, but why we should repeat this principle in respect of capital gains I cannot understand.
    The present provision is particularly dangerous It was in respect of this that my hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) in Committee pointed out to the Minister without Portfolio that even an advance for the purposes of education, or something of that sort, might be held to form a termination of the life interest in a part of the settled property and thus attract the full Capital Gains Tax on the full corpus of the settlement. This argument was rejected by the Minister without Portfolio, but since then I have been advised that those who are learned in these matters are not totally satisfied with his answer, and that in the normal process of trusts there is a danger that an advance for the purposes of education, or for setting up a beneficiary in his trade or business, will be held to terminate the life interest in a part of the settled property, and that that being so the full amount of Capital Gains Tax will be attracted for the whole capital value of the settlement.
    If that happened—and it was held to have happened in one case—in all subsequent cases no one would ever make an advancement for educational purposes, for purposes of setting up in trade or for the normal purposes of advancement. This would inhibit enormously the powers

    1723
    of trustees and the rightful exercise of those powers, because they would bring down upon their heads and upon the head of the capital of the corpus of the whole settlement this vast tax. I hope that this is wrong, but a great many people think that what I am saying is right. That being so, I hope that we can be reassured that the normal powers of advancement do not constitute, for this purpose, the termination of a life interest in any part of the settled property.
    Even if that is right and we can be reassured on this, I must ask the Financial Secretary to think again about whether it is in the best interests of the trustees and of the beneficiaries that, every time a life interest passes, the whole amount of the capital is subject to this tax. Of course it is not in their best interests. This is the way a headmaster treats a pupil when he is about to beat him: he says that it is in the pupil's best interests. Of course, it is in the best interests of every beneficiary that tax should be attracted only to that slice of the corpus which passes on the life interest. It may be, for administrative reasons, that we cannot test it; I do not understand that; but to pretend that it is in the interests of the subject that the whole amount of the capital should, every time the life interest passes, be subject to this is—if I may use an unparliamentary expression—humbug.
    Sir D. Glover: A very good Parliamentary expression.
    Mr. MacDermot: If I may have leave to speak again. I am not sure whether the question of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) is directly relevant, but I would assure him that an advance of the kind he described would not be a determination of an interest so as to be an occasion of charge—
    Mr. Fletcher-Cooke: Or any part of it?
    Mr. MacDermot: The only other comment which I would make—
    Sir Hugh Lucas-Tooth: When the hon. Gentleman says "advance", does he mean an advance made under statutory powers or any advance, however made, under the trust? There is a big difference and I think that he is referring only to the first.
    Mr. MacDermot: I was referring to the specific question which I was asked, about the advance for educational purposes.
    What we are concerned with in the Amendment is not what constitutes the determination of a life interest, but how the assessment to charge shall be made when that occurs. For the reasons which I have explained, we are satisfied that, in the interests of trustees as well—we have had no representations on this to the contrary—the procedure laid down in the Bill is the only practicable one.
    Amendment negatived.
    Mr. MacDermot: I beg to move, Amendment No. 38, in page 24, line 19 at the end to insert:
    (4A) If, in the case of the death of any individual, no relief is given under subsection (2) of the last foregoing section, or relief which is given in respect of an aggregate sum which is less than the amount available for relief under the said subsection (2),, then that amount or, as the case may be, the difference between that amount and the aggregate sum in respect of which relief is so given shall be available for giving relief under this subsection, and—

    (a) any gains which accrue to the trustees of a settlement on the disposal of settled property deemed to be effected at the date of the death in accordance with subsection (3) or subsection (4) of this section on the termination of a life interest by the death, or otherwise in consequence of the death, shall be aggregated and only so much of that aggregate as exceeds the amount so available for giving relief under this subsection shall constitute chargeable gains,

    (b) if subsection (5) below has operated to prevent subsection (4) applying on the date of the death paragraph (a) above shall apply to gains accruing on the disposal of the settled property deemed to be effected on the next occasion (if any) when subsection (4) applies,

    (c) in arriving at the aggregate—

    (i) the respective amounts of the gains shall be computed in accordance with the provisions of this Act (other than this subsection) fixing the amount of chargeable gains, and

    (ii) any allowable loss which accrues on the disposal shall be deducted,

    and the provisions of this subsection shall not affect the computation of the amount of any allowable loss,

    (d) if this subsection applies in relation to chargeable gains accruing to more than one body of trustees on the same death, the amount available for relief under this subsection shall be apportioned between those bodies of trustees according to the respective values of the settled property which those

    1725
    trustees are deemed respectively to have disposed of,

    and the references in this subsection to the amount available for relief under subsection (2) of the last foregoing section are references to five thousand pounds or as the case may be to that amount as reduced (or extinguished) under section ("transfer of business on retirement") of this Act.
    This Amendment implements an assurance which I gave in Committee when dealing with an Amendment by right hon. and hon. Gentlemen opposite, the effect of which would have been that the unused balance of the £5,000 death exemption should be allowed to be set off against gains accruing to trustees in consequence of that death. I said on that occasion that we should be prepared to allow any unused portion of the £5,000 exemption to spill over to the trust property, and that is what this somewhat lengthy Amendment is designed to do.
    Mr. Peter Walker: We welcome the new Patronage Secretary, the hon. Member for Cardiff, West (Mr. George Thomas). At any rate, he is occupying the seat usually occupied by the Patronage Secretary. Indeed, we can well understand the appointment of a new Patronage Secretary.
    Once again, we welcome this important Amendment. It was a very wrong omission from the original Bill, and we are very pleased at the manner in which the suggestions which we made in Committee have been received by the Financial Secretary. We are grateful to him for proposing the Amendment.
    Amendment agreed to.
    The Minister without Portfolio (Sir Eric Fletcher): I beg to move Amendment No. 39, in page 24, line 23, to leave out "ten" and to insert "fifteen".
    Mr. Speaker: May I invoke the help of the House on how the following Amendments may be grouped?
    Sir Eric Fletcher: I think that it would be convenient if we considered together Amendments Nos. 39, 40, 41, 42, 43, 44, 47, 48, 49, 50, 51 and 52.
    Hon. Members: Hear, hear.
    Mr. Speaker: I gather that the House so pleases.
    Sir Eric Fletcher: The whole of these Amendments refer to a discussion which
    1726
    we had in Committee, and they are designed to implement an undertaking which I gave in Committee. The House will recall that Clause 24(4) provides that on the termination of a life interest in possession of all or part of the settled property, all the assets comprised in the settlement are deemed to be disposed of and reacquired by the trustees.
    In order to prevent the trustees of a settlement from being charged too frequently to Capital Gains Tax on notional disposals in the case of a trust with several life interests simultaneously in possession, subsection (5) provides that the interval between any two charges shall not be less than ten years. If I may give an example, suppose that a trust were set up in year one and a life interest terminated in year three, the trustees would then be charged on the gains accruing on the notional disposal at that time. But if a further life interest fell in between, say, years three and thirteen, the trustees would not be charged until year thirteen, the conception being that there should be no second charge to Capital Gains Tax except after an interval of ten years, but that after ten years they should then be charged whether or not a life interest terminated at that point of time. In order to deal with the case of the discretionary trust where no life interests fall in, subsection (6) provides that such trusts are to be charged every ten years.
    In Committee, these proposals were criticised on the ground that the ten-year interval was too short. Amendments were put down by the Opposition suggesting that the period of ten years should be extended. Some hon. Members suggested twenty-one years and others suggested twenty-five years. At that stage I gave an assurance that if the Amendments were withdrawn the Government would put down a series of Amendments to extend the period of ten years to fifteen years. The Opposition Amendments were not, in fact, withdrawn. Nevertheless, the Government wish to implement the undertaking which I gave, and the whole of these series of Amendments gives effect to that undertaking.
    10.0 p.m.
    Mr. Fletcher-Cooke: The whole concept of notional disposal is, as the

    1727
    Minister without Portfolio knows, repulsive to my hon. Friends and I, and it does not make it any better that the notional disposal takes place at 15-year intervals instead of at 10-year intervals. The notional disposal concept is, of course, another aspect of how this tax is turned from a Capital Gains Tax into a capital levy or wealth tax.
    It is as though when one is dealing with Income Tax one says that someone who is not working as hard as he might shall be taxed on the sort of income that he could earn if only he exerted himself. It is the same principle, translated into the Capital Gains Tax. It is saying, "These trustees are not turning over their investments as fast as we want them to so that the Treasury can have its cut and, therefore, we will tax them as if they were". It is, to our way of thinking, totally foreign to the concept of a real, genuine, sincere and honest Capital Gains Tax.
    If the theory behind the Capital Gains Tax is, as I believe it to be, that those who depend entirely on earned income do not like to see people enjoying capital gains, if one is to have parity of reasoning and parity of burden then, as I said when I first spoke on this subject, the Treasury should tax the wage earner as if he had earned the full wage of which he was capable, whether or not he had earned it.
    Why trustees and settlements should be singled out for the notional disposal treatment I do not know. It may be that a great many of them do not turn over their investments as quickly as the Treasury would like, but they are in a fork here. If they turn them over too quickly they get subjected to the short-term Capital Gains Tax at a very high rate. If they do not turn them over fast enough, along comes the Treasury and says, "We will tax you as if you had".
    It is difficult to know at what speed the prudent, reasonable or governmentally approved of trustee should turn over or switch his investments. It is a monstrous thing to tax people for a capital gain which they have never made simply because the Treasury wants the money. I do not believe that the interval of another five years—and I am talking
    1728
    here of trusts without a life interest; there are not only discretionary trusts—makes any difference. We know that the Treasury does not like discretionary trusts and I have some sympathy with that view. As I say, there are many trusts without life interests. There are trusts for persons with a disability, persons of unsound mind and so on. There may be no life interest whatever. I do not understand why these trusts should be singled out for this revival of the law of mortmaine, as I mentioned in Committee.
    Companies are entitled to sit on their investments for many years without turning them over. If companies and corporations are not subjected to this 15 or 10 year assessment of what they would have made if they had turned over or switched their investments why should settlements be so singled out?
    This seems a most monstrous imposition and the Government have as yet said nothing to persuade me that this is anything but the thin end of a very dangerous wedge indeed. I wrote about this in the columns of The Times at the time of the Budget Statement. The mere fact of extending this Domesday Book from 10 to 15 years leaves my withers quite unwrung.
    Mr. Scott-Hopkins: I completely support the remarks of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and I hope that the Minister will particularly consider the case of an estate which has been left in trust to a minor, someone aged one or two. It would appear from the 15-year provision that when the minor becomes of age the estate, perhaps a farm, will be valued and the Capital Gains Tax will be paid on the value. This could lead to great hardship, even to the breaking up of the estate, which would be a very bad thing, particulary if it were a farm.
    Under the present Administration, with increasing inflation, the 15-year provision may cause great hardship. I urge the Minister without Portfolio to again consider the time factor and realise that the difficulties which may be caused resulted in my hon. Friends suggesting the period of 21 years in Committee. It is an important issue, and I hope the Minister without Portfolio will think about it.

    1729
    because hardship will be incurred by imposing a 15-year period.
    We heard during the Report stage that a decision had been deferred in respect of widows and so on. Where a minor is concerned, I think it is quite inequitable that an estate should be valued for the purposes of Capital Gains Tax, and it could well lead to the disposal of part of the estate to pay the tax. It is quite unfair, and I hope the Minister without Portfolio will think again and change the period of time he is now trying to write into the Bill.
    Mr. Peter Walker: While supporting the cogent arguments of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), the only way I can summarise the Amendments is by the reference I made to them in Committee, when I said:
    "One realises therefore, that this is a thoroughly bad Clause, and the Amendments in the names of my hon. and right hon. Friends of the Liberal Party all express these very real problems. None of these have been answered and the concession offered by the Minister was an insult after the debate. It has been obvious throughout the debate that the Government are unwilling to listen to realistic arguments and that it is a waste of time for us to argue against them."—[OFFICIAL REPORT, 26th May, 1965; Vol. 713, c 704.]
    Now that they have had a longer time to consider those arguments, they have shown once again that they are unwilling to listen to logical reasoning. This is a mean, unimportant concession, in the sense that it is a concession. We will have to support it and let it go through, but I regret that the Government have not given more consideration to the very cogent arguments in that debate.
    Sir Eric Fletcher: The issue is whether the period should be 10 or 15 years, and I understand from what the hon. Member for Cornwall, North (Mr. Scott-Hopkins) says that he is in favour of such an extension. However, I think the hon. Member has misunderstood the effect of the Clause. There is no automatic charge to Capital Gains Tax every 15 years, except in the case of a discretionary trust.
    Mr. Fletcher-Cooke: Discretionary or other trusts.
    Sir Eric Fletcher: In the case of a discretionary trust the situation would arise in which, unless there was some such provision, such a trust would escape liability to Capital Gains Tax altogether. That would open the door to very considerable evasion, and I do not think that any hon. Member opposite is proposing that in the case of a discretionary trust this Clause should be a complete escape from liability.
    In the case which the hon. Member supposed of a trust for an infant, there is no charge to tax when the child becomes 15 or 16 years of age. In a case of that kind, the charge only arises when the life interest passes.
    Amendment agreed to.
    Further Amendments made: In page 24, line 25, leave out "ten" and insert "fifteen".
    In line 28, leave out "ten" and insert "fifteen".
    In line 30, leave out "ten" and insert "fifteen".
    In line 32, leave out first "ten" and insert "fifteen".
    In line 32, leave out second "ten" and insert "fifteen".
    In page 26, line 2, after "(4)", insert "(4A)".
    In line 6, leave out "1955"and insert "1950".
    In line 10, leave out "1955"and insert "1950".
    In line 11, leave out "tenth" and insert "fifteenth".
    In line 13, leave out "tenth" and insert "fifteenth".
    In line 14, leave out "ten" and insert "fifteen".
    In line 15, leave out "1955"and insert "1950".—[Mr. MacDermot.]
    Mr. MacDermot: I beg to move, Amendment No. 53, in page 26, line 15, at the end, to insert:
    "but subsection (4) of this section shall not be applied by virtue of this subsection (taken together with subsection (6)) on a date falling before 7th April, 1967".
    After my earlier hesitation, Mr. Deputy-Speaker, I am now glad to say that I can give a very full explanation of the Amendment if any

    1731
    hon. Members wish me to do so, but perhaps it is sufficient to say that it introduces a two-year moratorium on the operation of the charge to tax of discretionary trusts under subsection (6).
    This Amendment results from an argument which impressed me in Committee. It was then pointed out that if the provision calling for the automatic levy of charge every 15 years on discretionary trusts had to begin to operate immediately as from Budget day, it would mean, owing to the spread provision introduced to see that these charges are spread over the whole of the 15-year period and do not all get bunched up at one moment, that the charges in the first year or two would involve a great deal of labour and result in very little revenue. It seems more satisfactory to have the moratorium for the first two years, which means that not until two years after the tax comes into force will we begin to operate the provision. The work would then produce some useful result. Meanwhile, the tax for those two years will be deferred until after 15 years have elapsed.
    10.15 p.m.
    Mr. Peter Walker: May I congratulate the Financial Secretary on his recovery and the tremendous zest and enthusiasm which he put into the brief he had just seen for the first time? In fairness to him I should withdraw that statement, because he remembered the debate we had on this question. In fact, however, he remembered it only for the purpose of what he expressed as part of the debate. The point he made was that there would be administrative inconvenience in starting on the valuations within a few months of the Bill coming into operation and also inconvenience for the taxpayer.
    The point we made when discussing this in Committee was a suggestion that the first valuation should not take place, when it was to be 10 years, until 1975 and, now that it is to be 15 years, not until 1980, and thereafter on the appropriate anniversaries of the appropriate trusts. Otherwise we should get a situation in which someone whose trust anniversary happened to have fallen in 1967 would have to start revaluing assets of the trust and paying Capital Gains Tax rather earlier than in a trust formed after 1965. This Amendment, however, deals with
    1732
    part of our complaint and will ease the administrative problems not only of the taxpayer but also, we believe, of the Revenue. For that reason we find the Amendment acceptable.
    Mr. R. J. Maxwell-Hyslop: I wish to ask a question of the Financial Secretary. If no provision is made in the trust deed—which presumably there would not be—as to the cost of these periodic valuations, is there anything to enable trust deeds to pay the cost of the valuation out of the trust funds rather than making the beneficiary pay?
    This is attributable to a number of different Clauses but it arises here when we are fixing the date at which a trust is to be valued. It is matter of concern that, notwithstanding what is written into the trust deed, the cost of the valuation if any could be met out of the trust rather than out of the residual benefits to the beneficiary of the trust.
    Mr. MacDermot: By leave of the House I speak again, but I am not sure that the question arises on the Amendment although it arose in one of our earlier discussions when, I think, the hon. Member for Tiverton (Mr. Maxwell-Hyslop) was not with us. I referred then to a provision in the Schedule which deals with the question of the expenses which can be allowed when calculating tax. I am afraid I cannot answer specifically without notice the question about the position between the trustees and the beneficiaries, but I imagine that there is a general provision entitling trustees to incur proper expenses in the administration of the trust and in the Schedule one would find that would be covered. If the hon. Member has anything further specific to ask about this when he has had an opportunity of looking at the effect of the Amendment, I will write to him.
    Mr. Deputy-Speaker (Dr. Horace King): This is a little wide of the Amendment, but having allowed the question, I thought I must allow the answer.
    Amendment agreed to.

    Clause 25.—(ESTATE DUTY.)
    Mr. Deputy-Speaker: The next Amendment is Amendment No. 54:
    In page 26, line 20, at end insert:
    (2) In estimating the principal value of any property given inter vivos by a deceased

    1733
    within five years of his death allowance shall be made for any capital gains tax borne in relation to and as a result of making such gift.
    Mr. Peter Walker: This is an Amendment which I placed on the Notice Paper to clear up the position of the possibility of Capital Gains Tax paid on a gift inter vivos not having deducted from it Capital Gains Tax. I have received a letter from the Financial Secretary in which he assures me that, as a result of the existing legislation, gifts inter vivos will not suffer from this effect. In view of that, I beg to ask leave to withdraw the Amendment.
    Mr. Deputy-Speaker: I am reminded that the hon. Member has not moved the Amendment, so he does not need to withdraw it but refrains from moving it.
    Amendments made: In page 28, line 5, leave out "ten" and insert "fifteen".
    In line 12, leave out "ten" and insert "fifteen".—[Mr. MacDermot.]

    Clause 26.—(MISCELLANEOUS EXEMPTIONS FOR CERTAIN KINDS OF PROPERTY.)
    Amendment made: In page 28, line 25, at end insert:
    (2A) If the adjusted sale price and adjusted purchase price to be taken into account under
    Schedule 6 to this Act in computing the amount of a gain accruing on a disposal of securities of one of the descriptions in Schedule (Capital gains: Government securities issued at a discount) to this Act are both within the exempt price range specified in that Schedule for those securities a gain accruing on that disposal shall not be a chargeable gain (and a loss so accruing shall not be an allowable loss) and if the range between those prices overlaps that exempt price range a proportion of a gain so accruing shall not be a chargeable gain, which shall be the proportion which the part of the range between those prices which overlaps that exempt price range bears to the whole of the range between those prices (and correspondingly a part of a loss so accruing shall not be an allowable loss).
    In this subsection "adjusted sale price" means the amount of the consideration for the disposal and "adjusted purchase price" means the amount of the consideration for the acquisition (that is the acquisition by the person making the disposal), both adjusted, where the nominal amount of the securities being disposed of is not one hundred pounds, to represent a price for a nominal amount of one hundred pounds.—[Mr. MacDermot.]
    Amendment proposed: In page 28, line 29, at end insert:
    (4) British Government securities shall not be chargeable assets.—[Mr. Peter Walker.]
    Question put, That those words be there inserted in the Bill:—
    The House divided: Ayes 274, Noes 279.

    Division No. 243.]

    AYES

    [10.21 p.m.

    Agnew, Commander Sir Peter

    Buchanan-Smith, Alick

    Dean, Paul

    Alison, Michael (Barkston Ash)

    Buck, Antony

    Digby, Simon Wingfield

    Allan, Robert (Paddington, S.)

    Bullus, Sir Eric

    Dodds-Parker, Douglas

    Allason, James (Hemel Hempstead)

    Burden, F. A.

    Doughty, Charles

    Amery, Rt. Hn. Julian

    Butcher, Sir Herbert

    Drayson, G. B.

    Anstruther-Gray, Rt. Hn. Sir W.

    Buxton, Ronald

    du Cann, Rt. Hn. Edward

    Astor, John

    Campbell, Gordon

    Eden, Sir John

    Atkins, Humphrey

    Carlisle, Mark

    Elliot, Capt. Walter (Carshalton)

    Awdry, Daniel

    Carr, Rt. Hn. Robert

    Elliott, R. W. (N'c'tle-upon-Tyne, N.)

    Baker, W. H. K.

    Cary, Sir Robert

    Emery, Peter

    Balniel, Lord

    Channon, H. P. G.

    Eyre, Reginald

    Barber, Rt. Hn. Anthony

    Chataway, Christopher

    Farr, John

    Barlow, Sir John

    Chichester-Clark, R.

    Fell, Anthony

    Batsford, Brian

    Clark, Henry (Antrim, N.)

    Fisher, Nigel

    Bell, Ronald

    Clark, William (Nottingham, S.)

    Fletcher-Cooke, Charles (Darwen)

    Bennett, Sir Frederic (Torquay)

    Clarke, Brig. Terence (Portsmth, W.)

    Fletcher-Cooke, Sir John (S'pton)

    Berkeley, Humphry

    Cole, Norman

    Foster, Sir John

    Berry, Hn. Anthony

    Cooke, Robert

    Fraser, Rt. Hn. Hugh (St'fford & Stone)

    Biffen, John

    Cooper, A. E.

    Galbraith, Hn. T. G. D.

    Biggs-Davison, John

    Cooper-Key, Sir Neill

    Gammans, Lady

    Birch, Rt. Hn. Nigel

    Cordle, John

    Gibson-Watt, David

    Black, Sir Cyril

    Corfield, F. V.

    Giles, Rear-Admiral Morgan

    Blaker, Peter

    Costain, A. P.

    Gilmour, Ian (Norfolk, Central)

    Bossom, Hn. Clive

    Courtney, Cdr. Anthony

    Gilmour, Sir John (East Fife)

    Bowen, Roderic (Cardigan)

    Craddock, Sir Beresford (Spelthorne)

    Glover, Sir Douglas

    Box, Donald

    Crawley, Aidan

    Godber, Rt. Hn. J. B.

    Boyd-Carpenter, Rt. Hn. J.

    Crosthwaite-Eyre, Col. Sir Oliver

    Goodhart, Philip

    Boyle, Rt. Hn. Sir Edward

    Crowder, F. P.

    Gower, Raymond

    Braine, Bernard

    Cunningham, Sir Knox

    Grant, Anthony

    Brewis, John

    Curran, Charles

    Grant-Ferris, R.

    Brinton, Sir Tatton

    Currie, G. B. H.

    Gresham Cooke, R

    Brooke, Rt. Hn. Henry

    Dalkeith, Earl of

    Grieve, Percy

    Brown, Sir Edward (Bath)

    Dance, James

    Griffiths, Eldon (Bury St. Edmunds)

    Bruce-Gardyne, J.

    Davies, Dr. Wyndham (Perry Barr)

    Griffiths, Peter (Smethwick)

    Bryan, Paul

    d'Avigdor-Goldsmid, Sir Henry

    Grimond, Rt. Hn. J.

    Gurden, Harold

    Mackenzie, Alasdair (Ross & Crom'ty)

    Rodgers, Sir John (Sevenoaks)

    Hall, John (Wycombe)

    Mackie, George Y. (C'ness & S'land)

    Roots, William

    Hall-Davis, A. G. F.

    Maclean, Sir Fitzroy

    Royle, Anthony

    Hamilton, Marquess of (Fermanagh)

    Macleod, Rt. Hn. Iain

    St. John-Stevas, Norman

    Hamilton, M. (Salisbury)

    McMaster, Stanley

    Sandys, Rt. Hn. D.

    Harris, Frederic (Croydon, N.W.)

    McNair-Wilson, Patrick

    Scott-Hopkins, James

    Harris, Reader (Heston)

    Maginnis, John E.

    Sharples, Richard

    Harrison, Brian (Maldon)

    Maitland, Sir John

    Sinclair, Sir George

    Harvey, Sir Arthur Vere (Macclesf'd)

    Marples, Rt. Hn. Ernest

    Smith, Dudley (Br'ntf'd & Chiswick)

    Harvey, John (Walthamstow, E.)

    Marten, Neil

    Smyth, Rt. Hn. Brig. Sir John

    Harvie Anderson, Miss

    Mathew, Robert

    Soames, Rt. Hn. Christopher

    Hastings, Stephen

    Maude, Angus

    Spearman, Sir Alexander

    Hawkins, Paul

    Maudling, Rt. Hn. Reginald

    Speir, Sir Rupert

    Hay, John

    Mawby, Ray

    Stainton, Keith

    Heald, Rt. Hn. Sir Lionel

    Maxwell-Hyslop, R. J.

    Stanley, Hn. Richard

    Heath, Rt. Hn. Edward

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

    Steel, David (Roxburgh)

    Hendry, Forbes

    Meyer, Sir Anthony

    Stodart, Anthony

    Higgins, Terence L.

    Mills, Peter (Torrington)

    Studholme, Sir Henry

    Hill, J. E. B. (S. Norfolk)

    Mills, Stratton (Belfast, N.)

    Talbot, John E.

    Hirst, Geoffrey

    Miscampbell, Norman

    Taylor, Sir Charles (Eastbourne)

    Hobson, Rt. Hn. Sir John

    Mitchell, David

    Taylor, Edward M. (G'gow, Cathcart)

    Hooson, H. E.

    Monro, Hector

    Teeling, Sir William

    Hopkins, Alan

    More, Jasper

    Temple, John M.

    Hordern, Peter

    Morrison, Charles (Devizes)

    Thatcher, Mrs. Margaret

    Hornby, Richard

    Mott-Radclyffe, Sir Charles

    Thomas, Sir Leslie (Canterbury)

    Hornsby-Smith, Rt. Hn. Dame P.

    Munro-Lucas-Tooth, Sir Hugh

    Thompson, Sir Richard (Croydon, S.)

    Hunt, John (Bromley)

    Murton, Oscar

    Thorpe, Jeremy

    Hutchison, Michael Clark

    Neave, Airey

    Tiley, Arthur (Bradford, W.)

    Iremonger, T. L.

    Nicholson, Sir Godfrey

    Tilney, John (Wavertree)

    Irvine, Bryant Godman (Rye)

    Noble, Rt. Hn. Michael

    Turton, Rt. Hn. R. H.

    Jenkin, Patrick (Woodford)

    Nugent, Rt. Hn. Sir Richard

    Tweedsmuir, Lady

    Jennings, J. C.

    Onslow, Cranley

    van Straubenzee, W. R.

    Johnson Smith, G. (East Grinstead)

    Orr, Capt. L. P. S.

    Vaughan-Morgan, Rt. Hn. Sir John

    Jones, Arthur (Northants, S.)

    Osborn, John (Hallam)

    Vickers, Dame Joan

    Jopling, Michael

    Osborne, Sir Cyril (Louth)

    Walder, David (High Peak)

    Joseph, Rt. Hn. Sir Keith

    Page, John (Harrow, W.)

    Walker, Peter (Worcester)

    Kaberry, Sir Donald

    Page, R. Graham (Crosby)

    Walker-Smith, Rt. Hn. Sir Derek

    Kerby, Capt. Henry

    Pearson, Sir Frank (Clitheroe)

    Wall, Patrick

    Kerr, Sir Hamilton (Cambridge)

    Peel, John

    Walters, Dennis

    Kilfedder, James A.

    Percival, Ian

    Ward, Dame Irene

    Kimball, Marcus

    Peyton, John

    Weatherill, Bernard

    King, Evelyn (Dorset, S.)

    Pickthorn, Rt. Hn. Sir Kenneth

    Webster, David

    Kirk, Peter

    Pike, Miss Mervyn

    Wells, John (Maidstone)

    Kitson, Timothy

    Pitt, Dame Edith

    Whitelaw, William

    Lagden, Godfrey

    Pounder, Rafton

    Williams, Sir Rolf Dudley (Exeter)

    Lambton, Viscount

    Powell, Rt. Hn. J. Enoch

    Wills, Sir Gerald (Bridgwater)

    Lancaster, Col. C. G.

    Price, David (Eastleigh)

    Wilson, Geoffrey (Truro)

    Langford-Holt, Sir John

    Wise, A. R.

    Legge-Bourke, Sir Harry

    Prior, J. M. L.

    Wolrige-Gordon, Patrick

    Lewis, Kenneth (Rutland)

    Pym, Francis

    Wood, Rt. Hn. Richard

    Litchfield, Capt. John

    Quennell, Miss J. M.

    Woodhouse, Hn. Christopher

    Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)

    Ramsden, Rt. Hn. James

    Wylie, N. R.

    Lloyd, Ian (P'tsm'th, Langstone)

    Redmayne, Rt. Hn. Sir Martin

    Longden, Gilbert

    Rees-Davies, W. R.

    Yates, William (The Wrekin)

    Loveys, Walter H.

    Renton, Rt. Hn. Sir David

    Younger, Hn. George

    Lubbock, Eric

    Ridley, Hn. Nicholas

    McAdden, Sir Stephen

    Ridsdale, Julian

    TELLERS FOR THE AYES:

    MacArthur, Ian

    Roberts, Sir Peter (Heeley)

    Mr. Martin McLaren and

    Mr. Ian Fraser.

    NOES

    Abse, Leo

    Brown, Rt. Hn. George (Belper)

    Diamond, Rt. Hn. John

    Albu, Austen

    Brown, Hugh D. (Glasgow, Provan)

    Dodds, Norman

    Allaun, Frank (Salford, E.)

    Buchan, Norman (Renfrewshire, W.)

    Doig, Peter

    Alldritt, Walter

    Buchanan, Richard

    Driberg, Tom

    Atkinson, Norman

    Butler, Herbert (Hackney, C.)

    Duffy, Dr. A. E. P.

    Bacon, Miss Alice

    Butler, Mrs. Joyce (Wood Green)

    Dunn, James A.

    Bagier, Gordon A. T.

    Callaghan, Rt. Hn. James

    Dunnett, Jack

    Barnett, Joel

    Carmichael, Neil

    Edelman, Maurice

    Baxter, William

    Chapman, Donald

    Edwards, Rt. Hn. Ness (Caerphilly)

    Bence, Cyril

    Coleman, Donald

    English, Michael

    Bennett, J. (Glasgow, Bridgeton)

    Conlan, Bernard

    Ennals, David

    Binns, John

    Corbet, Mrs. Freda

    Ensor, David

    Bishop, E. S.

    Craddock, George (Bradford, S.)

    Evans, Albert (Islington, S.W.)

    Blackburn, F.

    Crawshaw, Richard

    Evans, Ioan (Birmingham, Yardley)

    Blenkinsop, Arthur

    Crosland, Rt. Hn. Anthony

    Fernyhough, E.

    Boardman, H.

    Crossman, Rt. Hn. R. H. S.

    Finch, Harold (Bedwellty)

    Boston, T. G.

    Cullen, Mrs. Alice

    Fletcher, Sir Eric (Islington, E.)

    Bottomley, Rt. Hn. Arthur

    Dalyell, Tam

    Fletcher, Ted (Darlington)

    Bowden, Rt. Hn. H. W. (Leics S.W.)

    Darling, George

    Fletcher, Raymond (Ilkeston)

    Boyden, James

    Davies, Ifor (Gower)

    Floud, Bernard

    Braddock, Mrs. E. M.

    Davies, S. O. (Merthyr)

    Foley, Maurice

    Bradley, Tom

    Delargy, Hugh

    Foot, Sir Dingle (Ipswich)

    Bray, Dr. Jeremy

    Dell, Edmund

    Foot, Michael (Ebbw Vale)

    Broughton, Dr. A. D. D.

    Dempsey, James

    Ford, Ben

    1736

    1737

    Fraser, Rt. Hn. Tom (Hamilton)

    McBride, Neil

    Robinson, Rt. Hn. K. (St. Pancras, N.)

    Freeson, Reginald

    MacColl, James

    Rodgers, William (Stockton)

    Galpern, Sir Myer

    MacDermot, Niall

    Rogers, George (Kensington, N.)

    Garrett, W. E.

    McGuire, Michael

    Rose, Paul B.

    George, Lady Megan L'oyd

    Mclnnes, James

    Ross, Rt. Hn. William

    Ginsburg, David

    McKay, Mrs. Margaret

    Rowland, Christopher

    Gourlay, Harry

    Mackenzie, Gregor (Rutherglen)

    Sheldon, Robert

    Greenwood, Rt. Hn. Anthony

    Mackie, John (Enfield, E.)

    Shore, Peter (Stepney)

    Gregory, Arnold

    McLeavy, Frank

    Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

    Grey, Charles

    Mahon, Peter (Preston, S.)

    Short, Mrs. Renée (W'hampton, N. E.)

    Griffiths, David (Rother Valley)

    Mahon, Simon (Bootle)

    Silkin, John (Deptford)

    Griffiths, Rt. Hn. James (Llanelly)

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

    Silkin, S.C. (Camberwell, Dulwich)

    Griffiths, Will (M'chester, Exchange)

    Manuel, Archie

    Silverman, Julius (Aston)

    Gunter, Rt. Hn. R. J.

    Mapp, Charles

    Silverman, Sydney (Nelson)

    Hale, Leslie

    Marsh, Richard

    Skeffington, Arthur

    Hamilton, James (Bothwell)

    Mason, Roy

    Slater, Mrs. Harriet (Stoke, N.)

    Hamilton, William (West Fife)

    Maxwell, Robert

    Small, William

    Hamling, William (Woolwich, W.)

    Mayhew, Christopher

    Snow, Julian

    Hannan, William

    Mellish, Robert

    Soskice, Rt. Hn. Sir Frank

    Harper, Joseph

    Mendelson, J. J.

    Spriggs, Leslie

    Harrison, Walter (Wakefield)

    Mikardo, Ian

    Steele, Thomas (Dunbartonshire, W.)

    Hart, Mrs. Judith

    Millan, Bruce

    Stewart, Rt. Hn. Michael

    Hattersley, Roy

    Miller, Dr. M. S.

    Stonehouse, John

    Hazell, Bert

    Milne, Edward (Blyth)

    Stones, William

    Healey, Rt. Hn. Denis

    Molloy, William

    Strauss, Rt. Hn. G. R. (Vauxhall)

    Heffer, Eric S.

    Monslow, Walter

    Summerskill, Hn. Dr. Shirley

    Henderson, Rt. Hn. Arthur

    Morris Alfred (Wythenshawe)

    Swain, Thomas

    Herbison, Rt. Hn. Margaret

    Morris, Charles (Openshaw)

    Swingler, Stephen

    Hobden, Dennis (Brighton, K'town)

    Morris, John (Aberavon)

    Symonds, J. B.

    Holman, Percy

    Mulley, Rt. Hn. Frederick (Sheffield Pk)

    Taverne, Dick

    Horner, John

    Murray, Albert

    Taylor, Bernard (Mansfield)

    Houghton, Rt. Hn. Douglas

    Neal, Harold

    Thomas, George (Cardiff, W.)

    Howarth, Harry (Wellingborough)

    Newens, Stan

    Thomas, Iorwerth (Rhondda, W.)

    Howarth, Robert L. (Bolton, E.)

    Noel-Baker, Francis (Swindon)

    Thomson, George (Dundee, E.)

    Howell, Denis (Small Heath)

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

    Thornton, Ernest

    Howie, W.

    Norwood, Christopher

    Tinn, James

    Hoy, James

    Oakes, Gordon

    Tomney, Frank

    Hughes, Cledwyn (Anglesey)

    Ogden, Eric

    Tuck, Raphael

    Hughes, Emrys (S. Ayrshire)

    O'Malley, Brian

    Urwin, T. W.

    Hughes, Hector (Aberdeen, N.)

    Oram, Albert E. (E. Ham, S.)

    Varley, Eric G.

    Hunter, Adam (Dunfermline)

    Orbach, Maurice

    Wainwright, Edwin

    Hunter, A. E. (Feltham)

    Orme, Stanley

    Walden, Brian (All Saints)

    Hynd, H. (Accrington)

    Oswald, Thomas

    Walker, Harold (Doncaster)

    Irving, Sydney (Dartford)

    Owen, Will

    Wallace, George

    Jackson, Colin

    Janner, Sir Barnett

    Page, Derek (King's Lynn)

    Watkins, Tudor

    Jay, Rt. Hn. Douglas

    Paget, R. T.

    Weitzman, David

    Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

    Palmer, Arthur

    Wells, William (Walsall, N.)

    Jenkins, Hugh (Putney)

    Pannell, Rt. Hn. Charles

    White, Mrs. Eirene

    Johnson, Carol (Lewisham, S.)

    Pargiter, G. A.

    Whitlock, William

    Johnson, James (K'ston-on-Hull, W.)

    Park, Trevor (Derbyshire, S.E.)

    Wigg, Rt. Hn. George

    Jones, Dan (Burnley)

    Parkin, B. T.

    Wilkins, W. A.

    Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

    Pavitt, Laurence

    Willey, Rt. Hn. Frederick

    Jones, J. Idwal (Wrexham)

    Pearson, Arthur (Pontypridd)

    Williams, Alan (Swansea, W.)

    Jones, T. W. (Merioneth)

    Peart, Rt. Hn. Fred

    Williams, Clifford (Abertillery)

    Kelley, Richard

    Pentland, Norman

    Williams, Mrs. Shirley (Hitchin)

    Kenyon, Clifford

    Perry, Ernest G.

    Williams, W. T. (Warrington)

    Kerr, Mrs. Anne (R'ter & Chatham)

    Popplewell, Ernest

    Willis, George (Edinburgh, E.)

    Kerr, Dr. David (W'worth, Central)

    Prentice, R. E.

    Wilson, Rt. Hn. Harold (Huyton)

    Lawson, George

    Price, J. T. (Westhoughton)

    Wilson, William (Coventry, S.)

    Leadbitter, Ted

    Probert, Arthur

    Winterbottom, R. E.

    Ledger, Ron

    Pursey, Cmdr. Harry

    Woodburn, Rt. Hn. A.

    Lee, Rt. Hn. Frederick (Newton)

    Randall, Harry

    Woof, Robert

    Lee, Miss Jennie (Cannock)

    Rankin, John

    Wyatt, Woodrow

    Lever, Harold (Cheetham)

    Redhead, Edward

    Yates, Victor (Ladywood)

    Lever, L. M. (Ardwick)

    Rees, Merlyn

    Zilliacus, K.

    Lewis, Arthur (West Ham, N.)

    Rhodes, Geoffrey

    Lewis, Ron (Carlisle)

    Richards, Ivor

    TELLERS FOR THE NOES:

    Lipton, Marcus

    Roberts, Albert (Normanton)

    Mr. John McCann and

    Loughlin, Charles

    Roberts, Goronwy (Caernarvon)

    Mr. Alan Fitch.

    Mabon, Dr. J. Dickson

    Robertson, John (Paisley)

    Mr. MacDermot: I beg to move, Amendment No. 58, in page 28, line 35 at the end to insert:
    (5) A gain shall not be a chargeable gain if accruing on the disposal by any person of a decoration awarded for valour or gallant conduct which he acquired otherwise than for consideration in moneys or money's worth.
    This does the same in respect of the long-term tax as Amendment No. 12, which we have already passed, does in relation to short-term tax.
    Sir D. Glover Sir D. Glover
    rose—
    Hon. Members: Hear, hear.
    Sir D. Glover: I am so glad that the House unanimously applauds by intervention, particularly as on this occasion, for about the first time during our proceedings on the Bill, I rise to thank the Financial Secretary. I thank him for the help which he gave me as the hon. Member who moved an Amendment in Committee and to say that the hon. and learned Gentleman's Amendment is far better than the one which I then moved.
    I apologise to the hon. and learned Gentleman for not being here earlier when he moved the other Amendment. I was attending a conference under the chairmanship of Mr. Speaker. If I could have been present, I should have been glad to pay my tribute then. I am very grateful for what has been done. This is a small cloud of wisdom coming into the Government's handling of affairs. [An. HON. MEMBER: "Do not spoil it".] I shall not spoil it. Even from me the Government can learn wisdom, and in this case they have done. I am certain that no one in the House wanted the Capital Gains Tax to be applied to decoration of this sort, and the point only needed to be drawn to the attention of the Treasury for it to be dealt with. It is a small item, and I am grateful to the Minister for accepting my Amendment in the way he has.
    Amendment agreed to.

    Clause 28.—(PRIVATE RESIDENCES.)
    Mr. Deputy-Speaker (Dr. Horace King): The next Amendment selected is No. 61. Amendment No. 60, in page 30, line 20, at the end to insert:
    "or except for any time during which he has been unable to occupy the residence solely by
    1740
    reason of the terms and conditions of his employment"
    is not selected, but may be discussed with Amendment No. 61.
    Mr. MacDermot: I beg to move Amendment No. 61, in page 30, line 30, to leave out subsection (4) and to insert:
    (4) For the purposes of subsections (2) and (3) of this section—

    (a) a period of absence not exceeding three years (or periods of absence which together did not exceed three years), and in addition

    (b)any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the United Kingdom, and in addition

    (c) any period of absence not exceeding four years (or periods of absence which together did not exceed four years) throughout which the individual was prevented from residing in the dwelling-house or part of the dwelling-house in consequence of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties,

    shall be treated as if in that period of absence the dwelling-house or the part of the dwelling-house was the individual's only or main residence if both before and after the period there was a time when the dwelling-house was the individuals only or main residence.
    In this subsection "period of absence" means a period during which the dwelling-house or the part of the dwelling-house was not the individual's only or main residence and throughout which he had no residence or main residence eligible for relief under this section.
    This Amendment honours an undertaking given in a debate raised in Committee by an Amendment put down by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman). It extends the period for which a person may be absent from his residence and still enjoy exemption from liability to Capital Gains Tax in respect of that residence. The Amendment falls into two parts. The first deals with the case of the person absent abroad by reason of employment abroad, and the second deals with the person absent by reason of employment in some other part of the United Kingdom.
    The Amendment has a threefold effect. First, it proposes that there shall be ignored in determining whether or not the house has been occupied throughout as a principal private residence any period or periods of absence not exceeding three years in total, without any conditions at

    1741
    all. That reproduces what is already in the Bill. Second, and in addition, it proposes to ignore any period of absence throughout which the individual worked in an employment or office of which all the duties were performed outside the United Kingdom. Third, and also in addition, it proposes similarly to ignore any period of absence not exceeding four years, that is, four years on top of the basic three and whether at one time or as a total of separate years, during which the individual could not live in his house either because of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to live elsewhere, that condition being one reasonably imposed in order to secure that the individual could effectively discharge the duties of the employment.
    All these periods of absence are subject to one general condition, that before the period of absence and after it the house in question has to be occupied by the individual as his principle private residence. The conditions are aimed generally at trying to provide for the genuine case of the person who has bought a house as his own residence but, because of the nature of his employment, has not been able to live in it for quite prolonged periods, but they are framed in such a way as not to open the door to widespread abuse of what, I think, has been recognised to be an extremely favourable exemption given to the householder.
    Mr. Chapman: I do not understand the condition of having to reside in the house before and after. The whole point is that he will not reside in it afterwards. He will have decided to sell the house. If a man is a resident keeper of a children's home and he has to live on the premises, keeping his own house for a while and then deciding to sell it, there will be no afterwards in which he goes back to live there. So the concession is meaningless for him.
    Mr. MacDermot: The man must decide in this situation. If he takes an employment which will lead to his permanently wanting to give up the house, then he can sell the house at that stage and enjoy the benefit of the exemption. But if he intends to return to live in it, he can be
    1742
    away from it for periods of years in total and still enjoy the exemption.
    With regard to the case of the man who goes overseas, I have taken advice on the point raised in an Amendment tabled by the hon. Member for Barkston Ash (Mr. Alison), and it may save time if I tell him at this stage that we are advised that the terms of the new subsection (4, b) are wide enough to cover any period during which such an individual may visit this country either on leave or for purposes incidental to his employment, and he will still be entitled to the benefit of the exemption even though during those periods he does not occupy the house which he owns.
    Mr. Maxwell-Hyslop: I am doubtful about the accuracy of what the hon. and learned Gentleman says because of the words:
    "all the duties of which are performed outside the United Kingdom".
    If the man returns to this country on duty for a meeting, by definition all the duties are not being performed outside the United Kingdom. Would not paragraph (b) then fall?
    Mr. MacDermot: I am assured that the same point arises under the Income Tax Acts under Schedule E where it is necessary to determine whether the duties of an office or employment are performed outside the United Kingdom, and it has been determined for that purpose that visits of the kind that I have indicated are not regarded as being the perfomance of duties within the United Kingdom, and the same construction and interpretation will be applied to the Amendment.
    Mr. Maxwell-Hyslop: But the hon. and learned Gentleman quoted from the Income Tax law the phrase "the duties", not "all the duties". I am questioning the drafting of the Amendment—"all the duties". "All" is totally embracing. One cannot have an exception to "all" and still include the word "all".
    Sir D. Glover Sir D. Glover rose—
    Hon. Members: Answer.
    Mr. Deputy-Speaker: Is the hon. and learned Gentleman proposing to reply to the hon. Member for Tiverton (Mr. Maxwell-Hyslop)?
    Mr. MacDermot: The hon. Member for Ormskirk (Sir D. Glover) rose and I thought I might answer the two hon. Gentlemen together later.
    Sir D. Glover: I should like to put a question to the hon. and learned Gentleman on the point raised by the hon. Member for Birmingham, Northfield (Mr. Chapman) about the occupation of the residence on the person's return. I understand that if he comes home and decides then to take a job and sells his house, it is all right. But suppose that he decides when he is overseas that he will take a job and decides before he comes home to sell the house. Is the man covered by this provision? I do not think he is.
    Mr. Chapman: Yes, he is.
    Mr. Alison: I thank the Financial Secretary for his reassurance on my Amendment to the Chancellor's proposed Amendment. Mine was meant to be a probing Amendment. It is satisfactory if we can understand that the temporary termination of a period of absence does not imply termination of the period of absence in the full legal sense. On that assurance, I shall not press my Amendment.
    With regard to our Amendment No. 60 in respect of extending this general principle of definition to the appropriate place in the original Bill, it simply seeks to reinterpret the concept of the period of the ownership or residence of the house which entitles one to escape Capital Gains Tax. It seeks to reinterpret it within the principle of a period of absence which is now held under the Amendment to be co-terminous with a period of ownership. I hope, therefore, that he would be happy to accept that Amendment. May I ask his views on that?
    10.45 p.m.
    Mr. Maxwell-Hyslop: On a point of order. I was under the impression that I intervened in the Financial Secretary's speech. Are we now at liberty to catch your eye, Mr. Deputy-Speaker, while we are waiting for the hon. and learned Gentleman to continue his speech?
    Mr. Deputy-Speaker: I was at first under the same impression as the hon. Member, but what the hon. Member did was to intervene at the end of the
    1744
    Financial Secretary's speech and, unfortunately, he forfeited his right to speak, because an hon. Member may speak only once to a Question on Report, unless he gets the leave of the House to speak again. It is possible the hon. Member may get the leave of the House. I do not know.
    Sir D. Glover: On a point of order. I think it will be in the recollection of the House that the Financial Secretary said he was going to wait to reply to all the points, and that he did not indicate that he had terminated his speech.
    Mr. Deputy-Speaker: That was my impression, too, but I must judge by what actually happened, and the Financial Secretary made no attempt to continue his speech, so that since then we have had two speeches, interventions.
    Mr. Chapman: My hon. and learned Friend very kindly said he was moving the Amendment in response to one I moved in Committee. I should simply like to thank him very much indeed for trying to meet the points I raised at that time. Although the situation is extremely complicated, especially when we are trying to revoke a very complicated subsection and to substitute for it another very complicated one, the net effect, as I understand it, of the whole complication comes to this, that practically all the cases I raised in Committee are now satisfactorily dealt with, or will be when this Amendment is made to this Clause. So although I cannot follow in precise detail every one of the satisfactions which have, apparently, by this Amendment, been accorded to me, I nevertheless express my thanks, and I shall try in the years to come to understand how this is so. I am very grateful to my hon. and learned Friend.
    Mr. Maxwell-Hyslop: May I ask leave to put a further point?
    Mr. Deputy-Speaker: If leave is given by the House.
    Hon. Members: Go on.
    Mr. Maxwell-Hyslop: The second point which I wanted to raise is, what would happen in the case where somebody comes back from abroad and wants to reoccupy the house but cannot do so because, by reason of congestion in the

    1745
    courts, the decision giving recovery of access and ability to occupy the house is delayed so long that it comes outside the sever-year period? This is a very real point. The hon. and learned Gentleman the Financial Secretary will know far better than I of the delays in the county courts or the High Court to which it may be necessary to go in the near future, and it may well be that a person coming back from abroad cannot reoccupy his own house within the seven-year period because of the delays which are not due to defective intent on his part or lack of good faith on his part but just to the queue in the process of the courts. We should be most grateful if we could have a specific answer to that, and also to my earlier point.
    I do not see how it can be claimed that paragraph (b) in the proposed new subsection meets it. It says specifically
    "all the duties of which were performed outside the United Kingdom."
    If some of the duties are performed inside the United Kingdom, my reading of it, as a non-lawyer—and, funnily enough, the courts interpret the law as a non-lawyer would interpret it, that is to say, as it actually reads, more often than lawyers in this House do—is that by visiting the United Kingdom once on duty one immediately deprives oneself of the benefit of paragraph (b). We would be grateful if the hon. and learned Gentleman would advise us on these points.
    Sir Edward Brown: I should like to congratulate the Chancellor upon the Amendment because it does a great deal to relieve problems in my constituency, wherein I have a number of Admiralty servants who from time to time go overseas.
    I come back to the point about the word "all," because when these Admiralty people return from overseas they will not necessarily come back to the base. They will probably be posted somewhere else for three or four months before they come back to the home base. The inclusion of the word "all" seems to make all the difference in the world, and I should like the hon. and learned Gentleman to reconsider the position, because under the terms of the Amendment a man will suffer a disqualification if on returning from Africa he is posted to, say,
    1746
    Portsmouth for three or four months instead of returning direct to his home base.
    I go on to the point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) about obtaining possession of the house, and the danger of the seven-year period. The Minister of Housing and Local Government has recently introduced a Bill which cuts right across this Amendment. I therefore ask the Financial Secretary to refer the Amendment to his right hon. Friend so that he can make some regulations covering the people to whom I have referred.
    Mr. MacDermot: With your leave, Mr. Deputy-Speaker, and that of the House, I should like to answer the questions which have been put to me. My answer to the hon. Member for Tiverton (Mr. Maxwell-Hyslop) remains the same as before. The only reason why I delayed answering was that the hon. Gentleman asked me the same question twice within a minute or two, so I thought that I would seek further advice before repeating the answer which I had already given. I am in a position to inform the House that the word "all" makes no difference. The simple reason is that if the courts construe the words
    "duties performed outside the United Kingdom"
    to include a visit to this country, a visit on leave from service abroad, or a visit for the purposes of that employment, a temporary visit back to the head office, or something of that kind, the word "all" makes no difference because those continue to be embraced in the words
    "duties performed outside the United Kingdom".
    The second point which the hon. Gentleman raised, and it was also raised by the hon. Member for Bath (Sir E. Brown), concerned the position of the person who goes abroad and then, for one reason or another, there is some delay when he returns before he gets possession of his house. One suggestion was that there might be delay in getting possession through the county court, and the other was that he might be posted to some other place for a few months. I think that hon. Gentlemen have failed to realise that in the case of the person who serves abroad there is no time limit. The seven-year period does not apply to him. It does not

    1747
    matter how long he is away, provided that it is the result of the visit abroad. There is a provision in the Bill covering that.
    In the case of a person who is away from his own home in connection with employment in some other part of the United Kingdom where the seven-year period applies, my answer is that when an owner wants to recover possession for his own occupation he does so under the terms of the Rent Act. I am assured, and I think that the assurance has been given to the House, that the Lord Chancellor is taking steps to see that the delays which have been occurring in the county courts are shortened and that the procedure is speeded up.
    A person who is seeking to take advantage of the provisions of the Bill and who is intending to recover possession must take the necessary steps to set in motion proceedings for recovery so as to recover possession within that period, and, knowing county court judges, I should have thought that the factor that he was required to recover possession within the seven-year period would be borne very much in mind in deciding whether or not it was reasonable to grant an order for possession.
    Mr. Graham Page: This is a very real point. I was going to interrupt the Financial Secretary on it, but now that he has sat down I ought to make the point by way of a short speech. There is a grave possibility of delay, perhaps just at the end of the seven-year period. The Financial Secretary said that his noble Friend the Lord Chancellor had seen to this, but there has been six months since the Protection from Eviction Act, when we were promised that something would be done about remedying the delays in the courts, and nothing has yet been done. Now, the information that we are receiving from the county courts is that even when expedition is applied it is taking three or four weeks to get matters before the court. It may be just at the end of this seven years that a man is delayed for two or three months in getting possession.
    In the Amendment the only delay that is taken into account is that which arises by reason of a person's work, or some requirement of his employment. There is no provision for the unfortunate man
    1748
    who is delayed in getting possession of his dwelling. This matter should be dealt with, either by taking some real steps, which the Government have not yet taken, to hasten possession proceedings in the courts, or else by eventually amending the Clause.
    The Government may well have dealt with this matter had they accepted an anticipatory possession summons form of procedure, but they have discarded this in connection with another Measure. It would have been a help if it had been laid down in this Bill. I hope that the hon. and learned Member will reconsider the question.
    Mr. Alison Mr. Alison rose—
    Mr. Deputy-Speaker: Order. The hon. Member has addressed the House on Report. He has exhausted his right to speak unless he can get leave of the House to speak again.
    Mr. John Harvey: I do not want to detain the House on what may be a technicality. I want to revert to the word "all". My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was right in saying that the courts sometimes tend to take the simplest views of these matters. Let us suppose that a manager working abroad for a British firm comes home periodically to report on the job he is doing. If we turned the argument upside down, and this manager for some reason or other wanted to prove that he had performed some duty in this country by coming here to report, I would think that he would probably be able to do that. If the Financial Secretary says that this form of words has been quite acceptable up to now in Income Tax law we can accept it, but it might still not be a bad thing if the hon. and learned Gentleman were to ask the Treasury Solicitor to look at the form of words to see whether, to safeguard all concerned, it should be tightened up a little. We should try to make these things mean what they say when they leave this House.
    Mr. Alison: If I may speak again, with the leave of the House—
    Hon Members: No.
    Mr. Deputy-Speaker: The hon. Member has not the leave of the House.
    Mr. Hirst: I am not very clear about this. I apologise to the hon. and learned Member; I admit that this Clause is not one of the parts of the Bill that I understand very clearly—some of which I have studied most carefully—but I cannot understand the point that he made in his speech. It may be that the seven-years' period does not apply in the case of anyone who has been on duty abroad, but I should be grateful to have some elucidation of the position, because I am not alone on these benches in feeling that there is some lack of clarity on the matter.
    11.0 p.m.
    Sir D. Glover: I do not know whether I have any right to speak again, but when I spoke before I thought that I was intervening—
    The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish): No, you have not.
    Mr. Deputy-Speaker: Order. There is only room in the House for one Chairman—
    Hon. Members: Hear, hear.
    Mr. Deputy-Speaker: Order. I am afraid that the hon. Member for Ormskirk (Sir D. Glover) has addressed the House. I think he thought that he was making an intervention. I was a little doubtful myself at the time. If he can get leave of the House, he can speak again.
    Sir D. Glover: If I may have leave of the House—
    Hon. Members: No.
    Sir D. Glover: I only want one minute—
    Hon. Members: No.
    Mr. Deputy-Speaker: Order. I hope that the hon. Gentleman would have leave of the House. This was a clear misunderstanding.
    Sir D. Glover: Thank you for your ruling, Mr. Deputy-Speaker, and I thank the House for its courtesy.
    I want—with the leave from the House—to refer once again to the word "all". I understand what the hon. and learned Gentleman said about someone
    1750
    who is stationed overseas for a term and comes home on the duty of his responsibility overseas. In other words, as soon as he comes back to this country on a buying mission for the subsidiary overseas, this could generally be said to be part of his service overseas, and he is therefore, performing his duties overseas. But suppose that he was called home by the firm because they had a new process and he therefore spent three months in this country learning the process. There might have been a new invention in the firm and he might have been called home to learn about it. I do not think that the courts would rule that this was part of his service overseas. It would be part of his continuing service with that firm, which might be 25 years' service in this country and four years' service overseas.
    The hon. and learned Gentleman ought to have another look at this, because I am not sure that the inclusion of the word "all" does not mean that there are loopholes.
    Mr. MacDermot: If I have your leave, Mr. Deputy-Speaker, and that of the House, I will answer—for, I think, the third time—precisely the same point. All I can do is repeat the assurance given. We are at the Report stage and nothing can be done now by way of further Amendment. Either the House wishes to accept the Amendment or it wishes to reject it. Having had many questions fired at me on detailed points of interpretation, I have given what I hope is a satisfactory general assurance. If hon. Members want any particular points of construction dealt with in any detail, I must ask them to write to me and allow me to get advice after the matters have been considered with the detailed consideration which would be required. All that I can do at this stage is to state general principles.
    The one on which the Revenue will act is that where a person who qualifies under the Amendment and who is serving abroad comes to this country for a visit which is incidental to his employment that will not debar him from relief. Whether or not that would apply to a training course, I would imagine—though it is not for me to decide—that if this course is to enable him to do his job properly overseas that would be treated

    1751
    as being incidental. That is the kind of detailed point on which I should be glad to write to hon. Members—
    Sir E. Brown Sir E. Brown rose—
    Mr. MacDermot: Hon. Members need have no fears on this score. I think that I have misled the House about the courts in saying that this interpretation was given by the courts. This is the interpretation given by the Revenue in construing the similar point which arises under Schedule E. I am not aware of its having led to any court cases and I hope that the same would apply here, that the Revenue would approach this in a reasonable spirit.
    Sir E. Brown: The point which I was trying to elucidate was the question of a man posted to Africa for service, who spent a considerable time—two or 2½ years—there and was posted back to this country but not back to the base. He spent six months in this country, returned to the other post and finally came back to the base. I am certain that the Income Tax authorities would say that his service had been broken and he was resident in this country and working here for that six months before he came back to the home base. This is the real point.
    Mr. MacDermot: The hon. Member need have no fears. All these periods are cumulative. He can go off overseas for as long as he likes and that will not affect his rights. He can have his basic three years in this country, for whatever purpose. In addition, he may have four years within this country connected with his employment. With all the combinations of circumstances which the hon. Member envisages, he would still be covered. I hope that the House will accept the Amendment.
    Amendment agreed to.

    Clause 28.—(PRIVATE RESIDENCES.)
    Mr. MacDermot: I beg to move, Amendment No. 62, in page 32, line 17, at the end to insert:
    (10) If as respects a gain accruing to an individual so far as attributable to the disposal of, or of an interest in, a dwelling-house or part of a dwelling-house which is, or has at any time in his period of ownership been, the sole residence of a dependent relative of the individual, provided rent-free and without any other consideration, the individual so claims, such relief shall be given in respect of it and
    1752
    its garden or grounds as would be given under this section, if the dwelling house (or part of the dwelling-house) had been the individual's only or main residence in the period of residence by the dependent relative, and shall be so given in addition to any relief available under this section apart from this subsection:
    Provided that—

    (a) not more than one dwelling-house (or part of a dwelling-house) may qualify for relief as being the residence of a dependent relative of the claimant at any one time nor, in the case of a man and his wife livng with him, as being the residence of a dependent relative of the claimant or of the claimant's husband or wife at any one time, and

    (b) the inspector, before allowing a claim may require the claimant to show that the giving of the relief claimed will not under proviso (a) above preclude the giving of relief to the claimant's wife or husband or that a claim to any such relief has been relinquished.

    In this subsection "dependent relative" means, in relation to an individual, a relative of the individual, or of his or her wife or husband, who is incapacitated by old age or infirmity from maintaining himself, or the mother of the individual or of his or her wife or husband, if the mother is widowed, or living apart from her husband, or, in consequence of dissolution or annulment of marriage, a single woman.
    Mr. Deputy-Speaker: It is proposed that with this Amendment we should take Amendment No. 63. I understand from Mr. Speaker that there may be a Division on No. 63 if required. Amendment No. 63 is in page 32, line 17, at the end to insert:
    (10) This section shall also apply in relation to a gain accruing to an individual on a disposal of, or an interest in—

    (a) a dwelling-house or part of a dwelling-house which is or has at any time during the period of his ownership been the only or main residence of a dependent relative of his, or

    (b) land which he has for the occupation and enjoyment of the dependent relative with that residence as its garden or grounds up to an area (inclusive of the site of the dwelling-house) of one acre as it would apply if neither the individual nor the wife or husband of the individual occupied any other residence and the occupation of his dependent relative had been his occupation.

    In this subsection, "dependent relative" means a relative of the individual or of the wife or husband of the individual who is incapacitated by old age or infirmity from maintaining himself, or the widowed mother, whether incapacitated or not, of the individual or of the wife or husband of the individual.
    (11) The exemption contained in the last preceding subsection will not apply to a gain accruing to an individual on the disposal of or an interest in more than one dwelling-house or part of a dwelling-house.
    Mr. MacDermot: This Amendment implements an undertaking which I gave in Committee that we should introduce an Amendment to extend the owner-occupier's exemption for his permanent place of residence to include a residence which he provides for a dependent relative. May I point out to the Committee one or two points about the form of the Amendment which we are proposing?
    First of all, we propose that it should be a condition of the relief that the dependent relative must occupy the house rent-free without paying any other consideration. What we have in mind is the case of somebody who is providing a house for an impecunious or dependent relative, and it is not intended to apply to something which is let on a commercial basis.
    Secondly, if the other conditions are satisfied the house is to be treated as if the dependent relative's occupation of it had been the owner's occupation of it as a principal private residence. As a consequence of this, various tolerances which apply in Clause 28 to his own house will also apply to the other house. For example, the 12-month period provided by subsection (2) to allow the house to be sold after the owner has moved out of occupation will also apply for the benefit of the owner in the case of the dependent relative's house. Equally, the three-year tolerance for the period of absence will apply; if the dependent relative is ill and has to go into hospital for a prolonged period, this will not deprive him of his rights.
    Thirdly, as I suggested in Committee, only one dependent relative's house can qualify at any one period of time. We have framed the provision so that it could apply to more than one house in sequence but only to one at any particular time.
    Finally, we have given a wide definition to the term "dependent relative"—somewhat wider than the dependent relative allowance definition. Apart from individuals who are incapacitated by old age or infirmity from maintaining themselves, the definition also includes the mother of the individual if widowed or separated or divorced and whether or not she is incapacitated. That goes slightly
    1754
    further than the original proposal, but I hope that it is an extension which will commend itself to the House.
    Mr. John Hall: The Amendment does, as the hon. and learned Gentleman said, give effect to a promise made during the Committee stage of the Bill in reply to an Amendment moved from this side. Our Amendment No. 63 was put down really to protect the position, but we have no intention of pressing it. Although one might have different views as to the best way of achieving this object, we would accept the Government Amendment as it stands.
    As the hon. and learned Gentleman said during the Committee stage, it is an illogical addition to the Bill, but then, of course, the Income Tax Act is sometimes improved by a few illogical humanities being put into it. We are delighted that the hon. and learned Gentleman has given effect to what he promised and expanded it slightly.
    Amendment agreed to.

    Clause 29.—(CHATTELS SOLD FOR £1,000 OR LESS.)
    Amendments made: In page 33, line 18, leave out "forming" and insert "which have formed".
    In line 19, after "description" insert:
    "all owned at one time by one person".
    In line 19, leave out "the same" and insert "that".
    In line 34, leave out from "property" to end of line 36 and insert:

    (a) in the first instance subsections (1), (2) and (3) of this section shall be applied in relation to the asset as a whole, taking the consideration as including the market value of what remains undisposed of, in addition to the actual consideration,

    (b) where the sum of the actual consideration and that market value exceeds one thousand pounds, the limitation on the amount of tax in subsection (2) of this section shall be to half the difference between that sum and one thousand pounds multiplied by the fraction equal to the actual consideration divided by the said sum, and

    (c) where that sum is less than one thousand pounds any loss shall he restricted under subsection (3) of this section by deeming the consideration to be the actual consideration plus the said fraction of the difference between the said sum and one thousand pounds.—[Mr. MacDermot.]

    Clause 30.—(WORKS OF ART, ETC.)
    Amendments made: In page 34, line 26, leave out from "trustee" to "on" in line 28.
    In page 34, line 28, at end insert "section 24(3) or".—[Mr. MacDermot.]

    Clause 31.—(REPLACEMENT OF BUSINESS ASSETS.)
    Mr. MacDermot: I beg to move, in page 38, line 9, at end insert:
    Class 4
    Goodwill.
    Would it be convenient to discuss with this Amendment the next three Amendments, No. 71, No. 72 and No. 73, which all deal with amendments to provisions in Clause 31 relating to the transfer of business assets?
    Mr. Deputy-Speaker (Sir Samuel Storey): Amendment No. 71 is already selected for discussion with Amendments No. 310, No. 311 and No. 74.
    Mr. MacDermot: This Amendment again flows from our discussions in Committee when I was pressed by hon. Member's on both sides of the House to extend the class of assets which are entitled to the benefit of deferment from liability to capital gains on the transfer of the business to include goodwill.
    This affects a number of people for whom hon. Member's were concerned. It included in particular small shopkeepers, and it included insurance agents with their special problem relating to their agent's books. We looked at this problem and decided that there was no solution to it short of a general provision to create a new class of asset which would qualify for this deferment relief, a comprehensive class of asset constituting goodwill. That is what we have done in this Amendment. It will, I think, include all the types of cases which hon. Member's had in mind during our discussion in Committee, and I hope it will commend itself to the House.
    11.15 p.m.
    Mr. Peter Walker: I apologise for not being in my place when the Financial Secretary moved the Amendment, which, of course, my hon. Friends and I obviously welcome. We are delighted to see the Amendment in its entirety,
    1756
    every word of it, as originally proposed in Committee by my hon. Friends. We are delighted at the rapid conversion not just of the Financial Secretary but of all those hon. Gentlemen opposite who trundled into the Division Lobby to oppose the Amendment when it was first proposed in Committee. Not only did hon. Gentlemen opposite trundle into the Lobby to oppose it, they were led in by the right hon. Gentleman the Prime Minister.
    As I say, we welcome the conversion of hon. Gentlemen opposite. That applies not only to the Financial Secretary and the other Members of the Treasury Bench but seemingly the whole of the Parliamentary Labour Party. Thirty-six days ago hon. Gentlemen opposite decided that this was a bad Amendment. Thirty-six days later they all, every one of them, accept that it is a good Amendment.
    Mr. MacDermot: If the hon. Gentleman wishes to be up to his usual standards of fairness he might care to recollect that we did not say that it was a bad Amendment but that we wanted to consider the matter. On that occasion hon. Gentlemen opposite were so impatient that they did not want to allow us time in which to consider it.
    Mr. Walker: It would not be fair to the hon. and learned Gentleman to suggest that he did not put any arguments against the Amendment. He put some cogent arguments, although I am sure he will agree that one could not argue that it was a complicated Amendment or that it contained a great deal of complicated legal wording which had to be further considered with the Treasury lawyers. After all, so reasonable was it that it merely sought to insert the word "Goodwill".
    The Amendment was on the Order Paper for several weeks before it came before the Committee. Yet at the end of the consideration which the Financial Secretary must have given to it, he told the Committee—having given various reasons why goodwill of this sort should be subject to the Capital Gains Tax and should not be allowed to be transferred and so on—that so difficult was goodwill to define that the Amendment should not be accepted. In spite of various hon. Gentlemen opposite pointing out that the hon. and learned Gentleman had nothing

    1757
    to lose in accepting the Amendment, he recommended the Committee not to accept it. Fortunately, on behalf of those concerned we decided to press the matter to a division.
    It is remarkable that within only 36 days, presumably without there having been a general distribution throughout the Parliamentary Labour Party of the arguments which have changed the mind of the Financial Secretary, there has been a mass conversion on the benches opposite. It is surprising that of the scores of hon. Gentlemen opposite who voted against the Amendment, not one has come forward still retaining his original view about it. Not even the Prime Minister has come along to express his view about it, although it would be a refreshing change to see the right hon. Gentleman here during our deliberations on this so-called reforming Finance Bill.
    This is an important Amendment. Had it not been included it would have meant that many small business people throughout the country, on transferring from one location to another, would have been considerably penalised for the goodwill which they had established in their previous businesses. It would also have meant that many hundreds of insurance agents would have been caught fully by the Capital Gains Tax provisions. We are, therefore, pleased that within the short period of a month we have achieved the complete conversion of the party opposite so that the Government have moved the Amendment.
    Amendment agreed to.
    Mr. Peter Walker: I beg to move Amendment No. 125, in page 38, line 9, after the words last inserted, to insert "Class 4. Sportsmen."
    This very simple and straightforward Amendment relates to the transfer fees of football players. We presume that if at certain times certain football clubs obtain transfer fees on a football player they would have to pay Gapital Gains Tax on them but if a club then spent the money on purchasing another player it would be an obvious case of transfer of a business asset. Therefore, in the interests of the football clubs, and with the Minister of Sport enthusiastically supporting the Amendment, as we are quite sure he is, I am certain that I have only to
    1758
    sit down for the Financial Secretary to accept the Amendment.
    Mr. MacDermot: I always thought that hon. Members opposite had a tendency to a somewhat feudal outlook, but I see that on this occasion they have gone even further and have got the slave mentality. They seem to think that a footballer is the property of the football club. [HON. MEMBERS: "So he is."] I can assure them that that is not so. The footballer is not an asset. His ownership is not vested in the football club. What the football club has is a contractual right to certain of his services on the football field. I am afraid, therefore, that the Amendment is meaningless, which is the first reason—which hon. Members opposite will no doubt find a somewhat technical argument—for my rejecting the Amendment.
    Perhaps I may be allowed now to address myself to what I conceive to be the meaning they intended to convey. In all the cases where we have been able to check, the cost of the so-called "buying" of the player—and this applies in cricket as well—is treated as an expense in computing the profits, if such there be, of the club, and receipts are included in profits, so that the whole transaction is outside the scope of the Capital Gains Tax. For that additional reason, I hope that hon. Members will not find it necessary to press their Amendment to a Division.
    Mr. Peter Walker: We have made inquiries into this aspect, and I gather that the situation could arise in which this fee would not be treated as a revenue item but could be treated as a capital item. Would the hon. and learned Gentleman care to comment on the supposition that with certain clubs these contractual rights could be counted for accountancy purposes? I gather that that particularly applies to a club in, perhaps, the Southern League that seldom transfers players, or an amateur club that does not make a custom of transferring players, and that the fee could become a capital payment in some circumstances.
    I think I heard the Minister for Sport briefing the hon. and learned Financial Secretary on this point, but I am not talking of amateur clubs. In the Southern League there are professional clubs which only occasionally dispose of a player, and very seldom buy one. I gather that,

    1759
    occasionally, such a transfer fee could be treated as a capital item. I should have thought that, by the nature of Clause 31, if the money was expended on another player, the Minister would not wish to tax it, but if he suggests that this would become a capital item, perhaps the interpretation of Amendment No. 70 could be so extended as to cover this point.
    Sir D. Glover: I intervene on this Amendment because I hope that the Government are right in their interpretation. I happen to be the chairman of the anti-slavery society and take a very strong view of the suggestion that a football club has a title or lien on the body of a player. I understood that when a club buys a player it buys his ability as a footballer and does not buy anything else. Therefore, the club is buying only his particular skill and not creating any form of slavery and has no right to any other activity than football in the transfer fee. I think the Financial Secretary expressed what I understood the position to be. I shall be grateful for confirmation so that I shall not have to start a campaign against slavery by football clubs.
    Amendment negatived.
    Mr. MacDermot: I beg to move Amendment No. 71, in page 38, line 27, at the end to insert:
    (9) This section shall apply in relation to a person who, either successively or at the same time, carries on two trades which are in different localities, but which are concerned with goods or services of the same kind, as if, in relation to old assets used for the purposes of the one trade and new assets used for the purposes of the other trade, the two trades were the same trade.
    Mr. Deputy-Speaker: We can discuss with this Amendment the Amendment to the Amendment at the end insert:
    "and in this respect and for all the purposes of this section agriculture, horticulture and forestry shall be held to be concerned with goods and services of the same kind."
    Amendment No. 310, in page 38, leave out line 35.
    Amendment No. 311, in line 36, at end insert:
    "and (d) in relation to the management by by the owner thereof of an estate which consists principally of agricultural land as defined in section 315 of the Income Tax Act 1952."
    1760
    Amendment No. 74, in page 39, line 7, at end insert:
    (12) For the purposes of this section all forms of retail sales shall be considered to be one trade.
    Mr. MacDermot: May we also include Amendment No. 72, in page 38, line 36, leave out "or vocation" and insert "vocation, office or employment"; and
    Amendment No. 73, in line 38, leave out "and 'vocation'" and insert "'vocation', 'office' and 'employment'."
    Mr. Deputy-Speaker: If that is convenient to the House, certainly.
    Mr. MacDermot: Amendment No. 71 extends the scope of the term "trade" for the purposes, and only for the purposes of Clause 31. This problem came to light as a result of a remark I make in Committee when I went rather wider than was justified. Apparently the term "trade" has a somewhat restricted meaning under the Income Tax Acts, a more restricted meaning than I appreciated at the time. For the purposes of the Revenue practice based on decided cases in Income Tax law, there is one continuing trade only if both before the disposal of the old assets and after the acquisition of new ones a person is carrying on the same kind of trade, using the same organisation and the same sources of supply and dealing with the same customers.
    The difficulty which arises is that if a trader was trading in one town and then sold his shop and bought precisely the same kind of shop in another town with a different lot of customers, under existing tax law he would not be carrying on the same trade. What we have done is to extend the scope of this term solely for these purposes so that "trade" will include the carrying on of the same kind of business in a different place and with different customers.
    Amendments No. 72 and 73 would have the effect that Clause 31 applies, with any necessary modifications to offices and employments, as it does to trades, professions or vocations. The specific purpose is to deal with the case of insurance agents who, while being employed persons, have the right to sell their insurance books in whole or in part with

    1761
    the consent of their employers. This ensures that the goodwill provision which the House has accepted will extend to the case of the insurance agent.
    Sir M. Redmayne: I speak briefly, not on the particular point made by the Financial Secretary, but on my Amendment to the Chancellor's Amendment, which I put down to try to get on the record and perhaps to correct a situation which arises from what was, of course, an unintentional misleading answer given by the Financial Secretary in the debate on the Motion that Clause 31 should stand part of the Bill, for which he apologised in a letter to my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) on 3rd July.
    11.30 p.m.
    On Clause 31 he had been asked whether the word "trade" included horticulture, agriculture and forestry, and in reply he said:
    "As I understand it, for these purposes all branches of agriculture are treated as the same. It would be all forms of farming, including horticulture and forestry. Very wide switching of activities, as it were, will still enjoy the benefit of Clause 31."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1219.]
    In his letter he admitted that this was an exaggeration of the situation, and I think it would be an advantage to put on the record some of the points that he made in that letter. He confirmed—and this is important because it has caused some misunderstanding—that both horticulture and forestry, and of course agriculture, are trades for the purposes of Clause 31 and would, therefore, qualify for the deferment of Capital Gains Tax, each in its own right. He also confirmed that it is right to say that the trade of agriculture is a very wide one and would include different types of farming. For example, dairy farming and arable farming would be exchangeable one with the other for the purposes of this Clause, and he also made the point that farming is a special case under the Income Tax Act, 1952, in that all farming carried on by any particular person or partnership or body of persons is treated as one trade, wherever it may be carried on.
    All those are good points. However, in this letter to which I have referred the Financial Secretary says that farming for the purposes of this Clause
    1762
    "does not include horticulture or forestry, and so a person could not switch".
    in reinvesting his assets—
    "from farming to horticulture or forestry and remain within the same trade …"
    for the purposes of this Clause, as he had originally suggested. He continues:
    "I imagine that would be very unusual for anybody in farming to wish to make such a change …"
    I suggest that he is quite wrong, that it is not unusual, and furthermore is likely to become even more usual that it has been.
    If the hon. and learned Gentleman will refer the matter to his right hon. Friend the Minister of Agriculture or, indeed, seek any informed opinion on this subject he will find that land policy and farming policy, of any Government, is very likely to promote such switching, particularly from farming to forestry, in order to make use of land which is not of the highest quality for farming, and I think that as the years go by the policy will increasingly be to see that land which is at present farmed in too small parcels to be efficient will be given to horticulture.
    I do not know if the Financial Secretary will accept the Amendment, but it is important that we should have some statement to guide us. The definition of "agriculture" in the Agricultural Holdings Act, 1948, includes horticulture. I will not quote that definition, with which I am sure he is fully familiar. Therefore, there would seem to be very little reason why agriculture and horticulture should not be interchangeable for the purpose of reinvesting under the terms of this Clause. The interchangeability of forestry is not, so far as I can find, met by any similar definition in the law as it stands, but I ask the Financial Secretary to accept that it would be a most useful act of policy that these three should be interchangeable within the sense of the Clause, and to seek some means by which this can be achieved.
    Sir D. Glover: I should like to support the Amendment to the proposed Amendment for a very definite reason. In my constituency there are a lot of horticultural holdings and a lot of medium-sized farms, and the farms are getting bigger. If the Financial Secretary would tour my constituency he would realise the

    1763
    narrow difference between what is known as a horticultural holding and an agricultural holding. They grow virtually the same produce. Surely in all common sense they should be grouped together, although I know that the situation is different from that in the eastern counties. The farmers in my constituency do not like me to refer to them as large horticulturists. They like to be referred to as farmers. A great many of them are carrying on virtually the same rôle. There are some agricultural holdings of three or four acres and next door there are agricultural holdings three, four or five times as big but which are carrying on the same operations. I therefore hope that the Financial Secretary will be able to accept the Amendment to his Amendment.
    Mr. MacDermot: May I thank the right hon. Gentleman the Member for Rushcliffe (Sir M. Redmayne) for giving me this opportunity to correct a slip which I made during our discussions in Committee? I entirely confirm all that he has stated so carefully as the true position and I will not weary the House by repeating it. However, there is one addition that I would make to what he has said which to some extent deals with the point just made by the hon. Member for Ormskirk (Sir D. Glover). Although agriculture, horticulture and forestry are themselves different trades, a particular individual may carry on two or even three of these activities together, at the same time, as one trade, in the same way as may be done in other fields of business. If he is a trader carrying on in that way a mixed trade, he would enjoy the benefit of the Clause if he transferred and carried on again a mixed trade or one of the activities which he had been doing previously.
    I have been asked if I can accept the Amendment to the proposed Amendment as it stands, but I am afraid I cannot for this reason. We will be coming to another Amendment in which we are invited to extend the provisions of Clause 31 so that, in effect, anyone carrying on one trade of any kind can transfer the assets to a completely different trade and enjoy the benefit of Clause 31. This would open up such wide possibilities of switching where investment is in the form of a business that it would lead to endless deferring
    1764
    of liabilities to tax and it is one which we could not accept. The agricultural community is fortunate in having a very wide definition of the trade of agriculture which enables it to enjoy a wide degree of switching which might be denied to people in other spheres. I would remind the House that the object of this Clause is to see that the provisions of the Capital Gains Tax do not operate as a bar to the kind of redeployment of industry which we all want to see.
    The right hon. Gentleman urged an economic argument in support of his Amendment and has asked me to consult with the Minister of Agriculture about this aspect of the matter. That I will gladly undertake to do, but for the reasons I have stated I cannot advise the House to accept the Amendment to the Amendment.
    The Earl of Dalkeith: Amendments Nos. 310 and 311, which stand in my name, cover a point slightly different from that raised in the Amendment in the name of my right hon. Friend the Member for Rushcliffe (Sir M. Redmayne). These Amendments might have been tabled for discussion at an earlier stage but interpretation of the Bill is not altogether easy on this point and it was only after the Committee stage that the problems involved became fully apparent. I raise this matter partly because of my interest in it, which I declare, and which I believe qualifies me to speak on it with some knowledge and conviction, and partly because my Amendments seek to put right a wrong which I believe the Government would wish to put right.
    It is a fairly technical matter which I assume must have been overlooked by accident rather than intent. I have some confidence therefore that the Financial Secretary will want to accept the Amendments after hearing my brief explanation.
    A great part of our small island comprises hill and marginal land. Anyone who has studied the problems of land use will surely agree that it is here that there is the greatest scope for the development and improvement of productivity to the short-term and long-term economic advantage of the country.
    I am sure that the Minister of Land and Natural Resources, who was present a short while ago, and the Secretary of State for Scotland, would endorse my

    1765
    submission that the land generally, and these areas in particular, could be and should be more fully developed than they are at present. A great many reports and inquiries by expert bodies as well as by politicians have urged strongly that more should be done, especially by owners of estates, to carry out further development. But the essential point, which is so often overlooked, is that the main limitation to the progress which everybody wants to see and agrees is desirable is the shortage of capital.
    One does not have to look far to see the reason for this. It is that during the last 20 to 30 years—and this is particularly true of estates comprising mainly of hill and marginal land—the cost of maintenance of the fixed equipment has risen very much faster than income from rents. This means that it has been barely possible to keep pace with normal maintenance obligations, let alone carry out the improvement to and modernising of fixed equipment such as roads, bridges, drainage, river banking, flood prevention, housing, shelter plantations and all the rest. As a result, it has become in recent years the practice for the more progressive owners of estates to raise the necessary capital for this kind of modernisation and improvement by occasionally selling a farm.
    In this context, contrary to the popular belief that because ordinary building land is worth and sells at between £5,000 and £20,000 an acre, all land must therefore be immensely valuable, the greater part of upland farmland has probably a market value of between £5 and £50 an acre. This means that the 50,000-acre estate which is often sneered at can well be of lesser value than a sweet shop in Bond Street and will yield a much smaller return.
    11.45 p.m.
    In the unfortunate absence of adequate rent income on an estate, the practice of selling a farm in order to raise improvement capital is one which all progressive-minded people would surely wish to encourage. The Bill as it stands will do exactly the reverse, actively encouraging bad estate management instead of good. Not only will it deter an owner from selling a farm for the specific reasons I have given and thus slow down the process of improvement investment but it will be
    1766
    an incitement to him to hold on to farms which he might otherwise sell and milk them of their natural capital appreciation by neglecting his maintenance obligations and extracting maximum rents. This will be bad for the farming community and the country as a whole, and it will slow down the trend towards an increasing proportion of owner-occupation in farming, a trend which, I had thought, hon. Members opposite wished particularly to encourage.
    I am sure that these consequences are not deliberately intended by the Government. It seems illogical to defer payment of Capital Gains Tax when the proceeds of a farm sale are reinvested in another farm but not to do so when the proceeds are used for good estate management by investing them in the improvement of other farms.
    Acceptance of the Amendments would not necessarily cost the Government a penny. When a farm sale does not take place as a result of the Bill, no question of Capital Gains Tax will arise. The only effect of the Bill, unchanged by these Amendments, will be to contribute to the impoverishment of our natural resources at a time when everything possible ought to be done to stimulate greater productivity on the land, to reduce our dependence on imports and to assist our balance of payments. I hope, therefore, that the Financial Secretary will show how enlightened he is by accepting these Amendments, which, I am sure, he will find irresistible.
    Mr. Scott-Hopkins: The Financial Secretary's reply to my right hon. Friend the Member for Rushcliffe (Sir M. Redmayne) was extremely disappointing. He seemed to base his whole argument on Amendment No. 74. That is an entirely separate matter. My right hon. Friend's Amendment is drawn very narrowly, and the Financial Secretary ought to realise that an ability to switch between horticulture, forestry and agriculture, if need requires, is essential to the countryside and to those who are engaged in farming of any kind. I hope that he will reconsider his decision not to accept my right hon. Friend's Amendment because it is vital that it should be possible to switch between these different types of farming which go hand in hand.
    Mr. Peter Walker: I was shocked by the Financial Secretary's observation, in arguing against acceptance of the Amendment spoken to by my right hon. Friend the Member for Rushcliffe (Sir M. Redmayne), that Amendment No. 74—I presume that that is the one he meant—was so wide as to be unacceptable. If that is what he meant, I can only express sincere regret that the Government have determined not to accept the proposition that, for the purposes of Clause 31, all forms of retail outlet or shop should be regarded as one trade. We are not suggesting any relaxation of the Capital Gains Tax in this respect, because Clause 31 applies only to defer liability to tax. But the Government, apparently, insist that Clause 31 shall not apply to the case of a grocer who, for instance, decides to sell his business in order to become the proprietor of a sweet shop or sweet and confectionery shop.
    I cannot believe that the Government want to be so strict on the interpretation of Clause 31 as to say that a genuine transfer from one form of retailing to another should not enjoy the benefit of the Clause. Surely the House will agree that the basic skills involved in being a retailer are very similar. In the case I quoted of a grocer becoming the proprietor of a sweet and confectionery shop, the skills required are almost identical. He is for all practical purposes continuing the same trade and type of activity. Take the case of someone with a clothing shop who decides to buy a shoe shop. There are many similar examples. There is a tremendous identity of the types of skill involved in any form of retail outlet.
    It will be against the whole spirit of the Clause if the Government stick rigidly to the definition that if one is to move from one shop to another an identical type of product must be sold in the shops. It is unreasonable. It has caused a great deal of consternation and anxiety among various organisations representing the retail traders. The Amendment would cost the Government nothing. It would eliminate what would otherwise be a considerable hardship on a retailer deciding to change the nature of the products he will sell. I should have thought it was an Amendment which the Government could readily have accepted. We consider this of such importance that I shall certainly urge my hon. Friends to divide
    1768
    the House if the Government do not accept it.
    Mr. J. E. B. Hill: I want briefly to mention a class of persons who reduce the Clause as it stands, with the Government Amendment, to absurdity—sub-postmasters, of whom there are 23,000. They are hard to recruit, and their Post Office salary does not of itself usually provide a livelihood, so that the sub-postmastership, which is an appointment and not a trade, is linked to some ancillary retail business.
    If the sub-postmaster wishes to go up in his employment, he may in moving from a larger sub-postmastership, have to change to a different ancillary business, say from a tobacconist's to a sweet shop. As the Clause stands, and as the Financial Secretary has been good enough to tell me in correspondence, the sub-postmaster seeking to move may be penalised by the incidence of the Capital Gains Tax, so much so as to make a move unremunerative.
    Some sub-postmasters are in a happy position, particularly in rural constituencies, because their business will be linked to a general village store, but some of their colleagues may find themselves caught by the tax at the very moment when they want to move up in their careers. I therefore ask the Financial Secretary for this very limited purpose to consider that the small retail businesses should be one trade for the purpose of this tax.
    Mr. David Mitchell: I represent a constituency which has two expanded towns in it—Basingstoke and Andover. There is a tremendous need, with the incoming population, to bring in more shopkeepers. I very much fear that the Clause will reduce the number of shopkeepers who will move from one form of shopkeeping to another.
    After all, the skill which is required to be a shopkeeper is very much the same whatever one's actual business—in buying one's goods, stocking them, taking care of them, building up custom, selling them and delivering them to one's customers. I cannot see that the skill required is very different. I should have thought that in as much as the Financial Secretary accepts that husbandry is a profession, whatever part it takes, equally one should accept

    1769
    that a shopkeeper is a shopkeeper whether he is selling grocery, shoes or whatever it may be.
    I know that the Chancellor would wish his Bill to have a large measure of logic and common sense in it. [HON. MEMBERS: "Oh."] I ask him simply, where is the logic and common sense about this?
    How does he justify the following? A market gardener who grows and sells vegetables can become a pig farmer, but a greengrocer who sells vegetables cannot become a pork butcher. What is the logic in that?
    Hon. Members: Answer.
    Mr. MacDermot: Will the hon. Gentleman give way? I am being asked to answer. His hypothesis is wrong—[HON. MEMBERS: "Why?"]—because a horticulturist cannot transfer in the way the hon. Gentleman suggests without transferring to a different trade.
    Mr. Mitchell: But when I raised this in Committee I was quite clearly told by the Financial Secretary that a market gardener could transfer to poultry farming. If he likes to look up the record he will find that he made it quite clear that husbandry was a trade.
    Mr. MacDermot: If the hon. Gentleman had been present in the House when we were discussing this group of Amendments earlier he would have heard his right hon. Friend explain that I had corrected that mis-statement in a letter and that one of the right hon. Gentleman's reasons for moving the Amendment was to enable that correction to be made clear to the House.
    Mr. Mitchell: I am very grateful for that clarification, but would the hon. and learned Gentleman, then, clarify and show the logic of this, that an arable farmer growing corn can become a poultry farmer, but a baker selling corn is not allowed to become the village grocer? What is the logic of that? I will very readily give way to the hon. and learned Gentleman to hear his reply. What about the dairy farmer who can, presumably, become a flower grower, while the dairyman cannot become a florist? Where is the logic? An export merchant can become an import merchant, presumably to the disadvantage of the balance of payments, but on the other hand a
    1770
    distributor of imported German goods cannot become a producer of precision engineering goods for export. What is the common sense? What is the logic? We have not had the Chancellor or the Financial Secretary explain that.
    I think that we should have some logic put into this, and I would, with great respect, suggest that our Amendment regarding retailers ought to be accepted by the Government in view of the fact that the skill which is required is the same skill although the goods to be sold may be different.
    Mr. MacDermot: I can assure the hon. Gentleman that we do not want to do anything to prevent a pig farmer from being a butcher, a baker or a candlestick maker, or, as one of my hon. Friends suggested, a ballet dancer, if he wants to, but if he does so he will cease to be carrying on the same trade. I was asked to explain the logic behind it. The logic behind it is that this is a Clause dealing with the transfer of business of a person who is carrying on the same trade. What we are being asked and pressed to do, as we are on every occasion whenever any sort of concession is granted, is immediately to extend it. Then we are asked what the principle is. I am telling hon. Members what the principle is. Because they are seeking by their Amendment to extend beyond the principle, we cannot accept the Amendment.
    The effect of this extension they are suggesting amounts to saying that in the case of a man who is in business no Capital Gains Tax ought to be payable on realised gains unless the money is withdrawn from the sphere of business altogether, or, failing that, till the trader in question dies.
    12 m.
    That is not what we envisage to be the scope or purpose of the Clause which, as I have repeatedly said, is intended to ensure that the operation of this tax will not serve to prevent that kind of redeployment of industry. It is concerned primarily with the redeployment of industry, and with it other commercial and business activities, to ensure that there is what we all want to see, the full development of the resources of the different areas of the country. It is not intended as a means of enabling a person who ceases to carry on

    1771
    a trade to realise the assets of that trade and then to reinvest them in some other without being liable for tax on such capital gains as he may have made in the first trade.
    The hon. Member for Edinburgh, North (The Earl of Dalkeith) sought to widen the matter still further by taking it out of the sphere of trade altogether and asking that the same kind of privilege should be extended to a property owner who is managing an estate and who is not carrying on any kind of business. This would lead us even further away from what is the underlying purpose and principle of the Clause, and I must therefore advise my hon. Friends to reject the Amendment.
    Mr. Heath: It is quite clear that the whole House is thoroughly dissatisfied with the Financial Secretary's answer. I have been watching the faces of hon. Ladies and Gentlemen opposite, some of whom have had much experience in these matters, and they are obviously giving no support whatever to the hon. and learned Gentleman who has given us a circular argument that because the Clause is limited in the way that he described, it ought to remain limited and not be widened. This does not seem to be a very powerful argument.
    We have had a number of contributions which have completely undermined the hon. and learned Gentleman's position. We had a contribution from my hon. Friend the Member for Basingstoke (Mr. Mitchell), who, as the House recognises, is both persuasive and intelligent, but, if I may say so, he based his argument on one great fallacy. As he has been in the House for only a limited time, perhaps this is pardonable. The fallacy is that the Labour Government and the Financial Secretary in particular are as intelligent and as logical as he is. The Financial Secretary immediately leapt to his feet and denied this proposition and pointed out that he was refusing to be logical because he did not want to widen the Clause.
    It is apparent to us all that the sensible thing to do in this case is to adopt Amendment No. 74, which would embody my right hon. Friend's Amendment, and to allow those who want to change in the retail trade to do so. This is the obvious, sensible thing to do, and it could not involve any abuse. I believe that the Financial Secretary recognises this, and certainly the Chancellor does. Against this brick wall of failure of comprehension, we have no alternative but to divide the House.
    I notice that tonight the Treasury Bench is much better equipped for this performance. It is true that the Prime Minister is not here, but the Leader of the House is. He is waiting there ready to advise his right hon. Friend the Chancellor what to say in the event of another defeat. A few minutes ago the Secretary of State for Education and Science was present, presumably to advise the right hon. Gentleman on the good English in which to put the phrase, or even possibly to step into the Chancellor's shoes—we do not know. We also have the Minister for Sport present to advise the right hon. Gentleman which way to make a dash for it when it all happens. Rather than make all these elaborate preparations at the hour of midnight, would not it be better to be sensible and to accept the Amendment? If they cannot do so, we must divide the House.
    Amendment agreed to.
    Further Amendments made: In line 36, leave out "or vocation" and insert "vocation, office or employment".
    In line 38, leave out "'and vocation'" and insert "'vocation', 'office' and 'employment'".—[Mr. MacDermot.]
    Amendment proposed, In page 39, line 7, at end insert:
    (12) For the purposes of this section all forms of retail sales shall be considered to be one trade.—[Mr. Peter Walker.]
    Question put, That those words be there inserted in the Bill:—
    The House divided: Ayes 270, Noes 276.

    Division No. 244.]

    AYES

    [12.8 a.m.

    Agnew, Commander Sir Peter

    Astor, John

    Barlow, Sir John

    Alison, Michael (Barkston Ash)

    Atkins, Humphrey

    Batsford, Brian

    Allan, Robert (Paddington, S.)

    Awdry, Daniel

    Bell, Ronald

    Allason, James (Hemel Hempstead)

    Baker, W. H. K.

    Bennett, Sir Frederic (Torquay)

    Amery, Rt. Hn. Julian

    Balniel, Lord

    Berkeley, Humphry

    Anstruther-Gray, Rt. Hn. Sir W.

    Barber, Rt. Hn. Anthony

    Berry, Hn. Anthony

    Biffen, John

    Grimond, Rt. Hn. J.

    Nicholson, Sir Godfrey

    Biggs-Davison, John

    Gurden, Harold

    Noble, Rt. Hn. Michael

    Birch, Rt. Hn. Nigel

    Hall, John (Wycombe)

    Nugent, Rt. Hn. Sir Richard

    Black, Sir Cyril

    Hall-Davis, A. G. F.

    Onslow, Cranley

    Blaker, Peter

    Hamilton, Marquess of (Fermanagh)

    Orr, Capt. L. P. S.

    Bossom, Hn. Clive

    Hamilton, M. (Salisbury)

    Orr-Ewing, Sir Ian

    Bowen, Roderic (Cardigan)

    Harris, Frederic (Croydon, N.W.)

    Osborne, Sir Cyril (Louth)

    Box, Donald

    Harris, Reader (Heston)

    Page, John (Harrow, W.)

    Boyd-Carpenter, Rt. Hn. J.

    Harrison, Brian (Maldon)

    Page, R. Graham (Crosby)

    Boyle, Rt. Hn. Sir Edward

    Harvey, John (Walthamstow, E.)

    Pearson, Sir Frank (Clitheroe)

    Braine, Bernard

    Harvie Anderson, Miss

    Peel, John

    Brewis, John

    Hastings, Stephen

    Percival, Ian

    Brinton, Sir Tatton

    Hawkins, Paul

    Peyton, John

    Brooke, Rt. Hn. Henry

    Hay, John

    Pickthorn, Rt. Hn. Sir Kenneth

    Brown, Sir Edward (Bath)

    Heald, Rt. Hn. Sir Lionel

    Pike, Miss Mervyn

    Bruce-Gardyne, J.

    Heath, Rt. Hn. Edward

    Pitt, Dame Edith

    Bryan, Paul

    Hendry, Forbes

    Pounder, Rafton

    Buchanan-Smith, Alick

    Higgins, Terence L.

    Powell, Rt. Hn. J. Enoch

    Buck, Antony

    Hill, J. E. B. (S. Norfolk)

    Price, David (Eastleigh)

    Bullus, Sir Eric

    Hirst, Geoffrey

    Prior, J. M. L.

    Burden, F. A.

    Hobson, Rt. Hn. Sir John

    Quennell, Miss J. M.

    Butcher, Sir Herbert

    Hooson, H. E.

    Ramsden, Rt. Hn. James

    Buxton, Ronald

    Hopkins, Alan

    Redmayne, Rt. Hn. Sir Martin

    Campbell, Gordon

    Hordern, Peter

    Rees-Davies, W. R.

    Carlisle, Mark

    Hornby, Richard

    Renton, Rt. Hn. Sir David

    Carr, Rt. Hn. Robert

    Hornsby-Smith, Rt. Hn. Dame P.

    Ridsdale, Julian

    Cary, Sir Robert

    Hunt, John (Bromley)

    Roberts, Sir Peter (Heeley)

    Channon, H. P. G.

    Hutchison, Michael Clark

    Rodgers, Sir John (Sevenoaks)

    Chataway, Christopher

    Iremonger, T. L.

    Roots, William

    Chichester-Clark, R.

    Irvine, Bryant Godman (Rye)

    Royle, Anthony

    Clark, Henry (Antrim, N.)

    Jenkin, Patrick (Woodford)

    St. John-Stevas, Norman

    Clark, William (Nottingham, S.)

    Jennings, J. C.

    Sandys, Rt. Hn. D.

    Clarke, Brig. Terence (Portsmth, W.)

    Johnson Smith, G. (East Grinstead)

    Scott-Hopkins, James

    Cole, Norman

    Jones, Arthur (Northants, S.)

    Sharples, Richard

    Cooke, Robert

    Jopling, Michael

    Sinclair, Sir George

    Cooper, A. E.

    Joseph, Rt. Hn. Sir Keith

    Smith, Dudley (Br'ntf'd & Chiswick)

    Cooper-Key, Sir Neill

    Kaberry, Sir Donald

    Smyth, Rt. Hn. Brig. Sir John

    Cordle, John

    Kerby, Capt. Henry

    Soames, Rt. Hn. Christopher

    Corfield, F. V.

    Kerr, Sir Hamilton (Cambridge)

    Spearman, Sir Alexander

    Costain, A. P.

    Kilfedder, James A.

    Speir, Sir Rupert

    Courtney, Cdr. Anthony

    Kimball, Marcus

    Stainton, Keith

    Craddock, Sir Beresford (Spelthorne)

    King, Evelyn (Dorset, S.)

    Stanley, Hn. Richard

    Crawley, Aidan

    Kirk, Peter

    Steel, David (Roxburgh)

    Crosthwaite-Eyre, Col. Sir Oliver

    Kitson, Timothy

    Stodart, Anthony

    Crowder, F. P.

    Lagden, Godfrey

    Studholme, Sir Henry

    Curran, Charles

    Lambton, Viscount

    Talbot, John E.

    Currie, G. B. H.

    Lancaster, Col. C. G.

    Taylor, Sir Charles (Eastbourne)

    Dalkeith, Earl of

    Langford-Holt, Sir John

    Taylor, Edward M. (G'gow, Cathcart)

    Dance, James

    Legge-Bourke, Sir Harry

    Teeling, Sir William

    Davies, Dr. Wyndham (Perry Barr)

    Lewis, Kenneth (Rutland)

    Temple, John M.

    d'Avigdor-Goldsmid, Sir Henry

    Litchfield, Capt. John

    Thatcher, Mrs. Margaret

    Dean, Paul

    Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)

    Thomas, Sir Leslie (Canterbury)

    Digby, Simon Wingfield

    Lloyd, Ian (P'tsm'th, Langstone)

    Thompson, Sir Richard (Croydon, S.)

    Dodds-Parker, Douglas

    Longden, Gilbert

    Thorpe, Jeremy

    Doughty, Charles

    Loveys, Walter H.

    Tiley, Arthur (Bradford, W.)

    Drayson, G. B.

    Lubbock, Eric

    Tilney, John (Wavertree)

    du Cann, Rt. Hn. Edward

    McAdden, Sir Stephen

    Turton, Rt. Hn. R. H.

    Eden, Sir John

    Mackenzie, Alasdair (Ross & Crom'ty)

    van Straubenzee, W. R.

    Elliot, Capt. Walter (Carshalton)

    Mackie, George Y. (C'ness & S'land)

    Vaughan-Morgan, Rt. Hn. Sir John

    Elliott, R. W. (N'c'tle-upon-Tyne, N.)

    McLaren, Martin

    Vickers, Dame Joan

    Emery, Peter

    Maclean, Sir Fitzroy

    Walder, David (High Peak)

    Eyre, Reginald

    Macleod, Rt. Hn. Iain

    Walker, Peter (Worcester)

    Farr, John

    McMaster, Stanley

    Walker-Smith, Rt. Hn. Sir Derek

    Fell, Anthony

    McNair-Wilson, Patrick

    Wall, Patrick

    Fisher, Nigel

    Maginnis, John E.

    Walters, Dennis

    Fletcher-Cooke, Charles (Darwen)

    Marples, Rt. Hn. Ernest

    Ward, Dame Irene

    Fletcher-Cooke, Sir John (S'pton)

    Marten, Neil

    Weatherill, Bernard

    Foster, Sir John

    Mathew, Robert

    Webster, David

    Fraser, Rt. Hn. Hugh (St'fford & Stone)

    Maude, Angus

    Wells, John (Maidstone)

    Fraser, Ian (Plymouth, Sutton)

    Maudling, Rt. Hn. Reginald

    Whitelaw, William

    Galbraith, Hn. T. G. D.

    Mawby, Ray

    Williams, Sir Rolf Dudley (Exeter)

    Gammans, Lady

    Maxwell-Hyslop, R. J.

    Wills, Sir Gerald (Bridgwater)

    Giles, Rear-Admiral Morgan

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

    Wilson, Geoffrey (Truro)

    Gilmour, Ian (Norfolk, Central)

    Meyer, Sir Anthony

    Wise, A. R.

    Gilmour, Sir John (East Fife)

    Mills, Peter (Torrington)

    Wolrige-Gordon, Patrick

    Glover, Sir Douglas

    Mills, Stratton (Belfast, N.)

    Wood, Rt. Hn. Richard

    Godber, Rt. Hn. J. B.

    Miscampbell, Norman

    Woodhouse, Hn. Christopher

    Goodhart, Philip

    Mitchell, David

    Wylie, N. R.

    Gower, Raymond

    Monro, Hector

    Yates, William (The Wrekin)

    Grant, Anthony

    More, Jasper

    Younger, Hn. George

    Grant-Ferris, R.

    Morrison, Charles (Devizes)

    Gresham Cooke, R.

    Mott-Radclyffe, Sir Charles

    TELLERS FOR THE AYES:

    Grieve, Percy

    Munro-Lucas-Tooth, Sir Hugh

    Mr. Ian MacArthur and

    Griffiths, Eldon (Bury St. Edmunds)

    Murton, Oscar

    Mr. Francis Pym.

    Griffiths, Peter (Smethwick)

    Neave, Airey

    1774

    1775

    NOES

    Abse, Leo

    Grey, Charles

    Milne, Edward (Blyth)

    Albu, Austen

    Griffiths, David (Rother Valley)

    Molloy, William

    Allaun, Frank (Salford, E.)

    Griffiths, Rt. Hn. James (Llanelly)

    Monslow, Walter

    Alldritt, Walter

    Griffiths, Will (M'chester, Exchange)

    Morris, Alfred (Wythenshawe)

    Atkinson, Norman

    Gunter, Rt. Hn. R. J.

    Morris, Charles (Openshaw)

    Bacon, Miss Alice

    Hamilton, James (Bothwell)

    Morris, John (Aberavon)

    Bagier, Gordon A. T.

    Hamilton, William (West Fife)

    Mulley, Rt. Hn. Frederick (Sheffield Pk)

    Barnett, Joel

    Hamling, William (Woolwich, W.)

    Murray, Albert

    Baxter, William

    Harper, Joseph

    Neal, Harold

    Bence, Cyril

    Harrison, Walter (Wakefield)

    Newens, Stan

    Bennett, J. (Glasgow, Bridgeton)

    Hart, Mrs. Judith

    Noel-Baker, Francis (Swindon)

    Binns, John

    Hattersley, Roy

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

    Bishop, E. S.

    Hazell, Bert

    Norwood, Christopher

    Blackburn, F.

    Healey, Rt. Hn. Denis

    Oakes, Gordon

    Blenkinsop, Arthur

    Heffer, Eric S.

    Ogden, Eric

    Boardman, H.

    Henderson, Rt. Hn. Arthur

    O'Malley, Brian

    Bottomley, Rt. Hn. Arthur

    Herbison, Rt. Hn. Margaret

    Orbach, Maurice

    Bowden, Rt. Hn. H. W. (Leics S.W.)

    Hobden, Dennis (Brighton, K'town)

    Orme, Stanley

    Boyden, James

    Holman, Percy

    Oswald, Thomas

    Braddock, Mrs. E. M.

    Horner, John

    Owen, Will

    Bradley, Tom

    Houghton, Rt. Hn. Douglas

    Page, Derek (King's Lynn)

    Bray, Dr. Jeremy

    Howarth, Harry (Wellingborough)

    Paget, R. T.

    Broughton, Dr. A. D. D.

    Howell, Denis (Small Heath)

    Palmer, Arthur

    Brown, Rt. Hn. George (Belper)

    Howie, W.

    Pannell, Rt. Hn. Charles

    Brown, Hugh D. (Glasgow, Provan)

    Hoy, James

    Pargiter, G. A.

    Buchan, Norman (Renfrewshire, W.)

    Hughes, Cledwyn (Anglesey)

    Park, Trevor (Derbyshire, S.E.)

    Buchanan, Richard

    Hughes, Emrys (S. Ayrshire)

    Parkin, B. T.

    Butler, Herbert (Hackney, C.)

    Hughes, Hector (Aberdeen, N.)

    Pavitt, Laurence

    Butler, Mrs. Joyce (Wood Green)

    Hunter, Adam (Dunfermline)

    Pearson, Arthur (Pontypridd)

    Callaghan, Rt. Hn. James

    Hunter, A. E. (Feltham)

    Peart, Rt. Hn. Fred

    Carmichael, Neil

    Hynd, H. (Accrington)

    Pentland, Norman

    Chapman, Donald

    Irving, Sydney (Dartford)

    Perry, Ernest G.

    Coleman, Donald

    Jackson, Colin

    Popplewell, Ernest

    Conlan, Bernard

    Janner, Sir Barnett

    Prentice, R. E.

    Corbet, Mrs. Freda

    Jay, Rt. Hn. Douglas

    Price, J. T. (Westhoughton)

    Craddock, George (Bradford, S.)

    Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

    Probert, Arthur

    Crawshaw, Richard

    Jenkins, Hugh (Putney)

    Pursey, Cmdr. Harry

    Cronin, John

    Johnson, Carol (Lewisham, S.)

    Randall, Harry

    Crosland, Rt. Hn. Anthony

    Johnson, James (K'ston-on-Hull, W.)

    Rankin, John

    Crossman, Rt. Hn. R. H. S.

    Jones, Dan (Burnley)

    Redhead, Edward

    Cullen, Mrs. Alice

    Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

    Rees, Merlyn

    Dalyell, Tam

    Jones, J. Idwal (Wrexham)

    Rhodes, Geoffrey

    Darling, George

    Jones, T. W. (Merioneth)

    Richards, Ivor

    Davies, Ifor (Gower)

    Kelley, Richard

    Roberts, Albert (Normanton)

    Davies, S. O. (Merthyr)

    Kenyon, Clifford

    Roberts, Goronwy (Caernarvon)

    de Freitas, Sir Geoffrey

    Kerr, Mrs. Anne (R'ter & Chatham)

    Robertson, John (Paisley)

    Delargy, Hugh

    Kerr, Dr. David (W'worth, Central)

    Robinson, Rt. Hn. K. (St. Pancras, N.)

    Dell, Edmund

    Lawson, George

    Rodgers, William (Stockton)

    Dempsey, James

    Leadbitter, Ted

    Rogers, George (Kensington, N.)

    Diamond, Rt. Hn. John

    Ledger, Ron

    Rose, Paul B.

    Dodds, Norman

    Lee, Rt. Hn. Frederick (Newton)

    Ross, Rt. Hn. William

    Doig, Peter

    Lee, Miss Jennie (Cannock)

    Rowland, Christopher

    Driberg, Tom

    Lever, Harold (Cheetham)

    Sheldon, Robert

    Duffy, Dr. A. E. P.

    Lever, L. M. (Ardwick)

    Shore, Peter (Stepney)

    Dunn, James A.

    Lewis, Arthur (West Ham, N.)

    Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

    Dunnett, Jack

    Lewis, Ron (Carlisle)

    Short, Mrs. Renée (W'hampton, N. E.)

    Edelman, Maurice

    Loughlin, Charles

    Silkin, John (Deptford)

    Edwards, Robert (Bilston)

    Mabon, Dr. J. Dickson

    Silkin, S. C. (Camberwell, Dulwich)

    English, Michael

    McBride, Neil

    Silverman, Julius (Aston)

    Ennals, David

    McCann, J.

    Skeffington, Arthur

    Ensor, David

    MacColl, James

    Slater, Joseph (Sedgefield)

    Evans, Albert (Islington, S.W.)

    MacDermot, Niall

    Small, William

    Evans, Ioan (Birmingham, Yardley)

    McGuire, Michael

    Snow, Julian

    Fernyhough, E.

    Mclnnes, James

    Spriggs, Leslie

    Finch, Harold (Bedwellty)

    McKay, Mrs. Margaret

    Steele, Thomas (Dunbartonshire, W.)

    Fletcher, Sir Eric (Islington, E.)

    Mackenzie, Gregor (Rutherglen)

    Stewart, Rt. Hn. Michael

    Fletcher, Ted (Darlington)

    Mackie, John (Enfield, E.)

    Stonehouse, John

    Fletcher, Raymond (Ilkeston)

    McLeavy, Frank

    Stones, William

    Floud, Bernard

    Mahon, Peter (Preston, S.)

    Strauss, Rt. Hn. G. R. (Vauxhall)

    Foley, Maurice

    Mahon, Simon (Bootle)

    Summerskill, Hn. Dr. Shirley

    Foot, Sir Dingle (Ipswich)

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

    Swain, Thomas

    Foot, Michael (Ebbw Vale)

    Manuel, Archie

    Swingler, Stephen

    Ford, Ben

    Mapp, Charles

    Symonds, J. B.

    Fraser, Rt. Hn. Tom (Hamilton)

    Marsh, Richard

    Taverne, Dick

    Freeson, Reginald

    Mason, Roy

    Thomas, George (Cardiff, W.)

    Galpern, Sir Myer

    Maxwell, Robert

    Thomas, Iorwerth (Rhondda, W.)

    Garrett, W. E.

    Mayhew, Christopher

    Thomson, George (Dundee, E.)

    George, Lady Megan Lloyd

    Mellish, Robert

    Thornton, Ernest

    Ginsburg, David

    Mendelson, J. J.

    Tinn, James

    Gourlay, Harry

    Mikardo, Ian

    Tomney, Frank

    Greenwood, Rt. Hn. Anthony

    Millan, Bruce

    Tuck, Raphael

    Gregory, Arnold

    Miller, Dr. M. S.

    Urwin, T. W.

    1776

    1777

    Varley, Eric G.

    Wigg, Rt. Hn. George

    Winterbottom, R. E.

    Wainwright, Edwin

    Wilkins, W. A.

    Woodburn, Rt. Hn. A.

    Walden, Brian (All Saints)

    Willey, Rt. Hn. Frederick

    Woof, Robert

    Walker, Harold (Doncaster)

    Williams, Alan (Swansea, W.)

    Wyatt, Woodrow

    Wallace, George

    Williams, Clifford (Abertillery)

    Yates, Victor (Ladywood)

    Watkins, Tudor

    Williams, Mrs. Shirley (Hitchin)

    Zilliacus, K.

    Weitzman, David

    Williams, W. T. (Warrington)

    Wells, William (Walsall, N.)

    Willis, George (Edinburgh, E.)

    TELLERS FOR THE NOES:

    White, Mrs. Eirene

    Wilson, Rt. Hon. Harold (Huyton)

    Mrs. Harriet Slater and

    Whitlock, William

    Wilson, William (Coventry, S.)

    Mr. Alan Fitch.

    Further consideration of the Bill, as amended, adjourned.—[Mrs. Harriet Slater.]
    Bill, as amended, to be further considered this day.

    AGRICULTURAL WORKERS (INCOMES)
    Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Harriet Slater.]
    12.20 a.m.
    Mr. Paul Hawkins: Hon. Members will know from the Order Paper that in this debate I am going to stress the need for better farm produce prices to enable the incomes of farm workers and working farmers to rise nearer to those of their opposite numbers in industry.
    I am glad to have the opportunity to speak on this subject, which vitally affects hundreds of thousands who work on the land, either as farm workers or smallholders. The object I wish to secure in this debate should, I believe, be non-controversial.
    The Labour Party has said within the last 12 months that it was its aim to ensure better wages for farm workers. That was point 9 of Labour's 14-point plan for agriculture. Again, the Minister wrote in my own local paper last October, just before the election:
    "The main objective of Labour's new policy will be to ensure that the incomes of farmers and farmworkers move rapidly towards their industrial equivalents."
    There are many reasons why I am raising this matter, and I will mention only a few. Firstly, the Price Review itself. In the farming community's view, very little is printable about this and, whatever the Minister may say, the real crux of the matter is that those living and working on the land have had their incomes cut while everyone around them has been granted increases. That is the
    1778
    plain unvarnished truth, and I challenge anybody to deny it.
    Since the Price Review, farmers, in common with everyone else, have seen taxation and every other cost rise. In some cases farming has had extra cost added to it which the rest of the community has not suffered. For instance, credit is extremely short and loans exceptionally dear.
    In the case of loans from the Agricultural Mortgage Corporation, the farming community is paying 1 per cent. higher to borrow than the rest of the community. As a result more farms during the past few months have remained unsold than for many years past. Yet farmers are in that small minority of groups, together with pensioners and people living on fixed incomes, who are unable to pass their costs on to somebody else.
    They will have to wait eight months for the next Price Review, and then, of course, we do not know whether it will be a better one or a further cut in their incomes.
    The House will see, therefore, that there is little room for an increased labour bill—price increases must come first. Secondly, it is undeniable that agricultural workers' earnings—and I stress earnings—are way below the average of other workers in the country. While I do not wish to weary the House with a great many figures, some must be given to show the unfair disparity that exists between agricultural workers and other manual workers in industry. On 17th August, 1960, The Times stated in a leading article:
    "Farmworkers' earnings showed an average hourly figure of 3s. 9d. for men, working, on average, a 52 hour week. The average, in all manufacturing, was 5s. 10d. for a 48½ hour week. The contrast is excessive and it is natural that the drain of young countrymen into manufacturing industry continues".
    That was stated five years ago, but I believe that since then the gap has widened and not narrowed.

    1779
    This recent information will, I think, shock the House. It certainly shocked me. It is taken from a document containing statistics of incomes, prices and so on published by the Ministry of Labour in March of this year. It is shown that the average weekly earnings for male manual workers in agriculture was £13 6s. 9d. for a 52½ hour week. In all other categories—and 127 of them are listed—the earnings averaged £18 2s. 2d. for a 47½ hour week. In other words, there was a difference of £4 15s. 0d.—and five hours extra had to be worked for that differential.
    In addition, I extracted from that document seven industrial categories which, I believe, could be found in most rural constituencies. All except one are to be found in my constituency. They include animal and poultry food manufacturing, brewing and malting, agricultural machinery and so on. The earnings of men in those industries average £17 18s. 0d. against agriculture's £13 6s. 9d. The difference there is £4 11s. 0d.
    Trying, therefore, to compare the agricultural worker's wages not with the wages of someone employed in the car manufacturing industry in, say, Birmingham, but with comparable local industries, we see that there is still a very big margin of difference, and more hours must be worked. It is interesting to note from the same document that in 1965 farmworkers, in order to get the average wages for their industry, had to work two-and-a-half hours longer than they did in 1960.
    It is said that the living costs of farm-workers are much less, but many of them, certainly in my constituency, now live in council houses and pay quite rapidly rising rents. Many more workers in rural areas than in urban areas must run cars to be able to do their jobs. I do not believe that the extra benefits which the farming communities in rural districts are always said to have amount to more than £1 a week.
    Thirdly, I stress the fact that the small working family farmers are vitally affected in this matter as well. The labour element in their incomes is very high. If farm workers' earnings were on a par with average industrial earnings
    1780
    and the farming industry were reimbursed in the Price Review for this increase, then working farmers and their families would be far better off. The major part of the price of every item produced on the farm is the labour element.
    My other reason for bringing forward this subject tonight is a very serious one, and relates to something that has hit the eastern counties fairly hard—the drain of intelligent young men from agriculture. If food production is to expand—as I sincerely believe it must in the future, with rising standards and increasing population—we shall need to keep the very best of our younger men on the land. The extremely costly machinery with which our farms are now equipped needs these intelligent young men to operate it, and they deserve, and will demand, to be well paid for the work.
    I often wonder whether many members of the general public realise how skilled the modern farm worker is, and how costly is the machinery that he works. In his hands are tools costing thousands of £s, and a slip in controlling, say, the temperature of a drying plant could cost a farmer very considerable sums of money. Livestock husbandry has become highly scientific, and it is extraordinary how much a good stockman needs to know about breeding, feed rationing, diseases, and so on. I believe that Norfolk pioneered the stockmen's clubs, a movement that is spreading to other counties. The keenness of the stockmen to use the latest scientific information is most gratifying.
    But we are losing the keener young men. If we want to see livestock production—fat cattle, calf rearing, and so on—increase, we must do something to retain these young men on the land. The townsman's idea of the farm worker as a comic turn, with a bit of straw in his hair and a funny accent, was never true. He was always shrewd, humorous and skilled, and now he is a tip-top mechanic into the bargain, with considerable knowledge of the latest scientific and chemical advances in the industry.
    I have a few suggestions to make which, if acted upon, would help to improve matters. First, the Minister should state clearly that any negotiated settlement between the National Union of

    1781
    Agricultural Workers and the National Farmers' Union which brought workers' earnings more into line with those of the average manual worker would be treated at the Price Reviews as an allowable cost increase. In recent years, few wage awards have been agreed, which is bad for an industry which has had exceptionally good labour relations.
    According to friends in the N.F.U., the main reason for that is the belief that a negotiated settlement on these lines would not be reimbursed, so the independent members of the wages boards are left with the job. What a pity it is—and I am sure that many people in the countryside, and not only the land owners, would agree—that the N.U.A.W., instead of asking the N.F.U. to co-operate in this matter, should have chosen this time to produce, once again, its outworn and cock-eyed theories of land nationalisation. I believe that this can only lead to friction within the industry, and I hope that the union will drop that suggestion once the pamphlet has been forgotten.
    Further the Minister should also make it quite clear that the whole farming industry will have the lion's share in future increased consumption. At the same time there should be an urgent inquiry into dumping and the machinery to deal with it. Dumping destroys confidence and is rife in many sections of agriculture, in particular in potatoes in recent months. The machinery is hideously slow and completely outdated. It never seems to act until the damage has been done. Any reductions in food imports must be beneficial to the nation in our present precarious financial position and home agriculture saves more than any other section in the way of imports. Given the chance of expansion, it could save more. The Government should seriously consider the danger of allowing wide differences in prices in this country and in Europe. We have seen a gap, which ought to be closed, widened at the last Price Review. A radical change in prices when we enter Europe could be extremely harmful.
    In this short speech I have tried to show the quite unjustifiable difference between earnings in agriculture and other industries; the harmful effect that this is having on agriculture and could have on the country as a whole and on our
    1782
    relations with Europe; and the need for higher prices to pay for the very necessary earnings increase. I have also put forward some suggestions. These the Minister may or may not agree with, but I am certain that he will agree that there is a real problem here: the problem of losing from the land the younger skilled men. There is also the promise made by the Minister that he would bring up the earnings of small farmers and farm workers into line with industrial earnings. I hope that in his reply the Joint Parliamentary Secretary will have some constructive suggestions which will enable us to keep a sufficient labour force on the land.
    12.37 a.m.
    Mr. George Y. Mackie: I am tempted to intervene shortly to clear up one or two misconceptions in the mind of the hon. Member for Norfolk, South-West (Mr. Hawkins) about raising the financial status of the farmer. His party had a fair time in which to sort this matter out, but it has not been done.
    The only way in which the financial standard of the farm worker will be raised is by mechanisation and the fuller use of his time. Farmers will never manage to pay farm workers decent wages if the wages are the largest proportion of the outgoings, which the hon. Member seemed to think was the case. Unless wages are only one-third of the total cost of the farm the farmer will make no money and if he is to make any profit it needs to be one in four. For this we need efficiency and education. The Minister needs to look not at dumping but at the Government's promise to provide cheap capital for farmers to improve their mechanisation and raise the standard of farm workers. That is the major point for the Minister to attend to.
    12.39 a.m.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): I agree with quite a lot that the hon. Member for Norfolk, South-West (Mr. Hawkins) said. He said that there is a real problem here, but I am not sure about some of his solutions. He stressed, and the whole debate is on this, the position of the small farmer and the farm worker. He made statements, which I doubt if

    1783
    he could prove, that incomes have been cut. All the figures that we have—and they have never been questioned—show that in 1964–65 incomes in agriculture were at an all-time high. The hon. Gentleman must not make statements like that unless he can prove them. In fact, incomes have not been cut. [Interruption.] There may be a reason for that, though I doubt whether it is the reason that the hon Member for Cornwall, North (Mr. Scott-Hopkins) has in mind.
    The hon. Member has raised an important subject, although I am surprised that he should wish to bring it up this evening, because the Annual Review White Paper which was published less than four months ago surely made it clear that measures to deal with the problem of the low income farm were a fundamental part of the present Government's policy. Indeed, only a fortnight ago the measures we are taking were described again, with particular relation to small farmers in Wales and Northern Ireland, in debates both in the House and in the Welsh Grand Committee. The hon. Member would do well to read the reports of those debates.
    I should like to take up the question of the drift from the land. We all know that this had been going on, and I think it is very debateable whether this is a bad thing or not. The hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) mentioned this point, in a rather curious way, if I may say so, of agricultural income, how it is divided, and what the proportions should be. The fact is that the fewer people there are in an industry, the larger is the remaining income for those who are left in the industry. Agriculture has been of tremendous help in encouraging the release of labour by the use of mechanisation and greater efficiency.
    As to wages, as the hon. Gentleman knows, these are taken into account in the Price Reviews, whether they are agreed or not. I do not think it makes any difference whether they are agreed or not. I am not sure that I agree with the hon. Gentleman's townsman's idea of agriculturists. I remember some years ago coming to London to attend a meeting at Caxton Hall. I was looking at a bill advertising the meeting and the man at the door said, "Agricultural meeting? Room 16". I did not need
    1784
    to tell him which meeting I wanted. However, that is by the way.
    On the question of land nationalisation and similar red herrings, I am tempted to enter into that subject but I feel that tonight is not the time. This question of the lion's share of consumption is another subject which is too long to debate tonight, but, of course, we are definitely giving the British farmer a share of the increased consumption as the demand increases. That is our policy. Machinery for dealing with dumping, I admit, is slow. This machinery was brought in by the late Government and we know what the difficulty is there.
    I am grateful for a further opportunity to explain the way in which we are tackling all the problems that the hon. Member raised, such as the alleged need for higher prices for farm produce, the need to raise the incomes of the small farmers and farm workers, and so on. I should like to deal with the farm workers first. I should point out that there are perquisites enjoyed by agricultural workers, such as houses, free milk, free potatoes and that sort of thing. They are of considerable value. With regard to transport, I know that many farm workers live away from the farms in council houses, but there are still a number who live in houses on the farms, and they are often good houses.
    In addition, there is something attractive about farm work and, although I know it involves long working hours, it is rather different from standing at a bench and doing repetitive work. We should appreciate this point and not consider the matter purely from a cash point of view, although I know that cash is important. Farm workers have advantages which many of their town counterparts do not have.
    We can not treat argiculture as a single unit. There is a wide range of size and efficiency and an across-the-board increase in the guaranteed price will be of the most benefit to the largest producers. It is these producers who find it most profitable to expand. An across-the-board increase would therefore be an inefficient way to help the small farmer and such increases would not benefit farm incomes in the long run if they encouraged a position of over-supply leading to lower market prices. As we all know, that has happened more than once and it is a danger

    1785
    that the Government must constantly guard against. To adopt the across-the-board approach and simply to raise prices would create as many problems as it would solve both for the farmer and for the Exchequer.
    I might mention the position with regard to milk. Milk is of special importance to the small farmer and at the review we faced great pressure to give a very great increase in the guaranteed price. Since then milk production has continued to rise and has recently been running at a record level. The trend of production certainly does not suggest that any responsible Government could have gone further than we did. The award was as large as could be made having regard to the risk of over-expansion if it had been pitched too high.
    At this year's Annual Review we took account of the complex and heterogeneous nature of our agriculture. About 70 per cent. of the industry's total output is produced by about a quarter of our holdings. These include, of course, the largest holdings which have taken advantage of technological progress and have been able to secure economies of scale. Another half of our holdings are largely part-time holdings producing only a very small part of the industry's total output. The remaining quarter are mainly small and medium-sized businesses and many of these need help to improve their management, farming techniques and marketing arrangements if they are to provide a reasonable full-time livelihood. This help we intend to give.
    The Annual Review White Paper sets out our broad lines of approach. We decided first that all farmers—but small farmers especially—would benefit from the measures to encourage better marketing and co-operation and from the provision of better credit facilities. In order to improve credit, we are arranging to provide guarantees to the banks so that they may more readily make available loans both to individual farmers and also towards the marketing activities of farmers' co-operatives and groups. In addition, we are introducing grants to help co-operatives and groups which are marketing primary farm produce to extend their businesses. We are considering the possibility of wider arrangements
    1786
    for promoting agricultural co-operation and group activitity.
    In time to come the things we are doing will help farmers generally and in particular the small farmer. We will be laying before the House various schemes to help farm management and to increase the Small Farm Scheme to include farms from 20 acres to 125 acres. This will bring within the Scheme about another 40,000 farmers, about whom the hon. Member was speaking. But all these things take time and the hon. Member can ask his hon. Friend the Member for Cornwall, North about this as he knows this to be so, particularly with a heavy legislative programme. Despite the reverses last night we are going to do it and I can assure the hon. Member that he will be perfectly satisfied with the action which we take in the future. It will be to the benefit of agriculture and the small farmer in particular as well as the farm worker.
    12.49 a.m.
    Mr. James Scott-Hopkins: What a most unsatisfactory answer to my hon. Friend's well-argued case which he put so clearly. Much as I admire the Parliamentary Secretary's pleasantness of delivery, all he has done is promise us jam tomorrow and nothing today. He has spoken of more reviews going on and said that we will get an answer some time. Strange announcements have been appearing in the Press, as a result, I suppose, of inspired leaks to try the temperature.
    The Parliamentary Secretary did not answer a single one of the questions so extremely well thought out in the closely argued speech of my hon. Friend highlighting the difficulties in Norfolk which were of relevance to his constituents. The hon. Gentleman gave us the old menu once again, which we have been getting even since the Price Review.
    The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at ten minutes to One o'clock.

AGRICULTURE, FISHERIES AND FOOD
  Horse and Kangaroo Meat
  Horse and Kangaroo Meat
  Meat
  Meat
  Fishing Industry (Assistance)
  Fishing Industry (Assistance)
  Abattoirs
  Abattoirs
  Home Gardeners (Toxic Chemicals)
  Home Gardeners (Toxic Chemicals)
  Motor Vehicles (Licence Fees and Initial Allowances)
  Motor Vehicles (Licence Fees and Initial Allowances)
  Meat and Livestock Commission
  Meat and Livestock Commission
  Calf Subsidy
  Calf Subsidy
  Salmon
  Salmon
  Apple and Pear Development Council
  Apple and Pear Development Council
  Danish Bacon
  Danish Bacon
  Common Market Produce (Dumping)
  Common Market Produce (Dumping)
  Fishing Fleet
  Fishing Fleet
  Poultry (Humane Slaughter)
  Poultry (Humane Slaughter)
  Charolais Cattle
  Charolais Cattle
  Agricultural Co-operation (Report)
  Agricultural Co-operation (Report)
  Strychnine
  Strychnine
  Farm Workers (Sickness Scheme)
  Farm Workers (Sickness Scheme)
  Cereals (1965 Harvest)
  Cereals (1965 Harvest)
  Farmers (Credit Facilities)
  Farmers (Credit Facilities)
  Farm Rents
  Farm Rents
  Horticultural Improvement Scheme (Grant)
  Horticultural Improvement Scheme (Grant)
  Agricultural Exports
  Agricultural Exports
  Price Review
  Price Review
  Bacon Pigs
  Bacon Pigs
  Potatoes
  Potatoes
  British Trawlers' Federation (Report)
  British Trawlers' Federation (Report)
  Farms, Wales
  Farms, Wales
  PRISON COMMITTAL ORDERS (PRIVATE HEARINGS)
  PRISON COMMITTAL ORDERS (PRIVATE HEARINGS)
SCOTLAND
  Conveyancing Law and Practice (Estate Duty)
  Conveyancing Law and Practice (Estate Duty)
  JUDGES' SALARIES
  JUDGES' SALARIES
  Schools (Corporal Punishment)
  Schools (Corporal Punishment)
  Rating Valuations (Central Heating)
  Rating Valuations (Central Heating)
  Potatoes (Skin Spot and Gangrene)
  Potatoes (Skin Spot and Gangrene)
  Hospital Patients (Storage of Clothing)
  Hospital Patients (Storage of Clothing)
  Agricultural Buildings (Rating)
  Agricultural Buildings (Rating)
  Schoolchildren (Transport)
  Schoolchildren (Transport)
  Planning (Regional Studies)
  Planning (Regional Studies)
  Invalid Cars
  Invalid Cars
  Disabled Persons (Issue of Four-Seater Cars)
  Disabled Persons (Issue of Four-Seater Cars)
  Invalid Tricycles
  Invalid Tricycles
  Hospital Building Programme
  Hospital Building Programme
  The Arts (Co-operation of Local Authorities)
  The Arts (Co-operation of Local Authorities)
  Reservoirs
  Reservoirs
  Water Supplies (Demand)
  Water Supplies (Demand)
  Aberdeen Trawlers (Fouling of Nets and Gear)
  Aberdeen Trawlers (Fouling of Nets and Gear)
  Trawlers (Repossession by White Fish Authority)
  Trawlers (Repossession by White Fish Authority)
MINISTRY OF DEFENCE
  Cyprus (Expenditure)
  Cyprus (Expenditure)
  Royal Navy and Royal Marine Aircrew (Service Improvements)
  Royal Navy and Royal Marine Aircrew (Service Improvements)
  Rear-Admiral T. W. Best
  Rear-Admiral T. W. Best
  Royal Hospital School, Holbrook
  Royal Hospital School, Holbrook
  Children's Education and Maintenance Allowance
  Children's Education and Maintenance Allowance
  North Weald Airfield (Use of Buildings)
  North Weald Airfield (Use of Buildings)
TRANSPORT
  Municipal Transport Undertakings (Fares)
  Municipal Transport Undertakings (Fares)
  Road Haulage Charges
  Road Haulage Charges
  London Bus Passengers
  London Bus Passengers
  Imported Cars
  Imported Cars
  Bus Services
  Bus Services
  Motor Vehicles (Headlights)
  Motor Vehicles (Headlights)
RAILWAYS
  Foreign Visitors (Fares)
  Foreign Visitors (Fares)
  Clapham Junction Signal Box (Report)
  Clapham Junction Signal Box (Report)
  Railway Board Assets (Sale)
  Railway Board Assets (Sale)
  Season Tickets
  Season Tickets
ROADS
  Parliament Square
  Parliament Square
  Speed Limits
  Speed Limits
  Parking Disc System
  Parking Disc System
  Neasden Circus
  Neasden Circus
  M/
  M/
  Lancashire-Yorkshire Motorway (Outlane)
  Lancashire-Yorkshire Motorway (Outlane)
MINISTRY OF AVIATION
  VC10 Aircraft
  VC10 Aircraft
  Rome Convention
  Rome Convention
  Railway Kiosks
  Railway Kiosks
TELEPHONE SERVICE
  Kiosks, Wales and Monmouthshire
  Kiosks, Wales and Monmouthshire
  Kiosks (Increased Maintenance Costs)
  Kiosks (Increased Maintenance Costs)
POST OFFICE
  Letter (Delivery Delay)
  Letter (Delivery Delay)
  Letters and Parcels (Delivery in Birkenhead)
  Letters and Parcels (Delivery in Birkenhead)
  Postal and Telephone Services, Birkenhead (Employees)
  Postal and Telephone Services, Birkenhead (Employees)
  Threepenny and Forth Road Bridge Stamps
  Threepenny and Forth Road Bridge Stamps
  Stamps (Issue of New Books)
  Stamps (Issue of New Books)
LOCAL GOVERNMENT
  Lea Valley (Development)
  Lea Valley (Development)
  Keep Britain Tidy Week
  Keep Britain Tidy Week
  Water Supply, Sussex
  Water Supply, Sussex
  Water Supplies, England and Wales
  Water Supplies, England and Wales
  Reservoirs
  Reservoirs
HOME DEPARTMENT
  Assize Court Cases (Pleas)
  Assize Court Cases (Pleas)
  Traffic Accidents (Civil Proceedings)
  Traffic Accidents (Civil Proceedings)
  Betting and Gaming (Bingo)
  Betting and Gaming (Bingo)
HOSPITALS
  Hospital Management Committees
  Hospital Management Committees
  Regional Hospital Boards (Representation)
  Regional Hospital Boards (Representation)
  Staff Salaries
  Staff Salaries
  State Registered Nurses (Salaries)
  State Registered Nurses (Salaries)
  Radiographers (Salaries)
  Radiographers (Salaries)
  Occupational Therapists (Salaries)
  Occupational Therapists (Salaries)
MINISTRY OF HEALTH
  Immigrants (Medical Examination in Country of Origin)
  Immigrants (Medical Examination in Country of Origin)
  Doctors, Birmingham
  Doctors, Birmingham
NATIONAL FINANCE
  Attorney General's Department (Salaries)
  Attorney General's Department (Salaries)
  Taxation
  Taxation
  Government Expenditure
  Government Expenditure
  Import Duty (Potatoes)
  Import Duty (Potatoes)
  Chief Secretary (Bonn Visit)
  Chief Secretary (Bonn Visit)
  Overseas Military Commitments (Cost)
  Overseas Military Commitments (Cost)
  OVERSEAS CIVIL SERVICE (UNIVERSITY ENTRANTS)
  OVERSEAS CIVIL SERVICE (UNIVERSITY ENTRANTS)
EDUCATION AND SCIENCE
  University of the Air
  University of the Air
  County Schools (Governors and Managers)
  County Schools (Governors and Managers)
  Industrial and Labour Relations
  Industrial and Labour Relations
  John Innes Institute, Hertfordshire
  John Innes Institute, Hertfordshire
ECONOMIC AFFAIRS
  Cement (Proposed Price Increase)
  Cement (Proposed Price Increase)
  Petrol (Retail Sales)
  Petrol (Retail Sales)
  British Road Services Parcels Limited (New Tariff)
  British Road Services Parcels Limited (New Tariff)
  OVERSEAS VISITS (COMMUNIQUES)
  OVERSEAS VISITS (COMMUNIQUES)
MINISTRY OF LABOUR
  Port and Inland Water Transport Industry (Employment)
  Port and Inland Water Transport Industry (Employment)
  School Leavers, Abertillery
  School Leavers, Abertillery
OVERSEAS DEVELOPMENT
  Organisation for Economic Co-operation and Development (Aid Programmes)
  Organisation for Economic Co-operation and Development (Aid Programmes)
MINISTRY OF POWER
  Petition (Wolverhampton)
  Petition (Wolverhampton)
PUBLIC BUILDING AND WORKS
  Road Work, Hyde Park
  Road Work, Hyde Park
  Construction Industries (Materials and Components)
  Construction Industries (Materials and Components)
TECHNOLOGY
  Government Departments and Nationalised Industries (Computers)
  Government Departments and Nationalised Industries (Computers)
  Atomic Energy Authority (Staff)
  Atomic Energy Authority (Staff)
  Marine Nuclear Propulsion
  Marine Nuclear Propulsion
  Kipper Sausages
  Kipper Sausages
  Nationalised Industries and Post Office (Computers)
  Nationalised Industries and Post Office (Computers)
BOARD OF TRADE
  Woven Shirts (Imports from Portuguese Territories)
  Woven Shirts (Imports from Portuguese Territories)

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

LORD KINGS NORTON
Sir Harold Roxbee Cox, having been created Baron Kings Norton, of Wotton Underwood in the County of Buckingham, for life—Was (in the usual manner) introduced.

DEVELOPMENT SCHEMES IN BASUTOLAND AND THE TRANSKEI
2.45 p.m.
LORD BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what is the capital sum total of development schemes or defined projects of that character initiated by the Protecting Power (U.K.) presently in hand in the Protectorate of Basutoland; also what is understood to be the capital cost of comparable development being undertaken by the South African Republic in the Transkei.]
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (LORD WALSTON): My Lords, the approved Development Plan of the Basutoland Government for the three years 1963 to 1966 provides for a total expenditure of about £5¾ million. Her Majesty's Government expect to contribute about £2½ million towards this total by way of grants and loans. In the same period we expect to provide budgetary grants totalling £5½ million and assistance of about £250,000 under the Overseas Service Aid Scheme and the Special Commonwealth African Assistance Plan. The development of the Transkei is not a matter for Her Majesty's Government.
LORD BARNBY: My Lords, I thank the noble Lord for that reply. I see that the expenditure is averaged over three years, and my Question related to one year. Perhaps it has not come to his notice that the South African Government have announced that for the Transkei there is to be a special fund raised for this year of £500,000 sterling, that is 1,000,000 Rands. Would it not be possible to give an approximate figure for Basutoland, because one figure is for one year and the other is averaged over three years.
LORD WALSTON: My Lords, I did not understand very clearly the gist of the question which the noble Lord put to me. Should I be interpreting it correctly if I say that he asked me whether it would be possible to state for one year our total grants and loans and development aid in general to Basutoland? If that were in fact the question that he meant to put, I would say that it would be possible but extremely misleading, to give it, because these development plans are often not plans which can be carried out within the twelve months of the calendar. They spread over a long period, and it would be misleading to divide the sum involved by three to arrive at an appropriate answer. Therefore, if the noble Lord, as I suspect, was anxious to find out what was the scale of aid which Her Majesty's Government were giving to Basutoland, my Answer was more accurate than if I had divided the sum by three, which I well could have done. I repeat once more that we are not responsible for the aid that the South African Government gives to the Transkei. I would point out to anyone who wants to make facile comparisons that the population of the Transkei is twice that of Basutoland.
THE EARL OF SELKIRK: My Lords, could the noble Lord say what the annual budgetary assistance was? That would surely be a definite figure.
LORD WALSTON: Over the three year period we expect the budgetary assistance to be £5½ million. That does not mean to say that it would be slightly under £2 million per year, because it varies somewhat from year to year.
LORD BARNBY: My Lords, would it not be likely that the relationship of the expenditure in Basutoland and in the Transkei on a population basis would be watched by the Government, because the South African Government has announced, on the basis of five years instead of three, that there is to be a fund of £57 million, and there must be some relationship between the expenditure for the Bantu population in the two areas?
LORD WALSTON: My Lords, in arriving at our priorities for aid we are not motivated in any way by a desire to keep up with the Joneses or the South African Government. We do not look at the South African Government and say, "We must give more than they", any more than we look at the Chinese aid to Africa and say, "We must pre-empt that". We treat each case on its own merits, and try to hold a balance between many claimants.
LORD BROWN: My Lords, would it not be better, if we are comparing financial expenditure per head in these two territories, to include also a comparison for political liberties?
LORD SOMERS: My Lords, would not the noble Lord agree that since Basutoland is an extremely poor country, with practically no natural resources of its own, it is likely to need a good deal more than that if it is to put itself on its feet?
LORD WALSTON: My Lords, we should very much like to give more to a great many countries, but there is clearly a limit. We believe that this amount of aid will enable Basutoland to make very great progress. I dispute what the noble Lord said about Basutoland being entirely devoid of natural resources. It does have its own land, its agricultural potential, which can be increased considerably; it has considerable exports of mohair; it also has industrial diamonds in small quantities, and it has water, which may be a very saleable commodity to the
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surrounding areas. But I agree, of course, that it would be nice if we had unlimited resources and were able to give far more.

PLANNING OFFICERS FOR LONDON BOROUGHS
2.52 p.m.
LORD FARINGDON: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many of the Greater London boroughs have not appointed a borough architect with suitable qualifications to serve as planning officer; whether the Government will urge them to make such appointments; and what powers they have in the last resort to insist that they do so.]
LORD BOWLES: My Lords, under the London Government Act, 1963, each London borough council is required to appoint a borough architect as soon as is reasonably practicable, and in any event not later than April 1, 1968. Five councils have not yet made such an appointment. No obligation is imposed upon the Councils to appoint an architect with planning qualifications, and the Government have no power to require them to do so. In a departmental circular No. 23/64 the Councils were, however, reminded of their planning responsibilities and told that it was important that they should have a chief officer responsible for their planning who was qualified to deal with them.
LORD FARINGDON: My Lords, I thank the noble Lord for his Answer, and, if I may say so, the circular to which he has referred is highly satisfactory. Would he not agree that it is just when these new bodies are coming into operation in new spheres that they will require the best advice and guidance that it is possible to give them?
LORD BOWLES: My Lords, I quite agree with my noble friend.

USE OF SHRUBS FOR MOTORWAYS
2.54 p.m.
LORD FARINGDON: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether research to ascertain what are the most effective shrubs for plantation in the central verges of motorways and dual carriageway roads has reached any conclusions; and when it may be expected that such verges will be planted with approved plants.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LINDGREN): My Lords, experiments with anti-dazzle planting have been in progress on the Medway Motorway (M.2) since early this year. The immediate purpose of these experiments is to ascertain whether various species of shrub can survive in the conditions prevailing on a motorway central reserve. This will take some time, and it would be premature to take a decision now about further planting of this sort. Experiments with shrubs at the Road Research Laboratory have shown that the standard motorway central reserve would have to be several times wider to accommodate a thickness adequate to act as a crash barrier. We do not think that this would be justified for, in addition to taking up further agricultural land, it would add substantially to construction costs.
LORD FARINGDON: My Lords, I thank the noble Lord for his Answer, but can he give any idea as to when these experiments are likely to produce results which can be carried out throughout the country where motorways are being made?
LORD LINDGREN: My Lords, we are only carrying out this one experiment on the M.2, and it will take at least two years to ascertain the effect of the fumes from the traffic on the road, the effect of the wind and also the effect of salt, which is a new factor—the salt spray coming from salting the roads during the winter.
LORD MONTAGU OF BEAULIEU: My Lords, could the noble Lord say why it is necessary to carry out this experi
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ment, in view of the fact that on certain roads, notably the Winchester by-pass, there has been a central reservation planted for the last 25 years, which has been extremely successful? Would he not agree that one of the problems is cutting it down and keeping it trimmed, rather than getting it to grow?
LORD LINDGREN: My Lords, a great deal was done in the inter-war years by an association which I think was called the Road Beautifying Association, but on those roads there were dual carriageways between which the centre reservation was natural. In the construction of a motorway the foundation goes right across from side to side and the top soil on the central reservation is exceedingly shallow. Therefore it has not the advantage of the possibility of plants rooting in the same way as in the natural plantings on the pre-war dual carriageway roads.
LORD BRECON: My Lords, would the noble Lord not agree that it would be better to use steel barriers where cars are travelling so fast? Surely safety is just as important on the motorway as the beauty of shrubs?
LORD LINDGREN: Yes, my Lords; but if we can get beauty and safety we shall have the best of two worlds.
LORD FARINGDON: My Lords, can the noble Lord tell me whether in fact we could not gain from the experience of other countries which have had this type of road for a long time and in which I know the planting of the central reservation habitually takes place?
LORD LINDGREN: In many other countries, particularly America, these central reserves are much wider, and also the native plants of those countries are not necessarily the type of plant that would be useful in this country. We really want to use our own native plants if we are to make an effective barrier.
LORD ERROLL OF HALE: My Lords, as one object of the shrubs is to prevent motorists from being dazzled, and as it is proving very difficult to get these shrubs to grow to a sufficient thickness, would it not be better to light up the motorway?
LORD LINDGREN: That is a different question, and, of course, cost comes into it.
THE EARL OF BESSBOROUGH: My Lords, may I ask the noble Lord whether the John Innes Horticultural Research Institute, which I believe is shortly to be closed, has been doing any work on these lines?
LORD LINDGREN: I could not give any authoritative answer to that. The work in which we are interested has been carried out mainly by the Road Research Laboratory.

R.A.F. TRANSPORT PLANE CRASH
LORD ST. OSWALD: My Lords, I beg leave to ask a Question, of which I have given Private Notice to Her Majesty's Government; namely, whether they will make a Statement about the accident to a Hastings aircraft of the Royal Air Force at the Baldons, Oxfordshire, on July 6, in which over 40 Servicemen were killed.
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, my noble friend Lord Shackleton will be making a Statement at a suitable moment after 3.30 p.m.

FLINTSHIRE COUNTY COUNCIL (HIGHER FERRY SALTNEY FOOTBRIDGE) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

COMMUNITY CARE
2.59 p.m.
LORD AMULREE LORD AMULREE rose to draw attention to the increasing use being made of community care in the health and welfare services; and to move for Papers. The noble Lord said: My Lords, I first came across the term "community care" when I saw it on the cover of a Blue Book published in 1963 on the health and welfare services which it was proposed should be provided by the local authorities as part of the Ten-Year Plan. When I came to read that book it seemed to me to have a great deal in common with what one had read about the teaching in mediæval times, when the people of the world were encouraged to take their standards from the Seven Works of Mercy. These appeared in a great deal
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of mediæval teaching. They appeared in pictures, in paintings, in churches, in stained glass windows; and, apart from the fact that the Motion does not propose to deal with the burial of the dead, I think it can well be covered by what was intended by the Seven Works of Mercy.
Not long ago, most community care meant that people should be put into institutions. They were offered "the house", as the rather uncomfortable saying was, and at the same time some were given a certain amount of rather scanty outdoor relief. And that is one of the points I want to raise about the community. They have always shown a tendency for the community—and it is one that I hope this debate may assist to dispel—to shut up people they do not like, who they feel are not quite people they can approve of, people about whom possibly they feel a somewhat bad conscience. That, I think, has certainly been the tendency in the past, and that is what we have to get away from now. There has been a great movement away from it, but a certain amount of that opinion still stands.
I do not want to take up a lot of time with a great deal of history, but I think that the Old Age Pensions Act, 1908, was the first Act under which the State took care of some of its members and made some provision for their care. In thinking of that, one now comes to put the question: What, in the year 1965, does community care really mean? To my way of thinking—and I do not say that I am completely right—surely community care means enabling those who are destitute—and by "destitute" I do not mean necessarily financially destitute—or disabled to live as full and as normal a life as they can among their friends in the community. In other words, how can the community enable those of its members who suffer from some disability, be it mental or physical, to lead a happy, independent life and to contribute, if they so wish, their share to the work of the world, within, of course, the limits of their disability?
The second proposal or suggestion is that, in order that this can be done, one of the most important things is that you must be able to get easily into contact with people who are in need of community care. Therefore, you have got to have good means of communication. At

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the present time, the need of quite a lot of people is missed because the means of communication are not very good and the means of contact with them very difficult. The contacting can be done in a large number of ways. It can be done by medical social workers, health visitors, district nurses, voluntary workers of all sorts, and particularly, I think, people working for the various churches in this country. That seems to me the way in which contact can be made, and if we can use these means we shall find there are far more people in need of care from the community than would appear at the present time. The other day I read a paper by a Dr. A. R. May, and Dr. May made what seemed to me to be a profoundly important remark:
"In our society employment carries with it a social status."
Supposing it is agreed that this is so, and that does seem to me to be a very fair proposition to make, what can be done to ensure this? One could talk at great length on this very big subject and one could pose all sorts of questions. That I do not propose to do. I should like just to give one or two examples of what has been done, possibly to ask one or two questions, and to trust that, supposing my proposition is agreed to, more and more will be done to encourage this state of affairs.
I should like to say, in passing, that I do not wish to confine my remarks to-day to any one particular class of person. I have talked to your Lordships frequently about the elderly in the country. I shall refer to them in passing, but I want my remarks to refer to all people in the community, young or old, and whether mentally disabled or physically disabled.
I would start with a few words about the mentally ill and the mentally subnormal. As your Lordships will known, once upon a time people who were suffering from mental illness were kept firmly locked up in large hospitals and very little treatment was given them. I know one or two places where that was not so, but that was the broad picture in the country. Gradually that has been shown to be wrong, which was one of the great things done by the Mental Health Act, 1959. It opened the doors of these great mental hospitals and took away the stigma of certification from the patients who had been in them. The patients or the ex
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patients of those hospitals were to become the responsibility of the local authority and were to be taken care of in hostels rather than in hospitals. This, of course, was a long process, but I think I am right in saying that about forty local authorities have gone so far as to construct hostels, and one of the difficulties has been who they are to be staffed by. I gather that a voluntary committee was set up some years ago which was going to go into the staffing question, and that will be reporting towards the end of the year. Perhaps the noble Lord will be able to confirm that and say what steps have been taken to implement its recommendations.
One has got to be careful with mental patients, as with all other patients. A certain amount of difficulty occurred when the Mental Health Act first came into force, because some of the mental hospitals discharged their patients rather too enthusiastically. There was one particular example which I came across concerning about sixty or seventy elderly women who were not suffering from real mental disease but had something wrong with their mentality; they had been taken care of in a big mental hospital for something like twenty-five or thirty years and they were suddenly told they had to go out into the world. They had no idea what to do outside. Their families did not wish them to be with them, and so there was a good deal of trouble. What finally happened was that one of the old workhouses built immediately after the Poor Law Amendment Act, 1834, which had been shut before the war as unfit for human habitation, was turned into a hostel—a not very satisfactory hostel—in which they could be taken care of. Therefore, one must not be too enthusiastic about keeping mentally sick patients away from hospitals, because a certain number should be admitted to hospital for their own sake and for the sake of others, for the sake of the public and their families; and because, looking at it from another and rather different way, it is important that they should not be in the community, since they tend to have far too many children; they breed too easily, and children who are the offspring of two mentally sick people are not very satisfactory children.
I am sure that the trend of discharging, or not admitting, patients to mental hospitals is one that should be encouraged.

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There are two interesting experiments that I would mention which I have come across only recently. One is occurring at Bristol, about which I read an article in The Times newspaper of June 9. There, apparently, a great number of people who are mentally sick, schizophrenics and other people who really suffer grave mental illness, are working in factories, doing normal kind of work, outside the mental institution. The total number of people concerned in the Bristol area, so far as I can make out by doing some sums with the figures given, seems to be about 500, who are enjoying, certainly for the time being, a normal life, working on a production line and doing work which can compete with work done by normal people working in ordinary factories.
The same thing, I think, occurs in the Borough of Croydon. They have a big, comprehensive mental health service, and there about 300 or more people are working in some kind of industrial workshops where normal factory disciplines are kept. These are all people who suffer from the effects of severe psychotic illness, or they are all people who are said to be mentally abnormal. In some parts of the country such people are still kept under some control and care and they are people who, ten years ago, would certainly have been kept from any kind of work. It shows what can be done if you really try. I gather that the work done by these people is contract work with large firms upon a long-term basis, and the work they produce meets the employers' requirements as regards both delivery time and inspection.
This raises another important point—namely, that the staff working in these hospitals and giving patients what is called occupational therapy have got to learn that we must now proceed from doing handicraft to real industrial work, which I think has a bigger therapeutic quality than purely handicraft work. Here, I think one has to be careful in the appointment of the disablement resettlement officer, because, from what I read of Dr. May a few moments ago, it is essential to have a really
"critical appraisal of a patient's chances of employment unhampered by sentimentality or wishful thinking"—
both of which have been strong factors in keeping people back in the past. Those
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hospitals which have sheltered workshops (call them what you will) have to be skilfully managed so that there is a gradual changeover from what was the doctor-patient relation to the doctor-employee relation. If that can be done successfully, we shall have gone a long way to obtaining something of what we want.
There is another way in which the community can help. The women's institutes now have 14 branches in large mental hospitals. That is a way of bringing these women back into the world, and making them feel that they are in the world. The question one would like to ask is: Why cannot more be done in other hospitals for women patients? And what becomes of the unfortunate men in the purely male hospitals which do not get the benefit provided by the women's institutes? Surely something rather similar could be done there. That covers what I want to say about mental hospitals. I have given one or two examples of what can be done. I should like to know whether more is being done, and whether more of that kind of work cannot be encouraged on as big a scale as possible.
I should now like to say a word about the physically disabled. I think one has to look at this problem in a similar way. One thing I should like to see expanded is the work that I have seen done in a department of the hospital at Stoke Mandeville where a great man called Dr. Ludwig Guttmann treats a large number of patients, mainly young men, who have broken their backs or their necks in diving or other accidents. One thing Dr. Guttmann says is that he does not feel they have left his care until they are back paying their income tax. He can generally get these people who have broken their backs paying their income tax in a period of seven months, provided that he treats them from the start. That, I think, in passing, shows the value of a centralised, specialised department for difficult and specialised treatment. It also means that if one has a large place like that—I think he has about 170 or 180 beds—one can do much more to bring pressure on possible employers to employ these people.
If this can be done for people with broken backs and for paraplegics, cannot more be done for others suffering serious illness? I know quite well that a

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lot is being done by some firms now, particularly by Vauxhall Motors who, at Luton, have been running a rehabilitation department since about 1946 or 1947. They have had a large number of people pass through their hands, about 6,000 working all the time and recovering from their illnesses and their accidents, in the factory where they are working and continuing their work. I am pleased to see that this type of work is being copied by one or two firms, including British Railways. I think that it is an extremely important thing to encourage, so far as one can.
I should now like to say a word about some of the elderly people. There is a body called the Employment Fellowship which sets up workshops for the elderly. These have been quite successful in a general way. One or two have done really well and, because I think they have done well, I am going to quote one instance to your Lordships now. It concerns the former metropolitan borough of Finsbury. I cannot remember what that part of London is now called, but it is not Finsbury any more.
There, an employment centre was started ten or fifteen years ago with a small number of people. Gradually it grew, and to-day it employs 60 or 70 people; and the doctor in charge finds it of great value in preventing these people from becoming ill. In fact, so successful has it been that one or two of the patients have even got back to full employment following a period of work in the centre. I think the reason that it succeeded was that there are a great many little shops and firms in Finsbury, and the people in charge of the centre went round and found out what they could make to sell to these shops. They said "What things do you want to sell that we can make for you?" I think that is the way to start all employment schemes to find out what market is available, and not to try to fill the market with things that nobody particularly wants.
The same thing can occur, on a much smaller scale, in another institution with which I am connected, the Royal Hospital and Home for Incurables, at Putney. There, there was for a long time a big occupational therapy department which made things for the annual
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bazaar and the annual fete. They made nice baskets and rugs, and that sort of thing. But about five years ago we again got on to the production line in a proper way, and now a limited number of people, about 20 or 30, are working on full contract work for a factory, and they are doing their job just as well as if they were on the staff. That again seems to me to be something which it is important to encourage. There are difficulties: there is the question of the people being able to keep to their contract. There is the question of the raw materials being transported, and of the finished goods being transported. But I do not think that these difficulties are insuperable. There is one more point on this aspect. I am pleased to see that the fixed age for retirement is gradually falling off. More and more firms are employing more people who wish to work, and who are fit to work, for as long as they can do so. I think that is to be greatly encouraged.
I come back once more to the elderly people. I do not want to go in great detail into the domiciliary services, because other noble Lords will be speaking about those. In the Guardian on July 1 there appeared a sad little report from Bournemouth (and it came from a reputable, well-informed church-worker) about a lot of old ladies who were dying from malnutrition and starvation—not because they were poor but because they were lonely; because they felt isolated from the world. Nobody spoke to them, nobody saw them. And one must not forget that the taking of a meal is quite a social act. All of us might sometimes, perhaps, eat by ourselves, but if people have to take all their meals alone, without ever speaking to anybody, they do not eat as much as if they had some company, somebody to talk to.
In the case of the elderly, although the domiciliary services are very good indeed, there is the feeling of being cut off, a feeling of isolation rather than of loneliness. Old people do not so much mind being lonely, but they do like to feel that in some kind of way they are part of the community. I should like to refer to one of the difficulties of the domiciliary services run by the local authorities. A large number are still permissive, and this is one of the most evil forms of legislation that can be enacted. The good local authority will provide a proper

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service, but the bad local authority will not bother to do anything. I know that the Government do not like to tell the local authorities what to do—and on the general principle I agree with them—but they should take a stronger line from time to time.
The provision of successful community care will make a further demand on cooperation between statutory and voluntary organisations. That co-operation, I am pleased to say, is developing more and more. I am also pleased to see that a certain number of local authorities are employing medico-social workers to do work for them, instead of these workers working from a hospital. That is an encouraging sign. There is at the same time a great desire among people who are disabled, either physically or mentally, to lead an independent life and to be able to enjoy amenities in the same way as other more fortunate people can do.
There are all sorts of minor ways in which one can help. For example, a great many people have to go about in wheelchairs, and this will become more prevalent as the idea grows that many people do not need to be kept in bed but can be moved about in a wheelchair. The provision of a simple ramp leading up to one of the doors of a church or a cinema, if adopted widely throughout the country, would be a great step forward for people who are confined to wheelchairs and who cannot get about by the normal means of locomotion.
For those suffering from grave disabilities, such as the people from the hospital at Stoke Mandeville, there are these days electronic typewriters which can be operated almost effortlessly with one finger. In this way these unfortunate people can become competent typists and earn good money. The machines cost a good deal, but I know that the Ministry of Health are quite kind about supplying them. Their use will mean that a person is able to do a job of work and can himself contribute something. One sometimes has difficulty in finding people to take into their employment the people who use these electronic typewriters. They may not do so because they feel that they will not be as efficient as others might be, but I would assure them that they are as efficient. In this way the community could take a great step forward.
I have said little so far about the work of the voluntary bodies—I was going to leave that matter to other speakers who know so much more about them than I do; the Red Cross, the Women's Voluntary Services, the Councils of Social Service, the Citizens' Advice Bureaux, Day Centres, and many other admirable bodies. In all community work, where disabled persons, whether they be mentally or physically disabled—and I think that mental disability is the more difficult—are being encouraged to live at home with their families and to become part of the community, it is important that the family should be taken into full trust and confidence from the start. If one does not do the job with the full and complete agreement of the person's family, one will run into disaster. However, if one takes the family into one's confidence, then they will put up with the conditions involved in taking care of people. They will know that if things really break down the patient can be taken into hospital. In this way the family will do as much as they can for the person concerned. I have spoken for longer than I intended, I have covered a long, and rather rambling, field but I trust that my good friend Lord Taylor will be able to make something of what I have said. My Lords, I beg to move for Papers.

R.A.F. TRANSPORT 'PLANE CRASH
3.27 p.m.
THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON): My Lords, it may be for the convenience of the House if I now reply to the Private Notice Question of the noble Lord, Lord St. Oswald, raised earlier this afternoon, which requested that the Government should make a Statement about the accident to a Hastings aircraft of the Royal Air Force, on July 6, in which over forty Servicemen were killed.
Shortly after four o'clock yesterday afternoon, a Hastings from the R.A.F. Station, Abingdon, crashed near Dorchester, about three miles from the airfield. The aircraft, which carried Army and Royal Air Force passengers, some of whom were to undertake practice parachute jumps, had taken off a few minutes

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before. The captain had reported control difficulties and the aircraft was returning to the airfield. All six Royal Air Force members of the crew and the 35 passengers of the Army and Royal Air Force lost their lives. Two of the passengers were members of the Territorial Army undergoing parachute training.
A Board of Inquiry has been convened and assembled this morning.
I know that the House will join with me in expressing our deepest sympathy with the bereaved.
LORD ST. OSWALD: My Lords, on behalf of my noble friends, I wish to echo the sympathy expressed by the noble Lord in his Statement. This is, of course, a terrible way for fighting men to die, but for the bereaved one is as bad as another. I should like to express my personal sympathy to the noble Lord who is responsible for the Royal Air Force. We shall, of course, await the result of the Inquiry which he has announced.
LORD OGMORE: My Lords, on behalf of my noble friends on these Benches and myself, I would join the two noble Lords who have spoken in expressing our deep sympathy for the bereaved of the Servicemen who lost their lives. I notice that two of the Servicemen who lost their lives were members of the Territorial Army. I should like to ask the noble Lord whether the Government will take immediate action and look into the circumstances of these men. Their families may be put in considerable difficulty by having the breadwinner killed in this way, quite unexpectedly, while on temporary service with the Regular Forces.
LORD SHACKLETON: I am most grateful to noble Lords. I take the point made by the noble Lord, Lord Ogmore. Of course, their families will be eligible, since the men were on service, for all the benefits of pension and that kind of support. But I think his point was that this may present a very special problem since the families would not normally be within the care of the Service. I take note of the point. I am much obliged to the noble Lord.

COMMUNITY CARE
3.30 p.m.
Debate resumed.
THE MARQUESS OF LOTHIAN: My Lords the House will be grateful once again to the noble Lord, Lord Amulree, for drawing our attention to the question of community care. Indeed, the long list of speakers this afternoon is sufficient indication of the importance that the House attaches to this subject. The question of community care is, I think, sometimes overshadowed by more obvious matters connected with medicine: such matters as the future of our hospitals, questions surrounding general practitioners' conditions and remuneration, and problems connected with the drug industry. This is perhaps unfortunate. for, in my view community care is of increasing concern as the Ten-Year Plan gets under way, not only because it represents the requirements of so many of our fellow-countrymen but also because of the contribution that those great regional and voluntary services make to the welfare of this country, and which I am sure all of your Lordships agree are so much deserving of our encouragement and support.
In the last debate we had on this subject in April of last year, which was also introduced by the noble Lord, Lord Amulree, I had the honour to be performing the same function as the noble Lord, Lord Taylor, has to do this afternoon. I kept a record of what I thought had been some of the more valuable suggestions made in that debate, and I should like briefly to mention some of them again now, not only because I believe they are important but also to give the noble Lords who are to reply an opportunity of telling the House about progress which has been made in this field over the past months since the Government came into office.
I think the first point that was made in the previous debate was that a much greater degree of co-ordination between medical officers of health and county and local welfare officers should be achieved. The suggestion was made that the two branches might be combined, at any rate in a single headquarters, so as more easily to co-ordinate and centralise the help that is available to the community,

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and also the more quickly to allocate it where necessary. Another point was that if the pendulum is swinging back, as I think we all believe it is, towards more domiciliary care, then there is a pressing need for more voluntary auxiliaries who must be adequately trained. I have often wondered whether there is at this moment a case for an inquiry into the whole question of domiciliary training and enlisting more voluntary auxiliaries. I should be very glad to know what is the Government's view about this.
The third point—and I think this was made particularly by the noble Lord, Lord Stonham, on the previous occasion—was that a more imaginative appraisal of specialised needs should be encouraged. He gave the example that a Chair of Retardology should be set up and established at one of our universities. I myself thought that was a most interesting suggestion, for we must all know how desperately the parents of such children are in need of specialised research and advice on this matter.
Then other speakers urged a more positive and educational approach to what I might call the family nurse; in other words, those relatives who are prepared to shoulder some of the burdens of home nursing, either of old people or of children, or even of mothers who some people might think are discharged too early from hospital after childbirth. I feel that short-term training would be valuable and should be made available to such people, and they should be recognised and appreciated as important members of the Welfare Services. This type of training, I am certain, would be particularly valuable, for instance, to the parents of spastic children.
Another suggestion made during that debate was to consider the possible setting up of a committee to look into the means of enlisting and using more voluntary service; for example, that of women over the age of 40, people just retired, and giving them a part-time, short course of training. I say that because I am certain that there is in the country at the moment a considerable untapped source of energy, good will and useful service. It was also urged in that earlier debate that a more vigorous and effective advertising campaign should be mounted, with a twofold aim: first, of spreading infor
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mation about the existing services, what they consist of and how to make use of them; and, secondly, of recruiting for both the voluntary and the statutory services. In my view, this should be done at two levels—locally, by local authorities' welfare officers possibly adopting more the role of public relations officers; and, in the national field, by enlisting the radio, television and Press.
I sometimes think it would be helpful if we could somehow illustrate to the layman, whose interest and co-operation we hope to enlist, the aims of the Ten-Year Plan in, perhaps, a more striking way. One of the comparisons which sometimes comes to my mind is of the welfare system regarded as a solid building but with its four beams of suffering upheld, as it were, by the four pillars of the Welfare Service—the requirements of old age by old people's homes and by home nursing; those of the mentally subnormal, whom the noble Lord, Lord Amulree, has already mentioned, by increasing domiciliary care; those of the physically handicapped by occupational therapy in more training centres; and those of the ordinary sick, the convalescent and the maternity cases by the whole apparatus of general practitioner, district nurse, welfare and maternity clinics, et cetera. I feel that in this way the public might get a clearer view of all that has been achieved in the past and of all that we aim to achieve in the future. What is really most important of all is how, where and when the public itself fits into this structure, not only by receiving the benefits but, even more, by giving to it its own service.
But, whatever the means, the problem of recruitment cannot be left entirely to the local authorities and the voluntary services; the Government must provide much of the impetus. I should like to know, for instance, whether the noble Lord can give us any indication whether the staff shortage problem is being assessed on a national level before it is broken down regionally; or, again, whether it is considered that training centres should cover larger areas than just within the boundaries of local authorities, and, if so, how the Government can help in this matter. On another slightly different point, I should be glad if the noble Lord could give the House any information as to the establishment

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of clinic centres—a matter which I know is very near to his own heart.
My Lords, those were a few of the points raised in our previous debate, and there are a few others I should like to bring to the attention of the House to-day. I apologise to the noble Lord for not having warned him of what I was going to say, and I shall quite understand if he cannot give us all the answers to-day. The Ten-Year Plan was designed to set new targets for community care and to give fresh impetus to the Welfare Services, and I think it is true to say, fortunately, that a great deal of progress has been made since the Plan was launched in 1963. I think it is also true that this progress has been patchy and varies considerably from one local authority to another, which is why I myself feel that certain requirements are still needed, and why I should like, if I may, briefly, to suggest a few to your Lordships.
For instance, I am certain that it is important to appreciate that there is still much to be done to ensure better liaison and co-ordination between the various existing organisations, both voluntary and statutory. In the Report of the Carnegie Trust on handicapped children, which was published last year, there is a short passage which says:
"The impression presented by our case material was that a unified and integrated approach was rarely achieved. Often there was no one person directing the series of consultations and programme treatment recommended, and the personal contact between general practitioner and consultant, consultant and school medical officer, school medical officer and special school, tended to be superficial or non-existent. There were many fingers in the pie, but no cook."
I feel that, to some extent, that holds good for the general pattern of community care still. Indeed, whenever one hears this problem discussed or reads about it, this problem of co-ordination always seems to be the one important topic under discussion.
Most of us—in fact all of us—know that the vast majority of the existing organisations do most excellent work, and I should like to pay my own tribute to this. But I feel that there is still possibly too much overlapping, duplication, or, conversely, sometimes a lack of contact between them, and all this
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naturally causes a waste of time and money. One appreciates, of course, that there are all the usual problems involved—difficulties over loss of independence and sovereignty, pride and the like; all very understandable. But I feel that community care will never work really 100 per cent. until the word "community" takes on its real meaning—that is, of unity of purpose—and a real, harmonious, working partnership among hospitals, general practitioners and local authority services is achieved. I think this is the only way by which results will come, but I would urge on the Government to increase their influence, too, in achieving this partnership. I am wondering whether it would be possible, for instance, to foster a more competitive spirit between local authorities, perhaps singling out for special praise and congratulation those that do better than others.
The noble Lord, Lord Amulree, has touched on the problem of mental health, and I myself believe that in this field more extensive co-operation between the hospitals and local authorities is needed. For example, it is the case, as the noble Lord pointed out, that there are at the present time in the mental homes and hospitals up and down the country many hundreds of people whose condition is not really serious enough to require full hospital treatment or, indeed, to justify the expense. I know that in my own area, in our own mental hospital on the borders of Scotland, there are at least twenty such people. Equally, they cannot live at home among their families, so they do require this sort of intermediate accommodation—a hostel, or whatever you like to call it—where they can live under supervision, looking after themselves as much as possible, and being visited either by trained staff from the local mental hospital or by district nurses who have had some training in mental health. I know that many counties adopt this procedure—the noble Lord said, I think, that there were forty; but I feel it needs yet more encouragement and support.
Of course, it takes money, but this would be money well spent, for it would ease the pressure on mental hospitals, it would ensure a more normal and happier life for the patients (not all of whom, one must remember, are necessarily elderly), and in some cases, I should hope, it would

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help the patients in the transitional period towards full rehabilitation in the community. I think that this is one of the priorities. As noble Lords opposite know, I have not myself always felt that the present Government have been 100 per cent. right in the order in which they have placed their priorities, and I must say that I should have thought that, in this case, the extra £25 million or £30 million which has been allocated as a result of the abolition of the prescription charge should first be allocated to more urgent needs such as these.
It has occurred to me also, thinking of accommodation and these hostels, that this might be a possible use for some of our redundant cottage hospitals. I know that I speak for a great many country doctors, at any rate, when I say that I am not in favour of closing any cottage hospital unless there are exceptional reasons for doing so, but I would think that this is a possible use for some of those which have to be closed. I accept, of course, as the noble Lord, Lord Amulree, pointed out, that any increase in this type of accommodation raises problems of staffing.
There will also be—indeed, there is now—an increasing need for district nurses and health visitors who have some measure of training in mental health. I know that some of the larger authorities are providing this training, but certainly more is required by the smaller authorities. The reason is of course quite obvious: it is essential for any district nurse who has to deal with a mental patient to be able to supervise his drugs and his treatment. Another advantage would be for the district nurse to get to meet and to know the patient while he is still in hospital awaiting discharge. I know that this is all perfectly obvious, but it illustrates the need for increased co-ordination and co-operation in this instance between the local authorities, the county medical officer, and the local mental hospitals.
I think it is true to say that, of the many various and essentially human personnel who co-operate in the field of community care, it is the general practitioner who is the linchpin. I am told that, in some parts of the country, doctors are still having difficulty over the matter of notification about diseases or disability, especially among very young children up to five years of age. I know
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that in my own part of the world this is true. Several doctors have told me that they do not always get to know, for instance, about spastic children until possibly a year or so after they have been born—and, of course, with this particular condition the longer it goes unnoticed and unnotified the more difficult the treatment becomes. I am aware that this problem is perfectly familiar to the Government, and I would hope that it would be possible for them to encourage local authorities to devise systems to make sure, not only that medical officers of health are notified as early as possible about such cases, but that the general practitioners are, as well.
My Lords, if community care cannot operate without the general practitioner, equally the general practitioner cannot operate without the district nurse, and I am not certain myself that the relationship between the two is always as satisfactory as it could be. I know that in some authorities it is tightly organised: the district nurse is officially or semiofficially attached to a doctor or group of doctors. I believe, for instance, that Hampshire is a case in point. In other areas the connection is much less clearly defined, and the district nurse is more dependent on the nursing superintendent of the county or the local authority for her instructions. I myself believe that the former is the more helpful arrangement for the doctor; I think it is also better for the patient; and I would think that it would be more satisfactory for the district nurse, in that she would feel more a part of the team and her knowledge of the particular ways of the individual doctor would be greater. I know that it is impossible to be dogmatic about this—so much depends upon individual personalities, and upon the type and size of practice, whether it is in the country or in the town—but I think the general principle of a close, working partnership is indisputable and should be pursued as vigorously as possible.
Another brief point concerns the occupational therapist, who is a very important person, as you know, in this field. There is a shortage of occupational therapists, particularly outside hospitals, and the chief reason is not hard to find. It is that hospitals can provide the conditions and apparatus they need, whereas, in contrast, these are not always available

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outside. This is something which local authorities should be urged by the Government to tackle—to provide the right sort of premises and equipment. It is surely not too difficult or too costly a task.
I have tried to put before your Lordships a few of the problems that are still being encountered in the field of community care—problems in which it is, in my view, the duty of the Government to take a lead with local authorities. The main need, I think, remains the same. It is the insistent, overriding requirement for authorities, hospitals, doctors, district nurses and all those who work in this field increasingly to coordinate their activities, and to work together and for each other. In conclusion, my Lords, may I say that I have always hoped that it was possible to give any medical and welfare developments a non-political complexion, for they are all inherently the achievement of the unknown and often unsung public servants up and down the country who make realities of them, rather than of the politicians, who may or may not give the initial momentum. But I think it is fair to say that a climate was created by the last Administration in which far-reaching improvements in the field of community care were carefully planned and could develop. The Ten-Year Plan is, I think all your Lordships would agree, beginning to get off the ground, even though it may not yet be fully airborne. If it is really to be a new frontier in community care, then first the battle for co-ordination must be won. I think it is the present Government's duty now to achieve this, and the House will look forward to learning from the noble Lord who is to reply to this debate how the Government propose to do so.
3.55 p.m.
LORD BOWLES: My Lords, as the first speaker on behalf of Her Majesty's Government this afternoon, I wish to say how grateful I am to the noble Lord, Lord Amulree, for putting down this Motion for debate. It seems right to consider, first, just what we mean by community care. In the way in which it is likely to be used in this debate, it means services given outside hospitals: that means services given by the local authority health and welfare services,
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supported by voluntary services. It also means housing. It means the services of general practitioners, dentists, chemists and opticians, organised by the executive councils. The key figure is the general practitioner, who calls on the other services for the benefit of his patients and is, in fact, increasingly the leader of the domiciliary team.
It would, however, be wrong to think of the hospitals as outside the fold. They also serve the community, and the modern trend is more and more for them to join up with local authority services and to help to ensure that care for the patient is given, whenever possible, in his own home. As the expectation of life slowly rises and greater numbers survive into the seventies and eighties, and later, the elderly make up an increasing proportion of the population. The importance of community care, as well as care in hospital, for them is increasingly recognised, as was particularly emphasised by the noble Lord, Lord Amulree. The Government attach great importance to the development of these services, and in what I have to say I shall turn for illustration largely to the care of the elderly.
I do not wish to attempt to deal with all the points which the noble Lords, Lord Amulree and Lord Lothian, touched on in their excellent speeches. There is a long list of other speakers to follow me, and no doubt many of them will wish to discuss these matters further. My noble friend Lord Taylor will make a speech at the end of the debate, and no doubt he will wish to cover many of the points, so I shall confine myself to discussing the development of community care in London and the development of the nation's geriatric services.
This is, of course, a crucial time so far as London is concerned, a time of radical change. The redistribution of functions brought about by the London Government Act has put the health and welfare services into the hands of London boroughs. Many of us on this side of your Lordships' House expressed our concern at the breaking up of the great organisations which were directly responsible for so much of the life of the Metropolitan area. However that may be, it was done, and out of the miscellany of local authorities 32 new London boroughs emerged. They have had

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executive authority in these spheres for only three months. Their preliminary planning is, by all reports, going as well as can reasonably be expected. We look forward to seeing the advantages which will, no doubt, flow from a health and welfare service that is that much closer to the people it serves.
"Communication" is an overworked word, but there is no real substitute for it, unless one says "continuously keeping in touch". Since many different agencies are concerned, communication between them is literally vital. It is required between the boroughs, between Regional Boards and their individual hospitals and the boroughs, and between the teaching hospitals and all the agencies in the areas they serve. I am glad to say that satisfactory progress is being made in all these directions. The London Boroughs Joint Committee has come into existence to provide links between the boroughs, and will play an important part in this, together with its specialist sub-committees—for example, on welfare services and on staff training.
There is also liaison machinery at Regional Board level and hospital board level to bring the hospital services and the boroughs together. Good liaison machinery existed before the present reorganisation in London and exists elsewhere in the country, but it is the foundation of well coordinated planning, and the Government look for even closer contact in the development of plans for the future of Greater London. I shall be returning to this point later.
It is, of course, not only in the local authority field that there are changes in the London area. The changing role of teaching hospitals is an interesting example, with many implications for the health and welfare community services. The Hospital Service has from the very beginning been based on the idea that every district shall be served by hospitals within it, providing all services, including geriatric, that the district ordinarily would need. The idea of the district general hospital has emerged from this. With the teaching hospitals in England and Wales things have been different. Especially in London, they have selected their patients according to their needs and abilities as specialist teaching institutions, and have not attempted to serve a particular district.
LORD AMULREE: My Lords, the one teaching hospital to which I have the honour to belong has become a district hospital and does undertake full district responsibilities.
LORD BOWLES: My Lords, I was just coming to that. The provincial teaching hospitals have always, of necessity, served mainly their own area and they are now becoming district hospitals as the surrounding hospitals develop. The same trend is developing in London. University College Hospital has accepted complete responsibility for two postal districts in the Borough of Camden. Charing Cross Hospital, preparing to move to Fulham, and St. George's, preparing to move to Tooting, have absorbed local hospitals as a basis for district services. King's College Hospital and St. Thomas's have similarly taken over local hospitals with the object of providing district services in their own areas. Guy's Medical School propose to set up a unit in the Woolwich Arsenal Housing Estate to study from the very outset the whole of the service needs of an area and the part that hospitals should play in it. With this trend, medical education may be expected to broaden and the area of contact between the teaching hospitals and the other services, already large, will become still greater.
I now turn to my other theme—the care of the elderly. This is one of the most important functions of the community health and welfare services. Much is already being done. In the hospital world, it is especially gratifying to note the increasing interest of the teaching hospitals in geriatrics, to which I alluded just now. This reflects the increasing importance that our society attaches to the care of a rapidly growing section of the population—namely the elderly. Our future doctors—hospital doctors and general practitioners—will be better equipped to treat, and, still more important, to try to prevent, the ills of old age. I am told that only 5 per cent. of elderly people are in hospitals or residential care of any kind at any one time. Some 95 per cent. are in their homes, looking directly to the community services for their welfare. The general practitioner is usually the first point of contact of the community with the health and welfare services. He therefore has an important part to play in co-ordinating and

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calling upon the other services which are available.
One means of making firm the link between general practice and the local authority services is the association of health visitors with general practice. The figures I am now giving are from statistics for England and Wales, but the Scottish statistics are comparable. Some 300 practices already have health visitors attached to them. The function of health visitors to advise and help mothers and young children is already well known, but they are extending their work to take in the whole family, including the elderly. In 1964, there were the equivalent of 5,100 health visitors, whose visits covered some 275,000 elderly people, besides all their other work. In some areas, health visitors are employed as specialist visitors to the elderly. Present plans are for an increase in health visitors to about 8,200 over ten years.
The noble Lord, Lord Amulree, referred to home nurses. There were the equivalent of 7,937 home nurses in 1964, working under the direction of general practitioners. They made visits to about 440,000 patients over the age of 65. Exact figures of the number of visits involved are not now collected, but it can be estimated safely that it amounted to well over 10 million visits. Present plans are to increase the numbers of home nurses to nearly 10,000 over the next ten years. Advice has recently been given on the use of auxiliary help to increase the range of work of these and other local authority nurses. Domestic assistance is given by home helps in homes where there are elderly people, covering normal household work, cleaning, cooking, shopping, washing, and also "good neighbour" visiting and sitting-in to help relatives—the scope varying widely from one area to another. Numbers of staff have nearly doubled since 1953. There are now some 27,000, and present plans are for an increase to about 40,000 in ten years. The elderly account for some 75 per cent. of the cases in which service is given—266,000 out of 355,000 in 1963.
As the noble Lord, Lord Amulree, has pointed out, we must do our best to see that old people who want to keep their independence can do so. That is where all these services are of such value. The name of the noble Baroness, Lady Swanborough (whom I am glad to see in
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her place) is, if I may say so, almost synonymous with that of the W.V.S., who play so important a part by providing Meals-on-Wheels for elderly people who cannot cater for themselves. Here, local authority welfare services make a great contribution. Residential care in old people's homes is provided for those who cannot live independently in the community but in an atmosphere and place as closely related to normal living as posible. Up to 85,000 places had been provided for the elderly by the end of 1964. Present plans are to increase this total to 135,000 places in the next eight to ten years. Modern small homes, of from 30 to 60 places, are now typical of local authority building. But a third or more of places are still in former Public Assistance institutions. Authorities plan to be rid of most of these in the next ten years.
Another community service is housing for the elderly. This is for people who are getting on in years but can still look after themselves, if the environment they live in is adapted to their needs. About 25 per cent. of public housing programmes has been devoted to single bedroom dwellings, which are particularly suitable for the elderly without families. The total stock of such dwellings is about 375,000, although not all are always occupied by the elderly. Still in its infancy is sheltered housing—grouped single-bedroom dwellings with communal services under the watchful eye of a warden, with the assistance of his wife, to whose work I would pay tribute. These wardens are usually paid for by the welfare authority. There were dwellings in such schemes for about 36,000 people in 1963. We now have plans to increase numbers to 125,000 by 1969.
Besides the various advisory and practical services I have mentioned—and in this connection I recall again the invaluable Meals-on-Wheels—local authorities can provide various recreational services, and also help voluntary bodies to do so. Social clubs and voluntary visiting services can help to keep elderly people socially active and to avoid the isolation that can lead to apathy and neglect. There were some 7,000 social clubs, with various functions, in England and Wales last year. Besides this, local authorities—not only counties and county boroughs but all local authorities—can, and do, help with

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recreational trips and holidays. Some of these arrangements are most ambitious. I heard of an old lady of 90 who wanted to go on a trip to Ostend—her last chance to go overseas. So far she has lived long enough to go twice more.
There are, of course, some who need this kind of social help but are not fit or active enough to take the initiative. For them, the local authorities are providing day centres, where a range of services may be provided. There were some 200 in 1963 and the number is expected to double by 1974. Here, too, though not in the local authority field, can be mentioned the day hospitals which are attached to many geriatric units in England and Wales and relieve pressure on hospital beds. Some of the day hospitals perform a strictly health function; others emphasise the day care rather than the treatment of the elderly.
I spoke earlier on of the need for co-ordination if the community care services are to play their full part. I should like to end by saying that while much has already been done to draw together the many aspects of care for the elderly, there is still much to do. My right honourable friend the Minister of Health has already asked hospital authorities in consultation with local authorities and Executive Councils, to review their building programmes, giving a due and early share of resources to geriatric and psychiatric services. Local authorities will shortly be asked likewise to review their plans for health and welfare and to carry them forward to 1976, jointly with the hospitals and Executive Councils. The Minister expects soon to send a memorandum to all of those about joint planning in the particular field of care of the elderly. I think it is a good story, and I feel honoured to have told it to your Lordships and the people.
4.13 p.m.
LORD SIMEY: My Lords, I ask for your Lordships' indulgence in making this maiden speech. I ask for this with all due seriousness, and not merely as a formality, because on this occasion I am at the peculiar disadvantage of being a university professor of some thirty years' standing. I am sure you do not wish to have yet more professorial utterances ex cathedrâ in this House. I have been much assisted in my delibera
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tions on how to learn a new style of speaking at my age of life by the example set in my university for forthrightness of utterance and clarity of speech by our Chancellor, the noble Marquess, Lord Salisbury.
So far as community care is concerned, it seems to me that this debate has shown that we are all agreed. It is not yet quite a quarter-past four, and I suppose if we were to return home now we should be able to take part in family tea. Nevertheless, there are points latent in this debate which may raise matters on which some of us are at issue. The situation is this. We all agree that institutions should, so far as possible, be emptied, and that families should be asked to take over, where possible, the care of their members who are now in institutions. But it is often extremely difficult for them to do so, and some families suffer crushing burdens when their afflicted members are transferred to them from hospitals or, for instance, from mental deficiency institutions. Therefore, we have now got to the point at which we have to create a large number of supportive institutions, for the assistance of families who would otherwise be overburdened, and we are thus endeavouring to soften the sharpness of the transition to family from institutions.
A vast array of institutions—halfway houses, short-stay homes, psychiatric day hospitals (the varieties are legion)—is now being created, and it is highly desirable that they should be created, and we have thus arrived at the paradoxical position that, in order to empty the institutions, we are creating a large array of institutions of other sorts. And as to where the process will lead us in the end, one is very doubtful indeed.
This leads me to my first substantial point, which is that a muddle of truly British dimensions is being created. There will be more and more depth to the muddle if we cannot call a halt for a moment and take a look round to see where we are getting. The noble Earl, Lord Longford, has just been able to produce an interesting and important Report of a committee which has gone into the question of crime and has arrived at much the same sort of conclusion. Not being able to deal effectively with the health and welfare services which

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have so far been discussed, without somehow or other dragging in the family and the private lives of individuals in order to assist us, we have arrived eventually in this debate at the W.V.S., for instance; and I am glad to hear that.
So, also, the noble Earl and the other members of the Committee arrived at the same conclusion in their study of crime. They have come to the final conclusion that a general family welfare service needs to be created to make it possible to deal adequately with the needs of families one of whose members may have had criminal tendencies or have been convicted. The committee have asked for the consolidation of the services available for these persons and for these families at the centre. They have asked for the consolidation of these services in the Home Office and in a variety of other Ministries, as well. Furthermore, we need, for that purpose, to have the consolidation of services at the local level.
I am wholeheartedly in support of the noble Earl and his Committee in their suggestions. The only comment I have to make, which I feel is an important one, is that the report of the committee stops too short. We do not wish to have a new service limited to general family welfare; it seems to me that we need to go a little further and have a service which is directed more to the community than to the family. I give, as an example, the rapid development of the child care service that has taken place in the last ten or fifteen years in this country. We no longer seek to deal with the care of children in institutions. About half our children are out of institutions and in the families of foster parents—and foster parents who are not unaided. The foster parents are assisted and advised by child care officers, who give them the feeling that they are part of a wider scheme and that they are not alone. They can discuss their difficulties in that way with fully trained people. Thirty thousand children are now dealt with in this way. This seems to make good use of scarce resources, and, so far as the health services are concerned, it is something to which we must turn our attention in the immediate future.
Professional social workers are in very short supply—I speak now as a professor responsible for the education of social
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workers among other people—and we need to spread them as widely and profitably in the community as we can. We need to supplement their services by those of all people of good will, and we need to try to put them in the community at the point at which their services are of the greatest benefit to everyone. Community care seems to me to need a wider interpretation than has been given so far in this discussion. The noble Lord, Lord Amulree, seems to have dealt with community care solely in the interests of the medical services. Speaking of the aged, as the debate went on, it seemed to me that we were dealing with old people as people who were suffering from some sort of ill-health, as such; that old people are necessarily very sick people. I am sure that many noble Lords will not agree with that conclusion. There are many great statesmen in this country who were servants of another place and of this House at an advanced age. I am sure that that will continue more frequently in this House as more people become old.
I speak again as a former President of the National Federation of Community Associations. We have made good but slow progress with the development of the Association, and our services have been particularly beneficial to the members of our society in so far as they deal with youth and old people. It is obvious, to my mind, that the best place to deal with both these kinds of people is in the community as a whole. We do not want to extract young people from the community. If we do, we may well at times get further occurrences such as that at Brighton; and we do not want that to happen too often. Similarly, we do not want to extract old people from the community and deal with them as an odd sort of people on their own. It seems to me that that is about the most unpleasant kind of circumstances in which one can be placed. I hope it will never occur to me—at any rate in the immediate future—that somebody will put me into, or cajole me into joining, an old person's club, and do good to me while I am there. I do not want to have good done to me. I want to live as a member of the community.
It is exactly that situation that we have endeavoured to develop inside the National Federation of Community Associations, in which old people can

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play their part in community associations, and can be valued as persons with something particularly important to contribute to the associations: namely, the wisdom and experience they have accumulated during a long life. Furthermore, in the Association we have encouraged people in later middle age to prepare for retirement, so that there is no great jolt between active and wage or salary earning life and living in retirement in advancing age. We want to have in our community as few of those jolts as possible.
We also think it is a good idea, good social theory as well as good finance, for as many citizens as possible to be involved in the administration of the social services. That appeared to us in the past to be local government in its truest sense. The end product may be, and often has been on a small scale, the involvement of people in the administration of services, so that the services administered locally are their services and not the services of somebody ex machine, who appears from the Town Hall or from Whitehall, both places being possibly equally remote to the ordinary citizen.
I discussed this with a former Minister in the Dutch Government; and Dutch Government policy has been for many years—certainly since the last war—to encourage the development of community associations with precisely these objectives in view. The Dutch Government have not shrunk from giving quite substantial financial encouragement to the growth of these associations. They have assisted them financially both in the way of capital grants and also in the current grant to make it possible to employ trained staff who can now take part in what is another kind of social worker profession within which they can seek promotion. This seems to be ignored by the nationally-organised services in this country at the moment, except for some of the work done by the Ministry of Education. Grants have been given to foster community associations, but these grants have been small and have not added up to much. Furthermore, the Ministry of Health Circular 7/62, which sought to encourage local authorities to consult with the voluntary associations before they made their Ten-Year Plans devoted to health, seems never, somehow, to have got to the community associa
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tions. I enquired about this recently but I could find no indication that any discussions had taken place with the community associations as a result of that circular.
This seems to me to provide us with evidence that the Ministry of Health is insufficiently community-minded. We can carry the medical profession with us, we hope; we can carry the auxiliary medical professions; but can we carry the people, the ordinary citizens? That seems to me to be still a matter of doubt. We are too apt to consider that people need assistance by way of treating what I may term "ill-fare" medically, rather than to approach welfare socially. In sum, I am asking for the redeployment of scarce social work staff, to redeploy them so as to stimulate community activity. I am asking also for the giving of less attention by the social worker, such as the case worker, to services which cater for a few individuals, who are assisted personally by the social worker concerned. I am also asking for the involvement of our neighbours as citizens in meeting their own needs and those of other people. I am satisfied that very much more could be done in this way if we had a wider conception of community care.
4.28 p.m.
THE LORD BISHOP OF LICHFIELD: My Lords, the last speaker began by asking the indulgence of the House for his maiden speech. I feel that I also need to ask the indulgence of the House, speaking, as I do, immediately after a maiden speech of that calibre. I am sure that all noble Lords will wish to congratulate the noble Lord warmly on his magnificent speech. We shall look forward very much to further opportunities of benefiting from his wise counsel and advice in the future. I should like to add my word of thanks to the noble Lord, Lord Amulree, for putting down this Motion for debate to-day, because I think it is well that we should take a careful look at the community services; and when I tried to do some homework on the subject, in preparation for this debate, I was amazed at, as the Motion puts it,
"the increasing use being made of community care in the health and welfare services"
to-day.

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I should like to speak this afternoon mainly from the aspect of the problem as seen through the eyes of a Regional Hospital Board; because I have for some time had the privilege of serving as Vice-Chairman of the Birmingham Regional Board. As that Board serves five counties, and most of the West Midlands, it has the opportunity of seeing these problems and opportunities for service on a fairly wide scale. In his speech earlier in the debate the noble Marquess, Lord Lothian, mentioned the fact that what was needed was an increase in the co-operation between the hospitals, the general practitioners and the local authority. So far as our region is concerned it is that kind of team spirit which we are most anxious to foster. It should be noted that in our area 33 per cent. of all general practitioners have hospital appointments, and that, from the other point of view, between 30,000 and 40,000 visits of a domiciliary kind were paid by consultants during 1964.
The reason why this community care in the home is of such value and importance is that without it we should be in a very serious position in regard to the provision of beds. The provision of hospital beds is a very expensive and difficult matter. Since 1949 the number of beds available in our region has gone up by 6·7 per cent., and that has cost a great deal. But the actual case-load borne by these beds in a similar period has gone up by 70·6 per cent. That obviously means that, on average, there is a shorter stay in hospital for each patient. In our region again, with the considerable increase in population that has come through large immigration, the matter is becoming particularly pressing in regard to maternity hospitals and maternity cases. We have therefore evolved a planned early discharge of these cases, so that from 1953 to 1964 the average stay in hospital of a maternity case has come down from 11·2 days to 7·7 days. Some may regret this: they may feel that the mothers are leaving the hospital too soon after their confinement. But in view of the enormous demand on our maternity beds I do not know what would have happened if this reduction in stay had not taken place.
The point I wish to make this afternoon is that, because of this team spirit
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that we are trying our best to foster, we would maintain that these patients are not receiving any worse treatment as a result of the fact that they are staying a shorter time in hospital, but that through community care, which they can and do receive in their homes, they are being looked after as well as they would in any other way.
I should also like to draw attention to another development, again in our region, with which our Medical Officer of Health in the County of Stafford has been closely associated. An experiment was made in the Stafford General Hospital, whereby a County Council social worker visited all the patients, discussed with them their position at home, their needs, and so on, and thus was able to see that those who could go out from the hospital at an early date were able to go out, and also that these people received at home the facilities which the County Council and other appropriate authorities were able to offer. These facilities are not always known. It is true, of course, that the general practitioner, in his care of the patient, will endeavour to put the patient in touch with the various forms of assistance which that patient may need. But if this could be done on a really organised scale, with the hospital co-operating in the way I am quite sure it would, then it would be greatly for the good. I mention this as an illustration of the increasing use of these services to which the noble Lord has been drawing attention to-day.
The point I wish to make in regard to our hospitals is that we are seeking to use the beds there to the best of our ability, by ensuring that they are not occupied by in-patients who could be dealt with in some other way, and equally well cared for. Last week Her Royal Highness Princess Margaret visited the City of Stoke-on-Trent in order that she might officially open our great new out-patients' department which is now associated with the North Staffordshire Royal Infirmary. That is but one of these out-patient departments which our Board has been opening, but I think it is probably the largest in the country. It is not really an out-patient department—it is an outpatient hospital; and we believe that when it is in full use patients will be so well cared for that there will be no need, in many cases, for them to enter the hospital at all as in-patients. This will mean

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a great deal of new organisation, a new technique and a new approach to the problem, but I am quite sure that an immense amount of good will result, the whole object of the exercise being to see to it, so far as possible, that the sick person who is in need of care is kept in the community and not segregated out of the community.
A short time ago I had the great privilege of being asked to open a hostel set up by the local authority in the town of Newcastle-under-Lyme. The object is to bring to this hostel patients who have been discharged from the mental hospital. There they will come and live, for some months, it may be, while they adjust themselves to life again; and from this hostel they will go out, day by day, to suitable work and so earn their living again. As I saw that hostel, I thought that it was a splendid development. Thus we are trying to see to it that these people, who have been suffering in one way or another—and sometimes suffering acutely in their minds—are helped to find again a purpose and a real meaning in life and to have the satisfaction of knowing that they are once more able to do a really useful job for the community.
Mention has already been made in this debate of the contribution that can be made in this and many other ways by the voluntary organisations. Having, naturally, been associated at one time or another with many of these organisations, I should like to say that I think the voluntary organisations, taking it by and large, receive the same helpful encouragement from the statutory bodies. Next Sunday afternoon it is my duty to preach at a special service for the deaf and dumb. The work that is done by the voluntary organisations for those people has impressed me greatly as I have watched them over the years. They are people who have suffered, and do suffer, from a great physical disability. But, because of the loving care with which they are surrounded, they are able to go out and live a surprisingly useful life. I have the privilege, also, of being the president of our local association which cares for the blind. And I have been amazed at the way in which those blind people go out and live useful lives.
It is only when you come into contact with this kind of thing that you realise
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the amount of loving community care that is going on. Your Lordships will understand that in the course of my duty I often meet mayors and civic heads. Over the years I have been struck with the way in which those men, as they draw near to the end of their year of office, have said, "I thought that I knew my town pretty well; but it is only now that I have been mayor, and appreciate the work that is being done in a quiet and unassuming way on behalf of the community, that I realise the amount of that good will and good work that is going on." It is to this good will and good work that I wish to pay my tribute to-day. I am not asking for anything special: I am trying merely to underline what the noble Lord, Lord Amulree, has said, that increasing use is being made of all this community care, so that we may help all our friends who are in need of help to stay in the community and, so far as possible, subject to any limitations they may have, to live normal and useful lives.
As I draw towards my conclusion, I would say that in the Church, through the teaching of Christian stewardship, which I believe is something that is playing a great part in the life of the Church to-day, emphasis is being laid on the need to look out to see what practical help you can give to your neighbour. In the course of my duty, it is my privilege to take a number of Confirmation services, and as I have taken those services I have often been moved by the Blessing it is my duty to give to the candidates:
"Strengthen the faint-hearted, support the weak, help the afflicted."
We in the Church in this country sometimes get depressed by what appears to be a good deal of indifference; and that may well be the case. However, I think we can also say that in our country to-day we have a vast amount of practical Christianity and a real desire to help one's fellow men. Therefore I am thankful that to-day we have this opportunity of surveying the community care which goes on, in so many aspects and on so wide a scale. I am glad to have this chance of thanking most warmly all those ladies and gentlemen who play their part in that work, and to pray that God's blessing may rest upon their efforts on behalf of their fellow men.
4.42 p.m.
BARONESS STRANGE OF KNOKIN: My Lords, this is my maiden speech and I crave the indulgence of this House for any faults, an indulgence which I know your Lordships always readily give. It is now nearly two years since I took my seat here, and during that time I have been filled with admiration for the wonderful speeches and debates that I have heard, which have interested me more than words can say. So I feel extremely pleased that to-day I have the chance to support the noble Lord, Lord Amulree, in his Motion, because it gives me the opportunity to talk about the Health and Welfare Services in the rural areas.
There is a great difference in the conditions to be found in the towns and in the countryside, and also in the amenities that can be given. The services which are available in towns often cannot reach the wild places which I have in mind—the hills and the valleys and the scattered farmsteads. The amenities which have been mentioned to-day have filled me with great admiration and I have thought how wonderful it would be if they could be taken to the wild places of our country. Particularly do I feel this in the case of the elderly. In the remote hills and valleys people are good neighbours, but more and more the old people are becoming dependent upon voluntary organisations. This becomes increasingly evident as the years go by. The voluntary organisations have the chance to bring, and do bring, the necessities of life to the old people. In particular they bring medicines, the necessities for chiropody, bandages, bedrests, special foods and things of that nature which the elderly could not possibly get in any other way. This helps to make life better for the old people. No one can help but admire the work of the voluntary organisations, but it is becoming increasingly difficult for them. The price of petrol is increasing and so is the cost of car repairs. Also, of course, people have less time than they used to have.
In Wales, where I live, the Community Council and the National Old People's Welfare Council and the Committee for the Welfare of the Elderly have started many schemes and are anxious to expand them. They have also started some extremely good homes for the elderly, but many old people in the country do not
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want to go into the populated districts. The scent of the heather and the tang of the marshes is in their blood and they do not want to go into homes and institutions in towns, where they will not be so happy.
The financing of all the activities about which we have been talking to-day varies greatly: some undertakings do not make use of all the money which the local authorities have allowed them; and, on the other hand, some local authorities have only limited powers of giving assistance. An inquiry would fill these gaps, and from what I have heard this afternoon I am sure there are many noble Lords who agree with this. Everybody at some time has loved an old person and everybody is in sympathy with this subject. As we have heard, a great deal has been done but there is a great deal more still to be done, and I feel that the speeches made this afternoon on all sides of your Lordships' House will greatly help to improve the position.
4.46 p.m.
VISCOUNT ST. DAVIDS: My Lords, before the noble Lady sits down, I feel the House would wish me to rise to my feet and congratulate her. I understand that I have to refer to her conventionally in the House, even on this most unconventional occasion, as "my noble relative", although it has never before in the history of the House occurred that a son was able to get up to congratulate his mother. However, I should like most warmly to congratulate my noble relative, not only on her courage in rising to address this Assembly but also on the content of her speech, which I think your Lordships will agree was well worthy of the speeches which have been made in this debate so far. I hope indeed that I shall sit and hear my noble relative make another speech on some occasion in the not too distant future.
SEVERAL NOBLE LORDS: Hear, hear!
4.47 p.m.
BARONESS SUMMERSKILL: My Lords, may I join with the son of the noble Baroness in saying what a remarkable speech we have just heard and how fortunate we are to share in this little bit of history? I am sure she feels supremely happy, as I would under similar circumstances, to have her son follow her and

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congratulate her. Incidentally, her son has given me permission to tell the House that we have just heard the maiden speech of a lady over 80 years of age.
SEVERAL NOBLE LORDS: Hear, hear!
BARONESS SUMMERSKILL: Some of us who have joined in these debates before are familiar with the subjects, and I am sorry that the noble Lord, Lord Amulree, has gone out of the Chamber at this moment because I was going to congratulate him on once more initiating a debate on this subject. On this occasion he has called it "community care" and I have noticed that every speaker so far has defined "community care" in a different way. I warn my noble friend Lord Taylor that when he comes to answer he can be forgiven for not being ready with the answers because I am indeed going to range widely; I have been given permission. We have heard the noble Lord, Lord Simey, say he believes that the position of the aged and those in the field of crime should have our consideration; and he dealt with employment, with which I am going to deal also.
I have taken part in many of these debates and after receiving this week the Annual Report of the Ministry of Health—the Annual Report, I should point out, for 1964, which exonerates the present Minister of Health—I am of the opinion that if some of the advice which has been given over and over again in these debates had been followed we should have less cause for concern. We now learn in the latest Report that general practice is no longer attracting young doctors. Perhaps noble Lords here think this was already known. This was not known until this Report was issued this week. But not only has there been trouble with the general practitioners, but the young doctors of the country now are apparently experiencing a distaste for general practice and are no longer entering that field. If the comprehensive domiciliary service which my noble friend Lord Bowles has expounded to the House this afternoon—and some of us have been asking for that with monotonous regularity for the last twenty-five years in this place and the other place—had been established years ago, it would have been of inestimable service to the aged and to the chronic sick, and the burden which the
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exasperated doctors are complaining of would have been taken from their backs long ago.
I quite understand that my noble friend has come to this whole question to-day for the first time. When he tells the House, for instance, that 700 health visitors are attending doctors, has he forgotten that there are nearly 25,000 medical general practitioners in the country. We have been asking for the domiciliary services and the health nurses to attend the thousands of doctors in the country for years and years, and far from sitting back and purring with delight I was absolutely shocked when he said there were only 700 health nurses. The domiciliary service, of course, which could help the doctor in such a manner that his life would be completely changed, simply seems not to move at all.
I listened to every speech very carefully. The noble Marquess, Lord Lothian, kept calling for voluntary help in this field. He accepted the principle; he knew it was important. But we have got full employment. Where are all these women of forty sitting back in their homes, languishing, longing for a little job? I am sure that all the ladies here know what I am talking about. The suggestion is so ridiculous. Where are they? They are all doing a job, not sitting back in some Victorian drawing room saying, "Let me go into the homes of the sick and cool somebody's fevered brow". That was what the noble Marquess, Lord Lothian, was calling for, the women of forty, as though at forty women are sitting back with plenty of time because they are in such a decrepit condition that only a visit to the sick room now and then would be suited to their physical condition. These people are not there. They are in full employment. If you are going to have a comprehensive domiciliary service—physiotherapists, health nurses, chiropodists, the whole team—you have got to pay them. Women are no longer there to wait on men, without payment, particularly women of forty.
I listened to the noble Lord, Lord Simey, I am sorry he has gone to have that cup of tea which he said he could have with the family at a quarter past four but which he has missed. He said to the House, is ageing physiological or pathological? The aged person is suffering from

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a physiological condition, but nevertheless the pathological condition is quickly superimposed upon it. He or she develops arteriosclerosis, and arteriosclerosis of the brain can produce pre-senile dimentia and it comes very slowly. He had the most extraordinary theory that what was wrong with the country was that nobody was going up into the tall Peabody blocks in London and finding the old women and saying "What is wrong with you is that you want to come into the community and enjoy yourself". Habit determines our approach to so many things. If you have lived to 60, 65 or 75 you cannot develop new habits. You cannot say "Yes, I am a gregarious person. Take me quickly to some room where I can hear a stimulating lecture, take part in Morris dances", and so on.
Lord Simey's conception of old age is the conception of the senior common room, where elderly men delight in sitting with each other exchanging conversation on matters of the past, what they did at their public school or their university when they were young and what sports they indulged in. He has no conception of the mind of a woman who has produced seven children, let us say, brought them up well, devoted her life to cooking, scrubbing and washing. In some cases her husband has predeceased her and she finds herself alone in a miserable little room at the top of a building in this great wen of ours, with ten million people in London and Greater London. That is the problem we are discussing to-day, not the abstract problem that occurs to a professor (and I should say all this if the noble Lord were here, as your Lordships know) who has been out of touch with this particular aspect.
I say that the affluent society has passed by old people. Once more I would suggest to the Government that they should compile a register of the aged in their areas. The present method is absolutely haphazard. The doctor may tell the welfare officer that there is an aged person down the street. But these people I am talking about become stubborn. If they are ill they do not go to the doctor. There are plenty of noble Lords here who have now and then said to me, "Can I have a tablet?" and I have said, "I am not your doctor"; and they have
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said, "I do not like to go to him". These isolated people do not like going to doctors. It is no good the noble Marquess, Lord Lothian, saying the doctor should notify the welfare officer that there is an old person there. What we should do—and why the local authorities do not do it I cannot conceive—is to have a register of the aged in their areas, and it should be the duty of some official to visit the old people regularly. I believe that contact with these isolated and helpless people in our sprawling urban areas can only be maintained when a comprehensive register is compiled.
I listened to the right reverend Prelate the Bishop of Lichfield speaking on maternity just now. Listening to a man on maternity is always interesting, because, as we all know, we have never lost a father yet. But listening to the right reverend Prelate on maternity I thought was most enlightening. I have said again and again in these debates: Why do we not recognise that the midwife is the key figure in the maternity service and treat her like a queen, give her better conditions, higher pay, instead of letting her, in the crowded streets of London, use a bicycle to go to her job? What has happened? The midwife has been in silent revolt. Now we find, of course, that the conditions in our maternity hospitals have deteriorated instead of improving in the 20th century, and this has resulted in mothers being discharged from hospital in some areas 48 hours after the birth of their child. I raised all this last year and the year before, and I see from the Ministry of Health Report that all the warnings and pleas from this House and another place have had little effect.
In 1964, the latest year for which we have figures, 9 per cent. of mothers were discharged less than three days after delivery, which indicated that there has been no improvement on the previous year; it was 9 per cent. in the previous year. And the right reverend Prelate says, "Well, it is quite clear that this is normal. The team is working. Why should we worry that these women are being discharged?" It seems to be rather illogical. For instance, if it is desirable to discharge a women three days after the confinement, why have we for years always kept her in hospital for at least ten days? No doubt the right reverend

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Prelate has done a lot of visiting in his life, but he has not called on many women who have just had their babies. Probably they have not wanted to see him because they have not felt like it. The fact is that a woman who is sent home, as she is in this country, and as she is in any country (as again I said last year) where mediæval conditions exist, sits in bed with her purse under her pillow and conducts her housekeeping from bed, and she is denied all the rest which is her due. That is the reason why she must stay in bed.
I am beginning to think that in some Government Departments there are officials who feel that any criticism in this House or in another place reflects on themselves, and that accounts for the negative results. We can have these debates year after year, and we read the Ministry of Health Reports. In some respects there has been no change—in fact, conditions have deteriorated.
My noble friend Lord Taylor need not answer this point to-night, although I invite him to do so. We have been told that we can arrange our community care. I believe that the care of the pregnant woman is a matter for the community, and I should like to know whether there is any likelihood of reform of the Abortion Law now that we have a Minister who is sympathetic. I am thinking of pregnant women who are not fit to bear their children; I am thinking of young girls who have been subjected to some sexual offence; and I am thinking of thalidomide mothers—those women who may have taken drugs which may result in congenital malformation of the child. In my opinion the time has come when a doctor should be allowed to perform an operation on these women without the risk of being struck off the Register.
I come back to what the noble Lord who generally sits opposite and who is identified with the pharmaceutical industry says is my ritual dance. The only medical service where there seems to be no shortage of money or supplies is in the pharmaceutical field. The prescribing of expensive proprietary drugs continues to increase. Does my noble friend know that they accounted for 71 per cent. of all prescriptions last year, although there is a cheaper alternative in the National Formulary? Although we are told that committee after committee is formed to watch
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these things, the cost rose last year from £65 million to £72 million.
The National Formulary is a list of mixtures, pills, tablets and so on, which can be prescribed as an adequate alternative to expensive proprietary drugs, and it is distributed to every doctor. A doctor who prescribes in the National Formulary and has a social conscience sent to me last week a copy of the prescribing costs of his area. It is dated June 30. The cost per head of his prescriptions was 5s. 8d.; the average cost for the area was 9s. 11d., and the average for the country is just under 10s. My deduction from this is that the cost of drugs is twice as high as it need be—I know that my noble friend and I are spiritually attuned—if the Ministry took strong action and insisted that the National Formulary should be observed.
I do not want to be guilty of tedious repetition. I have dealt with drugs before, and everybody knows how strongly I feel about the subject. I want to come to another aspect of community care. This debate synchronises with the presentation of the Report of the National Assistance Board, which surely is concerned with the community care of the poorest in the community. In the course of the year I introduced a Bill into this House designed to help the unmarried mother and the separated and divorced woman and their children. I was opposed by both Front Benches. Nevertheless, your Lordships gave me an attentive hearing and the Second Reading received a majority vote, for which I thank the House. Subsequently, the Government opposed that Bill in another place simply by requesting a new Member, on hearing the name of the Bill called, to shout "Object!". He had neither heard the Bill expounded nor had he read the Bill. The Title of the Bill was called, and a voice shouted like a ventriloquist's dummy, "Object!". In fact, the procedure is that an individual may not necessarily identify himself at all. His mouth need not move. He can mumble "Object". The Bill fell.
I want to bring to the notice of your Lordships that the Report of the National Assistance Board justifies completely the provisions set out in my Bill. It will be recalled that I asked that the affiliation and maintenance orders should be underwritten by the Board, at the Board's scale—no more than the Board's scale

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immediately the court had made the order. This was to avoid the misery entailed where the man disappeared and some weeks elapsed before the woman applied for assistance. I would remind your Lordships that in the case of an unmarried mother it is she herself who has to find the man, wherever he may be, and report him to the police. This, of course, the girls are completely unable to do. I emphasised that by taking immediate action, not only would the mother and her child benefit, but it was in the interests also of the Assistance Board, because they have the machinery to summon the man and make him pay to the Assistance Board the amount which the Assistance Board pay to the mother. All my Bill asked for was that this machinery should be set in motion immediately the order was made at the court.
This Report was presented only last week and, to my amazement, it completely justifies my action. The Report says:
"When a woman applies for National Assistance because she is not being maintained by her husband, the Board's first duty is to meet need, but inquiries must from the outset be made about the husband. A quick approach may result in his providing maintenance so that no assistance has to be paid at all."
That is precisely what my Bill asked for.
The Report goes on:
"When a man has disappeared without trace, much more effort and time have to be spent trying to find him and, if he is found, in persuading him to accept his responsibility."
Later on it says:
"The preceding paragraphs in general apply also to the maintenance of illegitimate children."
I see that there are Members on the Government Front Bench who I believe have a social conscience, and I am asking them to see that this Bill survives. The Bill still has a chance of survival in another place if the Whips call off the individual prepared to shout "Object" to a Bill which he has not even seen. I am asking if the Government will relent and will help these unfortunate women.
The noble Lord, Lord Amulree, spoke of employment. My final words are going to be about employment, but on another aspect of it. I have said that these women
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certainly deserve community care, for they are doubly handicapped. Not only have they the responsibility of motherhood—a lonely motherhood with no man to support them—but in the labour market they are denied the rate for the job. We cannot talk about community care in a vacuum; we must relate it to the economic conditions of the most needy with whom we are concerned.
One in every three workers in our manufacturing industries is a woman, and in consequence our economy is based on cut-price labour. We read in our newspapers to-day that the general workers in the Transport and General Workers Union realise this. It is not surprising, therefore, that they rejected the prices and incomes policy as a totally unacceptable concept, if the rate for the job is not basic to its implementation. The Minister of State for Economic Affairs has perhaps not realised that very important problem, and that it is the Transport and General Workers' Union which covers all the women who are not getting the rate for the job. Other unions with high rates of pay may understandably think otherwise. It should be axiomatic that the rate for the job is paid in an industry before even one half of 1 per cent. increase is proposed. One cannot build a sound edifice on rotten foundations.
I would remind the House that the International Labour Organisation adopted a Convention advocating equal pay for women. Forty-four countries have ratified it, but not the Labour Government of Britain. Women's labour is used to subsidise an employer by the difference in the amount which she receives and the rate for the job. As a third of the labour force are women, the employer enjoys a very heavy subsidy at their expense. We should not congratulate ourselves on our social ambulance service which we have been discussing to-day, a service of community care, while we countenance the exploitation of labour at the lowest level.
5.12 p.m.
BARONESS SWANBOROUGH: My Lords, like others I am delighted to have the opportunity of listening to this debate on community and domiciliary care. Those of us who are working in this field feel that in recent times it has been possible to take a tremendous step forward

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because of the support which has been given to the voluntary helpers, both by Central Government and by local authorities. I do not know whether many people realise the value which is put on the opportunities by those who are backing the professionals and by the realisation that they are being given the opportunity of the privilege of service. I am very thankful to say that to-day young women are coming forward on a short-term basis to back the work which is being done. They are being more and more drawn into the service of the community.
I am going to discipline myself to-day not to speak about the voluntary services and the advance made in domiciliary care in recent years. Therefore, I am going to devote myself, in a short speech, to one point which I am constantly meeting as I travel the country, a matter which greatly preoccupies local authorities. I feel that special attention should be given to the solution of a very serious problem. In any group of patients the hospitals should surely be responsible for those who need continuous medical nursing care, and those of the rest who cannot go home should quite obviously be the responsibility of the local authority. This is not a question for discussion; it is a point on which everybody would agree.
If one takes almost any mental hospital in the country to-day, it is true to say that more than half the patients are over 65 years of age. I am convinced that this is a pattern which is quite general throughout the whole of the country. Again and again one finds that a large proportion of those who do not require continuous medical or nursing care have no home to go to, and a number of those who cannot be discharged require only a little extra care, as we term it—by which I mean help with dressing and bathing, and that sort of thing. This balance of patients who do not need the skill and attention of highly trained doctors and nurses is clearly the responsibility of the local authority, since they do not require hospital accommodation and are taking up space in a specialised hospital, but the local authorities are in great difficulty, in regard to both accommodation and finance, in establishing extra-care homes. There is no direct grant for this service. It is hidden somewhere in the general grant. While I know that Her Majesty's Govern
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ment have promised a percentage grant, which I believe will be a great encouragement and help, I would plead that the whole question be looked into as soon as possible.
I am not a doctor, but I am advised by my doctor friends that many old people become confused because of some underlying physical illness. Their minds become as delicately poised as those of babies, who become delirious in fever and recover with the fall in temperature. The general feeling is that if the underlying physical cause can be found and treated, the patient can go home, fit and well again, in two or three weeks, instead of spending two or three years in hospital. I believe that all confused old people should go, in the first instance, to an assessment and short-stay treatment centre for thorough investigation by a geriatrician, with the help, where necessary, of other specialists. Those whose confusion is part of a serious condition will obviously become the responsibility of the hospital. It is generally felt by those who work in this field that a very large number will go back home fit and well, with the result that not only will they not be a burden on the hospital and local authority accommodation but they will be all the better and happier for it themselves.
I realise how hard-pressed the Government Department must be, and I realise also the great burdens they bear, but I believe that if this matter could be investigated and coped with at an early stage, beds could be freed, waiting lists shortened, and the problem—which at present is cruelly affecting both local authorities and individuals—solved.
5.19 p.m.
LORD WELLS-PESTELL: My Lords, those of your Lordships who have looked at the list of speakers in this debate may have come to the conclusion that this is "maidens' day". As your Lordships will see, I am the last "maiden" on the list. I am fully aware that custom requires a maiden speech to have the merit of being brief, and the additional merit of being without contention; but at this point perhaps I ought to confess to your Lordships that in the normal way in future I may find that rather difficult, because I have not been reared in either school.

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Having been a lecturer for many years, when brevity is seldom possible and provocation is often essential, I have to guard against telling my audience what I am proposing to say, then proceeding to tell them, and finally telling them what I have told them. It is an occupational disease with lecturers, as some of your Lordships will know, but I am informed that it is often the hallmark of a good politician. However, over the years I have had to gear myself to a 45-minute period and have developed a built-in automatic device which pulls me down at the 45th minute. I am hoping that to-day it will operate at about the 15th minute, as I do not want to incur the displeasure of your Lordships, who are renowned for your charity on the occasion of a maiden speech; nor would I want to upset the noble Lord, Lord Egremont, if he were here, for I am sure he would have a concealed stop watch.
To-day, because of the shortage of time, there is only time for me to comment in a general way on community care. The phrase "community care" seems to be very much on the lips of all who are concerned with any form of social work, and I think there is a very real danger of its becoming meaningless and of being thought of as a solution to all our problems. Many people see community care as a State responsibility. Year by year we spend more and more on hospital and welfare services, and I think we have all to face the fact that there is a limit to the amount we can spend in these fields. We have to face the fact that in the future we shall not be able to afford to spend what the health and welfare services in this country need. Yet, in spite of what we spend, and it is a considerable sum, we appear to be a long way from meeting the wants and needs of the many people in the community.
The noble Lord, Lord Bowles, has given us this afternoon a definition of "community care". I suggest that it is the current definition of community care; a definition with which I should not disagree. But I think that in the very near future we must have a very different definition for community care. I am tempted to ask, when we talk of community care: does the community care? Is the community taking a full share of its responsibility? Is the community being
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given a real chance to participate? We have to think in terms of giving the community the opportunity of doing far more than it is doing, or is encouraged to do, at the present time. I believe that if the community were encouraged to show a greater sense of social responsibility toward's one's neighbour, we could get far more done at very little cost.
There is a growing tendency to talk in terms of "they" and "them", meaning the State or the local authority, and there is too little reference to "we" and "us"; and it is the "we" and "us" who are often far better placed to undertake some aspects of community care and service than many of the people in the community who are supposed to do it. Let me make it quite clear. I am not suggesting that a heightened sense of social and personal responsibility will solve all our social problems, nor am I suggesting that certain of our grave social problems can be met just by kindness or a desire to help, but I am saying that there are few instances where the needs of the individual cannot ultimately be met by adequate community care in the real sense, as distinct from some form of hospitalisation or institutionalism.
Residential care in one form or another will always be needed in the community for certain groups, particularly the mentally and physically handicapped and the aged, but by no means all of them. I recognise that the cost of providing residential accommodation will always be high, be it in hospitals or in institutions, and I feel sure that greatly improved domiciliary services with the ordinary people participating, and a greater awareness by ordinary people of the problem and a willingness on their part to help, to care for the handicapped and those in need, would be not only cheaper but more beneficial in the long run to those who are in need of help.
I am not unaware of the problem which faces us at the present moment. As a former probation officer and a sociologist—though, may I hasten to add, not in the same distinguished class as my noble friend Lord Simey or my noble friend Lady Wootton of Abinger for I have learned and continue to learn much from both of them—I feel that we are concentrating too much on providing residential care which caters for only a comparatively small number of people

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and forgets the wants and needs of the many. In my view, it is too great a concentration of time and energy, as well as money. In the field of old people's welfare, only a small percentage are in care. The remainder, generally speaking, fend for themselves if they have no family to help them.
Without the assistance of ordinary people—and I want to emphasise "ordinary people"—in the community, it is doubtful whether the Children Act, 1948, would ever have worked, or be working as well as it is to-day. To-day, as my noble friend Lord Simey said, as a result of a vast army of foster parents, thousands of children are given the benefits of a normal home life and all that that means in terms of happiness, natural development, and the feeling of being wanted and loved, not to mention the substantial saving to the community. I believe it would be possible to do something similar for more of our mentally and physically handicapped, and perhaps the lonely aged, by recruiting suitable people—I come back to it, "ordinary people"—for this aspect of community service.
In East Anglia where I live—and we are supposed to be a kind of backward people—something along this line has already been started. Severalls Hospital, which is a mental hospital in Colchester, has in a modest way already shown something of what can be done for the mentally handicapped, apart from what may be done by the local authority. The hospital social workers have already been successful in boarding out approximately 30 elderly patients, some of whom have been in the hospital continuously for many, many years—one, I believe, for 30 years. Large-hearted people and families have come forward and taken these patients into their homes. Can anyone, can your Lordships, can any of us, really imagine what it must mean to them to be back in the community, to feel that somebody cares, that somebody wants them to be a person, an individual again?
The National Assistance Board has made an allowance or supplemented a pension, as the case may be, to a total of £5 a week, so that the people who have taken them in are not doing it for nothing. It is worth while noting that the present cost of keeping a patient in that hospital is something in the region of £12 a week, but they can be kept out of the hospital
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and given the comforts of a home and the feeling of security, and the feeling that somebody needs them, for £5 a week.
This kind of development is all the more important in view of the serious shortage of professional social workers: and there is a very serious shortage. To me it is not surprising that there is a shortage, in view of the treatment meted out to professional social workers in this country. For far too long have they been treated as the Cinderellas of our Welfare State. Because they have developed social consciences and a deep-seated feeling for and understanding of people, they have been expected to work long hours for very little material return. If you are a professional social worker, you are not supposed to want a reasonable standard of living.
It is all very well for people in the community to pay lip-service, as has been paid this afternoon, to the professional social workers in the community. What is really needed is to pay them more money, not more lip-service. I speak with some feeling on this, having been one in years past. Because the shortage is going to get worse—and let us understand that the situation is not going to get better; it is going to get worse—we need to encourage ordinary people of the right kind of temperament to work within their own locality under the guidance of a trained worker. As the noble Lord, Lord Simey, said, we have got to deploy our trained people better in the future than we have in the past. I believe that in the community there is a tremendous amount of good will and sympathy for those in need, and I hope that we shall do something in the immediate future to harness that good will and put it to practical use.
Most of your Lordships will be familiar with the Younghusband Report of 1959, which made this point—and I want to quote:
"The good neighbour is a voluntary worker, though she may never have thought of herself in that way."
Let us face the fact: the good neighbour has a place in our social and welfare services, and we should be making plans now to use her to the full in the future. She will eventually be wanted, and will eventually become the centre of community care, with the professional social

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worker having oversight of her work and the work of a large number of similarly placed people in the locality.
Far too much of the professional worker's time is spent making systematic visits, in some cases quite pointless, and in others where persons of less skill could do just as much—and here again I speak with some experience of this, as a former professional social worker. Many of the people who are visited need only assurance, the opportunity to talk and the companionship which the visit gives; and, in my view, such visits could be undertaken quite effectively by the less skilled person. Every community is full of voluntary organizations—we all know that—many of them doing first-class work, and I am the first to recognise that; but far too many of our voluntary organisations are content to be inward-looking instead of being outward-acting. I would suggest that they use their membership, not so much for themselves but for the benefit of the community and for the welfare of the community.
In the Suffolk village of Combs, where I live, the rector has a system of wardens—a group of people each one of whom is responsible for visiting regularly six or eight homes. In this way the wants, needs and problems of those visited are quickly known; and, what is perhaps more important, the sick, the aged and the infirm feel in touch with what is going on. It should not be beyond the wit of man to arrange something like this in the towns, instead of waiting until the milk has been on the doorstep for several days before anyone bothers to investigate, only to find that it is t/o late to do anything. We could organise ourselves in wartime, when every street had its air-raid warden responsible for a group of houses. Why not a similar system, community care wardens, in peace-time?
5.35 p.m.
THE LORD BISHOP OF ST. ALBANS: My Lords, I am happy to follow my noble friend Lord Wells-Pestell, and to congratulate him on the success of his maiden speech and of his built-in device. It acted as he predicted. The noble Lord has done pioneer work in the marriage guidance field, and many of us are grateful to him for his work there. He has had a long and difficult illness to face, and he has faced it with faith
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and courage. We are delighted to see him with us again, and I hope that we shall have the advantage of listening to him and of learning from his wisdom on many future occasions.
I share the gratitude which many of your Lordships have expressed to the noble Lord, Lord Amulree, for this debate. My approach is the approach of the noble Lord, Lord Wells-Pestell, because I am thinking first of the responsibilities of the community and the weight laid on its members by the increasing claims they have to meet—on communities where there are full employment, rising costs, competitive standards and decreasing free time. I seldom meet people with leisure. Let me give your Lordships just two instances of increasing claims. First, I would mention fatherless families. I was reading the Report put out by the Salvation Army, called Tragedies of Affluence, on the occasion of its Centenary. In this Report, the Salvation Army draws our attention to the 400,000 children who are suffering some form of deprivation because their parents are separated—and the position is worsening. Perhaps these figures were in the minds of the members of the Labour Party's study group, under the chairmanship of the noble Earl, Lord Longford, when they pleaded for an urgent review and radical improvement of current allowances. The noble Lord, Lord Simey, has previously referred to this Report, which pointed out that many of the most intractable problems facing social workers arise from inadequate allowances and benefits.
The second area of increasing claims that I would mention is that where unmarried mothers are concerned. The Longford Report has argued for a family service and family centres to help re-habilitate homeless families, and to ensure that children suffering from any kind of handicap receive the care they need. Reference has already been made to this family service, and the noble Lord, Lord Simey, I think, questioned how far such a service could be adequately staffed, because we have to consider our limited resources and the shortage of trained social workers. Nevertheless, I am sure that the claims of unmarried mothers call for special consideration for many reasons, quite apart from the command that we

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should love our neighbour as ourselves. If we do not do more for these unmarried mothers, we shall increase delinquency and mental illness.
How can we help the community to meet these new demands? As I think of the communities I know, I see that their strength lies in their close-knit family life—family life of a cellular kind. It is limited to the family, limited to the home and limited to the garden; and their strength lies in the improved amenities of the new areas. But then, as I think of the risks and the dangers they face, the ever-increasing mobility of these communities comes home to me. A vicar who was working in such a community was saying that, of 66 couples he had married in the last three years, I think, only one was still living in that parish. And, my Lords, the speed of movement increases with the years.
The problem of mental illness is another thing that threatens these new communities. I would mention only one particular project, which commends itself very much to me. It is the Richmond Fellowship, one of these "half-way houses" which takes in people who need to be treated in smaller communities before they are ready for the rigours or delights of home life and who have been voluntary patients at mental hospitals. I feel that if the Government were able to encourage this particular Fellowship, or others that work on similar lines, it would be of real value to them. Because one of the difficulties these organisations meet is, first, that of acquiring a house; and, second, when they acquire a house, of persuading the neighbours that it is reasonable for them to support such an adventure. It is criticism from local residents that often prejudices these developments.
When I ask how we can help the community to meet the new demands on them, I break that question into two parts: First, what can be done to stimulate a community to develop its sense of responsibility? Second, how can communities grow in depth? I believe, in answer to the first question, that if we can encourage small groups to get together we can make progress. In my experience people to-day are more ready to meet in groups for informal discussions and group action. The other day I heard of a development in Bedfordshire where, in response to an invitation from one of the health officers,
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a group of Scouts took a hand in putting in good order an empty house so that it could become a community centre for Pakistanis. A small group talked it over and took action. They provided the necessary stimulation and the Pakistanis were able to take part.
On my second point, what can be done to help a community grow in depth? In new areas these communities grow their roots slowly: and the rate at which their roots grow is related to the amount of paper that enters the house. It seems to me that we are over-communicating. Memoranda of various kinds go out and stifle those who receive them: they are cluttered up with papers, and make no response. if we are to have communication—as the noble Lord, Lord Bowles, said: it is an overworked word—we need to communicate by word of mouth. If we can get people in the district to take a hand in visiting their neighbours, listening, befriending them, waiting on them; and then, when the opportunity comes, speaking to them about ways of serving the community, I believe that we shall get greater response from the community and that the community will grow in depth. If we have some of these points in mind when we appeal to the community, I well believe that it will give increasing support to the health and welfare services, and I am therefore delighted to support this Motion.
5.45 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, we are indebted to the noble Lord, Lord Amulree, for initiating this debate to-day. Like the noble Baroness, Lady Summerskill, I think I have taken part in a good many debates on this or similar subjects; but to-day's debate is particularly interesting and particularly original, since we have had this delightful, charming, historical moment when a noble Lord on the opposite side was able to congratulate his mother on her maiden speech from this side. Secondly we have had, in addition to that of the noble Baroness, two other maiden speeches. I was thinking, when I was listening to these, of how very varied are their experiences; how varied their speeches have been.
The last maiden speech was from the noble Lord, Lord Wells-Pestell, who comes from a community in East Anglia, a very rural part of England. He has, as

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we all know, great experience in social work. We have had from the noble Baroness, Lady Strange of Knokin, her account of rural ways. It rang a bell, so far as I was concerned, because the county I serve as a county councillor is an exceedingly rural area. I well understand the difficulty one has in persuading the widow of, let us say, a shepherd, who has lived all her life not nearer than 10 or 15 miles to a town and finally cannot be left by herself, to come into a home or perhaps to a house belonging to a relative nearer the town. I appreciate the agony she feels at leaving the country in order to come into what she believes to be the iniquities of a great metropolis—though it may be only a small village or a country town. Nevertheless, to her that does not matter. I appreciate very much the great problems of rural areas. We have had the speech of the noble Lord, Lord Simey, whom we all know and admire and have listened to many times on other occasions, talking about social service in Liverpool. We have had three important contributions to this debate by speakers from three different areas.
I should like to pick up one or two points which relate to my experience as a local government person, because I have found some of these things to be very frustrating and difficult to know how to handle. The first matter I should like to talk about is the responsibility of local authorities under the Mental Health Act. This is really a tremendous responsibility and I do not believe we are really facing it, nor do I believe it is being undertaken as well as it should, partly because it is so difficult to get the people to do the job and partly because it is a very formidable charge on any local authority. There is a sentence in the Report, Health and Welfare: The Development of Community Care, which was published in 1963, and is thus somewhat out of date, which I should like to quote:
"The purpose of the services in the community for the mentally disordered is to help them live as nearly normal lives as the nature and extent of their disability will allow."
That, I am sure, is the kind of text one should give in trying to organise local authority services; but the problem is enormous.
I do not have the figures for Scotland but I have those for England and Wales.
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They are for 1961–62 and are nearly three years out of date. About twice as many mentally disabled people live in the community as live in the mental hospitals. Twice as many—that is a very formidable number. About 400,000 mental patients every year are looked after by their family doctors, half of them looked after by general practitioners alone. Local authority expenditure on mental health service in the community rose from £4 million in 1959–60 to £9¼ million in 1963–64. As I think one speaker said, this is very unlikely to get less; and the responsibility on the local authority is really enormous.
As the noble Lord, Lord Wells-Pestell, said, there is a great shortage of trained workers for the care of mental health patients. The psychiatric social workers, who are in some senses the key people in this work, are very rare. In the area where I live, I pressed the Regional Hospital Board hard for three years to get them to appoint an additional psychiatric social worker for the area outside the hospital, particularly for patients who are now living in the community but who have been discharged from mental hospitals and care. Children in similar circumstances also needed care. Three years of hard hitting to get the Regional Hospital Board to appoint merely one extra person for this vital work! We have got the person now; but it has been a long haul to get her.
I should like to say a word in praise of one of the great voluntary organisations which has done a tremendous lot to help with the care of mental patients and also to help people to understand what it is to have to look after these people. I refer to the National Association of Mental Health. Here is an organisation which, I think, has done more from day to day, and with ordinary people, to care for the mentally sick than any other organisation which I know. It started from practically nothing and now has 53 branches. It has created an atmosphere of friendly understanding, so that a person suffering from mental illness is no longer looked upon as a sort of strange creature and someone to be avoided rather than helped.
The National Association of Mental Health has shown that mental health is part of the better undertanding between

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one human being and another. That is a great revolution in thinking and in action. In many places it has started clubs to which people can belong and where, as it were, they may be reintroduced to society and mix with people before they are completely fit and well, ready to take their place in the community. I hope that when the Government are considering, as they do from time to time, giving assistance to voluntary organisations, the Government will give particular attention to the National Association of Mental Health, because it is a key organisation for helping all who are concerned with this work, and particularly local authorities.
I wish to say a word about the community care of handicapped children. The noble Marquess, Lord Lothian, referred to a Report made on this matter by the Carnegie Trust. It so happens that I was the Chairman of the inquiry. I am also Chairman of the Carnegie Trust. The inquiry took place a long time ago, longer than I should have wished, in the sense that the Report took so long to publish. It is a very interesting Report. One of the things it revealed was the need for earlier diagnosis and for continuing care in cases where care is difficult.
Out of the Report came experimental centres. One is in the rural area near Shrewsbury. Here the day care of children is undertaken. They live with their families and are brought to the centre where assistance is provided for both mothers and children. The children concerned are extremely handicapped. The centre is a great success and is supplementary to the local authority services, although it is run by the local authority. It was expensive to provide, and the Carnegie Trust and other trusts assisted to finance it. This centre is doing a remarkable job in helping with a very difficult type of child.
We opened another centre which was financed partly by the Carnegie Trust and partly by Glasgow Corporation. It is a very big centre where there are facilities for helping mothers and babies. For the first time this form of help and diagnosis is available in one building. Previously, certainly in Glasgow, and I think also in other cities, mothers had to take their children to different places to obtain diagnosis and treatment. I strongly re-
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commend to the Government that experiments of this kind, which are proving very successful, should be regarded by the Ministry of Health as a pattern for the future when the provision of accommodation for this purpose is being considered. I recommend one other group to the attention of the Ministry of Health and to local authorities: I refer to the autistic children. The diagnosis of the mental state of these children is so new that a great many people do not know what an autistic child is. I am aware that the noble Lord, Lord Taylor, knows full well, so I will not burden the House with an explanation, but will simply say that this is a problem requiring special treatment and special schools. It is a problem with which local authorities are concerned, since many authorities find that there are autistic children in their communities. A certain amount has been done in London, a big city where large sums of money are available, but there are other areas in which this work could be developed but has not yet been started.
Other speakers have referred to old people and their care. I was particularly interested in the speech of the noble Baroness, Lady Summerskill. I thought that she was in rattling good form—as she always is, and I so often agree with her. We have occupied opposite Benches, or opposed each other in politics, for almost the whole of our lives, but I find it very difficult to disagree with her on subjects of this kind, in which her experience and knowledge is so vast and about which she adopts such a practical and sensible approach. The domiciliary care of old people has reached a much better standard to-day than that which obtained in past years. There are, of course, many old buildings that we should like to see destroyed: they are a hangover from the past, the old Poor Law hospitals and so on, which one longs to see blown up so that they may never reappear again. It is a fact that when the local authorities of which I have knowledge start domiciliary homes for old people, they are usually established in delightful country houses, in delightful circumstances and conditions. On the whole, this is very satisfactory, although I entirely agree with the noble Lord, Lord Simey, that in one sense these are the last places to which we should like to see old people go. There are services

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available which enable many old people to remain in their own homes or stay with their families, but there are cases where this is not possible, and for the people concerned I think that the modern type of homes which local authorities are starting to provide is very much better than anything we have ever known before.
The noble Lord, Lord Simey, stressed the need to define community care. Is it simply care in the community, or is it—as I think it should be; and Lord Simey feels strongly about this, too—care by the community? If it is care by the community, not only the local authorities are responsible, but also voluntary services of all kinds. As we heard from the right reverend Prelate the Bishop of St. Albans it is the concern of the churches and youth organisations. This is a commitment which affects us all, because we all live in the community; and that is a fact that we cannot stress too much. We need a great many trained people for social work. I support what was said about the Younghusband Report and the tremendous job which is being done, as a result of what was contained in that Report, in training welfare officers and workers throughout the country. This is a developing service in which the quality of the workers is improving. We cannot have too many well-trained people. Courses are being run in conformity with the recommendations in the Young-husband Report and these are of the greatest importance in relation to the improvement of community care by local authorities.
The great hobby-horse of the noble Baroness, Lady Summerskill, is the domiciliary care of people. My own is family case-work service. I have been working now for so long in the different sections of community care—welfare, child care and probation—and all the time I have been conscious that I was working in three separate departments, often dealing with three separate Ministries, in connection with the same people in the same community and often in the same family. This has been brought out recently in the interesting Report on the care of children and delinquency by the Committee sitting under the chairmanship of Lord Kilbrandon.
There is only one real solution. We should have a family case-work service.
1380 Otherwise we shall continue to our dying day to have people "passing the buck", saying that this is not their job but the work of somebody else. What is required is a service which can deal with the problems of a whole family. The only question that has to be settled is what Department should control that service. I know that in talking to the noble Lord, Lord Taylor, I am talking to someone who understands this problem. This is the last and most important revolution we have to face both in local and central Government, the co-ordination of these community services into a family casework service, which would deal with community care in toto and not keep it broken up in different sections. At present, much of this work does waste money and also wastes manpower and womanpower. I hope that the noble Lord, Lord Taylor, will take into consideration the large variety of views which have been expressed. But all of us hope that community care will be improved, will go from strength to strength, and will become more effective for the sake of the whole community.
6.3 p.m.
LORD SANDFORD: My Lords, I cannot remember a day on which we have had so many noble Ladies and noble "Maidens" in the field together making so many valuable contributions to our debate. I do not suppose that the noble Lord, Lord Amulree, would claim that it was as
… some watcher in the skies,
When a new planet swims into his ken"
that he calls our attention to community care, because community care is a fundamental without which none of our more advanced Hospital and Welfare Services could operate. If it were not for ordinary people caring for ordinary people, as the noble Lord, Lord Wells-Pestell, reminded us, no amount of policy and planning by the Government and local authorities, no amount of good work by voluntary agencies and no amount of training of professional social workers, could possibly avail.
I should like to turn first to look at the community and develop a little more the point made by the noble Lord, Lord Wells-Pestell, that we are concerned not only with care in the community, but also with care by the community. In

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many respects, the conditions of the community are not what they were a generation ago. In housing they are very much the better, but in other respects, particularly those relevant to this debate, a number of good things have been left behind in the old city slums which it would have been better to transfer into our new housing estates and New Towns. A year ago, in a debate similar to this, the noble Lord, Lord Taylor, told us of a survey he had caused to be undertaken in Harlow, from which it transpired that a high percentage (I forget the actual figure) of the people who had moved to Harlow were satisfied with their environment. He then instituted a similar survey in Bethnal Green and found a still higher percentage of people who were satisfied to remain there.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR COMMONWEALTH RELATIONS AND FOR THE COLONIES (LORD TAYLOR): My Lords, it was 86 per cent. in Harlow and 92 per cent. in Tottenham.
LORD SANDFORD: My Lords, I am sorry that I have not got the places right, but this illustrates the point that there is something in those older communities which we have not succeeded in transferring to the new ones. If we had succeeded, that story from Bournemouth would not have emerged. A welfare officer from Bournemouth, being interviewed by the B.B.C., ended the interview by saying, "If the old people will not come forward, what can we do?" Our system will not work if the community is not properly geared for it to work. A few days ago I heard another comment, from a member of the Council of Social Service in Letchworth, who said that it was not so much a problem of caring for old people as of finding the old people. They get lost. In the New Towns there is not the built-in structure, which we find in the old market towns, for bringing to light, and keeping before the people concerned, the need of so many of the people for whom the Health and Welfare Services are designed. I think that there is much that can be done to create such a built-in structure in these new communities.
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The noble Lord, Lord Wells-Pestell, mentioned the scheme which his rector had instituted in his village, and this gives me an opportunity of assuring him and, at the same time, of reporting to the right reverend Prelate the Bishop of St. Albans something which I ought to have reported to him before, because I am his executive chaplain, but I can do it now across the Floor of the House: on Friday week I am having a meeting at home with representatives from Bishop's Stortford, Hitchin, King's Langley, Royston and St. Albans, with a view to setting up the sort of scheme he has mentioned and, incidentally, deploying the resources not just of one denomination but of all the Churches in those areas. This is something which I am sure the Churches are in a unique position to do. What is involved is quite simple. It is to establish in every road or street, for every group of thirty or forty houses, one person who can assume the ordinary social responsibility for that group.
These people will not appear on the doorstep with a religious tract and set about trying to convert somebody; they are not people who drop in parish magazines; and they are not people who go bustling about trying to do a lot of good works. They are people whose chief contribution is their presence in the road, watching, waiting, and ready to take whatever action is necessary, or to see that somebody else takes such action. It involves quite simple things like welcoming newcomers and introducing them to their neighbours; it involves lending them a screwdriver, if that is what they want, and not giving them a parish magazine instead; it involves doing a little baby-sitting, if that is what they want, and not preaching them a long homily on repentance. It involves sensitivity to the social needs of the particular street or road for which they are responsible; and this service can be greatly developed.
Neither of the right reverend Prelates who have spoken so far has said much about this, but I very much hope to tempt the noble Lord, Lord Soper (and, incidentally, it is nice to see that in his feeling for the movement of Christian Unity he has moved along the Benches into a waiting position behind his Anglican colleagues), to tell us a little about the work in Notting Hill done by the churches under Methodist leadership, which have

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a great deal to contribute to the development of community care in that rather troubled area.
To turn from the communities to the care which is given in them, and away from the ordinary people whose help is so necessary, to the experts, the professionals who must guide and work with them, there is no doubt in my mind that we need large numbers of these people if all the developments and all the new insights into care and so on are to be followed up. But I think it is important to bear in mind that the number of people involved over the whole field of professional social work is really quite tiny. We are not now dealing with the 300.000 or 400.000 people who are required in the field of education in schools, or the 200,000 people who are required to man the work of the hospitals. We are dealing with a total, taking in the whole field—probation officers, child-care officers, psychiatric social workers, health visitors and everybody—of not more than 20,000. Surely it should be possible, with that quite small number, to reach higher standards of training, qualification and deployment than we have managed to reach so far.
The other day I was looking at a survey, carried out, I believe, by the child-care officers in 1963, which reveals that only 30 per cent. of that force is fully qualified, and 35 per cent. of them have no social work qualifications at all. That was in 1963, and perhaps the noble Lord can assure us that there has been some improvement since. Another instance is on the probation officer side. I believe that the male probation officer's case-load is not meant to exceed 60—and, in all conscience, that sounds high enough—but that since about 1956 the average case-load has exceeded that figure. Maybe this position is improving, too, in which case it would be nice to hear words of comfort to that effect. But I believe that if this elite, quite small force, on which the whole development and effectiveness of the Health and Welfare Services depend, is not fully trained and up to numbers, the rest of the service is bound to fail, and fail rather badly.
I do not know enough about this question to know exactly where the fault lies, but I suspect that much improvement would come if the arrangements for re
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cruiting and training over the social work field could be better co-ordinated. To the best of my belief—and I shall be corrected if I am wrong about this—there is one department in the Home Office which takes care of child-care officers: another department which takes care of recruiting and training of probation officers; another part of a department in the Ministry of Health which, in conjunction with the local authorities, deals with recruiting and training in the rest of the social work field: and lots of other separate bodies besides. It seems to me that we cannot get the best out of this service, and the limited number of people who have this sort of vocation, if the recruiting and training in the field of this range of workers is not properly co-ordinated. Perhaps the noble Lord can say something about this.
Another point about training which I think is important, and perhaps is not dealt with quite as thoroughly as it might be, is the question of refresher courses for the considerable number of senior men who are given some sort of social work title at the setting up of a service and find themselves in quite senior posts but have not had any full training for the posts which they hold. All this arises from the fact that since the war we have created new services far faster than we have been able to man them, and there is a serious short-fall which must be made good.
Finally, I turn from the community and the care of the community to the field which has been mentioned by so many other noble Lords—namely, that of partnership between all those concerned. By that I mean not only partnership between the statutory bodies and the voluntary bodies, but also between them and the private individuals, who have so much to contribute. I do not believe it is possible to establish any set pattern for this partnership. The blend will vary from place to place and from problem to problem. I think we must establish, though, that in any sort of social work all three—the voluntary bodies, the private individuals and the statutory bodies—will have something quite unique to offer; and all three must have respect for each other. They cannot make their full contribution in isolation from each other.
In saying this, I am quite aware that I am not saying anything at all new it is

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all fully accepted in theory. But we are quite a long way from seeing it work out in practice. This, I believe, is because we are content to enunciate the theory and the expectation in the hope that this is what will be done, without pressing further to take the practical steps that are required. One of the things required in many cases is that there should be a single person appointed, professional or non-professional, to do the co-ordinating. There is one example, of which I have some personal experience, that of a big mental hospital in Cambridge. This is where I did a certain amount of work during my training as a clergyman, and recently I heard of the developments there. They have appointed one person, Mrs. King—not a professional social worker—to do the necessary co-ordinating. I saw one of her recent reports. She is now co-ordinating (this has nothing to do with the professionals working in the hospital, but is quite separate) no fewer than 22 sets of separate groups of people, coming from twelve groups of varying kinds in Cambridge, visiting the hospital regularly; and on top of that, a hundred or so other particular visits from people outside making contributions of one kind or another. That sort of thing cannot happen unless somebody is appointed to do it. It is all very well to talk about partnership, but there must be a minimum amount of organisation to bring it into effect.
Another thing which is required—and this point has been mentioned already this afternoon—is some sort of directory available to people who need to know, setting out what work is being done, and by whom. The Council of Social Service for London produced an admirable booklet the other day, setting out all the voluntary work that was being done in London: the sort of work there was, what would be involved, in terms of the number of hours required, if one joined, the amount of training needed, and so forth.
One other step which has come to my notice recently (and I do not think anybody has so far mentioned it), is the initiative being taken by the B.B.C., which is wholly admirable. The B.B.C., on B.B.C. 2, starting in October, are producing weekly, with a short pause for Christmas, right into the New Year, a series of, I think, 15 or 20 short half-
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hour programmes, each one dealing with some particular aspect of social work. That in itself is a worthwhile operation, but it is made much more worth while by the fact that they are preparing a certain amount of literature in advance and encouraging people to commit themselves to watch this programme, week by week, in small groups and then, after the programme, to discuss the matter presented and take appropriate action in their own communities to follow it up. It is in this sort of way—these are just small examples from my own experience—that we shall enable these services to flourish. It is this sort of partnership on which the health and welfare services and, through them, the health and welfare of this nation, will grow from its present rather early forms into full maturity.
6.22 p.m.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, we have enjoyed three maiden speeches this afternoon. Perhaps it will be understood if I pick out one for special mention, for as a fellow countrywoman I should like to pay my warm tribute to the noble Baroness, Lady Strange of Knokin, who has to-day made her maiden speech. She was speaking from her heart, and that was recognised by your Lordships by the attention with which you listened to her. I am sure that those of your Lordships who heard her will join me in looking forward to hearing her next speech in very much less than the two years we have waited for this one.
We have ranged over a wide series of subjects in this debate to-day, and I have been fascinated to listen to the expertise with which so many of your Lordships have spoken on one subject or another. We are indebted—and I make no apology for adding my in-debtedness—to the noble Lord, Lord Amulree, for seeking to draw attention .to the increasing use being made of community care in the health and welfare services. I say this because he is an acknowledged expert in the whole range of subjects we are discussing to-day, and we are very fortunate to have had the benefit of his considerable knowledge and experience.
It seems to me that there is a very real need to build a series of bridges, underpasses, flyovers—what you will—between the hospital service and the

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local authority services. I am going to touch on only two of these possible bridges, because the hour is late, and most of us have been listening now for three and a half hours to a succession of speakers giving their own opinions on this great subject. Everyone wishes to live as long as possible, but no one wishes to be old—old and lonely. While science does much to prolong human life and ease its sufferings, it is doubtful whether the community as a whole does an equal amount to make prolonged life happy.
The first bridge of which I should like to speak is that provided by the "half-way homes." These are temporary bridges between the geriatric wards of the hospital and the more ordinary normal homes for the elderly. One of these, "Whittington," in Highgate, is run by the Association known as Hill Homes, after its remarkable founder, or foundress, Mrs. Hill, for patients coming from the Archway Group of hospitals that form part of the North London Group, of which I have the honour of being chairman. Patients who in the old days would have gone into hospital with no prospect of recovery may now look forward to at least a partial recovery, and in due course they may return to an almost normal life, commensurate with their age and temperament.
In hospital, quite rightly, every effort is made by doctors and nurses to help put bed-bound patients on their feet again. But what does the future hold for them then? Their old homes have often gone; relatives, owing to financial or housing difficulties, are not able to have them; and in many cases, although the people are partially recovered, they are certainly not well enough to live alone. Although transfer to local authority or voluntary homes for the elderly would seem to be the obvious answer, the patients often need more care and attention than this type of home is able to provide. The borderline between sickness and health has become a frontier over which it is difficult to pass, for the homes for the elderly and the geriatric wards of hospitals are under different authorities, both of whom are short of accommodation.
1388 In 1949, the King Edward's Hospital Fund for London saw an opportunity to help both the hospital service and the patient. Homes with gardens, in pleasant surroundings, linked with the hospitals in which the patient was recovering, could give the patient a real incentive to get well, and the hospitals would not find beds occupied by patients for whom they could do no more, yet who were not capable of fending entirely for themselves. The King's Fund allocated £250,000 towards the setting up of such homes to be attached to specially selected hospitals in London where interest in geriatrics was well proved. The Ministry of Health expressed great appreciation of the scheme. Seven such "halfway homes" were opened most successfully, and three other organisations, which also received substantial grants from the Fund, opened homes running on similar lines. In the "Whittington" Home, we were fortunate in securing the advice and help of that well-known and gifted geriatric consultant, Dr. Exton Smith, who continued to work in the hospitals and also in the home, thereby providing a superb link and liaison. The patients passed on to the homes from hospital continue to gain confidence and mobility, and after some little stay are able to move into a normal home for elderly people. Think of the contrast between that and being bed-bound for the rest of their lives!
At this same Whittington Hospital in 1959 the National Corporation for the Care of Old People sponsored an investigation into geriatric nursing problems, and although much of what is included in the final report of the investigation refers specifically to the hospital care of the older patient, there are some matters which could be related to a much wider field. I would mention particularly the section on clothing suitable for older patients. I do not know how much notice manufacturers have been able to take of the suggestion that clothing should be specially designed in respect of fastenings, so that the older person could be independent, so far as possible, in this vital matter of dressing. I am sure that some of your Lordships know how helpless your wives feel when they need someone to "zip up the back". If one is helpless with even the simplest clothing operation, this must be very discouraging to one's self-respect. This problem is not confined

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to older people only, but applies also to many disabled people. Much is being done to redesign kitchen implements to deal with the special problems of disability. I feel sure that a lot more could be done in the design of clothing as well.
The second bridge to which I would refer is that provided by the establishment of the Industrial Therapy Organisation which has grown up in connection with St. Bernard's Hospital, one of the large mental hospitals in the North-West Regional Hospital Board's area. Industrial therapy is now being used widely in mental hospitals as a means of preparing long-term psychiatric patients for permanent rehabilitation; and we have heard this subject dealt with by one or two speakers this afternoon in connection with the Bristol scheme, and the scheme which the right reverend Prelate mentioned in his Diocese of Lichfield.
When these patients have been given a substantial period of industrial re-employment training in hospital, the Industrial Therapy Organisation factories, where available, are designed to bridge the wide gap between the hospital training units and open industry. They are trained, not for sheltered workshops but for open competition in the industrial field. In these industrial therapy organisations, which are non-profit-making limited companies run by a small team of industrialists, trade union representatives and doctors drawn from the neighbourhood, patients become trainees for a final course of instruction under realistic working conditions in factory surroundings outside the confines of the hospital. Where possible, these trainees are also accommodated in hostels outside the hospital while undergoing this course, so that they may adjust themselves socially as well as industrially before taking their full place permanently in the community again.
This Industrial Therapy Organisation realised that, although mental illness had become one of the greatest social problems of our day, there had not existed, in this country certainly, an adequate national scheme for the re-habilitation of long-term mental patients. The Ministry of Labour has done its utmost, through its industrial rehabilitation units, to assist an all too small proportion of mental patients—mostly short-term—but these units are really designed to deal with the physically handi
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capped. This particular branch approached the Ministries of Labour, Health, Pensions and National Insurance, the National Assistance Board and the relevant county councils involved. In every case they met with encouragement and a spirit of understanding and co-operation.
In August, 1964, the first section of a new factory was opened in Hanwell. This was set up in valuable industrial premises ideally suited for the purpose, about one and a half miles from St. Bernard's Hospital, which can be conveniently reached by the trainees from their homes, their hostel or from the hospital, by the use of public transport. These premises could only be acquired as a result, again, of the generosity of the King's Fund which, through St. Bernard's Hospital, made a grant of £25,000 to buy the premises.
Under the negotiations and arrangements made with the various Ministries, the company receives the necessary recognition as a rehabilitation agency specialising in psychiatrics. Its trainees may receive training grants, lodging and dependants' allowances, insurance training credits and other assistance of graduated scales comparable with the facilities given in Ministry of Labour industrial rehabilitation units. The industrial rehabilitation manager of St. Bernard's Hospital was made the honorary works director of the company. A scheme of social rehabilitation is considered an important aspect of the company's work. It is done in an imaginative atmosphere and is linked where possible with the existing welfare and social services of the local authorities and other bodies.
My Lords, I have tried to describe two of the promising new bridges being built between hospitals and the more normal, everyday life in which we live. Both are admirable and their engineers deserve our gratitude and our encouragement. I have read through the stimulating report of the Ministry of Health for the year 1964, which is just available to us, and I cannot find any mention of either of these bridging operations. Could the Minister in his reply tell us whether it is going to be Government policy to encourage such developments? I am sure that if he can do so it will be a source of great stimulation to those

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already experimenting in these fields, as well as to those who might be thinking of making similar efforts in their own areas.
6.35 p.m.
LORD SOPER: My Lords, many who have spoken in this most interesting debate have proffered their thanks to the noble Lord, Lord Amulree, for initiating it, and not least for the subject matter of his Motion, the amplitude of which has encouraged so many speakers to range over a wide variety of related matters. I am much tempted to follow the advice of the noble Lord, Lord Sandford, but I must resist that temptation, in order to talk about a number of matters which have exercised a great influence upon my own thinking and of which I have some practical knowledge. For instance, the care of pregnant girls at the moment at which they become aware of their pregnancy is almost a peremptory need in any civilised community. In the hostel for which I am responsible many of these girls are under sixteen. Then there is the need to care for youngsters who come out of approved schools and hostel accommodation. Suffice it to say, if I may, in reply to the courteous question of the noble Lord, Lord Sandford, that one of the things we have discovered in the group ministry in Notting Hill for which I am responsible is that community care must cover the whole area of human life, and it will appeal to those who find that at the particular point at which they feel the need for that care, that care is offered.
Therefore, I want to take another subject which hitherto has not been touched upon, and I do it because I believe that "community care" is not a bad description of the characteristic quality of the Kingdom of Heaven. Quite the most Christian thing that has happened in my lifetime is the Welfare State. In that overall concept of care I remember, and my right reverend friends on the Prelatorial Bench will remember, that a well-known Anglican clergyman of the eighteenth century, among his various pieces of advice to those who helped in the community in which they lived, said this:
"Go to those who need you, and especially to those who need you most."
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There are two sorts of care: there is the care which is auxiliary to the already existing capacity to help himself of the one who is to be cared for; and there is the care which has to be given spontaneously and continuously, in the absence of any capacity of the one to be helped at that stage to help himself. It is in that latter connotation that I would venture upon a subject which has not yet been touched upon and very briefly say something about the whole realm of alcoholism. I reflect, my Lords, that you will want a guarantee that because I am a minister of religion I shall not exaggerate, as we are so often inclined to do in descrying in our congregations numbers which to the naked eye are not apparent, maximising the areas of original sin, and certainly emphasising and exaggerating our effects upon it. Therefore I have taken some considerable care to arrive at data which, although they are not precise, are, I think, viable and are certainly not extravagant.
Alcoholism is a stress disease. It first of all shows itself in the habits of drinking, and then expresses itself in quite physical effects. According to the national organisation on alcoholism, and indeed the International Health Office, it is clinically to be described as a disease. The important fact is that the alcoholic is not a drunk who can, if he has sufficient will-power, get rid of his habit and become sober. He has become a compulsive drinker and therefore does not possess in himself the capacity to right the wrong which he is doing to himself and the community in which he lives. It seems to me that this is a prime case for community care.
As to the numbers of alcoholics in the community, the present Minister of Health in another place said, not so long ago, that in his judgment the number was 500,000. Ten years ago the Carter Foundation, after careful assessment, thought it would be about 300,000, but were quite satisfied that the number was rising. Whether or not one agrees with either of those figures, there is an increasing and strong conviction that this is a manifest and major evil in the community, and those who, like myself, have had some little experience of trying to deal with it have been appalled by its incidence and its prevalence.

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The problem of alcoholism is, of course, a spiritual problem for the addict. It is not about that that I am going to speak, and I am certainly not intending to give a lecture on total abstinence, or the devil in solution. This is a clinically distinct episode in the kind of society in which we live. It would, I think, be not untrue to say that alcoholism is proper to the modern society in the same way that drunkenness was proper to societies that have gone before it. If you try to calculate, as it obviously is desirable to do, what are the deleterious effects of addiction to alcohol, as attempts have been made in the United States, where they claim, probably extravagantly, that there are 5½ million alcoholics, you find that the loss of productivity, the impairment of the total national product in almost every sphere that is worth calculating, must be immense. And if you reflect that there are perhaps 350,000 alcoholics in the community at the moment, and they are each set within a framework of at least four other human beings, it does not need any words of mine to persuade you of the terrible impacts of this scourge and the very great responsibility that rests on a civilised community to help those who, at the moment, are incapable of helping themselves.
I will refrain from any comment on the moral basis or the ultimate spiritual exercise in endeavouring to rehabilitate the alcoholic. I would say, in passing, that, in my judgment, cure is probably out of the question, and the only thing to be hoped for is permanent convalescence. But if that permanent convalescence is to be arrived at there are certain peremptory needs that have to be fulfilled, and I would presume to mention some of them in a very short speech. I should be unfair to myself if I did not in the first place say that I am quite sure that until we get rid of the particular aspects of the economic system in which we live, we shall increasingly impose stresses which will be almost intolerable on all except the strongest and most robust of our citizens; and, quite apart from the Christian ethic in this respect, it is surely the business of any civilised community to make it relatively easy for those who desire to do what is right to have an opportunity of so doing. Therefore, in general terms, since alcoholism is a conjoint quality of or disqualifica
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tion within the capitalist system, I, for one, as a professing Socialist, want to get rid of the capitalist system; and all the other methods that would be applied until that has been achieved would only be ancillary to that main task.
I believe that within the present system there is a widespread and reprehensible use of advertisement. I said, in another place (and by that I mean other than the other place to which your Lordships familiarly make reference here; it was in fact in the Methodist Conference a few days ago) that the prevalence of the public house as the cultural centre of English life in many of the films and other items shown on the television screen seems to me at least questionable, and I sometimes wonder what some of our television actors would do if they could not hold a cigarette in one hand and a pint pot in the other. And the almost continuous encouragement to drinking, I am quite satisfied is in itself dubious; indeed, I should go further and say it is wrong. The calculable results of drinking are no less in their final bad effects than those of smoking.
However, it is rather to specific issues I feel I can more properly direct your Lordships' attention, if I may, in these final comments. There are 196 active groups of Alcoholics Anonymous in this country; there are a number of institutions, most of them in London; there are a great many voluntary organisations at the moment calling meetings and taking minutes. But there is a great need for a national project in this country, comparable with the national projects already to be found in the United States of America, Holland and other places, and I hope that there may be something in the Governmental pipe-line to encourage us to believe that this problem will be treated nationally, because only under such a national attack do I think there is any real prospect even of modified victory.
The second and probably the most important immediate concern is to domesticate the alcoholic in order that he may be amenable to the treatment now offered to him, the anti-boost, the apomorphine, the drying-out process, the increase of vitamin, the various ways in which he can be encouraged to look more brightly on life and helped psychologically and spiritually to see that he needs and is prepared to accept the help that would be

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given. But unless you can put him into such an environment as would encourage the gradual emergence of new will-power—and this can only be done voluntarily at the moment—he will be unlikely to take that treatment. Therefore, in a simple sentence, what is needed is a hostel which combines the benefits of medical treatment and the domestic capacity to hold him there, by love, affection or kindliness, in order that he may be amenable to that treatment. Unless that happens it is almost a waste of time with 9 out of 10 alcoholics.
This kind of hostel treatment will have to be directed not only towards men but towards women. I am responsible for a small hostel for alcoholic women. I have no knowledge of the numbers there may be in the community, but the secrecy of wine-drinking middle-aged women who are alcoholics is to me an ever increasing concern, and I should not be surprised to find that the number, if it were known, would be frightening. I believe that this marriage of the voluntary society to the statutory body is the immediate way in which this particular enterprise can be carried through for both men and women.
Therefore, I would conclude by giving one practical illustration from the place where I worked for some little while. In the London County Council, just before its demise, a committee was set up to inquire into the poor relations of the alcoholics, the crude spirit drinkers, who pollute some of the open spaces in London—the crude spirit drinkers, who must, of all men, be the most melancholy and most unfortunate. I will not presume to tell your Lordships about them, but perhaps you do not know that they are so physically offensive that it is almost intolerable to be within three or four feet of them. Perhaps you do know that the processes of crude spirit drinking, the last processes of alcoholism, have the most ghastly physical effects. If a community believes itself to be civilised and if it really accepts the principle of community care, it will seek to care for such.
The London County Council went very carefully into this matter through an approved committee and came to the conclusion that only by the provision of some kind of hostel, some kind of home, would it be possible to do anything at all for the crude spirit drinker, and they felt
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it would be possible so to effect this remedial process only by the co-operation between the statutory bodies and an institution such as the one for which I work. The interim ethic of community care, I am sure, is to be found in the marriage of the voluntary association and the statutory body.
I would end with a plea. Most people find it much more convenient to ignore the alcoholic unless he happens to be a member of their own household, to pretend he is not there, and to minimise the whole idea in their minds when it is presented to them. Every other industrial country in the Western world is taking this problem with increased seriousness. We as a civilised and an officially Christian community should not lag behind. There is a great deal of good will towards the alcoholic. He is potentialy a most valuable member of society, for when he is not alcoholic he has no difficulty in finding a job. He is, while he remains an alcoholic, a curse to himself and a sorrow to those who love him. Community care for the alcoholic would be one of the marks of a truly civilised community.
6.50 p.m.
LORD STRABOLGI: My Lords, I think we are all indebted to my noble friend Lord Amulree for initiating this debate, which has covered a great many different subjects. I should like in a few words to confine myself to just one aspect of community care—namely, the question of old people and their treatment in mental homes. If I follow my noble friend Lord Soper and strike a less happy note, I will at least try to speak with the moderation which is the custom in your Lordships' House. A great many old people are going into mental homes mainly for two reasons: first, there is a great shortage of old people's homes; and, secondly, many of these old people's homes are not able to take old people who are incontinent and enfeebled. The result is that many of them have to go into mental hospitals, although they are not psychiatric cases at all.
Many of these mental hospitals are good, but some are really a disgrace to a civilised country. An example of the kind of hospital I have in mind is the one which was described by a psychiatric worker in this particular hospital in the

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issue of the Guardian of March 19 of this year. In hospitals of this kind, of which I believe there are six or seven in the country, old people, it would be no exaggeration to say, are treated worse than in the old-fashioned type of Victorian workhouses. They are treated worse because they are regarded as mentally deficient as well as merely poor. There is, for example, the practice of what is known as "stripping". This means that on entry all personal belongings are removed, including spectacles, deaf aids and dentures. There are no personal lockers. The food is appalling. In some cases the last meal is served at half past three in the afternoon. Electro-convulsive treatment is given, I believe, to almost every old person, irrespective of whether it is needed or not. In certain cases it appears that this makes them worse.
But the worst thing of all, I think, is the fact that they are given nothing to do. No effort is made to interest them. Without their spectacles they cannot read or sew. There is rapid deterioration through boredom. In some hospitals visitors are discouraged; no information is given about hours; it is difficult to find your way to the ward you want, and there is a great lack of voluntary workers.
We have heard with great advantage to-day the excellent speech of the noble Marchioness, Lady Reading, and one knows of the wonderful work that her organisation, the W.V.S., does. I wish, though, that as well they would direct their attention to some of the mental hospitals, and particularly to the wards for the old people, they being in them because they have no other roof over their heads, for no other reason. There is now a tremendous interest and sympathy of young people throughout the country. If they only knew of the conditions, I feel sure that many of them would go in and work voluntarily and give company to these old people. Hardly any ministers of religion visit. I do not at all blame the Churches of any denomination. I think the fault lies with the hospitals, who do not notify the churches of the various denominations of the patients as they enter. There is a shortage of medical and nursing staff.
THE LORD BISHOP OF LICHFIELD:My Lords, on a point of order, I must point out that every hospital has an
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accredited chaplain—Church of England, Free Church and Roman Catholic—and great care is seen that regular hospital visiting by the churches is carried out.
LORD STRABOLGI: My Lords, in reply to the right reverend Prelate I can speak only of what I know, and in the particular hospital that I know there are very few visits indeed. I do not blame the Churches. I think I made that clear earlier. I think the fault lies with the hospital, who do not notify the church when a patient of a particular denomination enters. There is a shortage of medical and nursing staff. Patients hardly see the doctor from one year's end to the other. The nursing staff do their best but are over worked, which leads, I think, to lack of attention and even, in some cases, although it is not the fault of the staff, indirectly to cruelty.
The result of all this is an atmosphere of humiliation and neglect. The patients are—this is a term which is used by some friends of mine in one of the universities who are making a study of this problem—"pulped". They lose all sense of self-respect. Worst than this, many are cowed and frightened. All just vegetate and seem lost to the world. And they are lost to the world. There is nothing more relentless than the State machine when it gets the helpless into its maw. I know one old lady of over 75 who spent two years in this place that I have described on the outskirts of London. The physical deterioration was rapid. Recently we managed to get her rescued and transferred to a good Catholic old people's home where she is making rapid improvement. I went to see her last Sunday and her progress was amazing. Of course, the reason is that she is being treated with love and kindness by the nuns. She has her own locker. She wept for joy when she saw that she was going to have one.
Therefore, I would urge the Government that there must be an early priority given to a programme of building more homes for old people, and in small units, so that those whose families cannot look after them do not have to be diverted into mental hospitals, which are not places for people who are not mentally incapacitated but merely incontinent and enfeebled. In the olden days, primitive tribes used to turn their old people into

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the cold to die. We are more civilised—we merely allow them to rot in mental hospitals. So far as a great many people are concerned, especially old people, the Welfare State is little more than a sham and a mockery.
7.0 p.m.
LORD TAYLOR: My Lords, I think that it would be advantageous if, straight away, I say a few words to my noble friend Lord Strabolgi while his speech is fresh in our minds. I remember visiting "Hillside," which the noble Baroness, Lady Brooke of Ystradfellte, will know very well. It is an old L.C.C. Public Assistance institution at the bottom of Highgate Hill, not far from her hospital. There they have an excellent ward for senile geriatric patients such as the noble Lord has been describing. I remember one old lady there who was 102. When I got home I remember my children saying, "Did you ask the question?" I said, "Yes, I did ask the question." The question was, "Do you get a telegram from the Queen on your 101st and 102nd birthdays, as well as on your 100th?" The answer, I now know, is that you do not.
LORD AMULREE: My Lords you do not get a telegram from the Queen. You get a telegram from the Queen Mother on the subsequent birthdays.
LORD TAYLOR: My Lords, I stand supplemented, rather than corrected.
Now in "Hillside" a large number of these old people are incontinent, but there is no smell in the ward. They are nursed by one trained nurse and some assistant nurses, who come mainly from the Commonwealth. There is no reason at all why the conditions which he has been describing should obtain in any geriatric ward, whether it be in a mental hospital, in an old people's home or in a general hospital. If the noble Lord will let me have the particulars, that is to say the name of the hospital concerned, I will certainly see that his statements are dealt with and that we fully investigate the conditions which he has described. I can remember going, as a young lad, to my first job in a mental hospital. I was supposed to be looking after 450 people and there were some pretty bad things then. But the work I was trying to do then is now
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done by four or five doctors. I do not know of any hospital as bad as the one described by the noble Lord.
LORD STRABOLGI: I can take the noble Lord one afternoon to the one that I have described.
LORD TAYLOR: We will certainly see that it is thoroughly looked at.
The noble Lord, Lord Amulree, cannot complain that his Motion has not succeeded. Its wording is
"To draw attention to the increasing use being made of community care in the health and welfare services."
It is not critical, but descriptive. He succeeded in drawing from all parts of this House a long series of descriptions of what is being done and what needs to be done, and I shall have the greatest difficulty in trying to give your Lordships a full reply. May I say what a pleasure it was to have five noble Baronesses taking part in the debate, particularly the noble Baroness, Lady Strange of Knokin, and to hear the noble Viscount, Lord St. Davids, congratulate her on her maiden speech. Her contribution was, to me, a breath of the countryside. I am so glad she made it because, in thinking about the needs of the community or of individual human beings, one often forgets people isolated in the countryside where there can be just as much sorrow and misery in the backroom of the poor farmhouse as there is in the upstairs room of the tenement.
Dean Swift wrote in 1725 to Alexander Pope:
"I have ever hated all nations, professions and communities, and all my love is towards individuals; but principally I hate and detest an animal called man, although I heartily love John, Peter, Paul and so forth."
I must say that I find the words "community care" very mysterious. The phrase means no more than caring for people. I do not quite see what special significance the word "community" has. The other phrase I do not like is being "in care". I hope to goodness that I am never "in care", although—who knows?—one may be one day. But I think that it is an unfortunate expression. The best definition of community care came from my noble friend Lord Soper, who said that community care is the equivalent to the Kingdom of Heaven. I began to

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think that there was something in what he said. At the same time, one had a feeling that community care can sometimes go wrong. One can be too busy, if one is not careful, minding other people's business.
Community care is something which, fortunately, most of us usually do not need. But that does not make it any less important when we do need it. Some of us will need it after a severe illness or in old age, some of us after suffering the loss of a faculty, such as sight, or undergoing a neurological illness, or a severe injury. We had a very good description from my noble friend Lord Amulree of the remarkable work of Dr. Guttmann at Stoke Mandeville. Caring for, and continuing to care for, severe injury is likely to be one of the growing forms of community care which we have to face. It is a major task, and the noble Lord described it so well that I do not need to go over it again.
I should like to say a word about industrial rehabilitation. My noble friend Lord Amulree said that Vauxhall Motors had an industrial rehabilitation unit. I remember visiting Austin's, at Long-bridge, where they employ about 14,000 people. They have a small industrial rehabilitation unit, but they have the greatest difficulty in supplying enough patients to keep that unit going. The Slough Industrial Health Service, which covers about 25,000 people, has an industrial rehabilitation unit, but only a quarter of the people in the unit come from Slough. To run such a unit efficiently it is necessary to draw on a large area of the community for people in need of industrial rehabilitation. The right thing to do is to relate rehabilitation to Regional Hospital Board areas because the Boards cover a large enough area for this purpose. This is not in any way to belittle the work of the industrial therapy organisations which were mentioned by the noble Baroness, Lady Brooke of Ystradfellte.
LORD BRECON: My Lords, the noble Lord might like to know that the Austin Company have in South Wales a factory employing 400 miners who suffer from pneumoconiosis where, in fact, they make many of the cars for Longbridge. It has been a very successful unit of rehabilitation for those suffering from this disease.
LORD TAYLOR: That is a most important and valuable contribution. This is a different kind of rehabilitation, but even more valuable, because these people are continuously disabled and cannot often be permanently rehabilitated. One has to keep them all the time in this sort of environment.
In addition to those who need care as a result of severe injury, there are those who need it because they are badly handicapped in one of three ways. I do not think I need say very much about the old, because my noble friend Lord Bowles gave them a fair run. Then there are the physically handicapped, and they include the congenitally handicapped—people who are born with a disability, whether 'because of the effect of drugs such as thalidomide, or congenital heart disease or what-you-will. Thank goodness! many of these can now be helped by surgery and completely rehabilitated, completely brought back into the community.
There are those with an acquired handicap, as a result of injury or neurological disease. The noble Baroness, Lady Elliot of Harwood, mentioned autistic children. Autism is, I suppose, one of the most awful handicaps anybody can have. It is a very rare handicap and, therefore, there is a need for very few schools to deal with them, but unfortunately there is almost nothing one can do for these children. They are completely devoid of any emotional reaction whatsoever, or their emotion, in so far as they express it at all, bears no relation to their environment. They do not speak, they appear not to hear, and yet appear quite normal in the way they grow up. Sometimes they have been thought to be juvenile schizophrenics. Fortunately, they are very rare, but they are one of those problems which we do not yet know how to deal with.
There is a further very important group. This includes the psychiatrically handicapped, the subnormal, or psychiatrically ill. Then there are those whose psychiatric illness has a social emphasis. These include the alcoholics, to whom my noble friend Lord Soper referred, and the psychopaths, who also, I think, sometimes appear among the alcoholics and methylated or crude spirit drinkers. They are quite incurable, I think, even with my noble friend's hostels. They do permanent damage to themselves and they really

1403
become tramps—almost vegetables, one might say—in the end. Finally, one might well include criminals among those who are both psychiatrically and socially ill. My noble friend Lord Soper spoke of these people also in connection with the after-treatment of discharged borstal boys and boys and girls from approved schools.
As I have been listening, I have felt there was one real point of controversy which emerged in this debate, and that was the controversy between my noble friend Lord Simey, in his extremely interesting maiden speech, and my noble friend Lady Summerskill, in her equally interesting, vigorous speech. My noble friend Lord Wells-Pestell, in his maiden speech, also contributed to this particular controversy. My noble friend Lady Summerskill said, and I am inclined to agree with her—
LORD BRECON: My Lords, could the noble Lord address the microphone? We could then all hear.
LORD TAYLOR: My Lords, I thank the noble Lord for that suggestion. I never quite know whether to reply to my noble friends over my shoulder, or to speak into the microphone in the hope that what I say will come back to them. I shall try to speak into the microphone.
BARONESS SUMMERSKILL: The noble Lord was saying that he agreed with me.
LORD TAYLOR: I agree with my noble friend Lady Summerskill that there is not an indefinite reservoir of unemployed ladies and gentlemen who are ready to do voluntary social work. They just do not exist nowadays. Middle-aged ladies are fully occupied, very often in paid work; those who are not are doing social work already. To find the voluntary social workers to help trained social workers will be very difficult indeed.
There are, of course, limits to the speed at which any developments can take place; for instance, the amount of capital investment which can be spared for building homes for old people and handicapped people is limited, because these capital schemes have to compete with many other urgent calls on the available resources. In the same way there is a limit to the supply of potential social workers. We must therefore avoid call
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ing on social services whenever we can and must carry our own burdens.
My noble friends Lord Simey and Lord Wells-Pestell reminded us that, under the Children Act, it had been possible to relieve society of the burden of caring for children by the development of foster parenthood. My noble friend suggested that it might be possible to apply the principle, as it were, in reverse; that grown-up people should adopt old people to foster as parents in their homes. That seems to me a most intelligent and most thoughtful suggestion, which is well worth looking at and doing if it possibly can be done.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, I am sure the noble Lord realises that this has been experimented with in Exeter with great success.
LORD TAYLOR: My Lords, I did not realise that it had been done in Exeter, but I am very glad to have elicited the fact from the noble Baroness.
I want to be brief, and therefore perhaps it would be best if I looked through the points which your Lordsips raised and tried to answer these in particular. The noble Marquess, Lord Lothian, spoke about the patchiness of services. I think patchiness is one of the prices we pay for having services run by local authorities. One cannot avoid this patchiness, and the system which we have, which his Government used, and which we shall be using again, of calling for a plan to be submitted and then revised every year or so, with continuous stimulation by the Minister of those authorities which seem to be negligent, is about as far as one can go, while preserving local autonomy. I do not see how one can therefore avoid having some areas where things are going ahead faster than in others. I took the noble Marquess's point about the possible use of cottage hospitals as halfway houses for mental patients. That certainly is one possible use for them. They are also, of course, ideal old people's homes.
My noble friend Lord Simey spoke about the importance of community associations, and the possibility of community associations playing their part in preventing the deterioration of old people. I should like to agree with him, but to

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say that the successful running of community associations is a very difficult job indeed in my experience. I have seen four community associations working in one town—namely, Harlow where I used to work—and each of those community associations covered a population of about 20,000, yet I do not think any of them had more than 1,000 active members. In other words, to make a real impact on the community is very hard indeed, though many of the things the community associations may do can of course affect people who are not members. Running community associations is a skilled job, and one cannot expect to get people of the quality one needs at the figures which can now be offered.
The right reverend Prelate the Bishop of Lichfield, in his account of the work of his Regional Hospital Board, spoke of the increasing use of an outpatient department at Stoke-on-Trent as a comprehensive treatment centre, and I am quite sure this is the way that outpatient departments will develop in future. I think this is a glimpse of the future. He spoke also of the remarkable work which is done by voluntary organisations for the deaf and dumb and for the blind. Indeed, when I got my brief from the Ministry of Health, like those mayors whom he visited and who, at the end of their terms of office, realised how much was done, I, too, realised how much was done, and also how much there is to do. The work of the welfare officers of the local authorities, specially trained in the teaching of the blind and in the care of the blind in the home, is, I must say, really remarkable.
My noble friend Lady Summerskill spoke about the need for a register of old people in every area, and I agree that this is something which may be needed. But it is not easy to say how it might be achieved. The problem, I think, is ascertainment; and, short of making a complete census of every room in a borough, I cannot see that one could pick up the needs of all the old people, particularly the cases one wanted to pick up-the non-communicating old people. It is possible to arrange for general practitioners, on a voluntary basis, to notify the names of old people in need of care, and that, I believe, is
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done in Newcastle, although I do not know how successful it is. But I should like to tell my noble friend that the question of a register for the aged is something that the Government are now considering. She will also know that a Bill on the reform of abortion law is before another place now, and that the Government have said that they are strictly neutral on the subject. She will know also that there is a committee on the pharmaceutical industry, under the chairmanship of my noble friend Lord Sainsbury, which I hope will give her some of the things she wants.
The noble Baroness, Lady Swan-borough, had to leave but she spoke particularly of the admission of old people into hospitals and long-stay homes when they were in a state of confusion, and of when this confusion was due to an organic cause; and she suggested that they should all be properly examined and assessed. Of course, she is right; they all should be: but I must say that I think the great majority are. The noble Lord, Lord Amulree, will know better than I the drill and the growth of geriatric units where such assessments are made extremely efficiently now. So, provided the old person goes through a geriatric unit, there should be no failure to ascertain a physical cause of mental confusion.
My noble friend Lord Wells-Pestell, besides his very interesting observations to which I have referred, told us about Severalls, a mental hospital which has improved beyond all knowledge in the past ten years, and told us about their success in boarding out 30 elderly patients at a cost of £5 per week per patient instead of £12 per week—and I must say that I thought that was a very interesting achievement, and something which can obviously be developed. The noble Baroness, Lady Elliot of Harwood, referred to the difficulty that arises when old people are rehabilitated from a mental hospital and are brought back into a community, and asked where they could go. The truth of the matter is that, with modern treatment, it is increasingly possible to socialise old people who would previously have been regarded as hopeless. This presents precisely the problem of where they are to go; and, if the Severalls solution can be applied generally, there is a very good one.

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I unfortunately missed the speech of the right reverend Prelate the Bishop of St. Albans, but he told me beforehand that he was going to deal with mental health halfway houses. Here I should like to say that it is easy enough to see how the halfway house acts for the old person, for the physically disabled and for the physically handicapped, but for the acute mentally ill it is not quite so clear yet what is wanted of a halfway house unless the patient has been confined in hospital for a very long time. My psychiatrist friends assure me that, with modern psychiatric treatment, they can get almost every patient, other than the psychopaths and the elderly confused, well again within three or four months and back to their own homes in this sort of time, although they may relapse.
If they can do this, and if one has acute psychiatric wards in general hospitals, there should not be this building up of resistance to their return, and there should be no necessity for industrial retraining because they should not have lost their skills in this period. But, although it may be easy enough for a person who has been depressed, for example, to go back to his old work quite satisfactorily, it is more difficult with schizophrenic patients, who are naturally rather withdrawn; and they may place a considerable burden on their families. If, of course, they have no family, or if their family refuses to take them, the need for accommodation for them is manifest and obvious. But with these short stays in hospital that is much less likely to happen.
The noble Baroness was right in saying that the growth here has been much slower than in the case of the mentally subnormal, where the services have been growing rapidly in the last two or three years. Here, things are going much more slowly, because we do not yet quite know what is required; what is the proper way of halfway house between the mental hospital or the acute psychiatric ward and the return to home. It may be that they are not invariably required for anything like all the patients. I hope they are not.
THE LORD BISHOP OF ST. ALBANS:My Lords, may I ask the noble Lord one question, as he was not here when
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I spoke? I raised the question of the Richmond Fellowship, because I am interested in that, and I made the point that that particular halfway house has found difficulty in finding suitable accommodation, partly because of the resistance of the residents in the neighbourhood. They feel that there is something "funny" about a halfway house for people who have come from mental hospitals, and they are inclined to resist. The particular point I wanted to make was that I hoped the Government could do something to encourage such districts to think again before taking such a line.
LORD TAYLOR: I would entirely agree about that; and may I say that one knows from one's own family experience that getting hostels for borstal boys and girls is inclined to meet with exactly the same kind of resistance from the neighbours, perhaps even worse resistance sometimes. If I can help at all practically in the case of the Richmond Fellowship, I will certainly see what can be done, although the acquiring of premises by these voluntary bodies is often the most difficult thing they have to do because of the capital cost of the buildings and the value of the site of the place where they want to go.
My Lords, I do not think I should continue any longer, but I must say one word in reply to the noble Lord, Lord Sandford, who is just opposite me. He was kind enough to make some references to my work in Harlow. I want to say two things: first how much I admire the work of the Fulbourn Mental Hospital and the work that is done there. It is an extremely good mental hospital. Also I should like to say a word about his street observers. I happen to live in a long street. I reckon that there must be nearly 2,000 people in my street in various blocks and flats. I do not know how his street observers know when somebody wants a screwdriver or is in some other social trouble at the other end of a long street, but no doubt the scheme is more practicable in a country town.
I should like to say something further, if I may, to the noble Baroness, Lady Brooke of Ystradfellte. It is just a word of praise and admiration for the Hill Homes. They are wonderful institutions.

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Mrs. Hill is the wife of Professor A. V. Hill, whom some of us who were in the other place knew well; I think I knew him when I was a student of physiology, which was a very long time ago. He is a Nobel Prize man. He is still going strong; so is she, and so are the Hill Homes. May they continue to flourish and serve the old people of North London in this wonderful way!
My Lords, I think I really have said enough and I should draw this very interesting debate to a close. But before the noble Lord, Lord Amulree, winds up and says the concluding words I should like to say how valuable the Government found it, how many stimulating ideas we have had injected into us. We will look at everything that has been said; nothing will be wasted. I can promise noble Lords and noble Ladies that we will make sure that if answers appear to be called for which I have failed to give, we will try to give them in letter form. But action is really more important. I feel we have had here a series of bases for action, whether by voluntary societies, by local authorities or by the Government themselves. We have had so much that is useful, so much that is stimulating, that I think the noble Lord, Lord Amulree, can congratulate himself on a really successful debate.
7.33 p.m.
LORD AMULREE: My Lords, I should like to thank the noble Lord, Lord Taylor, for his kind speech in summing-up. There are one or two brief points that I wish to make. The noble Lord looked to me as if the words "community care" came from me. They are words that I dislike intensely. I saw them for the first time on a large book published in 1963. I do not know what they mean. That is what I have been trying to find out to-day. I trust that we shall one day be able to banish them from normal talk.
The other point I wish to make is that the object of my speech in this debate was not to try to get more places built; but to get more people going from the places that have already been built, so that we should not want any more hostels and institutions, so that people would continue to live in their homes and so that those who, unfortunately, were in hospitals
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would be able to come out of them. I was not putting forward the plea that more should be built. Thirdly, the noble Marquess, Lord Lothian, referred to the patchiness of things, and the noble Lord, Lord Taylor, also referred to that. Surely that is partly due to the vice of permissive legislation. If you are going to permit local authorities, rather than to say to them, "You shall", then you are going to get into trouble. I know that you are also going to get into trouble if you say, "You shall"; but one must take a chance.
Before I sit down I should like to thank the large number of noble Lords who have come and supported me. I am pleased that so many noble Baronesses took part, and particularly pleased that we have had such a large number who have come along and made maiden speeches. I would particularly refer to the maiden speech of the noble Baroness, Lady Strange of Knokin. It was rather a remarkable effort and I was very pleased that she was able to come along and say a few words in support of my Motion. With your Lordships' permission, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

NEWSPAPER PHOTOGRAPH OF ALLEGED GHANAIAN PRISONERS
7.35 p.m.
LORD BROCKWAY LORD BROCKWAY rose to ask Her Majesty's Government whether they will establish an inquiry into the circumstances which led the Daily Express to publish a photograph of alleged political prisoners in chains in Ghana in March, 1965, which was in fact a photograph of prisoners in Togoland in January, 1963. The noble Lord said: My Lords, I rise to put the Question in my name on the Order Paper. I regret that I am again initiating a debate at what is a comparatively late hour for this House. That does not mean for a moment that I regret the length of the previous debate. If I should be in order in so doing, I would express appreciation to the noble Lord, Lord Amulree, for having initiated that debate, and also my appreciation to those who took part in discussing a subject which is of such overall human importance.
I particularly regret that the Minister who had the duty of replying to that debate also has the duty of listening to this debate and of replying to it at the end. I am anticipating that more Members of this House than those who have placed their names on the list of speakers will be taking part. I want just to say that I have had a letter from the noble Lord, Lord Luke, who sits on the opposite Benches regretting that he is unable to stay, but saying that I can quote him as supporting me in my remarks—an expression of confidence before having heard the remarks I am going to make!
I should like to begin by saying that I am not raising this matter from political antipathy to the Daily Express. I am, of course, opposed to the general policy of that paper, although I should like to express appreciation of its contribution to good inter-racial relations in this country. The Editor who resigned yesterday is an old friend of mine; he was at one time Editor of Tribune; and although the Daily Express has said rude things about me during the last week, I have no grudge against it. That is not the motive of my raising the matter this evening.
I have tabled this Question for three reasons. First, I am by profession a journalist and am jealous of the honour and integrity of my own profession. Second, I think there is evidence that the responsibility for the circumstances which led to the publication of this forged photograph was part of the machinations of a wider circle, which used the Daily Express as an instrument for its purposes. Third, I am concerned that justice is done to Ghana. Ghana is a member of the Commonwealth and her President at the Commonwealth Prime Ministers' Conference gave, and is still giving, signal service to the British Government.
I hope that during this debate no one will attempt to excuse the publication of this forgery because of their criticism of Ghana's detention of political offenders. I share that criticism. By public statements, by correspondence and by personal conversations I have made my views known to the President. Indeed, when the Daily Express published this photograph I wrote at once to Dr. Nkrumah expressing my deep revulsion.
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If such was the effect on me of this photograph, one may sense what was the effect upon others less sympathetic towards African independence.
Let me relate the facts. On March 17 this year the Daily Express published a photograph across seven columns of a page. I have here a copy of that day's issue of the paper. It is a photograph of a number of prisoners shackled together in chains. The caption beneath the photograph reads:
"Shackled together like slaves of a bygone era—Ghana politicians and Opposition Party officials in a Ghanaian prison."
This spectacular photograph was accompanied by a dispatch from the Daily Express correspondent at Lomé in Togo. I quote the opening two paragraphs:
"These men shackled together in a Ghana prison camp are members of Ghana's loyal Opposition. Among them are politicians and officials of the Opposition United Party and leading citizens who have been critical of the regime of Kwame N'krumah of Ghana. This picture, given to me by Mr. Idana Asigri, a Ghanaian Member of Parliament who spent two years in a Government prison camp before he escaped, is proof of the incredible political situation in Ghana."
The dispatch ends with these words:
"Those that resisted the Government including Members of Parliament were sent to political prison where they have languished in chains for six years."
The Daily Express accompanied the photograph and that message from Togo-land by an editorial article in which it used these words:
"The other African members of the Commonwealth should rise in anger against N'krumah. They can count on the support of all in this country who believe in justice and decency."
That, I suggest, was a very serious incitement to the other African Governments who are members of the Commonwealth.
The authenticity of this photograph was generally believed by the political commentators in our Press. Even so fair and objective a writer as my noble friend Lord Francis-Williams, who will be taking part in this debate, accepted that authenticity when writing for the New Statesman, though, with characteristic honesty, in the journal Punch, for which he is now writing, he indicated that that view was then mistaken. This picture and the report of the Daily Express must have made an impression of revulsion not only

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on the public in this country but on persons of influence, and indeed on the Governments of the world, through their Embassies in London.
This was not all that the Daily Express did. It syndicated this photograph and its report throughout the world. I have here copies of photographs of some of these reproductions which show that in other countries this photograph, which was later to prove to be forged, was published widely everywhere. For example, Paris Match, which has one of the largest circulations in France, published the photograph on an even larger scale than the Daily Express had done in this country. The widely circulated paper in Germany, Stern, similarly reproduced the photograph and published the reports as given in the Daily Express. Perhaps what is more serious is that it was published in other African countries, and in African countries in the Commonwealth the effect could only have been to cause serious doubts and divisions. I have in my hand a copy of the picture as it was published in the Nigerian Daily Express, again with a report attacking the Ghanaian Government in the belief that this photograph was accurate. My Lords, people throughout the world must have seen this photograph giving a distressing image of Ghana in every continent, an image of a cruel and barbarous Government which, by its behaviour, had placed itself outside the pale of civilisation.
I wish to say in fairness to the Daily Express that when, at last, it was convinced that this photograph was a forgery, the Editor communicated with the papers to whom the photograph had been sent and withdrew any claim for payment for the provision of this forged photograph. I do not know how fully or adequately the papers concerned corrected the mistake, but the damage had been done. One can never catch up with a spectacular lie which circulates the world.
What followed? On March 26, Dr. Nkrumah, the President of Ghana, denied in the Ghanaian Parliament that the photograph was of any political prisoners in Ghana. The next day the Daily Express recorded his repudiation, but republished the photograph and again asserted that it was genuine. On April 13 the Ghanaian Minister of Information
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held a Press conference in Accra at which the former Director of Togolese Information Services gave the facts regarding the photograph. It had been taken not in a Ghanaian prison at all, but in Togoland, to illustrate how prisoners had been treated there. After President Olimpio had been overthrown, the new régime collected former prisoners together and posed them in this and in other photographs to demonstrate how prisoners had been shackled under the previous dictatorship. One of the prisoners shown in the photograph, a Lomé taxi driver (Lomé is the capital of Togo) appeared at the Press conference and corroborated the Director's account. He was clearly recognisable as being in the photograph, and he gave the names of nine other prisoners in the picture. The next day the Daily Express gave a brief report of the Press conference in two paragraphs, but again asserted that the photograph was genuine.
On April 15 the Agence France Press published a statement quoting official Togolese sources to the effect that the Government of Togo deeply regretted that a photograph taken to expose oppression in Togo under the regime of President Olimpio should have been used to mount an entirely unfounded attack on the Government of Ghana. The Daily Express does not subscribe to this agency, and unfortunately it did not appear to note the reproduction of the message of the agency which appeared in the official bulletin published by the Ghanaian High Commissioner. This was the situation when the Commonwealth Prime Ministers met. The Daily Express, despite all the evidence, was still maintaining that this photograph was authentic.
To the Commonwealth Prime Ministers' Conference came a group of Ghanaian editors, one of whom was chairman of their association and of the Ghana Radio and Television Corporation, and three of whom were Members of Parliament. They raised this matter with the Editor of the Daily Express. As a result of their doing so apparently, in June the Daily Express sent a "senior executive" to Africa to investigate. His report was received on June 23. I quote:
"It confirmed that the picture was not taken in Ghana but Togo when some prisoners who had been released on the fall of the Olimpio Government posed for a photograph to show the conditions under which they suffered."

1415
On June 24, more than three months after the first publication of the photograph, and after the Daily Express had repeatedly declared that it was genuine, it acknowledged that the photograph was a forgery. It wrote:
"We regret this error and express our apologies".
I think that most people would regard the apology as inadequate. In a statement of 500 words, there was only one sentence of eight words of regret and apology. Indeed, a large part of the statement was devoted to a repetition of the charges against the Ghanaian Government's treatment of political prisoners and their statement of regret and apology ended with these words:
"The mistake—"
mistake!—
"that the Daily Express has made in this matter is, we venture to think, relatively unimportant—"
relatively unimportant!—
"compared to the unrequited wrongs of these wretched people."
The Daily Express statement repeated that the photo came through an ex-Ghanaian M.P. then in Togoland. As I have already indicated in my reading of the original report he was Mr. Idana Asigri, one of the Opposition, in exile. It is difficult to believe that Mr. Asigri did not know the truth about the photograph. It was extensively used by the Togo Government as propaganda against the preceding Olimpio régime which it had overthrown. It was widely distributed in Lomé. It seems impossible that anyone in political life in Lomé would have been unaware of the true origin of this photograph.
This leads me to my second reason for raising this subject to-night. I think it is clear that the "planting" of this photograph was part of a comprehensive plan to defame the Ghanaian Government. One cannot refrain from saying that the rÔle played by those who participated in this forgery inevitably causes one to doubt the wider allegations which they made. Let us look at the sequence of events. On March 16, the British Press, including the Daily Express, published an account of a letter submitted to Mr. Harold Wilson, the Prime Minister, by Dr. Busia, Leader of the Opposition, the United Party in
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Exile, asking for the intervention of the Commonwealth countries, following the death of Dr. Danquah, into the ill-treatment of 600 political prisoners. I should say at once that I had been deeply concerned by the detention of Dr. Danquah. I have little doubt that some leaders of the Opposition had been guilty of a conspiracy to assassinate the President, but I knew Dr. Danquah and I do not believe it of him. I expressed my disquiet to Dr. Nkrumah at the time. I was distressed to hear of Dr. Danquah's death, but I know of no evidence of his ill-treatment in prison.
In view of the identification of the Opposition with this forgery, one cannot accept the statement of the United Party's Secretary at Lagos that Dr. Danquah's death was due to police tortue. That statement began the campaign which had its climax in this forgery. It was followed by Dr. Busia's letter to the Prime Minister, which alleged that Dr. Danquah had been tortured and kept in chains for thirteen months. This was followed by the publication of the forged picture in the Daily Express. I ask: can it be a coincidence that the photograph was published on the day following Dr. Busia's letter to the Prime Minister?
The serious fact is that it was on the repeated evidence of Opposition leaders that the Daily Express for three months justified its publication of the photograph. I have in my hand a copy of the letter the Editor of the Daily Express sent to the Ghanaian editors when they approached him. It is quite clear from this letter that it was on statements of the Opposition leaders, who had made these charges of torture and of prisoners being in chains, that the Daily Express rested its case.
"On March 17,"
says the Editor,
"the Daily Express published the photograph of chained political prisoners supplied to our correspondent in Togo through the agency of officials of the United Party."
I quote from the Editor's letter again:
"On March 26 the Daily Express quoted the Press officer of the United Party of Ghana, who named two members of the detainees in the picture and identified them as members of his party known to him and still in a Ghanaian prison. He added that the photograph had been taken within 24 hours of the arrest of the prisoners."
A third quotation:
"On April 18 Mr. Ekow Richardson, the General Secretary of the United Party, claimed that the picture published in the Daily Express was genuine."
A fourth quotation:
"On May 29 a detailed letter from the Secretary of the U.K. Branch of the United Party to the Chairman of the I.T.A., a copy of which was sent to the Daily Express, again confirmed that the picture published in the Daily Express was authentic."
Finally, the Editor stated that
"Dr. K. Busia, the leader of the United Party in Britain has today "—
that was June 17
"made the following statement: ' I have no doubt that the picture published in the Daily Express was taken in Ghana. Its authenticity has been thoroughly checked '."
I give those quotations because they indicate that the Daily Express repeated its charge that this photograph was genuine on the statements of the Leaders of the Opposition in Ghana. All these statements have now been proved wrong. After the falsehoods of which the leaders of the Opposition have been guilty, one cannot accept the long series of grave charges they have made about prison conditions; and it will not be possible to believe them in the future. I think it is clear that the forged picture was a deliberate part of a conspiracy to denigrate the Ghanaian Government by allegations which in tested cases have now proved not to be true. Incalculable harm has been done.
My Lords, I want to conclude by asking what can now be done to right this wrong. The Government may say that they have no responsibility in this matter. But this is a case where a British newspaper, of mammoth circulation, has given publicity to a forgery which makes an atrocious charge against a Government of the Commonwealth, and it has distributed that forgery around the world. It is a case where subjects of the United Kingdom and of the Commonwealth—the leaders of the Opposition—have initiated that forgery and identified themselves with it even after it has proved to be untrue. Not since the case of the forged "Parnell letters", published by The Times during the Home Rule conflicts, has a graver political fabrication been committed. The Government can-
1418
not ignore this affront to a member of the Commonwealth.
In my Question I ask whether the Government will establish an inquiry. Before the forgery was proved, the Editor of the Daily Express suggested to the Ghanaian editors that the International Commission of Jurists at Geneva should be asked to make an inquiry. In the present circumstances, it would be difficult for any Government to accept the services of that Commission to inquire into the case of an admitted forgery. Moreover, the Commission is not a constitutional tribunal, and could not require evidence to be given; and undoubtedly it would be ignored by some of those whose evidence would be needed.
I put the following alternative suggestions for action by the Government. First, the attention of the Press Council has been drawn to the forgery. In view of the gravity of the case, I think the Press Council would be justified in adopting an exceptional course which is permissible under their constitution. In order that justice shall not only be done but shall appear to be done, and in order that the truth may be made known to the deceived world, why should not an inquiry be held in public at which those who contributed to this fabrication could be asked to give evidence and could be examined? This is possible within the constitution of the Press Council. I refer to subsection (3) of Clause 2, which under the heading "Objects of the Council" reads as follows:
"to consider complaints about the conduct of the Press or the conduct of persons and organisations towards the Press; to deal with these complaints in whatever manner might seem practical and appropriate, and record resultant action."
I ask the House to note especially the fact that the terms of reference of the Council include not only the conduct of persons, but of organisations, towards the Press. This would allow an examination into the charge that there was a conspiracy to plant this forgery on the Daily Express by the Opposition Party. Your Lordships will note, also, that the Council is authorised:
"to deal with these complaints in whatever manner might seem practical and appropriate".
A public inquiry, therefore, is not excluded. This would surely be an appropriate method to do justice to the Government of Ghana in the eyes of the

1419
world, and to reach the truth of how the forgery came to be perpetrated. I may add that I gave notice to Lord Devlin, the Chairman of the Press Council, that I intended to refer to this tonight.
My second suggestion is that the Public Prosecutor should be asked to consider whether this is not a case appropriate for prosecution for criminal libel. One must bear in mind that not only was this appalling forgery printed and distributed throughout the world, but editorially the paper urged African members of the Commonwealth to rise in anger against Nkrumah. There is surely a prima facie case, first, because a forgery has been published, and secondly, because there was incitement of Governments to rise against the President of a fellow-member of the Commonwealth.
Thirdly, I would ask the Public Prosecutor to consider whether perjury has been committed. The Daily Express justified its repeated assertion that the photograph pictured Ghanaian political prisoners in chains by reference to statements made by leaders of the Opposition Party. It is difficult to believe that the Editor would have accepted statements in this grave matter, involving the honour of his paper, unless they were sworn statements. Were they? If they were, those making any false statement could be charged with perjury under the Statutory Declarations Act. I ask the Government to consider this, and to make the necessary inquiries.
Finally, I ask the Minister to make clear in his reply to this debate the abhorrence which Her Majesty's Government feel at the atrocious wrong which has been done to Ghana and its President. Surely this is due to a member of the Commonwealth. It is due, particularly at this moment, to the President, who, despite doubts by other African Governments, is co-operating courageously with our Government in the greatest of all causes, the cause of peace.
8.10 p.m.
LORD FRANCIS-WILLIAMS: My Lords, I rise in this matter to support my noble friend, though I shall not seek to cover quite so wide a field as he has done. I wish to apply myself particularly to the position of the Daily Express in this affair, without dissociating myself
1420
in any way from my noble friend Lord Brockway's very serious criticisms (which I support) against those Ghanaian politicians who provided the original information. I was to some extent brought into this matter, and made an inquiry into it, because, as my noble friend has said, I originally accepted the authenticity of the picture, believing that no newspaper, not merely with the reputation, but with the resources at its command of a great organisation of that kind, would publish such a picture without having made absolutely sure that it was true and correct. I accepted its authenticity, and referred to it in a column on Press matters that I was then writing for the New Statesman.
Because of this, when the six Ghanaian editors came over to this country for the Commonwealth Conference they approached me, presented me with evidence which they had accumulated to show that this picture was a forgery, and asked me whether I would take the matter up with the Daily Express. I at once did so. I was at that stage assured by the Daily Express that they were still completely confident of the authenticity of their photograph. They had received it from their correspondent in Togo, a Mr. Ernest Gogry, with whose ability and good faith, apparently, they were satisfied—though I am not quite sure, in view of all the circumstances, why they should have been.
LORD BOOTHBY: Good faith.
LORD FRANCIS-WILLIAMS: They assured me that when he received it he had had sworn statements as to its authenticity from Mr. Idana Asigri, the Leader of the Ghanaian Opposition Party, and that this had been supported by other members of the United Party of Ghana, including Dr. K. A. Busha, the leader of the United Party in exile, who is, of course, a lecturer at Oxford—a fact which seemed to give them additional confidence that he must be right. They were able to produce, and to counter every statement made by the Ghanaian Government by, other statements—and, I think I was told, sworn statements—from the other side, stating that the photograph was authentic, claiming to identify people on the photograph as members of the United Party—two of them said to be people who had worked

1421
in its head office, and who had been imprisoned. These declarations continued right up to the end.
Even after the Press conference held by the Information Minister of Ghana, at which he produced evidence said to identify those in the photograph, and to show that they were not Ghanaians at all, Mr. Richardson, the General Secretary of the United Party of Ghana in exile, issued a statement to the Daily Express in which he categorically asserted that the photograph had been procured in Ghana through intelligence sources, of whose reliability he was fully satisfied, and that two men in it had been identified by him as personally known to him as former workers in the United Party Headquarters in Accra.
The question I ask myself, looking at this as I do, from the point of view of a newspaperman, is how far was the Daily Express justified or not justified, in the light of all this, in the first place, in publishing the photograph, and in the second place, in continuing to defend it, in continuing to proclaim its authenticity, despite the accumulated evidence to the contrary. I am bound to say that after discussing this matter fully with the then Editor of the Daily Express, and after looking at various evidence that they produced, I myself am satisfied that the Daily Express was genuinely misled—at least, the Daily Express in London was genuinely misled.
There was a period when I think the Ghanaian authorities felt very strongly—and certainly the six Ghanaian editors who came to me felt very strongly—that this was a deliberate forgery hatched up by the Daily Express itself. I do not, from such inquiries as I have been able to make, and from the evidence that I have seen, believe that to be so. But I consider that the Daily Express showed both bad judgment and amazing incompetence in accepting this picture without the full inquiries which one would have expected. They have stated again and again to me that they had made inquiries before publishing it. Those inquiries, so far as I am able to discover from the evidence I asked them to produce, and which they produced, is consistent with nothing more at any stage than statements from exactly the same group of people over and over again.
1422
I am bound to say that I do not believe that the Daily Express would have published this photograph if it had purported to be a photograph of prisoners in any other country but Ghana, probably, and if it had not come to them immediately following a great many other stories of conditions. I say nothing as to whether or not those stories may be correct. I disagree to some extent with my noble friend Lord Brockway, in that I think it will be a great pity, and perhaps one of the gravest damages that the publication of this forgery will have done, if, because of it, we are all now inclined to close our minds to reports of conditions in Ghana or, for that matter, anywhere else, and to feel: Well, there was the Daily Express forgery—everything else must also be a forgery.
LORD BROCKWAY: My Lords, perhaps I may interrupt to say that I agree entirely. I hope that my noble friend knows how I always intervene when there is any suggestion of personal political persecution, and I hope that that will be sufficient assurance.
Loan FRANCIS-WILLIAMS: It is indeed, and I gladly say so. It was only that I thought that some of the phrases my noble friend used at the end might have given that impression, and I think it would be very dangerous if they did. I hope that the British Press will always feel that it has a responsibility to disclose facts of tyranny and suppression, wherever it finds them. But it also has the equally essential responsibility of making sure that the evidence upon which such allegations are made has been as thoroughly explored as it possibly can be, and I do not believe that in this case such evidence was explored with anything like the thoroughness that one would expect from a great newspaper, a newspaper in command of immense resources for examining information all over the world.
When one considers what the Daily Express can do when it puts a whole team of reporters to try to discover something which in many cases I, and I think many of your Lordships, might consider was not worth discovering, I cannot believe that had it brought to bear the same resources upon this matter it could not have discovered that this was a forgery.

1423
After all, it was only a matter of four weeks before the Ghana Government was able to produce not merely the full list of the people who actually had been photographed and the details of the circumstances in which they had been photographed but, as my noble friend has said, produced one of the people on the photograph before a Press conference. If they could do that in that length of time, I cannot believe that the Daily Express with all its resources, if it had wanted to, could not have found out the truth about this photograph. I accept entirely its honesty in that it allowed itself to believe that the photograph was true, but I am amazed both at its incompetence and its readiness to allow itself to be deceived and, in turn, to deceive its readers.
My Lords, following my meeting with the six Ghana editors and my discussion with the Editor of the Daily Express, I discussed again with the Ghana editors the Daily Express suggestion that this matter should be put before the International Commission of Jurists in Geneva. The Ghanaian editors said, for reasons which I fully appreciate, that they did not think that would be acceptable. I then asked them whether they would be prepared to accept an investigation by the Press Council, which it seemed to me with Lord Devlin, an eminent Judge, at its head was entirely and ideally suited to make an investigation of this kind.
I then spoke to the Editor of the Daily Express and said that I assumed he also would be prepared to put the whole matter before the Press Council, and he, too, agreed. That was before the final disclosure was made. But I was also told by the Editor of the Daily Express that they were still making inquiries, that they had sent an executive out to examine the matter on the spot and that they were waiting for information from him. On June 23 I was rung up by the Editor of the Daily Express who said, "It begins to look as if the evidence is accumulating to show that we were wrong ". I said that if that were so I hoped there would be no question of waiting for a Press Council investigation or anything else but that they would publish their facts fully and completely.
1424
Two days later they did publish them, and I think it is only right to say that they were published with considerable prominence, although I agree with my noble friend that it was with a perhaps rather lame and in some ways excessive attempt to justify. At any rate, there was no attempt still to pretend that the photograph was authentic. At the same time, they immediately circulated all those newspapers which in the ordinary way of their business receive the Express syndicated service, telling them that it had been proved to be a fake.
My Lords, since then two further things have happened. Their correspondent in Togo, from whom they received this picture, has been dismissed. The Editor, who was the Editor throughout all this period, has to-day vacated his position. I do not want to suggest that the only reason for that vacation of his position is this incident—
LORD BOOTHBY: They change once a week.
LORD FRANCIS-WILLIAMS:—but I think it may well have been one of the factors leading up to it. Without seeking in any way to defend the Daily Express, since I think its irresponsibility, its incompetence, its failure to investigate as any newspaper should investigate, is indefensible, I am satisfied that the general management of the Daily Express has, perhaps somewhat belatedly—indeed I think very belatedly—accepted responsibility, realised what has happened and is no longer seeking to make any excuses. I believe that in those circumstances the original proposition that this is a matter which could properly be fully investigated by the Press Council should stand. I believe the Press Council has the necessary qualifications to make a full and searching inquiry and that in a matter of this kind it is the best instrument to do so.
If the Government feel that they should intervene in any way, I hope that their intervention will, at any rate for the time being, rest with using all the influence they may command to persuade the Press Council to make that investigation as quickly as possible. When that investigation is completed and more facts are available there may be a case for further consideration, but, speaking in this matter as one who has been a journalist for more

1425
than forty years and who has, despite some of its little ways, a high regard for the British Press as a whole, I feel it is essential that in a matter in which a British newspaper has so deceived not only its own public but a large section of the world public, there should be full investigation by the Press Council, and that the Press Council is the most appropriate body for that task.
8.30 p.m.
LORD BOOTHBY: My Lords, I think your Lordships may have been a little bit astonished by the emotional tribute to the total integrity and honesty of the Express newspapers paid by the noble Lord, Lord Francis-Williams, although he did qualify that a little bit towards the end. If it is any consolation to the noble Lord, Lord Brockway, what they have said about him during the last twenty years is nothing by comparison to what they have said about me.
LORD FRANCIS-WILLIAMS: If I may intervene, they have also had a number of smacks against me.
LORD BOOTHBY: That is all right. I do not dissent, essentially, from anything that the noble Lord has said; although I was a little surprised when he suddenly burst out into the tremendous tribute to this great organisation of total integrity and honesty, because I have never regarded it quite as that.
LORD FRANCIS-WILLIAMS: May I just say I cannot remember using any phrase of "total integrity".
LORD BOOTHBY:Certainly "honesty" was used.
LORD FRANCIS-WILLIAMS: I said I thought it had probably been honest but shockingly incompetent, and if they want to publish that as a tribute they are quite entitled to do so.
LORD BOOTHBY: I was delighted to hear the final words "shockingly incompetent", for that at least made the speech a great improvement on what it had otherwise looked like being.
I am going to be very brief. I have never been to Ghana in my life. I have not the pleasure of the acquaintance of
1426
Dr. Nkrumah. I have a feeling that I would not approve of all the methods by which he governs that country at all. But I do think the noble Lord, Lord Brockway, has rendered a tremendous service to-day by exposing what is without any question the greatest political forgery since Piggott. There is no doubt about that at all. I think that, in one form or another, either through the Press Council or through this House, or both, we should express our stern dissent from the methods that were used; because it is in fact a forgery, as I am sure the noble Lord, Lord Francis-Williams, will agree, almost without parallel in British journalistic history since Piggott. That is all I want to say.
8.33 p.m.
LORD WADE: My Lords, the publication of this picture in the Daily Express was certainly a very grave error, and I am not satisfied that sufficient care was taken to ascertain whether or not it was a forgery. Nor am I entirely satisfied that a sufficiently full apology was given when the error came to light. I have been to Ghana on three occasions, but I do not think this is the appropriate time for talking about conditions in Ghana. That is not really the issue. I have risen partly because of the references to Dr. Busia, whom I have met. I do not think the noble Lord, Lord Brockway, intended to attack Dr. Busia; but, in case that impression was created, I must say that I have been impressed by his fairmindedness and his genuine concern for the welfare of his country, although he is now living in this country. It may be that Dr. Busia was deceived; I do not know. I have not discussed this matter with him. But I should not like it to be suggested that he has been acting other than in good faith, at any rate without more evidence.
But the main point of course is that the publication of this picture was most unfortunate. This kind of thing tends to bring discredit to the British Press. I am sure noble Lords would agree that, on the whole, the British Press maintains very high standards, and I hope this regrettable departure from those high standards will soon be forgotten and will not do damage throughout the Commonwealth.
8.35 p.m.
LORD KENNET: My Lords, there are only two aspects of this matter which seem to me worth while underlining. The first is part of the clearing up of the squalid history at the Daily Express itself. The Ghanaian editors, in their correspondence with the Daily Express Editor, asked him not only to inform the newspapers which syndicated the famous photograph that it was a forgery—which of course he did—but also whether he would insist on the printing of a rectification of the fraud in their papers just as he had agreed to print it in his own paper. They went further than this and said that, in the event that any of these foreign newspapers refused to print that rectification, they considered the Daily Express ought to pay for advertising space at their own expense in those papers in order to rectify the matter. So far as I have been able to ascertain, the Daily Express have not done this, or at any rate not communicated to the Ghanaian editors who have been handling the matter even the list of the papers which have printed the forged photograph. This is a very practical point.
The Government of Ghana is not an immensely wealthy one with world-wide resources. One can well imagine it must be a continuous embarrassment and nagging suspicion to them that the thing has been appearing in many newspapers they have not seen it in, and they are themselves deprived of the possibility of correcting it because they do not know where it has appeared. I think this matter is one the Press Council might well investigate and I hope it will see fit to counsel the Daily Express to take that action which the Ghanaian editors have asked for, or, at the very least, publish a list of the papers which syndicated or could have syndicated the photograph.
If I may say one word about the question of prisoners in Ghana, like everybody in Britain, I have for years been reading reports of the fact that not only are there political prisoners in Ghana without trial but also that they have been mistreated, chained, have died in mysterious circumstances and all the rest of it. I think we can all agree that one should regret the existence of such a thing as an untried political prisoner anywhere in the world, but there is indeed a sharp dividing line between that and the physical
1428
mistreatment of prisoners in prison. In this context it is very much part of this story to notice what Dr Nkrumah said in April of this year in Ghana. Your Lordships will remember the context of this. He had been urged to admit inspection by international or Commonwealth organisations into the Ghana prisons. Having previously said, "No, I do not agree that my country is so different from others, simply because a forged photograph has been published, that I should submit it to international inspection any more than any other country would", what he said was:
"To those who appear to be so concerned about conditions in our prisons to the extent of even forging photographs about them we offer a challenge. The Government of Ghana have decided to invite representatives of the Christian Council. the Archbishop of the Catholic Church of Ghana. Bishop R. R. Roseveare of the Anglian Church of Ghana. Bishop Bowers, the Catholic Bishop of Accra ",—
an American—
"representatives of the Muslim Council and the Red Cross of Ghana to inspect conditions in our prisons and to let the world know the truth."
I do not know whether that invitation or challenge was taken up by the Bishops or the Church Council. I do not know whether they have inspected the prisons or, if they have, what they have found. But I am sure that in the future newspapers in this country, or any other, which allege improper conditions in Ghana's prisons are more or less bound to inquire of that Church Council what happened to the President's invitation.
LORD SEGAL: My Lords, before my noble friend rises to reply, I would submit that the House should consider for a moment what may be a possible aftermath to this debate. As I conceive it, it should result, and I hope it will, in immensely strengthening the position of Dr. Nkrumah in Ghana, and just because of this likely sequel to this debate, perhaps it might not be inappropriate at this stage to express the hope that because of his strengthened position Dr. Nkrumah may try to avoid any policy of undue repression of his Opposition. Just because he will be left in a position of vastly greater strength, may the hope go out from this House that he will in future exercise that strength wisely and carefully, so that one of the possible results of this debate may not be an

1429
increase in the repression that may conceivably be going on in Ghana at this moment, of which we have not heard sufficient evidence in this debate, and that the Opposition may not, as a result of this debate, be caused to suffer in any way.
8.40 p.m.
LORD TAYLOR: My Lords, Her Majesty's Government cannot in any way complain about my noble friend Lord Brockway's having put down this Question. In addition he was kind enough to send me all the papers, and also to warn me in advance of the particular points which he intended to raise. I am sure we are all grateful to him for his interesting review of this most difficult situation and for having made it the occasion of the notable speech by my noble friend Lord Francis-Williams, and the contributions by the other noble Lords who have spoken.
I must be exact in what I now say and I will therefore stick closely to my brief, because I want to give my noble friend a really accurate answer. I have listened with interest to his account of the controversy between the Daily Express and the Ghanaian Ministry of Information and certain Ghanaian editors about the photograph published in the Daily Express of March 17. The noble Lord has put on the Order Paper a precise Question, whether Her Majesty's Government will establish an inquiry into the circumstances which led the Daily Express to publish the photograph of alleged political prisoners in chains. To this the answer must be, No. I would add that Her Majesty's Government of course deplore any misrepresentation of the truth and regret that in this case offence was caused to another Commonwealth country.
I understand that before the Daily Express published the retraction to which the noble Lord referred, the High Commissioner for Ghana addressed a letter to the Chairman of the Press Council asking him to conduct an inquiry into the circumstances surrounding the publication of this photograph and the subsequent events. It would not be appro
1430
priate for the Government to seek to established an inquiry into the actions of a newspaper in a case of this kind. The Press Council, not the Government, is the right body to decide whether an investigation should be made, and to make the investigation in public or private if it decides that there should be one. No doubt the noble Lord and others concerned will make sure that all the evidence available to them is at the disposal of the Press Council, and that body will no doubt take note of the statement which my noble friend has made here tonight.
LORD BOOTHBY: My Lords, if the noble Lord will allow me to interrupt him, all it will do is to take note.
LORD TAYLOR: My Lords, I feel that this really must be left to the Press Council, in whom I have great faith.
LORD BOOTHBY: Well, I have none.
LORD TAYLOR: We shall see who is right. My noble friend asked me two other questions. He asked whether the Director of Public Prosecutions would consider a prosecution for criminal libel, and said that the Director of Public Prosecutions should consider a prosecution for perjury if sworn statements have been made. I cannot, of course, answer for the Director of Public Prosecutions. I am, however, informed that if the noble Lord has any evidence which he thinks should be considered with a view to prosecution for any offence, his correct course would be to send the evidence to the police authorities and ask them to investigate the matter.

MERSEY TUNNEL (LIVERPOOL /WALLASEY), ETC., BILL
The Queen's consent signified, and Bill reported from the Select Committee, with Amendments.
GULF OIL REFINING BILL [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments considered and agreed to.
  DIRECTION INDICATORS ON MOTOR VEHICLES
  DIRECTION INDICATORS ON MOTOR VEHICLES