Sitting of 24 June 1965

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

    Maritime Authorities (Sewage Disposal)
    Mr. Arthur Pearsonasked the Secretary of State for Wales if he is satisfied that the amenities of the South Wales coast lines are adequately safeguarded by the existing arrangements for disposal of sewage and trade effluent; and if he will make a statement.
    The Under-Secretary of State for Wales (Mr. Harold Finch): The maritime authorities in South Wales are continuously improving the sewage disposal arrangements. Since the war they have spent over £2·5 million on schemes involving new or improved outfalls, and they are now considering further schemes estimated to cost about £14 million. The authorities have in general shown themselves fully alive to their responsibilities for avoiding nuisance and my right hon. Friend is continuing to watch the position closely.
    Mr. Pearson: Is my hon. Friend aware that this little departure from the crawl of the past is welcomed, but is not the swamping of the beaches by sewage filth due to the vexatious delays between the evolving of schemes and the execution of the treatment of sewerage?
    Mr. Finch: If my hon. Friend has any particular case in mind in the Bristol Channel, I shall be glad to look at it to see what progress can be made. I shall certainly do that.
    Sir Knox Cunningham: With a view to making improvements, will the hon. Gentleman consider some of the sewage schemes which exist in foreign countries?
    Mr. Finch: Every factor will be borne in mind by the authorities that deal with it, and I am prepared to call their attention to anything that is relevant.

    Communications
    Mr. Clifford Williamsasked the Secretary of State for Wales when he expects to receive the report from the Welsh Planning Board on communications in Wales.
    The Minister of State, Welsh Office (Mr. Goronwy Roberts): My right hon. Friend expects to receive a report on this subject before the end of July.
    Mr. Williams: While thanking my hon. Friend for that reply, may I ask whether the report will cover the desperate need for improvements in road communications in the industrial valley areas of South Wales.
    Mr. Roberts: I am well aware of my hon. Friend's keen interest in this important matter, but, as he knows, the Heads of the Valleys Road Scheme is now nearing completion and my right hon. Friend is very anxious to consider other road improvements which will link the North with this system and the South with the coastal system.
    Mr. Hooson: Is the Welsh Planning Board also considering the urgent necessity of improving communications between North and South Wales? As the hon. Gentleman knows, it is very difficult to go from one part to the other. The road journey takes a long time. Is progress being made on the North-South Wales trunk road?
    Mr. Roberts: The original Question related to communications in Wales, and that, of course, includes communications between North and South Wales. That aspect of the matter will certainly not be neglected.

    North Wales
    Mr. J. Idwal Jonesasked the Secretary of State for Wales if the Welsh Planning Board will undertake a study of the industrial future of North Wales.
    Mr. Goronwy Roberts: Yes, Sir. As my hon. Friend is aware the Welsh Planning Board has already submitted to my

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    right hon. Friend a report on the problems of Mid-Wales and it is at present engaged on a study of South Wales. My right hon. Friend is most anxious that the Planning Board should examine the problems of North Wales as soon as possible.
    Mr. Jones: I thank my hon. Friend for that valuable reply, but may I ask whether the industrial estates of North Wales will be considered as part of this structure?
    Mr. Roberts: Certainly. Industrial estates are of some importance in the Wrexham and Deeside areas, and there are one or two similar estates in other parts of North Wales. The proposed study will definitely include an appraisal of the position and prospects of such areas.

    B.4275 Road (Mountain Ash-Aberdare)
    Mr. Probertasked the Secretary of State for Wales when the results of the origin and destination survey carried out on the B.4275 road linking Mountain Ash and Aberdare will be announced.
    Mr. Finch: The survey was carried out by the local highway authority, the Glamorgan County Council, which has communicated with the Aberdare Urban District Council about the matter.
    Mr. Probert: I thank my hon. Friend for that reply, but is he aware that some time has elapsed since the taking of this survey and that in the meantime the traffic has considerably increased? Will he convey the urgency of this matter to the highway authorities, particularly in view of the traffic bottleneck in Aberdare?
    Mr. Finch: I can assure my hon. Friend that I will make the necessary inquiries on the lines that he suggests.

    Cardiff—Merthyr East/West Link Road
    Mr. Probertasked the Secretary of State for Wales when he expects a start to be made on the proposed new trunk road Cardiff Merthyr East/West Link Road north of Abercynon.
    Mr. Finch: This link road would be a classified road and its construction is
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    a matter to be settled in the first place between the two local highway authorities, the Glamorgan County Council and the Merthyr Tydfil County Borough Council, who are now in consultation with the Welsh Office about the project.
    Mr. Probert: Is my hon. Friend aware that the residents in this area have suffered considerable inconvenience for a number of years and that the Ministry of Transport has suggested to highway authorities that an immediate solution could be brought about by the creation of a small link by-pass which would form part of the major scheme? Will he bring this matter to the attention of the highway authorities?
    Mr. Finch: My hon. Friend will appreciate that this is a matter entirely for the authorities, but if we can spur the matter on we shall do so.
    Mr. Pearson: Can my hon. Friend say whether there is any prospect of these two authorities being merged into one and thus simplifying the process?
    Mr. Finch: That is quite another matter.

    New Town
    Mr. Hoosonasked the Secretary of State for Wales why the investigations of the new town consultants have been limited to the area between Caersws and the English border.
    The Secretary of State for Wales (Mr. James Griffiths): I have asked the consultants to consider this area in the first place because, on the advice of the Welsh Planning Board, an up-to-date urban centre developed here would be well placed in relation to other parts of Mid-Wales, including other towns where the Development Commissioners are accelerating the provision of small factories, and because of the road and rail facilities which already exist along the Severn Valley.
    Mr. Hooson: Is the Secretary of State aware that it is a widely held view that if there is a new town in the area the further west it is the better? If it is in the eastern part of mid-Wales it will inevitably draw population from the west and will add to the depopulation of the rural areas.
    Mr. Griffiths: My anxiety is to see that the first new town in Mid-Wales is so placed as to be able to attract industry and workers there, including some of the 100,000 Welshmen who left Wales to seek work in the Midlands conurbation. If this is done and is a success its influence will extend to other parts of Wales.
    Mr. Gibson-Watt: We would not all agree with the attitude of the right hon. Gentleman towards the idea of a new town in Central Wales, but if there is to be such a town, can he tell us whether the present investigations by the consultants are limited to Montgomeryshire, or whether this is merely the first step and that he may go elsewhere?
    Mr. Griffiths: It is not limited. I have asked them in the first place to look at the Severn Valley because this seems to me to be the most appropriate place.
    Mr. Hooson: May we take it from that reply that the Secretary of State intends, immediately after they have made the first report, to ask them to make a second report—to investigate a second area?
    Mr. Griffiths: When I have received their first report I shall consider it, and I hope that we shall then be able to make a final decision.

    Welsh Language (Report)
    The following Questions stood upon the Order Paper:
    8 and 12. Mr. S. O. DAVIES: To ask the Secretary of State for Wales (1) whether he has now received the Report of the Hughes-Parry Committee, set up to consider the legal status of the Welsh language; and when it will be published;
    (2) if he has now received the Report of the Hughes-Parry Committee set up to consider the legal status of the Welsh language; and when it is likely to be published.
    Mr. T. W. Jones: On a point of order. You will have noticed, Mr. Speaker, that Questions Nos. 8 and 12, in the name of the same hon. Member, are in identical terms, which clearly indicates what is true, namely, that the people of Wales are waiting for some information about this report.
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    Since my hon. Friend is not present to ask these Questions, I am wondering whether an opportunity will be given this afternoon for the Secretary of State to inform us when this is to be published.
    Mr. Speaker: I cannot contrive the latter point because it is not within my care. With regard to the other point, I am afraid that all it indicates is that the point was missed.

    Council for Wales
    Mr. J. Idwal Jonesasked the Secretary of State for Wales what subjects the Council for Wales has been asked to examine and report upon this year.
    Mr. Goronwy Roberts: I understand that the Council hopes to submit two reports to my right hon. Friend fairly soon, one on road development and the other on forestry. A third report, dealing with the provision made for the arts in Wales, is also expected to be ready this year. These subjects were selected for examination by the Council, as indeed it has discretion to do.
    Mr. Jones: Would it be a good idea to have an examination of the structure of technical education in Wales and to have a report by the Council for Wales?
    Mr. Roberts: It will not be possible to ask the Council to undertake any further studies, since the Council has handed over its economic and technical work to the new Welsh Economic Council. It is now being considered whether another advisory council may be necessary to take over the Council's cultural work. In that sense I am afraid that I must say "No" to my hon. Friend's suggestion.
    Mr. McBride: Can my hon. Friend say whether, in that report, there is any reference to the possibility of the construction of a clearway from the North-West into South Wales? I believe that this would lead to fuller use being made of the South Wales ports.
    Mr. Roberts: I am sure that all the relevant factors which might contribute towards a solution of the problem of road communications are being studied by the Council, but I will look into the specific point which my hon. Friend has raised.
    Mr. Hooson: Has the Council for Wales been asked to consider industrial relations, especially with regard to the use of the Welsh language in industry and particularly with regard to the recent incident in Blaenau Festiniog? Has it been asked to report on that matter? Will it be asked to consider the position in the future?
    Mr. Roberts: The Council for Wales has not been asked to consider that point, but I understand the hon. Member's interest and anxiety about it—which all Welsh Members share.
    Lady Megan Lloyd Georgeasked the Secretary of State for Wales whether he will now make a statement about the future of the Council for Wales.
    Mr. James Griffiths: The completion of its present studies will bring to an end the Council's distinguished work over many years. Its work in the economic field will be taken over by the new Welsh Economic Council and when I have studied the report which the Council for Wales will be making on the provision for the arts in Wales, I shall consider what body would be appropriate to carry on the work in this field.
    Lady Megan Lloyd George: As the Council obviously, therefore, will be dissolved in due course, will my right hon. Friend consider an all-Wales body which would be more representative than the Welsh Economic Council?
    Mr. Griffiths: This is a matter, of course, of local government reorganisation. As my hon. Friend knows, this is something which is now receiving our attention.
    Mr. Gibson-Watt: Some of us will regret that the Council is coming to the end of its time. In view of the great work which it has done and the good advice which it has given to a number of Ministers and Governments over the years, could we take this opportunity of placing on record our good thanks and gratitude for what it has done?
    Mr. Griffiths: I share the hon. Member's view. I met the Council for Wales in order that I could personally offer not only my own thanks but the thanks of the whole House for the work which it has been doing over the years.
    Mr. T. W. Jones: Could we also put on record that the previous Government never adopted any suggestions of the Council?

    Housing
    Mr. Alan Williamsasked the Secretary of State for Wales what estimate he has made of the number of houses which will be built in Wales this year; and how this figures compares with the average annual output in the last 10 years.
    Mr. Finch: On the basis of the number of houses completed during the first five months of this year, it is estimated that about 20,000 will be completed this year. This compares with 18,969 last year, and an average annual number of completions over the last ten years of 13,184.
    Mr. Williams: Is my hon. Friend aware that hon. Members on this side of the House very much welcome the increase, which is equal to 60 per cent. over the average record of the previous Administration? Does he realise that the Tories in Wales so neglected housing that over the ten years from 1954 the loss of housing production in Wales was the equivalent of a complete standstill in the building industry in Wales for one year and ten months?
    Mr. Finch: I appreciate what my hon. Friend has said.
    Mr. Gibson-Watt: I do not accept the figures produced by the hon. Member for Swansea, West (Mr. Alan Williams). Will the hon. Gentleman give us an assurance that plans for housing in Wales will not be held up by the present unfortunate shortage of cement which is prevalent in other areas in the border counties?
    Mr. Finch: I can assure the hon. Member that we shall do all we can. I cannot prophesy what the position will be next year, but as I understand it, it is proceeding satisfactorily at the moment.
    Mr. Probert: In relation to the construction of houses by local authorities, will my hon. Friend convey to his right hon. Friend the Secretary of State the importance of the retention of housing

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    concessionary subsidies in respect of any future proposals for changes in subsidies?
    Mr. Finch: I shall certainly draw attention to that aspect of the matter.

    Industrial Development (Carmarthenshire)
    Lady Megan Lloyd Georgeasked the Secretary of State for Wales whether the Welsh Planning Board, in the study they are making of the industrial prospects of South Wales, will give consideration to the towns and valleys of Carmarthenshire.
    Mr. James Griffiths: The largely industrial south-eastern part of Carmarthenshire comprising the coastal towns from Llanelly to Kidwelly and the industrial areas to the north of them are included in the Planning Board's present study of the prospects of industrial South Wales. The rest of Carmarthenshire will be the subject of a separate study.
    Lady Megan Lloyd George: As there is little or no prospect of work in many of these parts of Carmarthenshire, will my right hon. Friend expedite the studies, otherwise these places will become shadow towns and valleys?
    Mr. Griffiths: I share my hon. Friend's concern about this part of South-West Wales, which both of us know so well. The Report on the industrial part of South Wales, including industrial parts of Carmarthenshire, I expect to receive before the end of July. There will follow a study of the rural areas, including those of Carmarthenshire, which I hope to receive before the end of the year.

  EDUCATION AND SCIENCE

    London and Manchester Universities (Business Schools)
    Mr. Charles Morrisonasked the Secretary of State for Education and Science what progress is being made in establishing the new business schools at the universities of London and Manchester.
    The Secretary of State for Education and Science (Mr. Anthony Crosland): Both schools have leased temporary pre-
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    mises which are now being adapted and equipped. Staff are being recruited and planning is at an advanced stage. The first full-time course at Manchester will begin next September. In London it is hoped to hold some part-time courses this autumn, and full-time courses should start in February next.
    Mr. Morrison: Would not the right hon. Gentleman agree that progress so far has been due largely to the initiative of the previous Government? Would he say whether he is satisfied now with the progress which is being made and also whether he considers that any particular encouragement should be given to industry and business to make use of the facilities which are now beginning to become available for them?
    Mr. Crosland: I do not think that the question of these two notable business schools is quite a matter for party political points across the Floor of the House. Very rapid progress is being made. I do not think that special encouragement is required at the moment. Indeed, I am very encouraged by the fact that in one case full-time courses are starting in September and, in the other, in February. That seems to me to be a considerable rate of progress, whichever Government is responsible.
    Mr. Rhodes: Is my right hon. Friend aware that both the McMeeking Report a few years ago and the Report this year of the A.T.T.I. have drawn attention to the terrible wastage of business talent in this country because of the inadequacy of business training during the previous Administration?
    Mr. Crosland: Yes, Sir.
    Mr. Osborn: How many chairs are unfilled? How many have been filled in both establishments? Is there adequate co-ordination with the Minister of Technology, and to what extent is his or other Ministries responsible?
    Mr. Crosland: As far as staff is concerned, the London School, as the hon. Member no doubt knows, has appointed its director. The Manchester School is waiting to appoint one now and will do so as soon as it finds a suitable candidate. Both schools have advertised for their first instalment of staff and are

    1923
    immediately engaged in interviewing candidates. It is too early to give the figures. I am satisfied that liaison between the schools and the Ministry of Technology and the Government generally will be close and sufficient.

    Local Authority Maintenance Staffs (School Improvements)
    Mr. Farrasked the Secretary of State for Education and Science whether, in the next financial year, he will permit local education authorities with direct labour ground maintenance staffs which are not fully employed in the winter months to undertake site and playing field improvement schemes, off the ration, up to £2,000 on any one item.
    The Minister of State, Department of Education and Science (Mr. R. E. Prentice): No, Sir.
    Mr. Farr: Is the hon. Member aware that there is a widespread feeling amongst local education authorities that the whole of the mini-minor works allocation off ration should be restored to them? Is he also aware that this highlights a specific example, whereby there is a real danger of redundancy amongst ground maintenance staffs which are fully employed in the summer but unable to perform any of the off-ration works and will be short of work in the winter months.
    Mr. Prentice: Of course, I am aware and have been made very well aware of the way in which local authorities value the mini-minor allocation, but I have explained several times in the House that this had to be removed in the sense that allowance had to be made for it out of minor works as a whole. This reduced the amount for allocation. This principle applies to any concession, however small, and it would have to be allowed for from the total minor works allocation. It is a call on resources and therefore reduces the amount avavilable for other urgent works.
    Mr. Chataway: Because this does not add further burdens or make any definite demands on the resources of the building industry, would the hon. Gentleman reconsider this? It is a very modest proposal to relax this restriction a little.
    Mr. Prentice: I have been studying very carefully in recent months various possibilities of relaxing restrictions. The difficulty is that any kind of work like this makes a demand on resources. If it is a modest piece of work, it is a modest demand, but it is still a demand. To free it in this way, to reduce the total allocation in this way, would create unfairness between one authority and another. All authorities have a great deal of work to do under this heading.
    Mr. Morrison: While appreciating the difficulties in this matter, could I ask whether the hon. Member could suggest what should be done with ground maintenance staff in the winter if they are not fully employed on maintenance?
    Mr. Prentice: I am advised that many authorities organise their labour force in such a way that they are fully employed in the winter. One of the difficulties with the suggestion is that this would create a new distinction between those authorities who organise a labour force in one way and those who do so in another. This would be resented by those which did not benefit from it.

    G.C.E. Examinations (Leicestershire)
    Mr. Farrasked the Secretary of State for Education and Science why some pupils in Leicestershire Education Authority schools have to complete their general certificate of education examinations in holiday time; and whether he will arrange for all examining boards in the country to bring forward their examination dates to prevent this happening.
    Mr. Prentice: I understand that the dates of the trade holidays for Leicester and Leicestershire were fixed after certain of the examination timetables were settled by the responsible examining authorities. In the case of some schools the dates fixed by the responsible bodies did not clash with the trade holidays, and one examining body was able to offer alternative arrangements.
    My right hon. Friend recently published proposals for general changes in the dates of G.C.E. examinations to avoid this kind of difficulty and give greater scope for staggered holidays. Comments

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    were invited from all the bodies concerned and he expects to have received replies from them all by the end of next month.
    Mr. Farr: I am grateful to the Minister of State for that detailed reply. Is he aware that the London University G.C.E. Examining Board is the only examining board which has not fallen into line at the moment? The result is that a large number of pupils in Leicestershire now have to take their examinations during their holidays.
    Mr. Prentice: I am afraid that it is too late to do anything about the examination this year, but we have had assurances that all the examining bodies which carry out examinations in Leicester or Leicestershire have now agreed that their examinations next year will be completed by the end of June. This is apart from the wider operation which I mentioned in my original reply.

    Royal Shakespeare Company (Grant)
    Sir Knox Cunninghamasked the Secretary of State for Education and Science what amount of the subsidy paid from public funds to the Royal Shakespeare Company, namely, £80,000 for 1964–65, was expended on the productions at Stratford-on-Avon, and what amount on the productions at the Aldwych Theatre.
    The Joint Under-Secretary of State for Education and Science (Miss Jennie Lee): This information is not available. The Arts Council grant is for the work of the Royal Shakespeare Company as a whole.
    Sir Knox Cunningham: Would the hon. Lady ask Sir Fordham Flower so to prepare the accounts that this information will be available. Would she agree that, since the National Theatre receives grants to produce plays of a very wide range in London and since excellent Shakespearean productions are produced at Stratford-on-Avon, it would be wiser to give this £80,000 a year to the Royal Shakespeare Theatre for production of Shakespeare at home and on tour?
    Miss Lee: I hope that the hon. and learned Gentleman would not want either direct or indirect political direction or censorship of the Arts. The questions which he raises are for the Arts Council,
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    and he can be assured that the assessors established by the Arts Council are looking very carefully indeed not only at the amounts granted but at how this money is spent.

    Comprehensive Education (South Dorset)
    Mr. Evelyn Kingasked the Secretary of State for Education and Science what information he has as to the number of grammar schools in the South Dorset constituency which will be affected in the foreseeable future by plans for comprehensive education.
    Mr. Prentice: I am aware that the Dorset Local Education Authority is considering possible schemes of comprehensive education in parts of the county, but it has not made any proposals to my right. hon. Friend affecting the future of the two grammar schools in the South Dorset constituency.
    Mr. King: May we assume that the necessary urgent building improvements to grammar schools in which Dorset people take great pride will not be held up because of any hypothetical reorganisation which might take place in future?
    Mr. Prentice: It is not the intention of the Government that any improvements scheduled in our programmes should be held up by reorganisation proposals.
    Mr. Chataway: Does that mean that the Minister does not rule out the rebuilding of grammar schools in subsequent building programmes?
    Mr. Prentice: My right hon. Friend will be issuing a circular to local authorities on that matter. That will be in a week or two, but I think that it would be better for the House to await that circular because this is one of the issues with which it will deal.

    Swanage Grammar School
    Mr. Evelyn Kingasked the Secretary of State for Education and Science in what way provision of classrooms, showers, changing room facilities and other accommodation at Swanage Grammar School falls short of the standards laid down by his Ministry.
    Mr. Prentice: I understand from the Dorset Authority that the teaching area

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    of this school is 5,359 sq. ft. below the minimum standard. The school is short of six toilet fittings and six wash basins and there is no medical inspection room. The playing fields are below the minimum size laid down. No precise standards are laid down for hall, gymnasium, changing rooms, showers and storage space.
    Mr. King: Is the Minister aware that I visited this school recently and that the conditions there fall very far short of what any reasonable parent might expect? May we hope that the Minister will give us a definite date by which the improvements will be carried out?
    Mr. Prentice: Improvements to and extensions of this school were included in the proposals submitted by Dorset for the 1965–68 programme but were not accepted by the former Government who then, of course, had responsibility for the matter. If in due course the improvements are submitted again, for the remainder of the 1967–68 programme, we will give the matter careful consideration.

    Correspondence Colleges
    Mr. Parkasked the Secretary of State for Education and Science if he will introduce legislation to enable the State registration and inspection of correspondence colleges.
    Mr. Crosland: No, Sir. I am awaiting the submission to me of a draft scheme for the establishment of a national accrediting body for correspondence colleges, and I believe that such a development is likely to provide the best means of achieving a general improvement in the standards of correspondence education.
    Mr. Park: I thank my right hon. Friend for that Answer. Is he aware that the courses offered by many of the commercial correspondence colleges are often of a very low quality? Is he also aware that students are often exploited by tricks of salesmanship and that the purpose of these institutions is not, in fact, education but the amassing of profit? Would he not therefore agree that there can be no effective supervision by any body which is dominated by the commercial colleges themselves and that only inspection and registration by his Department will bring about the improvements which are necessary?
    Mr. Crosland: I am certainly aware that there is a lot that is unsatisfactory in the present situation regarding correspondence education. It was for that reason that we set up the committee which is now sitting under the chairmanship of Dr. Gurr, who was recently the Chief Education Officer for Middlesex. I believe that that was the right way to go about it, because had we chosen the alternative suggested by my hon. Friend, it would have taken a great deal longer and would have required legislation. I believe that the course we have taken is by far the quickest method of trying to cure what is unsatisfactory in the situation. As to what may come out of this, I envisage that a national accrediting committee or body will be set up, and that the chairman and at least half the members should be appointed by me so that the independent members appointed by the Secretary of State will be in the majority on that body.

    Grammar School Education (Newcastle-upon-Tyne)
    Mr. Rhodesasked the Secretary of State for Education and Science what percentage of schoolchildren living in the city of Newcastle-upon-Tyne were not admitted to grammar schools when they were being considered for selective secondary education in each of the years 1960, 1962 and 1964, respectively.
    Mr. Prentice: Information is not available in the form requested. With permission, I will circulate in the OFFICIAL REPORT the percentages of 13 year old pupils for whom the local education authority was financially responsible, in schools of different types in 1960, 1962 and 1964, respectively.
    Mr. Rhodes: Is my hon. Friend aware that on the basis of the previous Written Answer to me, which was of a similar type to the Answer which my hon. Friend has just given, he gave information to show that approximately only one in five of the children in the City of Newcastle are receiving the benefits of a grammar school education? Would he agree that there is no evidence to show that children in Newcastle are less intelligent than children in other cities which have a higher percentage of children attending grammar schools? Bearing this in mind, would my hon. Friend support

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    the actions of the L.E.A. in doing away with this outmoded system of the 11-plus segregation which is undermining the educational potential of children in that city?
    Mr. Prentice: To answer the first part of my hon. Friend's supplementary question, the information in the Answer which I will circulate will be in similar terms to the Answer to the previous Question to which my hon. Friend referred. My only difficulty was that the wording of the two Questions were slightly different. To answer his general point, I of course accept that children in Newcastle-upon-Tyne should be regarded as intelligent on average as children elsewhere. The difference between the number of children who are getting a grammar school education in different parts of the country is one of the examples of the absurdity of segregating children at the age of 11.
    Sir E. Boyle: In view of the criticism just now of the omission of a Dorset school from the building programme, is the Minister of State aware that the previous Administration approved two very large secondary schools for Newcastle in the 1963–64 and 1965–66 programmes, worth more than £½ million each, which will enormously increase the chance of children in Newcastle getting a secondary course leading to G.C.E.?
    Mr. Prentice: The previous Government approved a number of building improvements, but not nearly enough in terms of the general needs of the country.
    Following are the percentages:

    1960

    1962

    1964

    Primary (all age)

    7·8

    7·0

    1·6

    Modern

    64·5

    54·1

    53·2

    Technical

    13·2

    16·5

    19·0

    Comprehensive

    Nil

    6·5

    7·6

    Grammar

    11·4

    12·3

    13·2

    Direct Grant Grammar

    2·8

    2·9

    4·6

    Independent

    0·4

    0·6

    0·8

    Retired Teachers (Recruitment)
    Mr. Russell Johnstonasked the Secretary of State for Education and Science whether, in view of the teaching shortage, he will encourage local authorities who face difficulties in filling specific vacancies to make direct approaches to retired teachers with a view to their recruitment.
    Mr. Crosland: Local education authorities generally, and particularly those in shortage areas, already seek to retain the services of suitable teachers after their retirement. This practice has my full support.
    Mr. Johnston: While admitting that this is really a very narrow Question, would the right hon. Gentleman not agree that it would be desirable to have more push in this direction, not only to take account of teachers who are just retiring but also of teachers who have retired for three or four years and who might be susceptible to such a direct approach, which might enable them to fill, say, a particular science vacancy? Would the Minister not agree that an approach of this sort might help to mitigate the problem?
    Mr. Crosland: I will consider the question whether any additional push on our part would be helpful. In general, local authorities are now fully seized of the seriousness of the teacher shortage problem. A great deal of pushing has been done by my Department in recent months and I am sure that the great majority of authorities now know the serious position they have on their hands.
    Mr. Rankin: Would it not encourage more teachers to return to the profession after their retirement if my right hon. Friend paid them, on their return, the pension which they have already earned for teaching?
    Mr. Crosland: The question of full pay, pensions and so on was raised in the debate on 30th April, when I said, as I have said on other occasions, that I have a great deal of sympathy with the teachers' case here. The trouble is that one cannot consider teachers in isolation. This matter raises the whole question of public service pensioners and it becomes a major question covering many Departments besides my own, ultimately becoming a matter for the Treasury.

    Regional Colleges
    Mr. Hamlingasked the Secretary of State for Education and Science whether he will take steps to make regional colleges independent of local education authorities.
    Mr. Crosland: No, Sir. As my hon. Friend knows, it is the policy of the Government to develop regional and other leading technical colleges as part of the public sector of higher education alongside the universities. I believe that this can be done most effectively within the local education authority system under arrangements providing for proper academic freedom.
    Mr. Hamling: Would my right hon. Friend not agree that in many cases regional colleges cover a much wider area than typical local education authorities, some of them indeed having international reputations and that so often L.E.As are too parochial to govern an institution of that nature?
    Mr. Crosland: We are doing the preparatory work and are about to set up a study group on the whole question of advanced work, in particular in the regional colleges and the whole technical college sphere, as well as to consider whether any changes are needed in the general structure. I hope that the point made by my hon. Friend will come within that general review.
    Sir E. Boyle: Would the right hon. Gentleman not agree that it really could not make sense to treat regional colleges differently from area colleges, which also do a considerable volume of full-time higher education? Would he not further agree that one gets a little fed up with a great deal of comment in the Press and elsewhere suggesting that no higher educational institution can be of national standing if it remains within the ambit of a local education authority? Would the Minister not agree that this is not true and make it plain that such views are not held by the overwhelming majority of hon. Members on either side of this House?
    Mr. Crosland: I agree most strongly with the latter point made by the right hon. Gentleman. Anybody who has had the pleasure, as I have had in recent months, of going around and looking at both the technical colleges and colleges of education must get the incredibly strong impression of the enormous vigour, energy and experience which local authorities have put into the higher education system. Like the right hon. Gentleman, I feel strongly that it is
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    not only important that we have a considerable sector of higher education under local control but that local authorities should maintain a considerable stake in higher education.

    Governing Bodies (Staff Representation)
    Mr. Hamlingasked the Secretary of State for Education and Science what further guidance he will give to local education authorities on the representation of staff on governing bodies.
    Mr. Crosland: Questions of the internal government of technical colleges will be covered in the consultations which I am going to have with the national representative bodies about the future pattern of advanced work in the further education system. Arrangements for the government of colleges of education are being reviewed by a study group which I recently set up.
    Mr. Hamling: In the 20th century is it not appropriate that institutions of higher education like colleges of education and technical colleges where advanced work goes on ought to be as democratic and self-governing as universities?
    Mr. Crosland: I am entirely in favour of adopting the best practice which is most suitable for the mid-20th century, but I should not like to go into more detail at the moment, if my hon. Friend will forgive me, because in the case of colleges of education a study group is already at work, and in the case of technical colleges I hope that one will be at work by the autumn.

    Air Pollution
    Mr. John Hallasked the Secretary of State for Education and Science whether there is an exchange of information between the Air Pollution Research Unit and similar research units in other countries; what harmful substances have been identified in air pollution by research workers in this and other countries; and what research has been carried out into the effect of all those harmful substances by this country.
    The Joint Under-Secretary of State for Education and Science (Mr. Denis Howell): There is very close contact and

    1933
    frequent exchange of information between the Air Pollution Research Unit of the Medical Research Council and other national and international agencies in this field. A great many substances, a few of which are potentially harmful to human beings, have been identified in air pollution and their relevance to human health is kept under constant scrutiny and examination.
    Information about work being undertaken in this general field in the United Kingdom is available in a report of the Warren Spring Laboratory, entitled "The Investigation of Air Pollution"; the annual report of the Medical Research Council; and in "Scientific Research in British Universities and Colleges"; all published by Her Majesty's Stationery Office.
    Mr. Hall: Would not the hon. Gentleman agree that the evidence to date shows that the rate of lung cancer is greater in the metropolitan areas than in rural areas even where the rate of smoking per adult may be the same or greater in the rural area? Does it not show that air pollution must play a very prominent part in the development of lung cancer, and is the hon. Gentleman satisfied that the amount of research now carried on is sufficient?
    Mr. Howell: I am quite certain that this is a matter very much in the minds of the authorities concerned. I agree with the general tenor of the hon. Member's supplementary question, but as yet no direct relationship has been shown. We shall continue to give support to such research.
    Sir G. Nicholson: What are the relations of the Department and other authorities responsible for administering the existing rules and regulations? Is it not patently obvious that there is much unnecessary pollution because many lorries—and indeed cars—are so neglectfully maintained that unnecessary pollution is caused? British Railways render the air offensive by lack of proper maintenance.
    I hope the hon. Gentleman will not say that this is a matter for other Departments, but will tell us what liaison he has.
    Mr. Howell: Two-thirds of that supplementary question was for the Minister of Transport, but I am happy to assure
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    the House that there is constant and very close co-operation between all the Departments concerned.
    Mr. John Hallasked the Secretary of State for Education and Science how much has been spent in each of the last five years on research into air pollution by the Air Pollution Research Unit of the Medical Research Council.
    Mr. Denis Howell: With permission, I will tabulate this information in the OFFICIAL REPORT.
    Mr. Hall: It is a little difficult to comment until I see the figures published. May I nevertheless ask whether the amount is anything like the £1 million to be spent this year by the Tobacco Council to examine the relationship between smoking and health? If it is not so large, why not?
    Mr. Howell: It is nothing like that. It has gone up from about £21,000 in 1960–61 by about 50 per cent. to £32,800 for 1964–65.
    Mr. Hall: Is that not a grossly inadequate amount to spend on this important topic? Is the lack of research into this topic because it might throw up results which might be expensive to cure? Is that the reason why research is not being undertaken'?
    Mr. Howell: I do not want to promise greater research on this question irresponsibly, but whether or not the amount was inadequate, it was the programme authorised by the previous Administration.
    Following is the information:

    £

    1960–61

    …

    …

    …

    21,363

    1961–62

    …

    …

    …

    21,681

    1962–63

    …

    …

    …

    26,584

    1963–64

    …

    …

    …

    31,340

    1964–65

    …

    …

    …

    32,800

    South-East Kent Technical College
    Mr. Ennalsasked the Secretary of State for Education and Science what representations he has received concerning the omission of Dover from the programme of building for the South-East Kent Technical College in 1966–67.
    Mr. Prentice: The only project in respect of Dover submitted for this

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    Programme was for some communal accommodation and my right hon. Friend has received no representations about its omission other than those made by my hon. Friend.
    Mr. Ennals: Will my hon. Friend confirm that the Minister's decision was based on the priorities presented by Kent County Council and not on any decision against this proposal? Will he bear in mind that Dover has been waiting for a long time?
    Mr. Prentice: Yes, I can confirm that Dover was lower down the list of building projects and I shall bear this in mind in future programmes.

    DISENGAGEMENT IN EUROPE
    Mr. Martenasked the Prime Minister what proposals he has for disengagement in Europe.
    The Prime Minister (Mr. Harold Wilson): I have nothing to add to the Answers which I gave to Questions on 11th March and which my right hon. Friend the Secretary of State for Foreign Affairs gave on 3rd May.
    Mr. Marten: Does that mean that there has been no progress at all over this question of disengagement in Europe? If so, does the Prime Minister recall his election hopes expressed to the electorate about disengagement? Does this not amount to the fact that those hopes were held out without proper consultation and proper consideration?
    The Prime Minister: The hon. Member may have forgotten the very long exchanges we had on this at Question time on 9th February in which I stated our policy. This was the basis on which I spoke in Germany on my visit, both to the German Government and to the German Press. We hope to make further progress on this matter as part of proposals for arms control in that area. We have not changed our policy at all on this matter, but the hon. Member must realise, as I am sure all hon. Members do, the great difficulties especially before the German election.
    Sir Alec Douglas-Home: Clearly this is a very difficult matter. Can the Prime Minister say whether the Minister for
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    Disarmament is following up the plan for placing observers in the N.A.T.O. and Warsaw Pact areas, which always seemed the most likely preliminary to some thinning out of forces on either side?
    The Prime Minister: Yes, indeed, he has and we hope to go further on the matter of arms control and some agreed withdrawal on both sides of the Iron Curtain of conventional troops, quite apart from the nuclear situation. I think the whole House would want to see progress made on this. Equally, the House recognises the enormous difficulties, including that of giving some reassurance to Germany.
    Mr. Grimond: In the very cordial atmosphere which followed Her Majesty's visit to West Germany, would it not be possible to approach the West Germans to see if we can agree with them proposals for some modification of the tension on the East-West frontier in Europe which we can then put before our allies?
    The Prime Minister: I said in the House once, as I said in Bonn, and I am sure we all agree, that any progress towards German reunification and many of the other things to which the Germans attach so much importance, as we do, must depend on a detente in Europe. This requires the greatest co-operation of all States. Even at some risk, as it may be, to get that detente arms control and disengagement are all part of such a policy.
    Mr. Rose: Will my right hon. Friend seeks the views of the East and West German Governments, together with the Polish, Czech and Hungarian Governments, to seek eventually a European conference on the question of disengagement when the political climate is perhaps more appropriate than it is now?
    The Prime Minister: The Foreign Secretary has visited Czechoslovakia and had many discussions with the Czechoslovakian and Polish Governments on this question. As far as the East Germans are concerned, this is obviously not going to be done without agreement with the Soviet Government and I think we can assume that the Soviet Government will be—shall I put it this way?—well aware of the views of the East Germans on this matter.

    SECURITY
    Mr. Fisherasked the Prime Minister if he will give details of the dispositions has made to keep himself informed about security risks.
    The Prime Minister: I would refer the hon. Member to the Answer I gave on 18th May to a similar Question by the hon. Member for Chigwell (Mr. Biggs-Davison).
    Mr. Fisher: Is the right hon. Gentleman aware that although many of us on this side of the House have nothing against the Paymaster-General [HON. MEMBERS: "Oh."]—except perhaps that he is not very good at answering Parliamentary Questions—nevertheless we feel that his status and responsibility in this field is not very clear to the House of Commons and that Parliament is entitled to know where exactly responsibility lies and to what extent? The Prime Minister himself has delegated his authority in this very important field.
    The Prime Minister: I have delegated no authority in this important field. I have made it clear to the House on a number of occasions that a Prime Minister must not be put in the position of not being informed of everything going on in this field. I have taken steps to ensure that I shall be fully informed. I did not notice in the Question anything about my right hon. Friend the Paymaster-General, who is better at knowing the answers to the questions than some hon. Members are at knowing the questions to the answers. I am sure that the hon. Gentleman will join in the tribute paid by Mr. Macmillan to my right hon. Friend for all he did in the field of security in some very difficult issues two years ago.
    Mr. Kershaw: Quite apart from the view that some of us hold about the Paymaster-General, does not the Prime Minister realise that when a party Minister meddles in security matters this is bound to raise anxieties in the country? Even if the Prime Minister has residual responsibility in this matter, many of us are not content that there should be a party Minister, and this Minister in particular, with the responsibility for security.
    The Prime Minister: I thought that for a very long time in our constitutional history all Ministers have in fact been members of parties. While I am not myself concerned about the interest hon. Members take in my right hon. Friend, which seems a matter more for a psychiatrist than for any other kind of professional, I should have thought that we would all agree that in the past there have been occasions when there was a feeling that the Prime Minister was not kept sufficiently in touch with security matters, and this is what we want to put right.

    STEEL INDUSTRY
    Mr. Ridleyasked the Prime Minister what machinery for co-ordination exists between Government Departments on Her Majesty's Government's policy with regard to the steel industry.
    The Prime Minister: I would refer the hon. Member to the Answer I gave on 15th June to a similar Question by the hon. Member for South Angus (Mr. Bruce-Gardyne).
    Mr. Ridley: Does the Prime Minister feel that the machinery for co-ordination between the Minister of Power and the First Secretary of State and Secretary of State for Economic Affairs worked well on the night of the steel debate? Can he tell the House, following that sordid bargain, which policy the Government have adopted towards steel, or is the First Secretary still listening to his hon. Friends?
    The Prime Minister: I do sympathise with the hon. Gentleman. There are so many questions on the Order Paper about the Paymaster-General and other subjects that every Question which is put down to me now is about six weeks out of date, including this Question of the hon. Gentleman's. I am perfectly satisfied with the machinery for coordination. If the hon. Gentleman wants to know the policy of the Government on this matter, if he is in any doubt, I will send him a copy of the statement that I made the Wednesday following the debate to which the hon. Gentleman referred.
    Mr. Macleod: If the policy of the Government is clear, could the Prime Minister tell us whether his promise to

    1939
    the House made on 18th March that the House would be invited to pass the Steel Bill into law this Session still holds good?
    The Prime Minister: In the words of the lady at the Hammersmith Palais de Danse, I say to the right hon. Gentleman, "Do you come here often?" [Laughter.] It is very nice to see the right hon. Gentleman. On his question, I think that the position that the House now has to face, with the pretty fair knowledge that we are not likely to be able to introduce much new legislation between now and July—[HON. MEMBERS: "Ah."]—is that the House will have to consider its convenience in the matter, as to what part of the summer it intends to sit into. I can imagine that right hon. and hon. Gentlemen will not want to sit on 12th August, but we are prepared to receive representations. Then we shall have to decide whether our convenience is best served by extending the Session in order to get this and other necessary legislation through, or whether we should make a clean start with an early new Session. This is a matter we have to consider between us.
    Mr. Macleod: Is the Prime Minister aware that at Question Time even the Prime Minister is expected occasionally to answer questions? This one is in absolutely specific terms. On 18th March, and to great applause from his side of the House, he gave an undertaking that Parliament would be asked to pass the Steel Bill into law this session. Now, "Yes" or "No"—does that pledge hold?
    The Prime Minister: I have said—
    Hon. Members: Answer.
    The Prime Minister: —that it all depends on how long right hon. and hon. Gentlemen are prepared to sit.
    Mr. Macleod: "Yes" or "No"?
    The Prime Minister: I know how disappointed the right hon. Gentleman is at being left behind by his right hon. Friend. I can promise him that he will not be disappointed in having this Bill early enough for him to show how he can shine.
    Several Hon. Members—
    Mr. Speaker: "Yes" or "No" we must get some more Questions done.

    CRIMINALS (PRESS ARTICLES)
    Mr. Derek Pageasked the Prime Minister what representations he has received asking for the introduction of legislation to make it illegal for criminals to make money by selling their stories to the Press.
    The Prime Minister: None, Sir, but, as I have made plain on previous occasions, the Government thoroughly deprecate this practice.
    Mr. Page: Does not my right hon. Friend agree that the publication, for instance, of the Bossard memoirs by papers such as the Sunday Telegraph and the Daily Express appeared to show more concern for circulation than for the national interest? Does not my right hon. Friend think that this deplorable practice should have been referred to the Press Council?
    The Prime Minister: I thought that it was the Daily Sketch, myself. In past years hon. Members on both sides of the House have deprecated the fact that those who have been found guilty of a criminal offence can then make large sums of money for themselves by selling their memoirs. I am sure that my hon. Friend is right: this is a matter for the Press Council. Proprietors generally have expressed their abhorrence of this practice, and I am sure that the House would do well to leave these matters in the hands of the Press Council which, I think, is perfectly capable of dealing with this practice.
    Sir D. Renton: Is the Prime Minister aware that some people, including former Members of the House, have produced most interesting reminiscences about their experiences in prison? Would he not agree that it would be an unwarrantable interference with freedom to prevent or discourage those reminiscences from being published, since they sometimes give information about the prison system which could not otherwise be obtained?
    The Prime Minister: I am well aware that hon. Members opposite are rather disturbed by the revelations of the former Postmaster-General, but I was not aware that anyone yet regarded him, in the wording used in the Question, as a criminal.
    Mr. Hugh Jenkins: Is my right hon. Friend aware that not all of us share the confidence that he has just expressed in the Press Council's ability and intention to take action in this matter?
    The Prime Minister: Yes, Sir, but I think that we must leave this to the Press Council. I think that it would be wrong for us to try to legislate in this matter. I think that the Press Council is well aware of the feeling of the House.

VIETNAM (COMMONWEALTH MISSION)
Mr. Jacksonasked the Prime Minister what further steps Her Majesty's Government propose to take in order to assist in the obtaining of a peaceful settlement in Vietnam.
Mr. Ennalsasked the Prime Minister what proposals he has put before the Commonwealth Prime Ministers concerning a peaceful settlement in the Vietnam conflict.
Sir F. Bennettasked the Prime Minister how many, and which, of the approved recipient countries of the proposed Commonwealth Peace Mission have intimated favourable and non-favourable reactions, respectively.
The Prime Minister: I have as yet nothing to add to the statement which I made in the House on 17th June.
Mr. Jackson: Would the Prime Minister consider whether we might not keep this Peace Mission in continuing committee during the summer, bearing in mind that negotiations are likely to be protracted? Secondly, would he again convey to the United States the immediate and urgent necessity of bringing this bombing to a close?
The Prime Minister: The Heads of Governments who were appointed by their colleagues to be members of the Mission issued a statement last Saturday asking for all sides to show the utmost restraint in military activities so as not to prejudice the work of the Mission. We are now waiting to see the result of the representations made in certain capitals—I am thinking of one in particular. It would be premature of me to say anything about this. I can say this, however. Even if it becomes
1942
impossible in the immediate situation to visit some of the key capitals concerned, it is certainly the intention of the Mission which has been established to remain in being and to be able to travel as soon as conditions are appropriate for us to exercise the mediatory activities that the whole Commonwealth wants.
Sir Alec Douglas-Home: I do not want to ask the right hon. Gentleman about the Russian reply, but would he bear in mind the importance of the machinery of Co-chairmen, the British and Russian Co-chairmanship of the Conference, and also the fact that the Geneva Conference continues in session and that, therefore, it is the most likely forum at which this matter could be settled?
The Prime Minister: I am glad the right hon. Gentleman raised that question. The Russian reply is in terms that they have no responsibility for the fighting; they are not parties to the fighting and they believe it is a question of the Mission having discussions with the countries directly concerned. Of course, there are three involved and there is the Vietcong as well.
As far as Co-chairmen are concerned, it was the view of most of us at the Prime Ministers' Conference that we want to be able to establish the conditions in which, first, a conference can be held and, secondly, we hope a cease-fire can be organised. Certainly I agree, and most of my colleagues agree, that the right machinery for convening that conference would be the Co-chairmen of the Geneva Conference. This has a continuing responsibility, and we were very anxious as early as February or March, when Mr. Gromyko was here, to activate the two Co-chairmen into calling a conference themselves. This did not prove possible. I do not think we can stand aside. We believe there is agreement between the two Co-chairmen, and this is one of the most important reasons compelling us to take the action now.
Mr. Ennals: Would my right hon. Friend agree that the very mention of the Commonwealth Peace Mission has had an impact in that it has shown the united determination of the Commonwealth that the Vietnam problem must be settled by negotiation? Would my right hon. Friend further agree that it has a long-term job to do and that it

1943
must be flexible in its procedures in order that we may find a way of solving the problem?
The Prime Minister: I agree with my hon. Friend about this. The reason why the Commonwealth had to take action is that we are not only very representative of the world in general but we have so many different views amongst ourselves—I do not disguise it—[Laughter.] I do not know why hon. Members want to titter about the fact that this multi-racial Commonwealth, representing all points of view and alignments except Communist ones, inevitably has different views about responsibility for the situation in Vietnam. So far from being a weakness, this is a strength because a mission undertaken on behalf of the whole Commonwealth, aligned to no particular interpretation of the fighting in Vietnam, can be a very powerful force for securing mediation, particularly at a time when tragically it is not possible for the United Nations itself to intervene.
Sir F. Bennett: I do not ask the Prime Minister to make any sort of premature statement but simply to answer a question namely, how many have sent an official answer—not unofficial or secret—"Yes" or "No" and which countries those are.
The Prime Minister: I think the answer is that three have sent official answers. The Governments of South Vietnam and of the United States are prepared to receive the Mission and welcome its appointment. The Soviet Union have given an answer which is known to the House, that they feel it is not for them; but it is not in any sense a hostile answer. But the other two to whom messages have been sent, namely, China and North Vietnam, have not yet replied.
Sir F. Bennett: I thank the right hon. Gentleman.
Mr. Sydney Silverman: Is my right hon. Friend not impressed just a little bit by the remarkable change of front indicated by the Leader of the Opposition in his speech yesterday and in his Question today when he seems to have been recommending to my right hon. Friend that the use of the Geneva Conference might be a more hopeful means of bringing about a negotiation, the Leader of
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the Opposition having described that proposal a few months ago, when it was made by some of my hon. Friends and myself, as a cowardly proposal? May it not be, having changed his mind so remarkably, that there is something in the idea after all?
The Prime Minister: I think these issues are far too important to be made the subject of exchanges across the House. I think it has been the wish of all of us to secure the activation of the Co-chairmen of the Geneva Conference, and all we have been doing—we have been working very hard on this as a Government—is to see how that can be achieved. The right hon. Gentleman is absolutely right to say that at the end of the day this should be convened by the Co-chairmen. I have some little doubt about his speech yesterday when he referred to the Laos situation. As he knows, it took two years to get that settled in more favourable circumstances than we face today in Vietnam. I am sure that he and the House will agree that the dangers arising from the situation in Vietnam are so urgent that we had to make this highly unconventional approach, or any other approach that lies to hand, to try to get the parties together.
Sir Alec Douglas-Home: I agree with the Prime Minister as long as from now on he will make the necessary preparations—because one has to prepare these matters behind the scenes very carefullyx2014;before any real conference can take place on this kind of matter.
The Prime Minister: Yes, I agree with the right hon. Gentleman. But we have been in the closest touch with the Soviet Government for many months now, and I am sorry to say that up to now this has not proved productive. Those preparations were going on all the time. The problem was how to get people to come round a table, and this is what we are trying to do. I agree that it was an unconventional approach. I think that when the right hon. Gentleman ponders about this he will realise that any other approach would not have been possible. There are so many difficulties that if we had given prior notice of this in certain countries or if there had been a lot of informal soundings in advance, I believe that certain things

1945
would have started up which would have made it still more difficult to get this Mission established.
Mr. Philip Noel-Baker: Does the Prime Minister realise that very many people in this country and, I believe, throughout the world will rejoice that the Mission intends to pursue its task, and will he represent to those who may be concerned that any persons in China or elsewhere who seek to question the fact that the Mission will be acting in good faith and in the interests of humanity as a whole will only call in question their own good faith and will lose in the estimation of those who have tried to make good and friendly relations with them?
The Prime Minister: I thank my right hon Friend. I made clear last Thursday evening that I did not underrate the enormous difficulties—none of us does—and if we are disappointed—I hope we shall not be—in terms of an immediate mission going out to the capitals concerned, we have decided that we shall stay in being to take advantage of a more favourable change in the climate or tide at any time and we shall be prepared to go. Certainly there is a widespread realisation now that the problem in South Vietnam, with all its dangers, will not be solved by military means alone. Those who think purely in terms of victory are, I think, facing a very difficult situation and there must be a move of people round the conference table. I know that this is realised in some parts of the world. I hope it will be realised by everyone who has any responsibility for the continuation of the fighting.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: We must move on. Sir Alec Douglas-Home, Business question.

BUSINESS OF THE HOUSE
Sir Alec Douglas-Home: May I ask the Leader of the House whether he will state the business of the House for next week?
The Lord President of the Council (Mr. Herbert Bowden): Yes, Sir. The business for next week will be as follows:
MONDAY, 28TH JUNE—Remaining stages of the Monopolies and Mergers Bill.
Motion on the Import Duties (General) (No. 4) Order.
TUESDAY, 29TH JUNE—Progress with the remaining stages of the Rent Bill.
WEDNESDAY, 30TH JUNE—Rent Bill: Remaining stages, which it is hoped to complete by seven o'clock.
Afterwards, Second Reading of the Patents (Employees' Inventions) Bill [Lords].
THURSDAY, 1ST JULY—Supply [20th Allotted Day]: Committee. There will be a debate on Housing in England and Wales.
Remaining stages of the Housing (Amendment) (Scotland) Bill.
Motion on the Double Taxation Relief (Taxes on Income) (Jamaica) Order.
FRIDAY, 2ND JULY—Private Members' Bills.
MONDAY, 5TH JULY—The proposed business will be: Finance (No. 2) Bill: Report stage.
Sir Alec Douglas-Home: Is the right hon. Gentleman aware that the programme which he has announced for next week is, once again, very congested? Does he not realise that the consequence of the Government's gross overloading of the Parliamentary programme is a lowering of respect for the House in the country? Could we have less business, please?
Mr. Bowden: I do not regard next week as being overloaded. It may be that the Rent Bill, which I think the whole House wants, will take a little longer than up to seven o'clock on the second day, but we had better see how we get on with that.
Sir G. de Freitas: Is my right hon. Friend aware of the publication today of a report by Dr. Knapp, of the United States Department of Agriculture, showing the benefits which British farmers could derive from agricultural co-operation provided that it is free from the National Farmers' Union? Will the Leader of the House consider providing us with an opportunity to discuss this problem of the possibility of agricultural co-operation being sabotaged by the National Farmers' Union?
Mr. Bowden: It is important that we should discuss agricultural co-operation

1947
perhaps before the end of July, but I cannot promise a day. Between now and the end of July the greater proportion of the time available is in the hands of the Opposition and no doubt they will choose agriculture for debate on a Supply day.
Mr. Selwyn Lloyd: Will the Leader of the House consider again the business for Tuesday and Wednesday? I have in my hands a mass of Amendments to the Rent Bill, most of them originating from the Government themselves, and I suggest that it is almost an insult to the intelligence of the House to think that this business can possibly be concluded by seven o'clock on the second day.
Mr. Bowden: I have already said that I think it is possible to conclude by seven o'clock. We shall see how we get on and if it is not possible we shall run on a little later. I hoped that we should have been able to rise at the end of July for the Summer Recess but, if not, we can run for a few days into August.
Mr. Warbey: Can my right hon. Friend say when we are to have a debate on Vietnam, and particularly on Motion No. 260 on the Order Paper on preconditions for peace in Vietnam, which puts forward constructive proposals for peace there.
[That this House, desirous of helping the Vietnamese people to secure the peace with independence, sovereign equality, security and justice which along with other formerly dependent nations, they were promised in Article 2 of the United Nations Charter and which was specifically pledged to Vietnam in the Final Declaration of the 1954 Geneva Conference, to which Her Majejsty's Government adhered, calls upon Her Majesty's Government to endorse and act upon the following proposals as essential pre-conditions to the success of any peace initiative, based, as U Thant has repeatedly said it must be and as the main parties have already agreed, on the essential principles of the Geneva Agreements on Vietnam, namely, a re-affirmation of the British Government's support for the sovereignty, independence, territorial integrity; and essential unity; of the State of Vietnam as one nation in fact and law;
1948
the official recognition by Her Majesty's Government of the Government of the Democratic Republic of Vietnam, formed in September, 1945, as a stable, independent govenment, constituted in accordance with the principles and practice of international law, and entitled to enter into official relations with the representatives of other sovereign states and to adhere to valid international agreements; the immediate establishment of full reciprocal diplomatic relations between Her Majesty's Government and the Government of the Democratic Republic of Vietnam, on the understanding that the de facto authority of the Democratic Republic of Vietnam extends at present from the frontier with China and Laos to the military demarcation line on the 17th parallel; the suspension of British recognition of any governmental authority south of the 17th parallel until such time as a new government has been formed with the participation of the South Vietnam Liberation Front and other popularly-based political forces; the withdrawal by Great Britain and the other members of the Commonwealth of any assistance (direct or indirect, military or political or diplomatic) to any regime in South Vietnam which is not clearly based on popular support; and the cessation of the landing of United States and other foreign forces in Vietnam and complete cessation of United States or other foreign air or naval attacks against any part of Vietnam.]
and also on Motion No. 264,
[That this House congratulates the Leader of the Opposition on his frankness in publicly admitting that his long opposition to the recall of the 1954 Geneva Conference to deal with the problems of Vietnam was misconceived and has failed ignominiously to check the revolt of the Vietnamese people against the violation of the Geneva Agreements and of the Final Declaration by the Great Powers, to cement the Anglo-American alliance, or to divide the Communist alliance.]
which censures the Leader of the Opposition for the hypocritical part which he has played over this whole matter—[HON. MEMBERS: "Oh."]—including converting the Foreign Office into an instrument of American policy, and also for the part which he has played in—
Mr. Kershaw: On a point of order. Is it in order to use a question on business to make these abrasive remarks?
Mr. Speaker: No, it is not. I have not the Motion in my hand, but no doubt the hon. Member for Ashfield (Mr. Warbey) will exercise his great skill in attracting attention to the Motion in a manner which does not involve allegations of that kind.
Mr. Warbey: I was not making any allegations. If I made any personal allegations against the Leader of the Opposition I withdraw them. I should not have used the word "hypocritical" on this occasion and I realise that.
Mr. Speaker: Order. Business questions are rather a burden to us all and it would assist if the hon. Member would state quickly what his business question is.
Mr. Warbey: I was asking if we are to have a debate on the two Motions on the Order Paper which I have mentioned. I was indicating—
Mr. Speaker: Order. I would be obliged if the hon. Member would briefly indicate what he was asking about. Let us get on.
Mr. Bowden: I cannot promise a debate because the contents of the Motions would probably come within the debate on foreign affairs which we have already promised to the House, but in view of the Prime Minister's statement on Thursday of last week, the discussions at the Commonwealth Prime Ministers' Conference and Questions today, I think that we ought to await developments now before we have a debate.
Mr. Boyd-Carpenter: Can the right hon. Gentleman say when the Bill, forecast in the Queen's Speech last November, to provide for leasehold enfranchisement will be introduced? Has it shared the fate of the Steel Bill?
Mr. Bowden: It will not be introduced next week.
Mr. Heffer: In view of the great amount of interest shown in the question of the procedures of the House and its reform, can my right hon. Friend say when the two Reports issued by the Select Committee on Procedure will be debated?
Mr. Bowden: Time will be found before we rise for the Summer Recess for a debate arising from the First and Second Reports of the Select Committee on Procedure and the Government's proposals in relation to them.
Sir C. Taylor: The Minister of Overseas Development made an important statement in the House last week and we were not able, quite rightly, to cross-question the right hon. Lady on that occasion. Will the right hon. Gentleman give time in the near future for a debate on Motion No. 254 which refers to overseas loans, so that we can fully discuss the statement made by the Minister?
[That, in view of the financial situation of the country, this House wishes to express its astonishment at the statement made by the Minister of Overseas Development, whereby it has been announced that Her Majesty's Government, having borrowed large sums from the International Monetary Fund, international bankers and other sources at various rates of interest, and which must in due course be repaid, are now prepared to lend unspecified moneys to unspecified developing countries free of interest.]
Mr. Bowden: I cannot promise a debate in the immediate future. I understand that my right hon. Friend will be likely to be issuing a White Paper dealing in rather greater detail with the statement which she made.
Sir C. Taylor: Shall we have a debate on the White Paper?
Mr. Bowden: I cannot promise that at the moment.
Mr. Michael Foot: When my right hon. Friend says that a debate on foreign affairs should be postponed because of the Prime Minister's statement last week, will be take into account the fact that there are many of us on this side of the House who believe that if the bombing of North Vietnam continues, in blunt defiance of the appeal made by the Commonwealth Prime Ministers, this will make a debate urgent? Therefore, if the bombing continues, will my right hon. Friend undertake to rearrange the business of the House so that we can discuss this campaign of murder which is still proceeding in Vietnam?
Mr. Bowden: I would remind my hon. Friend that the bombing ceased for five days in the hope that a solution might be reached. We shall have to await developments. If it were felt that a debate should take place immediately we would, of course, rearrange business.
Mr. Sandys: Will the Prime Minister be making a statement about the outcome of the Commonwealth Prime Minister's meeting? If so, on what day?
Mr. Bowden: I cannot say whether a statement will be made, but certainly a communiqué will be issued as usual.
Mr. Richard: May I call my right hon. Friend's attention to Motion No. 196 which calls for investigation into the case of Timothy John Evans?
[That this House calls on the Secretary of State for the Home Department to carry out an investigation into the case of Timothy John Evans as he advocated in 1961, or to appoint a Judge of the High Court to hold a public inquiry for that purpose.]
This Motion has now been signed by 92 hon. Members. Does my right hon. Friend not think that this is a matter which should be discussed by the House so that in this case justice may at last be seen to be done?
Mr. Bowden: As far as I know, my right hon. and learned Friend the Home Secretary has nothing further to say following his statement on 4th February, but a debate perhaps could well take place on an early day Motion or on a Private Member's Motion; and there are probably two or three opportunities available between now and the end of July.
Mr. Fisher: As the Prime Minister has found it expedient not to answer the question put to him by my right hon. Friend the Member for Enfield, West (Mr. Iain MacLeod), can the Leader of the House, whose responsibility it is to allocate Government time, tell us whether we are to have a Steel Bill this Session?
Mr. Bowden: No, Sir, I cannot say firmly at this stage.
Mr. Snow: When my right hon. Friend was replying just now to my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about consideration being given
1952
to the Reports of the Select Committee on Procedure, had he taken into account the fact that important matters are raised in the new Motion, No. 257, on the Order Paper suggesting to the House a certain order of priority in the matter of specialist committees which the Select Committee might take into consideration and discuss?
[That this House is of the opinon that immediate action should be taken to bring Parliamentary procedure and the conduct of Government into line with modern developments; takes note that the protracted consideration of the Finance Bill and the subsequent all-night sittings which this has created, together with the archaic procedure which prevented for three hours the Prime Minister, on Thursday, 17th June, from making a statement of international importance, are two recent examples of the failure of the present system; and considers that it is useless for the Government, Opposition and Members of Parliament to call for the modernisation of Great Britain and the streamlining of trade unions and industry whilst themselves trying to carry on under a system which was evolved over 700 years and much of which has not yet reached the twentieth century; that this House therefore calls for immediate action to improve this and regards the protracted deliberations in the Committee of Procedure as not sufficiently speedy or drastic to meet modern demands; and urges that the following proposals should be dealt with as a matter of urgency: that the House should now meet in the morning on Tuesday. Wednesday and Thursday, and that the Parliamentary timetable should be revised accordingly to exclude any sittings later than 10 p.m., but that Standing Committees should continue to meet at their present times; that all major Bills should be taken upstairs in Committee and not on the Floor of the House; that Specialist Committees charged with the consideration of both legislation and broad administration of policy should immediately be introduced on an experimental basis; that the voting procedure is archaic and time-wasting and should be urgently reviewed and a method utilising modern techniques should be introduced, in order to make unnecessary the transport of sick Members to the Lobbies; that all speeches should be subject to a time limit extendable at the will of the House; that facilities in the House

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of Commons for Members are far below the required standard to carry out their duties efficiently; and that until it is possible in the long term to provide a new seat of Government designed for this purpose there should be very urgent steps taken to provide Members with separate office accommodation, hostel accommodation and far greater research facilities.]
Mr. Bowden: I am not absolutely certain, but I think that the Select Committee on Procedure is discussing that matter at the moment.
Sir K. Pickthorn: Has the Leader of the House further considered the matter which I may shortly refer to as "taxation by dead heat"?
[That this House, recognising the normal duty of the Chair to give a casting vote when the voices are equal, declares that proposals for taxation of the people should not be initiated by this means.]
Mr. Bowden: Yes, Sir; I have given this further consideration. As I said last Thursday, there are many precedents for a casting vote being given when there is a dead heat on business normally. This was a financial matter, which may raise a rather different point. I think that, perhaps, the Select Committee on Procedure might look at it and take evidence and see whether it can advise the House.
Sir K. Pickthorn: May I thank the right hon. Gentleman for his attention to this matter and, at the same time, ask him not to think it grudging to doubt whether the whole of this matter falls within the normal function of that Committee?
Mr. Ogden: Can my right hon. Friend say whether it is correct that there is only one more day available to debate nationalised industry? As this is a critical time for the National Coal Board, could time be made available before the end of the Session for a debate on the coal industry?
Mr. Bowden: It is correct that there is one more day available out of the three, but the choice of subject on nationalised industry day is a matter for the Opposition.
Mr. Sharples: Can the Leader of the House say whether the Home Secretary intends to make a statement on immigra-
1954
tion policy next week, as the Government's proposals seem to have been fairly extensively recorded already?
Mr. Bowden: My right hon. Friend the Prime Minister promised a statement on immigration as soon as the Government have anything to say.
Mr. Russell Johnston: Reverting to matters to be put before the Select Committee on Procedure, may I ask the Leader of the House whether his attention has been drawn to Motion No. 255, with reference to proceedings on the Highlands and Islands Development (Scotland) Bill? As I recollect, the right hon. Gentleman was present in the Chamber on that occasion, and I am sure that he will agree that the situation was extremely unfortunate.
The Prime Minister was here, seeking to make a statement, and this adversely affected the debate. This is the sort of thing which might happen next week. The same kind of situation might arise at any time. Will the right hon. Gentleman say whether this matter is definitely being referred to the Select Committee of Procedure?
[That this House regrets that there was no adequate procedure to enable the Prime Minister to intervene during the Report stage of the Highlands and Islands Development (Scotland) Bill for the purpose of making a statement of national importance concerning Vietnam and calls on Her Majesty's Government to refer this matter to the Committee on Procedure; and further regrets that those honourable Members who entered the Chamber to hear the Prime Minister's statement and remained in anticipation of it, while not infringing the strict rules of procedure, should by their attitude of manifest disinterest have adversely affected the conduct of the debate on the Highlands and Islands Development (Scotland) Bill.]
Mr. Bowden: I have looked at this point. I think that there is a case for discussion to take place probably through the usual channels in the first place about a new Standing Order which would permit a Prime Minister to make a statement at any time on an urgent matter of international or national importance without interrupting a debate.

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This is not the first occasion when this sort of thing has happened, and I do not for a moment suggest that the Clerks of the House who would have advised Mr. Speaker at the time were at fault. I think that it ought to be looked at, but through discussions, first of all, through the usual channels.
Mr. Philip Noel-Baker: Although no one would wish to have a debate on foreign affairs if it might damage the prospects of the Peace Mission on Vietnam, will my right hon. Friend take into consideration that perhaps such a debate might strengthen the hand of the Mission and that, in any case, there are other questions, such as the situation in San Domingo and Malaysia, which urgently require discussion by the House?
Mr. Bowden: I hope that, when we reach the foreign affairs debate, a two-day debate as promised last week, it will be comprehensive; but I do not rule out the possibility of circumstances requiring that it be taken rather earlier than expected.
Mr. Biggs-Davison: Reverting to the question by my right hon. Friend the Member for Streatham (Mr. Sandys), has the Leader of the House studied two Motions concerning the Commonwealth Prime Ministers' Conference, one in the name of several of my hon. Friends and myself and the other in the name of my hon. Friend the Member for Yarmouth (Mr. Fell) and others of us?
Is he aware that the last Commonwealth debate was too short and some of the speeches were too long for private Members to be able to express their views on these great matters'? May we have an assurance that, when the communiqué from the Commonwealth Prime Ministers' Conference is published, the House will be enabled to discuss it at the length which it deserves?
[That this House reaffirms its faith in a Commonwealth based upon the need and desire of peoples to maintain their sovereignty in partnership with others; recalls India's Five Principles, enunciated by the late Jawaharlal Nehru, namely mutual respect for territorial integrity and sovereignty, non-aggression, non-interference in internal affairs of an economic,
1956
political or ideological character, equality and mutual benefit and peaceful co-existence; welcomes the extension of the activities of the Commonwealth Parliamentary Association; looks forward to the establishment of the Commonwealth Secretariat and Commonwealth Foundation; would support a generally acceptable Commonwealth Court of Appeal; proposes co-operation between the National Economic Development Council and corresponding bodies in other Commonwealth countries and for a more complete survey of Commonwealth resources; believes that, since international debt imposes its own form of colonialism, technical assistance and freer trade within the Commonwealth should take precedence over grants and loans; would welcome further commodity stabilisation arrangements; believes that, as a sequel to the United Nations Conference on Trade and Development, the General Agreement on Tariffs and Trade should he so modified as to allow the modernisation of Commonwealth preferential trading arrangements; recommends consideration of a Commonwealth Bank, and also of a Commonwealth Payments Union, on the lines of the former European Payments Union, to act as a buffer between creditor and debtor nations and obviate the erection of trade barriers because of temporarily adverse balances; would welcome more direct oversea Commonwealth participation in the management of the Sterling Area; believes that Commonwealth immigration into the United Kingdom must be limited by absorptive capacity and that much of it would he unnecessary in a more evenly developed Commonwealth; urges Her Majesty's Government in the United Kingdom to discuss with Her Majesty's Governments in the old Dominions the rapid expansion of their populations which their very security demands; notes the approach of Nigeria, Kenya, Uganda and Tanzania to the European Economic Community; holds Europe and the Commonwealth to he complementary concepts, witness Australia's valuable membership of the European Launcher Development Organisation; and urges that the partnership of Commonwealth with European nations, linked in London, could and should become a decisive world force for peace with justice.]
[That this House reaffirms its faith in a Commonwealth based upon the need and desire

1957
of peoples to maintain their sovereignty in partnership with others; recalls India's Five Principles, enunciated by the late Jawaharlal Nehru, namely, mutual respect for territorial integrity and sovereignty, non-aggression, noninterference in internal affairs of an economic, political or ideological character, equality and mutual benefit and peaceful co-existence; considers that the timing and conditions of Rhodesian independence are matters exclusively for Her Majesty's Government and the Rhodesian Government; trusts that nothing will be done to provoke a unilateral declaration of independence; urges political leaders and parties in Rhodesia to eschew violence and work the Constitution; urges Her Majesty's Government further to assist the educational and economic advancement, and thus the political emancipation, of all in Rhodesia; deprecates threats of economic or other sanctions against the Republic of South Africa as self-defeating, contrary to the aforesaid Five Principles and likely to harm the promotion by Her Majesty's Government of the prosperity and independence of Bechuanaland, Basutoland and Swaziland; would welcome with full respect to the sovereignly of India and Pakistan, a settlement within the Commonwealth of their disagreements over the Rann of Kutch and over Kashmir; believes that this would facilitate combined sub-continental defence strategy on the lines already suggested by Field-Marshal Ayub Khan; recognises India's reluctance either to make nuclear weapons or to commit herself to a military alliance with the United States of America and congratulates Her Majesty's Government on deploying British nuclear as well as conventional forces east of Suez; therefore considers that the said Government deserves Commonwealth support in holding the necessary base and staging facilities from Gibraltar to Singapore; further congratulates Her Majesty's Government in the United Kingdom, supported by Her Majesty's Governments in Australia and New Zealand, on aiding the defence of Malaysia, whose independence and integrity are of concern to the whole Commonwealth; and foresees a special rôle for the Commonwealth in the eventual settlement of South-East Asia.]
Mr. Bowden: As Leader of the House, I am quite prepared to accept that all debates are too short and all speeches too long. We did have a debate prior to the Commonwealth Prime Ministers' Conference, at the request of the Opposition. Let us see what happens as a result of the communiqué. If there is an opportunity, no doubt we can have a further debate, but we are really pressed for time between now and the end of July. Nevertheless, if the Opposition care to use a Supply day for this purpose, it could be done.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. We must get on.
Sir C. Osborne: On a point of order, Mr. Speaker. In view of the Motion No. 263, which is a personal attack upon me, a despicable, mean and contemptible one, based on deliberate misrepresentation—
[That this House deplores the action of the hon. Member for Louth in asking Her Majesty's Government to punish ordinary men and women for exercising their democratic rights in industry and calls upon the Leader of the Opposition to dissociate himself from this proposition.]
Mr. Speaker: Order. I have not the Motion in my mind at the moment, but I should be glad if the hon. Gentleman would indicate what is his point arising on the business question or a point of order. We cannot get into a debate about its merits or demerits.
Sir C. Osborne: I should like to have your guidance and help in this matter, Mr. Speaker, as you were closing business questions. This is a personal attack upon me in Motion No. 263, which is based on a gross and deliberate misrepresentation of what I said. I ask the Leader of the House whether he will provide time—
Mr. Speaker: Order. That is different. The hon. Gentleman cannot do that now because I have indicated that we must bring the business question to an end. I understood the hon. Gentleman to be raising a point of order.
Sir C. Osborne: Then may I ask for your guidance, Mr. Speaker? By what means can a back bencher on either side defend himself from a mean and despicable attack like this? This Motion which has been used against me misrepresents what I said. May I be allowed to remind you, Sir, of what I actually asked?
Mr. Speaker: No. Let me help the hon. Gentleman. This was not in my mind at first, but I think that as it amounts to—I shall not define the character of the Motion—I should relent to the extent of allowing the hon. Gentleman to ask the Leader of the House for time to have it debated, if that is what he desires.
Sir C. Osborne: I ask for time, Sir, because of—
Mr. Speaker: The hon. Gentleman must be kind to me, because I am relenting in his favour. What he is allowed to do is not to give reasons any further, but to ask whether he may have time.
Sir C. Osborne: I am much obliged. May we have time to debate this matter, which I regard as a nasty, mean, personal attack?
Mr. Bowden: No, Sir; I cannot promise Government time. This is a matter for the half-hour Adjournment debate or for a private Members' occasion, of which there are a number. In this early day Motion, I have been asked to dissociate myself from the remarks of the hon. Gentleman. Like everyone else in the House, I hope, I deplore wild-cat strikes; but I cannot associate myself with the hon Gentleman's view that they should be punished.
Sir Alec Douglas-Home: Mr. Speaker, could you help my hon. Friend and the House? If there is an attack on a Member, a Motion on the Order Paper is used for this purpose, and the Government do not give time, how does the Member manage to defend himself or to get justice from the House?
Mr. Speaker: I know of no procedure other than to seek time from those who control the business of the House, which I cannot do. I know that the importance of the point which the right hon. Gentleman has made will be borne in mind.
Mr. Iain Macleod: May I put this point to the Leader of the House? He will recall that, recently, in a case which indirectly concerned myself and which an hon. Member thought, wrongly, I hope, involved an attack upon him, the Leader of the House thought it right to provide a small amount of Government time—this is the point—to discuss it. The Leader of the House will agree that it is right to have fair play, as it were, between the two sides of the House. In view of this, without comment on the merits of the situation, will he consider a small amount of time, some Government time, being given to this issue?
Mr. Bowden: The right hon. Gentleman will recall that the matter he referred to arose out of a Report of the Committee of Privileges following a complaint of privilege, a very different
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matter. If any Government could be asked to supply time when any Member felt that he had been injured by an early-day Motion, we should never get away from it and we should discuss precious little else.
Sir H. Butcher: On a point of order, Mr. Speaker. I am the hon. Member referred to in the Motion tabled by my hon. Friend the Member for Carlton (Sir K. Pickthorn), but I accept that fact and do not desire that it should be debated. I am entirely happy to leave it as it is. However, the point of order that I put to you, Mr. Speaker, is this. Where an hon. Member is specifically and individually attacked, as my hon. Friend the Member for Louth (Sir C. Osborne) has been, am I correct in saying that the only protection for him is solely within the hands of the Leader of the House?
Mr. Speaker: I suppose that if he asks my permission and submitted it, an hon. Member in this situation might make a personal statement—[HON. MEMBERS: "No."] It might be so. I am not committing myself one way or the other, but since the hon. Member was asking whether that was the only remedy, I had to include it. On the other hand, it is only fair to point out that the personal statement would have to be of a non-controversial character. That might create difficulty.
Mr. William Hamilton: Further to that point of order, Mr. Speaker. Is it not the case that when a hostile Motion, early day or of any other type, appears on the Order Paper, and an hon. Member disagrees with its terms, it is a relatively simple matter for him to table an Amendment to it?
Sir C. Osborne: It is a personal attack on me.
Mr. Speaker: The question of the sufficiency of these remedies is scarcely one on which I should like to comment.
Mr. Iain MacLeod: Further to the point of order, Mr. Speaker. I know that the Leader of the House will understand the importance of this point. Does he appreciate that it is a false point to say that the original question was connected with a matter of privilege? That matter of privilege had been disposed of by the Chair.

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It was after that that the Leader of the House, because his hon. Friend thought that there was an attack upon him, thought it right to provide a small amount—two or three hours—of Government time. If he will do that for an hon. Member on his side of the House, it is his duty, as Leader of the House, to do it for an hon. Member on this side.
Mr. Bowden: The right hon. Gentleman's recollections are not correct. If he will refer to it he will see that the position which I took up earlier is right. If I thought that the cases were on all fours I would not hesitate. But I warn the House, in the interests of this and of future Governments, that if one gets into the position that simply by putting down an early day Motion attacking an hon. Member one will have a debate, no Government at any time will be able to do very much else.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: We must get down to our business.

ORDERS OF THE DAY

  FINANCE (No. 2) BILL
  Considered in Committee [Progress, 23rd June].
  [Dr. HORACE KING in the Chair]
  4.5 p.m.
  The Chairman: Before I call the hon. Member who is to move the first of this last series of new Clauses, as this is the last Committee day on the Finance Bill, with its long sittings and its many Amendments, I think that both sides of the Committee would like me to commend the servants of the House for their very faithful service during the long Committee stage of the Bill, especially the OFFICIAL REPORTERS, for dealing and coping with highly complex debates.
  Above all, I would wish to commend the printers, who, night by night, have had to cope with the Notice Paper.
  Hon. Members: Hear, hear.
  Mr. Edward Heath: May I support you in what you have said, Dr. King. I am sure that they will be preparing themselves for a similar time on the Report stage.
  The Chairman: No comment.

New Clause.—(AMENDMENT OF SECTION 211 OF INCOME TAX ACT 1952.)
In section 211 of the Income Tax Act 1952 (which relates to earned income and old age relief) a claimant shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on two-ninths of the first £45 of his investment income providing the claimant's total taxable income does not exceed £3,000.—[Mr. Grant.]
Brought up, and read the First time.
Mr. Anthony Grant: I beg to move, That the Clause be read a Second time.
The purpose of the Clause is to give some relief, a very small relief, to people who voluntarily save, on a basis rather similar to those who quite involuntarily reach advanced years, and also on a similar basis to the so-called earned income relief. It is couched in very modest terms. I have already received one letter from a correspondent in Edinburgh who complains about the niggardly

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nature of my Clause and comments that he assumes that I must mean £450 instead of £45. I can only conclude that in Edinburgh they are much more concerned with the thrifty than perhaps we are here.
Nevertheless, the Clause is deliberately couched in modest terms as a start in what we think is the right direction. We have borne in mind the terror of the Government lest any benefit should be given to rich men by including in the Clause an anti-tycoon proviso to exclude people whose total taxable income is more than £3,000. We have in mind the need to assuage the suspicions of the Financial Secretary who suspects that there is a Surtax-payer lurking behind the skirts of every small man. We hope that that aspect will not be an objection to the Clause by the Government as it has so often been an objection before.
The Clause is designed as an initial symbol that thrift and savings are desirable and, indeed, necessary qualities in our country today. It is designed to help the many people who are not necessarily in pension schemes, people who desire to help themselves and provide for their future, and who do not, unlike those in pension schemes, get any tax relief at the moment. It is not only intended to be a small but immediate relief to them; it is intended as a symbol to encourage people who do not save to believe that it is worth their while to do so, and to show them that the Government think that people who save should be encouraged rather than condemned for doing so.
The fundamental principles underlying the Clause are these. First, if we are to expand without inflation, the savings of our people as a whole are absolutely vital and must come from the broad mass of the community. Secondly, we believe that it is socially desirable to spread wealth and encourage people to prepare for their old age without blind reliance upon State or other pension schemes.
Furthermore, the Clause is intended to repair some of the damage which has been done to these concepts by the Bill so far. Investment and unit trusts, which are very much the small man's medium of savings, have been dealt very serious blows in the Bill; investment clubs have been neglected entirely. I have tried at a number of stages in the Bill to relieve
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the damage which has been done and to soften some of the blows, but I regret to say that my efforts have proved completely abortive.
The new Clause is my very last hope of salvaging something out of the wreckage of savings that the Bill has created. I pin my faith upon the protestations of belief in the small investor and the small man which has been made by a number of members of the Government, most notably by the Chief Secretary, who, I know, holds these views very sincerely, and by a number of his supporters, most vocally by the hon. Member for Manchester, Cheetham (Mr. Harold Lever). There are many others who tacitly support these views.
I pin my faith on this Clause because encouragement to people to save is not intended merely as a hedge against inflation, laudable though that may be. It goes deep into the roots of our economic structure. It is deeply concerned with ideas of freedom, individual responsibility and independence. There are very many people in this country who regard it as their duty independently, on their own, to provide for their future and their old age. This is something which should not be condemned. It is a sturdy independence which should be encouraged by the Government, and the Government should be seen to be encouraging it. That is the purpose of the Clause.
In addition, the Clause could have a profound effect upon our incomes policy as a whole. I want to draw the attention of the Committee in general and the Government, in particular, to what has just happened in Germany. They have recently passed what they call "A 312 Mark Law." Under that law 25 million wage-earners will earn full tax relief on £28 per annum, provided that the sum is invested over five years. The idea behind this move is to break the wage-price inflationary spiral, which is entirely in keeping with our own ideas of an incomes policy.
To give an example, the German building workers have recently negotiated a new agreement in which employers and employees each contribute to an investment fund which after 40 years will provide an investment fund for each individual worker of about £4,000. I am pleased to see the First Secretary present, because some of these remarks

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are intended for him and to give him some ideas for his incomes policy. This scheme is a check upon inflation by channelling some of the extra earnings back into production rather than into the purchase of consumer goods.
What is happening in Germany is something which I commend not only to the Chancellor of the Exchequer, but to the First Secretary. It will cost the Germans a great deal of money—£400 million per annum. They think that it is worth it. I do not believe that my new Clause would cost an enormous sum of money, but I certainly think it a worth-while proposal. Will the Chief Secretary tell us how much it will cost the Treasury? I do not believe that it will be much. It is a logical progression with the idea of giving encouragement to investment and savings—a progression which starts with the idea of welfare for all, moves on, as our society becomes more prosperous, to houses for all, and then moves on now and in the future to shares for all.
The Government must make up their mind whether they want wealth to be concentrated entirely in the hands of the State or whether they accept that we are still primarily a free capitalist society. If they accept the latter, and if they want to make the free enterprise society a success, they must realise that the savings and investment of the people form an integral part of that system. I very much hope that the Government will accept the Clause. Some of the figures are rather arbitrary, but if the Government do not like the wording of the Clause I hope that at least they will undertake to bring forward a proposal along these lines on Report.
Unless they can offer some promise of incentive for people to save, a slight softening of the blows which have been inflicted upon the saver by the Finance Bill, some relief for the thrifty, some encouragement towards wider share ownership, not only are the Government in danger of putting our economic future in jeopardy, not only will they fail to bring relief to many worthy, needy and very responsible members of our community, but they may be losing a great opportunity to ensure that we remain competitive and free in the modern world. I move the Clause as a very small chink
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of light to lead us towards the end of our economic tunnel.
4.15 p.m.
Dame Edith Pitt: I should like briefly to support my hon. Friend the Member for Harrow, Central (Mr. Grant) in this new Clause. I hope that it will command the sympathy of the Chief Secretary for the point which I have in mind, which is that it would encourage the small saver and particularly the industrial worker who—I do not want to make a political point—in recent years has been better able to put a little aside to make himself independent and to stimulate the old virtue of thrift and independence. As the Chief Secretary is aware, there has been a changing pattern. In years gone by those who were able to save usually chose the method of the Post Office or National Savings Certificates—in the City of Birmingham we added the Municipal Bank to that—and they received encouragement because the first £l5 of investment income was free of tax through the Post Office or the Municipal Bank. I want to see the same principle extended to those who are looking for shares, mostly unit trusts, as a means of saving.
There has been considerable progress in this direction. The working man feels that he does not understand the Stock Exchange, or equities, but he can understand unit trusts; he feels that they will be safe for his savings. I know from my own experience that a number of Birmingham people have put their first savings into that kind of venture; indeed, the first shares that I myself ever bought were unit shares, and I have commended this method of saving to other people as a way of beginning to save in a modest way.
It is for these reasons that I should like to see this impetus towards investment, which adds in a modest way to the prosperity of our country, given encouragement by allowing this small amount of income to be free of Income Tax. The average unit trust investment is about £300, so that the income from this amount would come within the bracket suggested in the Clause. Because I want to see this good habit encouraged, I hope that the Chief Secretary will look sympathetically on the Clause.
Mr. Ian Gilmour: I should like to support the new Clause which was so compellingly moved by my hon. Friend the Member for Harrow, Central (Mr. Grant) and cogently supported by my hon. Friend the Member for Birmingham, Edgbaston (Dame Edith Pitt). Quite apart from all the other reasons for saving, it is important to try to channel the savings of the wage earning man into industry. This happens in America, and I am sure that the Chief Secretary envies the strength of the capital market in America even if he does not envy them the capitalist system there. No one could say that our capital market was particularly strong at present. Indeed, there would be a strong case for this new Clause in any year.
A proposal to this effect was put forward before the General Election by my hon. Friend the Member for Worcester (Mr. Peter Walker) and myself in a pamphlet of which I need not remind the Chief Secretary, because he gave an extremely misleading quotation from it earlier in this Parliament. I therefore need not draw his attention to it again beyond pointing out that the idea proposed in the Clause has not been dreamed up while we are in opposition. It was put forward when the Conservative Party were in power, and it was also, like this Clause, put forward very modestly.
The need for the Clause has been very greatly increased by the economic situation over the last few months, and particularly by the Finance Bill. I do not know whether we are in a situation of inflationary-deflation or whether it should be called deflationary-inflation, but it is plain to some extent that we are getting the worst of both worlds. We have a credit squeeze, shortage of capital and rising prices, and there is an increasingly great need for savings and capital. The Government the other day had to offer 6½ per cent. I am sure that the First Secretary wants to do anything he can to encourage increased savings. As my hon. Friend pointed out, this is not a proposal in respect of which the Government's obsession with tax avoidance could give them an excuse for rejecting it, because it has a built-in ceiling and, therefore, the tax avoidance mania which the Treasury Bench have shown on the Bill needs no outlet on this Clause.
The Chief Secretary knows the American example where the first 100
1968
dollars investment income is tax-free. The Government have been a bit reluctant to follow the Americans' example when it leads to lower taxation. They have been inclined to follow their example only when it leads to higher taxation. On this occasion they could well change their ideas and follow what happens in America.
Savings have greatly prospered under Conservative Governments. As my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) said in an earlier debate, the Financial Times now appears on the factory floor. This is a way in which we can see that it appears there more often. This is a test of the Government's intentions. They have protested that their intentions are good towards private enterprise and saving. If they are, I urge them to accept the new Clause. If they are not, I urge them to do their best to conceal their intentions, also by accepting this Clause.
Mr. Geoffrey Lloyd: I strongly support the new Clause. I should like to tell the Committee of the experience which I have derived as president of the Birmingham and District Wider Share Ownership Association. Our officers are giving lectures in a considerable number of factories in the Midlands and are finding that very great interest is being shown by industrial workers in the simple exposition of investment practice for new investors. Also, evening classes on the same subject run by local authorities have been extraordinarily popular.
I have consulted the officers and committee of the organisation to which I have referred. They are strongly in favour of the new Clause, and I should like to explain why. The effect of the Clause is to allow the first £10 of income from an investment—this excludes people earning over £3,000 a year—to be free of tax. It is interesting to realise what this would mean in capital terms. If people invested in a share yielding 5 per cent., £200 of savings would be involved. If they invested in a share which had greater capital appreciation prospects and a lower yield—say 3 per cent.—savings in the neighbourhood of £300 would be involved.
Can the industrial workers in the Midlands, with whom, like my hon. Friend the Member for Birmingham, Edgbaston

1969
(Dame Edith Pitt), I am primarily concerned, afford to make this kind of investment? The doctrine not only of the Birmingham branch, but of the National Wider Share Ownership Association is that the first savings should be either in the Post Office, or, as in the case of the Midlands, in the Birmingham Muncipal Bank, which also has a concession about the first £15 of earnings being tax free. We regard this as the sheet-anchor of somebody who should be able to call immediately on liquid resources. When this has been done, there should be investment in equity shares. This is wise for the individual, and it has certain economic and social advantages.
I wish to address myself to the question whether the industrial worker can afford not only to put his first savings in the Post Office or in the Birmingham Municipal Bank, but to go on and invest in equity shares. I admit that in the Midlands wages in engineering are about £1 a week higher than those in the rest of the country. We are probably the pace setters in industrial wages and, we hope, productivity and this new kind of investment. Therefore, what we can achieve in the Midlands is particularly important, because we hope that later it will be copied by the rest of the country.
Many wages in Birmingham are between £15 and £20 a week, but a tremendous number of men earn between £20 and £25. A substantial number earn between £25 and £30. I do not want to be misunderstood on this point, but a considerable number of men in industry in the Midlands earn between £30 and £40. I have taken pains, during the last few days, to inquire about this matter. I know that polishers in anodised aluminium who are working on window trims, and so on, for motor cars, admittedly with heavy overtime and long hours, are earning £40 a week.
I am not suggesting that enormous numbers of people in Birmingham are earning this, but I assert without fear of contradiction that there are some earning £40 a week, which is about £2,000 a year. I have inquired what proportion of workers engaged, for example, in the preparation of aluminium components for motor cars are earning this amount. In a works of about 150 workpeople of which I know, there are six polishers
1970
earning this sort of money. The Committee can form its own impression from this fact.
Are these people, who clearly can afford to invest, doing so? The answer, broadly, is, "No". They have been brought up in a working class tradition. In the past it has not been the habit of the working class, as my hon. Friend the Member for Edgbaston says with all her experience, to invest in equity shares. It was thought that this was only for the rich or the middle classes. Also, it is so much simpler for them to go in for other forms of saving, particularly in the Post Office or the building societies. This is where the concession is extremely important. People know that, because of the concession made in respect of Post Office savings, the first £15 in interest means that they have £15 to their credit. As a result of the arrangements which have been made between building societies and the Revenue, people know that, whatever the interest on building society deposits, perhaps 4 per cent., they will get it and that they do not have to indulge in complicated manœuvres to claim back tax.
Therefore, it is very important, in our view—and I feel sure that my hon. Friend the Member for Edgbaston, with her great knowledge of working-class psychology, would agree with this—that we should give this concession and let it be known that Parliament wishes to encourage this type of investment, just as it let it be known in 1956 when the Chancellor of the Exchequer gave the concession in respect of Post Office Savings that that was something which Parliament wished to encourage.
But we would need the Revenue's co-operation in a way which is possible. Once the investor had established with the inspector of taxes that he had investment income, the deduction should be made automatically under P.A.Y.E. and should be confirmed by submitting dividend vouchers at the end of the year. The Revenue, I hope, would be willing to assume that he retained the income throughout the year, but if he did not and failed to notify the sale, the Revenue could always reclaim its tax in succeeding P.A.Y.E. instalments.
I have consulted distinguished firms of accountants on this matter and they feel, from their knowledge of the way in

1971
which the P.A.Y.E. system works, that it would be possible for the Revenue to do this. The Chief Secretary will, I am sure, realise that this is something of considerable importance. We feel that it would simplify the initial investment by industrial workers in equity shares. Every working man, as he becomes more prosperous and as he has, in the American phrase, sufficient discretionary income to engage in this form of saving, has to make a personal breakthrough from the old habits of thrift and to add this new method of saving to his way of life. That is why it is very important that Parliament should encourage it and the Revenue should co-operate in establishing a system which makes it simple for him. The last thing such a man is is a financier. He is a practical man with his hands who has some savings and does not want to engage in complicated arrangements for reclaiming tax.
4.30 p.m.
Under the Clause, instead of his being in a position where if he got, say, £5 on investment income, tax would be deducted at the standard rate and he would have to make a reclaim. He would, for the first £200 or £300 of savings, get £10 with the minimum of complications. This system could economically be of considerable importance to the country, because it can be seen from the figures I have quoted that the sums involved in these wage rates can become considerable as a source of savings. The Revenue could help by giving us more figures as to the numbers of people receiving different ranges of income. I believe, indeed, that it already produces a certain number of such figures.
If the Government agreed to do this they would be doing something of considerable importance in the context of our social and economic development. Since the war, particularly during the years of great prosperity under the Conservative Government, we have been seeing the working class assuming middle-class habits and, in effect, becoming middle class. I remember being laughed at soon after the war by Socialists when I suggested that washing machines would be in every home within a few years. We have long got far beyond that. We have cars, Continental holidays and home ownership, and what is proposed now in
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this Clause is a further example of the process.
My hon. Friend the Member for Norfolk, Central (Mr. Ian Gilmour) referred to what is taking place in America. According to the American correspondent of The Times, there are 20 million shareholders in the United States, a threefold increase in the last 10 years. We have also heard about developments in Germany. Perhaps it hurts us a little to feel that the Germans should be in advance of us in this, but we must remember that the idea of social insurance itself came from Germany, where it was introduced by Bismarck towards the end of his life, and we have developed it here. It was not a specifically English idea in origin and we should not be too proud to look at the experience of other nations.
I hope that the Government will accept the Clause.
Sir Lionel Heald: I am pleased to support my right hon. and hon. Friends who are associated with the Wider Share Ownership movement. I am not directly associated with it, but I am convinced of its valuable work. I hope that the new Clause will receive very careful consideration. It has been rightly said that the financial effect involved would be small, but it should not be regarded as a token Amendment, for it is much more than that. It is a step forward in principle of very great importance.
It might not be inappropriate for me to say that this provides the opportunity for the Government to make clear to the Committee and to those outside interested in savings their attitude towards small savers and small investors. When we discussed Clauses 34 and 63 we were, unfortunately, unable really to achieve anything, certainly for investment trusts, and now it must be admitted that we have achieved very little for the small investor.
I hope, Dr. King, that you will not think it improper or inappropriate, for it is relevant, if I refer to the unfortunate misunderstanding between the Chief Secretary and me on the question of the Government's attitude towards savings. I think that the right hon. Gentleman will agree with me that it arose largely from the fact that I said I had written a letter to him and he said that he had not received it. Naturally, just as he said that

1973
his arrangements for dealing with correspondence are highly efficient, I like to think that my arrangements, although not of an official character, are also extremely efficient and perhaps some hon. Members will know why I have a rather personal feeling about that.
The Chief Secretary has sent me now a most courteous letter in which he says he has discovered that my letter was sent, was passed to the Inland Revenue and, owing to great pressure of correspondence in that Department, took several days to reach its destination. Had he received the letter earlier, he would have had notice of the points I intended to raise and much of the misunderstanding, I believe, would have been removed. I also believe that, at the time, he had an unfortunate impression of the effect of what I had said. However, on reading HANSARD he was able to see that there was no hard feeling on my part.
I hope and believe, therefore, that it may be possible for the right hon. Gentleman and me to continue the friendly relations we have always had and that this will assist in making clear that my chief interest in this matter is to help the small investor who, I believe, can make a very important contribution to the future of the country.
Mr. Terence L. Higgins: We have spent many days and long nights discussing details of highly complicated legislation recently and it is appropriate than on this last day we should have a chance to discuss this very important proposal. I warmly support the new Clause. A great deal has been said, from this side of the Committee, about the encouragement of savings and every one on both sides wishes to encourage them. Therefore, we hope that the right hon. Gentleman, in half-term holiday mood, may feel that he can accept this Clause.
As I understand, this would give relief not only to those intending to save, but also to those who have already saved and who are perhaps living in retirement on a fixed income. I support the Clause strongly because, if there is one group of persons who, in an age of ever-increasing prosperity, have found their real income declining, it is those relying on fixed incomes.
In earlier times, when we had less of the Welfare State, many people saved to
1974
make provision for their retirement but now find that the fixed incomes from their investments are buying less and less. These are the real victims of inflation. Any relief that can be given from Income Tax should be given to them. A very large number of people in my constituency write to me about the problems of inflation and particularly about rising rates. It is extremely difficult for them to face the last years of their lives in hardship as their real income steadily declines.
I also urge support of the Clause because, some time ago, we failed in our attempt to get through a Private Member's Bill to assist old age non-pensioners. The Government did not see fit to enable that Bill to come before the House. I know a number of people, over 80 and living on very small fixed incomes from investments, who have no relief. Many of them supported the Labour Party in the expectation of receiving an incomes guarantee. As far as one can see, it is probable that the incomes guarantee scheme will not, in fact, be introduced until 1967. Therefore, there is again a strong reason for the Committee to support the new Clause.
Finally, with the introduction of the Corporation Tax, it has become clear that people who live on investment income from companies that make most or some of their profits overseas will find that those companies will have to reduce their dividends. That will result in very real hardship to some people living on fixed incomes on whose behalf I now speak. If they are to suffer, the least the Government can do is to introduce some compensating measure that will do something to offset the effect of the Corporation Tax on this group.
It has been said that the Government must take stronger action against' people living on big investment incomes. My hon. Friend the Member for Harrow, Central (Mr. Grant) has been very careful to ensure that the provisions of the new Clause do not cover those people—though the Chief Secretary might reasonably say that the limit in the new clause is set too high. In this case, if he liked to reduce the limit while accepting the new Clause, we would still be grateful. In the Clause we have excluded from relief those living on large investment incomes. We seek some compensation for those on small

1975
investment incomes who are now suffering more than any other group in the community.
The Chief Secretary to the Treasury (Mr. John Diamond): I hope that it will be thought convenient that I should now reply, having regard to the great deal of business which, I gather, it is the desire of both sides to get through in the course of the day.
First, Dr. King, may I associate myself with your remarks about the assistance the Committee has received from those who have all the dreary labour of listening to what has been said and none of the fun of participating in it. We recognise the tremendous help they have been to us, and we are very happy that you should have thought fit to start the proceedings with a word of tribute and appreciation.
On a personal note, I am also most grateful to the right hon. and learned Member for Chertsey (Sir L. Heald) for his courteous remarks and for the obvious sympathy with which he made them. I assure him that if there was any misunderstanding, it is completely removed. The right hon. and learned Gentleman was, as he knows, the Member of Parliament for the constituency in which I lived. I did not then disclose to him which way I voted, and I do not propose to do so now, so as to avoid raising the temperature.
The debate has partly referred to what I might call "hard cases"—the hon. Member for Worthing (Mr. Higgins) referred particularly to them. Therefore, perhaps I might start by describing very shortly the three ways in which hard cases in this field are already dealt with. First, there is age relief. That deals with the investment income of people who are over 65, and gives to them, within limits, the earned income relief that is proposed in this new Clause. Then we have the small income relief. That deals with people below 65 years of age, and provides that where their income is not above certain limits they, again, get earned income relief on investment income. We therefore have two cases in which, already, earned income relief is granted on investment income—for those below 65 where the total amount is small,
1976
and for those above 65, again within limits.
Further, we have an age exemption relief which gives complete exemption for taxpayers over 65 who have small incomes. They do not pay any tax at all provided that their income does not exceed certain figures. Those figures are being increased by the Bill, so that a married couple over 65 years of age with an income of £12 a week will be completely exempt. Therefore, I suggest that, on the ground of hardship the situation is, by and large, reasonably met.
4.45 p.m.
The hon. Member for Harrow, Central (Mr. Grant) moved the Clause more in terms of saving, and many speakers have concentrated on that aspect. That being so, perhaps I may be allowed to repeat what I have said many times—many times from that side of the Committee as a back bencher and, perhaps more relevantly, from this side in my present capacity.
Savings are to be encouraged in every possible way—large savings, small savings. Every additional pound that an individual saves is a direct contribution, may be, to the building of a hospital, or to something else to which the individual concerned does not realise he is contributing. But, by his saving, he is making that possible. If the taxpayer wishes us to contribute more in overseas aid, then, apart from the exchange problem, the very fact of his saving makes that possible.
So there is every possible inducement to encourage people to save, both from the point of view of Government policy and from my own view. Speaking personally—this is not a Government remark, but a personal one—I think that saving is in every sense encouraging to the character of the individual, and wholly to be recommended from whatever point of view one looks at it. So there is no doubt where we stand about encouraging saving.
The question that arises is: what is the best method of encouraging small savings? Is the method proposed in the Clause the appropriate one? I must say that that method suffers from a very considerable defect. It rests on a blurring of the distinction between earned income and unearned income. It does not deal

1977
with any question of hardship, as with the three cases I have dealt with—old age, the person who was ill, and, therefore, could not earn income, but had to rely only on unearned income, or the person who, after pensionable age, did not have a pension because, for some reason or other, was not able to earn it during the period of ordinary livelihood and, therefore, had to rely on unearned income only.
The Clause does not deal with any of those cases, but opens the door very wide, and says that every moderate saver, every person with a moderate amount of investment income—the amount referred to is about £1,000—should have a benefit in the form of earned income relief. I do not take the view that this is a method of encouraging saving. There are many methods—the Government have announced some, and others are under consideration—but I do not think that this is the right way to encourage savings.
I find it very difficult to see why this burden of taxation—small, admittedly; the Clause would cost about £10 million—should to that extent be removed broadly from the shoulders of those who do not earn to those who have earned income. For those main reasons, and without going into the subject at greater length, I cannot recommend the Committee to accept the Clause.
Mr. Peter Walker: The Chief Secretary said that he was at one time a constituent of my right hon. and learned Friend the Member for Chertsey (Sir L. Heald), but that to avoid tension in the Committee he would not disclose which way he voted. As the right hon. Gentleman knows, I was a resident for a period in his constituency, and did my best—
The Chairman: Order. I allowed the right hon. and learned Member for Chertsey (Sir L. Heald) and the right hon. Gentleman the Chief Secretary to range out of order in the interests of reconciling personal differences that have grown up. I hope that the hon. Member for Worcester (Mr. Peter Walker) will not go too far.
Mr. Walker: I think that what I have to say is very much in order. Having heard the Chief Secretary's reply, I do not hesitate to say that if I still lived in
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his constituency I would work very hard to get rid of him.
The general lack of detailed argument in the right hon. Gentleman's reply showed how very thin his case was. One has noticed during our Committee proceedings that if the right hon. Gentleman is on a weak point he endeavours to repeat the opposite to his point with great passion and sincerity. If we point out that the Corporation Tax is complicated, we are told that it is simple. If we point out that the Government do nothing about savings, the right hon. Gentleman points out his desire to help savings, and then says why he will not help in that direction today. This has been typical of the right hon. Gentleman's method of arguing this afternoon.
My hon. Friend the Member for Harrow, Central (Mr. Grant) produced very cogent economic and social arguments for the acceptance of the Clause, economic arguments, further developed by my hon. Friend the Member for Norfolk, Central (Mr. Ian Gilmour), as to the importance of a healthy and vigorous capital market in this country. The one way in which we shall substantially improve the capital market in this country is to harness the considerable incomes of the great majority of the people into that capital market. There are many problems and tasks before those concerned with the operation of channelling this money into savings. There is obviously the task of simplifying the procedures and there is also the task of persuading people to go in for new forms of savings.
The main difficulty for the present small saver going into most equity investments is the Income Tax deducted at the source. In future, there will also be the application of Corporation Tax. For this reason, there is a hesitancy on the part of those on lower rates of tax to go in for this kind of saving, and because of this very fact there is some justification for certain taxation incentives being given to them.
There is also the very strong argument for encouraging savings because of the present inflationary tendencies in the economy. Only this week, the Government have announced in a Written Answer that since they have been in office the purchasing value of the £ has gone down from £1 to 19s. 2d., an indication of the strong inflationary pressures

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which currently exist. A very topical illustration of the need to take money out in savings is the announcement only within the last 48 hours that there is not to be an increase in London Transport's fares.
There has been an increase in wages, so that much more money is to be put into the economy to increase demand. It would be very fine for the Government if that increase in demand resulting from the considerable wage increases now taking place were to be diverted into savings. I am sure that the Chancellor of the Exchequer would be delighted if that were the case. If the Government want to encourage savings to a greater level, they have to do something about it and not just exhort people to save without some distinct incentive.
What we are asking for is not a revolutionary or outstandingly new principle. This is a method which is used in many countries where the capitalist system, the free enterprise system, exists. Many hon. Members will be aware that in the United States, for example, the first 100 dollars of income from investments is tax-free, and that is 100 dollars for the man and 100 dollars for his wife, which can be put together so that the total relief for the family is 200 dollars tax-free income from investments.
Any person connected with the investment industry in the United States will agree that one of the reasons why the United States has been so successful about providing the colossal volume of capital needed for its expanding economy is that it has been able to attract into industry the savings of the great mass of the people in the United States. To a large extent this has been done by distinct and considerable tax incentives for the wage earner. By supporting the Clause we would be taking a considerable step forward in giving that direct encouragement.
There is also the social aspect of the Clause, dealt with by my right hon. Friend the Member for Birmingham, Edgbaston (Dame Edith Pitt) and my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and particularly emphasised by my hon. Friend the Member for Worthing (Mr. Higgins), who, as we know, has a
1980
considerable population in his constituency living on fixed incomes and who is well aware of the problems. I do not think that my hon. Friend will be particularly satisfied with the response of the Chief Secretary, who took the view that there was no longer any real problem for these people. Any of us who know the plight of people on fixed incomes and living in retirement will know that there is still a real problem.
This Bill itself will go a considerable way to decreasing the incomes of these people because of the very nature of the Corporation Tax with its disincentive to distribution, which will mean that overall the level of dividends will be decreased. These people are dependent on the level of dividends.
Mr. Diamond: Supposing that were true, as it may well be in many cases, is not this the very thing the hon. Gentleman wants—the encouragement of corporate savings?
Mr. Walker: If the Chief Secretary is now arguing that the way to encourage savings in future is to stop companies from distributing to shareholders, he will have a shock, because if the Government embark on the policy of attaining their savings, or largely doing so, not through people contributing part of their earning power to industry, but by the Government insisting through their taxation policies that those who invest should never receive proper rewards for their investments, there will be a great fall and not an increase in savings.
I am rather surprised that the Chief Secretary should suggest—and perhaps this is the key to his complacency on this issue—that the Government no longer want to encourage individuals to invest, but will insist that savings should be made within companies because of the impact of the Corporation Tax. That is a very dangerous policy to adopt and it will end in a great deal of difficulty for the whole free enterprise system.
Mr. Diamond: I interrupt for a second time only because of the importance of what is said from the Dispatch Box and to make it perfectly clear that the Government are most anxious for every individual saver and for every corporate saver and for every saver of every possible kind to save more.
Mr. Walker: This is a repeat performance by the Chief Secretary. Every time he makes a remark saying that he is to do nothing for the individual saver he says, "May repeat that I love individual savers?". A few moments ago he clearly made the point—and the Committee heard it—that the real way which the Government have in mind to encourage savings is out of corporate savings. He agreed that the people in the constituency of my hon. Friend the Member for Worthing would have lower incomes in future as a result of the Corporation Tax and that these people would either be discouraged from saving, or would suffer from lower incomes as a result.
What we are saying is that if in his endeavour to encourage corporate savings the Chief Secretary is lowering the incomes of the constituents of my hon. Friend, it is not unreasonable for him to accept the Clause to make some amends for the lowering of their incomes.
Mr. Joel Barnett: Surely the hon. Gentleman accepted the case when my right hon. Friend pointed out that the very small investment income holder did not pay any tax now?
Mr. Walker: At no stage did I deny that. What I am saying—and I know that the hon. Member for Heywood and Royton (Mr. Barnett), with his considerable knowledge of these affairs, is well aware of it—is that there are many people, particularly in constituencies like Worthing, who, although they get relief from the present Income Tax position, will, nevertheless, as a result of the Bill, have their incomes reduced because of the lower distribution of dividends, and the Clause would make some amends for that. That is beyond denial. If their incomes are over a certain level, they will obtain certain relief from the Clause.
There is the social aspect, mentioned by my right hon. Friend the Member for Edgbaston, of the importance of getting a wider spread of participation in industry, a kind of sense of ownership. Perhaps because for so long the political battle in this country has been between the advocates of the Socialist system and the advocates of the free enterprise system, those of us who want to see this spread of ownership throughout the country are constantly having to overcome basic
1982
prejudices against profit and capital. It has been said that the difference between capital and savings is that if another man has a bank account that is capital, whereas if one has a bank account oneself, that is savings. It is time for a difference in the basic attitude.
If hon. Members opposite now recognise that whether they or we are in power the free enterprise sector of industry is of paramount importance, they must see that the taxation system encourages the maximum spread of ownership of British industry. They are not doing that now and still their prejudices are coming forward.
Earlier this afternoon we heard of further delays in the nationalisation of steel, as we had expected. A much better social way of obtaining the true participation in ownership of British industry is to encourage wider share ownership. This is a much better theme and one which our people would respond to far more than the Government's outdated proposals and nationalisation.
5.0 p.m.
During the course of the Bill there have been a series of blows to savings. We have had blows to the unit trusts investment, to the investment trust movement and to the life assurance method of saving. The cost of this new Clause is about £10 million, the Chief Secretary says. The cost of the increased savings taken directly from the policy holders of life assurance will be £23½ million, so that in accepting the Clause the Chief Secretary would be making only small amends for the damage that he and his colleagues have done throughout the various stages of this Bill.
My right hon. Friend the Member for Bexley (Mr. Edward Heath) said during the Second Reading debate on this Bill, when condemning the fact that it did very little to help our existing economic problems, that the Bill had done nothing to stimulate competition and nothing to stimulate savings. We hoped that after the long debates that have taken place during the Committee stage, this Clause would at least give some opportunity to the Government to repent and make amends for the real damage that they have done to savings. Unfortunately, they have not taken the opportunity and I certainly hope my hon. Friends will divide the Committee.
Mr. R. Gresham Cooke: Before we part with this Clause I would like to say something to the Chief Secretary which would apply particularly if he happened to be here another year. I have put down a new Clause to allow the first £15 of investment income to be free of tax and if it has been selected we will have a debate. My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) put down a new Clause about contractual savings and this year my hon. Friend the Member for Harrow, Central (Mr. Grant) has taken up the banner and I hope that he will be successful this year and not 40 years on.
I had hoped that this year we would get much further because of the impetus given by Germany. Germany has always been very progressive in these matters of social security, such as helping the worker and the saver. Their scheme which, I believe, is called the 312 Mark Law, is worthy of serious study by Treasury officials.
I hope that within the Treasury there is no jealousy towards industrial savings. The Treasury helps savings in the Post Office by allowing £15 free of tax, the building societies by giving a lower rate of tax than the standard rate, but there is no assistance whatever given to this type of industrial savings. There are 10 million people in industry, many of them earning very good wages and becoming more and more interested in putting money back into industry, and the Treasury ought to do more to assist the man on the workshop floor.
I was rather sorry to hear the Chief Secretary talk about this new Clause as a blurring between earned and unearned income. Does that really matter? The interest we are talking about comes from saving from earned income on which the taxpayers have no tax incentive and I hope that next year the Treasury will see that these industrial savings are put on the same basis as building societies and Post Office savings and receive a tax incentive.
Mr. Barnett: I sympathise with the idea behind the Clause to encourage new savings, but I cannot help feeling that its sponsors and the hon. and right hon. Members who have spoken in favour
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of it are under a very serious misapprehension if they think that it will help.
The right hon. Gentleman the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), in his speech, made it clear that it would complicate rather than simplify the matter. The major point he made was that the reasons why people were not investing in this way was largely because they received the interest net rather than gross as they do in the Post Office Savings Bank, the Trustees Savings Bank and so on.
I would have thought if we were to spend £10 million or some such figure by way of assistance to encourage savings we might consider giving the £10 million as a form of assistance to the unit trust movement in order to allow them to pay interest gross where required, as happens in the case of some finance companies whereby interest can be paid either gross or net. We could allow unit trusts to pay interest gross and give some allowance to the unit trust themselves as a contribution towards the additional administrative expenses in which they would be involved.
This would enable them to reclaim the tax to pay small unit trust owners the interest gross. I think that something along these lines would be a much greater form of encouragement to the small saver in particular, for he would then be able to see clearly the return he is obtaining, in the same way as applies when he invests in the Post Office or Trustee Savings Bank.
Mr. Reader Harris: We are somewhat disappointed at the Chief Secretary's answer to the new Clause. I do not doubt his sincerity when he says the Government want to see more saving, but, as our Front Bench spokesman has already pointed out, their promise and performance do not always match in these matters.
I am becoming increasingly worried because I hear it said so often now by hon. Members on the Government side, perhaps in circles a little more to the left of the Chief Secretary, that what is aimed at is a state where people do not have any savings at all and that when they reach retirement they ought not to have any savings. Instead, they ought to draw a pension which would

1985
enable them to live an adequate life. I hope that this is not Government policy, but I hear that view expressed so often that I think it is a trend in Labour Party circles.
It is a disappointment that we have not had this very modest concession made today. My information is that savings are falling, and have been falling, since the Labour Government came into office. There may be a variety of reasons for this, and I may be wrong, but the same thing happened when a Labour Government were last in office. Everything should be done to increase savings.
My hon. Friend the Member for Harrow, Central (Mr. Grant) is to be congratulated on bringing this matter forward today. I hope that even if we have not had a concession on this occasion we shall perhaps get it on another. It is not too late for the Chief Secretary to give further consideration to this matter between now and Report.
Mr. Geoffrey Lloyd: The Chief Secretary expressed an undivided authoritative Revenue opinion about the principle involved in this Clause when he condemned it by saying that it blurred the distinction between earned and unearned income. In a Select Committee of this House in 1906, which was the origin of the distinction adopted by later Chancellors of the Exchequer between unearned and earned income and what was called in those days permanent and precarious income, which
was another definition, the Chairman of the Select Committee said:
"There is no short and sharp distinction"
between the two classes at one point. Sir Henry Primrose, then Chairman of the Board of Inland Revenue, said, with all the authority of his position:
"I have indicated that my opinion is against charging a higher rate upon the income that is derived from savings as long as those savings are in the hands of those persons which have made the savings."
This may not be a popular view with recent Chancellors of the Exchequer, but it is a reasonable view which comes from somebody in high authority. I believe that there is no person whose savings are more nearly in his hands than the industrial worker who saves in the manner we are contemplating in this Clause. Therefore, I think that the Chief Secretary must accept the view that some blurring between the two has something to commend it.
I think that the right hon. Gentleman's reply is pre-eminently the reply of an exhausted Treasury Minister who is without a spark of imagination, who does not appreciate the new social force, and who is doing nothing, and is not prepared, to exert himself to encourage a new and important social movement.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 136, Noes 147.

Division No. 201.]

AYES

[5.10 p.m.

Alison, Michael (Barkston Ash)

Crawley, Aidan

Harvey, John (Walthamstow, E.>

Allan, Robert (Paddington, S.)

Crosthwaite-Eyre, Col. Sir Oliver

Hastings, Stephen

Allason, James (Hemel Hempstead)

Curran, Charles

Hawkins, Paul

Anstruther-Gray, Rt. Hn. Sir W.

d'Avigdor-Goldsmid, Sir Henry

Hay, John

Awdry, Daniel

Doughty, Charles

Heald, Rt. Hn. Sir Lionel

Baker, W. H. K.

Drayson, G. B.

Heath, Rt. Hn. Edward

Balniel, Lord

Eden, Sir John

Hendry, Forbes

Batsford, Brian

Elliot, Capt. Walter (Carshalton)

Higgins, Terence L.

Beamish, Col. Sir Tufton

Emery, Peter

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

Biffen, John

Errington, Sir Eric

Hordern, Peter

Biggs-Davison, John

Fell, Anthony

Hornsby-Smith, Rt. Hn. Dame P.

Birch, Rt. Hn. Nigel

Fisher, Nigel

Hunt, John (Bromley)

Black, Sir Cyril

Fletcher-Cooke, Charles (Darwen)

Jenkin, Patrick (Woodford)

Blaker, Peter

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

Kerr, Sir Hamilton (Cambridge)

Boyd-Carpenter, Rt. Hn. J.

Fraser, Ian (Plymouth, Sutton)

Kershaw, Anthony

Boyle, Rt. Hn. Sir Edward

Glover, Sir Douglas

Kimball, Marcus

Braine, Bernard

Goodhew, Victor

Lagden, Godfrey

Brinton, Sir Tatton

Grant, Anthony

Legge-Bourke, Sir Harry

Brooke, Rt. Hn. Henry

Grant-Ferris, R.

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

Burden, F. A.

Gresham Cooke, R.

Longden, Gilbert

Buxton, Ronald

Griffiths, Eldon (Bury St. Edmunds)

Lubbock, Eric

Carlisle, Mark

Griffiths, Peter (Smethwich)

Mackenzie, Alasdair (Ross&Crom'ty)

Channon, H. P. G.

Grimond, Rt. Hn. J.

McLaren, Martin

Clark, William (Nottingham, S.)

Gurden, Harold

Maclean, Sir Fitzroy

Clarke, Brig. Terence (Portsmth, W.)

Hall, John (Wycombe)

McNair-Wilson, Patrick

Cooke, Robert

Hall-Davis, A. G. F.

Marples, Rt. Hn. Ernest

Cooper-Key, Sir Neill

Harris, Frederic (Croydon, N.W.)

Mathew, Robert

Costain, A. P.

Harris, Reader (Heston)

Maude, Angus

Craddock, Sir Beresford (Spelthorne)

Harrison, Brian (Maldon)

Mawby, Ray

Maxwell-Hyslop, R. J.

Roots, William

Vickers, Dame Joan

Meyer, Sir Anthony

Royle, Anthony

Walker-Smith, Rt. Hn. Sir Derek

Mills, Peter (Torrington)

Sharples, Richard

Walters, Dennis

Mills, Stratton (Belfast, N.)

Sinclair, Sir George

Ward, Dame Irene

More, Jasper

Smith, Dudley (Br'ntfd & Chiswick)

Weatherill, Bernard

Morrison, Charles (Devizes)

Speir, Sir Rupert

Whitelaw, William

Mott-Radclyffe, Sir Charles

Steel, David (Roxburgh)

Williams, Sir Rolf Dudley (Exeter)

Munro-Lucas-Tooth, Sir Hugh

Stoddart-Scott, Col. Sir Malcolm

Wills, Sir Gerald (Bridgwater)

Onslow, Cranley

Studholme, Sir Henry

Wilson, Geoffrey (Truro)

Orr-Ewing, Sir Ian

Summers, Sir Spencer

Woodhouse, Hon. Christopher

Osborne, Sir Cyril (Louth)

Taylor, Sir Charles (Eastbourne)

Wylie, N. R.

Page, R. Graham (Crosby)

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

Yates, William (The Wrekin)

Peel, John

Taylor, Frank (Moss Side)

Younger, Hn. George

Prior, J. M. L.

Thomas, Rt. Hn. Peter (Conway)

Pym, Francis

Thompson, Sir Richard (Croydon, S.)

TELLERS FOR THE NOES:

Redmayne, Rt. Hn. Sir Martin

Thorpe, Jeremy

Mr. MacArthur and

Rees-Davies, W. R.

Tilney, John (Wavertree)

Mr. R. W. Elliott.

Ridley, Hn. Nicholas

van Straubenzee, W. R.

NOES

Albu, Austen

Holman, Percy

Orbach, Maurice

Atkinson, Norman

Horner, John

Owen, Will

Bacon, Miss Alice

Howarth, Harry (Wellingborough)

Page, Derek (King's Lynn)

Bishop, E. S.

Howarth, Robert L. (Bolton, E.)

Paget, R. T.

Boston, T. G.

Howell, Denis (Small Heath)

Parker, John

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

Howie, W.

Parkin, B. T.

Bradley, Tom

Hughes, Emrys (S. Ayrshire)

Pavitt, Laurence

Bray, Dr. Jeremy

Hughes, Hector (Aberdeen, N.)

Popplewell, Ernest

Brown, Rt. Hn. George (Belper)

Hunter, Adam (Dunfermline)

Prentice, R. E.

Brown, Hugh D. (Glasgow, Provan)

Hunter, A. E. (Feltham)

Pursey, Cmdr. Harry

Brown, R. W. (Shoreditch & Fbury)

Hynd, H. (Accrington)

Redhead, Edward

Buchanan, Richard

Irving, Sydney (Dartford)

Rees, Merlyn

Butler, Herbert (Hackney, C.)

Janner, Sir Barnett

Reynolds, G. W.

Callaghan, Rt. Hn. James

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

Rhodes, Geoffrey

Carmichael, Neil

Jenkins, Hugh (Putney)

Roberts, Albert (Normanton)

Carter-Jones, Lewis

Jenkins, Rt. Hn. Roy (Stechford)

Roberts, Goronwy (Caernarvon)

Chapman, Donald

Johnson, Carol (Lewisham, S.)

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

Cousins, Rt. Hn. Frank

Jones, J. Idwal (Wrexham)

Rogers, George (Kensington, N.)

Crawshaw, Richard

Jones, T. W. (Merioneth)

Rose, Paul B.

Darling, George

Kelley, Richard

Shore, Peter (Stepney)

Davies, Ifor (Gower)

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

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

de Freitas, Sir Geoffrey

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

Short, Mrs. Renée (W'hampton.N.E.)

Delargy, Hugh

Lawson, George

Silkin, John (Deptford)

Dell, Edmund

Leadbitter, Ted

Silverman, Julius (Aston)

Diamond, Rt. Hn. John

Ledger, Ron

Silverman, Sydney (Nelson)

Driberg, Tom

Lee, Miss Jennie (Cannock)

Skeffington, Arthur

Dunnett, Jack

Lewis, Arthur (West Ham, N.)

Slater, Mrs. Harriet (Stoke, N.)

English, Michael

Lipton, Marcus

Snow, Julian

Ennals, David

Loughlin, Charles

Stonehouse, John

Evans, Albert (Islington, S.W.)

McCann, J.

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

Evans, Ioan (Birmingham, Yardley)

MacDermot, Niall

Swain, Thomas

Fletcher, Sir Eric (Islington, E.)

McInnes, James

Symonds, J. B.

Fletcher, Raymond (Ilkeston)

McLeavy, Frank

Taverne, Dick

Floud, Bernard

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

Thomas, George (Cardiff, W.)

Foley, Maurice

Manuel, Archie

Tomnev, Frank

Foot, Michael (Ebbw Vale)

Marsh, Richard

Tuck, Raphael

Freeson, Reginald

Mason, Roy

Urwin, T. W.

Garrow, A.

Mayhew, Christopher

Varley, Eric G.

Gourlay, Harry

Mikardo, Ian

Wallace, George

Griffiths, Will (M'chester, Exchange)

Molloy, William

Warbey, William

Gunter, Rt. Hn. R. J.

Morris, Alfred (Wythenshawe)

Weitzman, David

Hamilton, James (Bothwell)

Morris, Charles (Openshaw)

Wells, William (Walsall, N.)

Hamilton, William (West Fife)

Murray, Albert

White, Mrs. Eirene

Hamling, William (Woolwich, W.)

Newens, Stan

Whitlock, William

Hannan, William

Noel-Baker, Francis (Swindon)

Wilkins, W. A.

Harper, Joseph

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

Wilson, William (Coventry, S.)

Hart, Mrs. Judith

Norwood, Christopher

Zilliacus, K.

Hazell, Bert

Ogden, Eric

Heffer, Eric S.

O'Malley, Brian

TELLERS FOR THE NOES:

Henderson, Rt. Hn. Arthur

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

Mr. Fitch and Mr. Gray.

New Clause.—(EXPENDITURE ON EDUCA- TION IN SALESMANSHIP OR BUSINESS MANAGEMENT.)
(1) Where, after 6th April 1965, an individual incurs expenditure for the purposes of his education in salesmanship or business managemeent or in both at any institution which may for the time being be approved for
1988
the purposes of this section by the appropriate Minister, the expenditure shall be deducted as an expense in computing the emoluments of his office or employment assessable under Schedule E for the year of assessment in which the expenditure was incurred if and to the extent that it does not exceed whichever is the lesser of—

(a) one hundred and fifty pounds, and

1989

(b) one tenth of the income on which he would be chargeable to income tax under Schedule E for that year of assessment if no deduction were made by virtue of this section.

(2) Where the course of studies to which the expenditure relates does not extend over a period exceeding one year the expenditure shall be treated for the purposes of this section as if it had been incurred wholly in the year of assessment in which the course cornmenced.—[Mr. Charles Morrison.]
Brought up, and read the First time.
Mr. Charles Morrison: I beg to move, That the Clause be read a Second time.
I move the Clause with every confidence that it will be acceptable to the Government, for at some time or another almost every Government spokesman, not to mention numbers of my hon. and right hon. Friends, have stressed the need for better management in business and industry and better salesmanship of British products, especially abroad. The Clause has been tabled with the objective of providing yet one more incentive and form of assistance to those concerned to enable them to make use of the opportunities which are becoming increasingly available for education in salesmanship or business management.
In the words of the Labour Party's 1964 General Election manifesto:
"Skill, talent and brain power are our most important national resources."
It is the task of management to ensure that these resources are used to the fullest extent and organised to the best advantage, and it is the task of salesmanship then to sell the products of industry. Yet for many years these most demanding tasks were considered to be almost amateur arts. The great advances in technology in recent years have made it obvious that there is a growing need for specialised training, and that it is no longer enough to leave the manager or salesman haphazardly to learn his job within the narrow confines of the experience of one firm.
If this view is acceptable to the Committee it will agree that the new Clause will provide yet one more means of assisting and encouraging individuals to make use of the facilities for management training which are now available. Only this afternoon, at Question Time, the Secretary of State for Education and Science told us of the progress which is being
1990
made with business schools for those in the top flight of business training, but at all levels throughout the country an increasing number of courses are becoming available for management training.
The United States has always taken the lead in this matter. Until recent years Britain has lagged far behind, but now successful efforts are being made to make up lost ground. The need for management and salesmanship training has been realised, and the opportunity has been provided. It must now be the aim of government to ensure that the opportunity is used to the fullest extent and to best advantage.
The new Clause will help towards this end. It has even more relevance than might be thought at first sight, because it is generally agreed that management training is not a once-and-for-all-time experience. It can be divided into three separate but main stages—a post-graduate course of one type or another; a course of general management, perhaps ten years later, and a further course, some years after that, when an individual is entering the flights of top management. At each of these stages expense will be incurred and will have to be borne by the indivdual or his employer, whether it be an individual employer or a company.
In many cases the bigger and more progressive companies will make arrangements either to train their staff themselves or to finance their mangement training. But this will not always occur. Some companies—perhaps the small ones—will be unwilling to undertake such an expense and other companies, of which there are still quite a few, regrettably, do not yet appreciate the need for training. In these cases the individual has to take the initiative himself, and if he desires to improve his knowledge he must bear the cost.
At all three stages of training this can bear harshly upon him. The demand upon his pocket can even be so great as to dissuade him from his intention. This is particularly so at the stage of middle management training, because there is more likelihood of this occurring at about the age of 30, just when an individual may be classified as a young man, and when he is already bearing the high expenses involved in setting up house or in rearing a young family. He may be prepared to make short-term sacrifices for

1991
his future good, but the pressures and demands upon him and upon his pocket may be such as to remove any possibility of making such sacrifices.
The new Clause could be just enough of an aid to tip the balance in favour of a decision to carry on with his training. I sincerely hope so, because if a man should decide against involving himself in the cost of training not only will he be doing himself a disservice; his potential will be lost. Not only will his ability at middle management level be severely curtailed; the likelihood of his having any chance of reaching the top flight of management may be rendered impossible.
The acceptance of the Clause could be of lasting and significant benefit to industry. Its direct cost cannot be very great, but in any case the advantages would far outweigh any tax loss. The best management and salesmanship in this country compare favourably with those of any other country, but there is far too big a gap between the best and the average, and anything which can be done to decrease that gap should be encouraged as an essential part of Government policy.
The Clause may go some way towards doing this, and if it is successful in encouraging the better use of the opportunities and facilities which are now available it may be considered a very important addition to the Bill.
Captain Walter Elliot: I hope that the Financial Secretary will be able to accept the Clause. It will undoubtedly encourage people to carry out this training. They are largely young people, many of whom do this work mainly in the evening. It is extremely hard work and, therefore, encouragement is all the more necessary. I know that it is hard work, because I have done it myself.
I do not want to bore the Committee with stories of what I have done, but I should like to describe what is entailed. The mention in the Clause of the period of one year, I must confess, causes me to give a hollow laugh. In my case, it took three years, working in the evenings. It may surprise the Committee, but I pride myself on being one of the most recent graduates in the House, if not the most recent. I took an economics degree
1992
and, for three years, I attended in the evenings. I was considerably the oldest, but there was a small bunch of young men who attended night after night. Some fell by the wayside, but I always said that if ever I could do anything to encourage those young people to train themselves I would do so.
5.30 p.m.
I assure the Financial Secretary that this entails grinding hard work, which should have all the encouragement possible. I should like to extend the Clause to cover other facets of higher training. It cannot possibly cover my new Clause, but, perhaps, business administration means such things as economics. Perhaps that could be considered. In any case, anyone willing to spend his time in preparing himself for advancement at this time in our economic life ought to be encouraged. Too small a proportion of those available do this. Many people are prepared to soldier on in a set job without doing anything to prepare themselves for higher positions.
I believe that we should do all we can to push those who are willing. I hope that we shall not get from the Treasury any of the dreary arguments which we have had in the past—for example, that, after taxation, it is up to the individual to decide what he does with the money which is left. I believe that, as a principle, that has been exploded. It should not be applied to education and training. I hope that the Financial Secretary will give this suggestion the most sympathetic consideration. From my own experiences, I know how necessary it is, and how valuable this concession will be to those young people who are prepared to make the effort to get themselves trained.
Mr. Dennis Walters: I should like to support the Clause. It is a very mild Clause, because of the relatively small amount of money involved, but, on the other hand, I believe that the advantages which would result from the inducement proposed would be considerably greater that the sum of £150 might lead one to expect. As my hon. Friend the Member for Devizes (Mr. Charles Morrison) pointed out, this would apply basically to people in full time employment who are anxious to improve their business education in their own time. There would be no abuse, because the Clause provides that Ministerial approval

1993
must be given and that the expenditure must be incurred on goods and services which are relevant to a particular institution.
It is generally agreed that education in business should be encouraged and helped. This Clause is a way to provide such help, which could be important but which would not cost a great deal of money. Education in business needs to be promoted much more specifically. There have been reports—for instance, from the Institute of Personnel Management and the British Institute of Management—which have pointed to deficiencies in our management training and to the fact that it may have proceeded at times in too haphazard a fashion. They have also drawn attention to the extent to which other countries have gone ahead of us. My hon. Friend the Member for Devizes referred to the United States, which is an example which we all know, but it applies also to European countries, particularly Germany.
Good salesmanship is important to exports. This has been proved time and time again. Better training is extremely important to industry. The Clause could help both of these and would cost very little. I think that it should be accepted.
Mr. Ian Lloyd: I endorse the plea made to the Financial Secretary on behalf of this new Clause. It is all too easy for us—preoccupied as we are with the great magnitude of national economic problems—to reach the conclusion that the solution to these problems lies in this Chamber. Needless to say, the decisions which we take and the lead which we give are of over-riding importance, but we should not forget that there are between 150,000 and 200,000 important centres of decision elsewhere in the country. The decisions made there by British industry, whether private or public, are vital to our future. It is the quality of these decisions which has to be considerably improved if we are to rise out of our national economic malaise.
We must do everything we can here to encourage business education and the training of management. We must encourage people to take advantage of opportunities which they might not have had before, whether by financial means or otherwise. I had the privilege in 1947 of visiting the Harvard Business
1994
School in the United States, which is now regarded as the most important business school in the world. There are about nine other such schools in the United States which they regard as being in the top class. We have made great progress by establishing two such schools in Britain which will be coming into operation shortly. The Administrative Staff College, which I attended some years ago, has been setting a lead in this way.
We have a great deal more to do and there is no limit to the encouragement which we can give. Last July, I visited a number of Japanese shipyards. One of the things which struck me most forcibly was the number of young men on the receiving teams in those shipyards who had had an American education from the Massachusetts Institute of Technology. They spoke fine English, they were on the ball, they knew what they were talking about and they were familiar with modern industrial problems. I should like to see in Britain a similar obvious ratio of highly trained people.
All political parties nowadays are on the side of the angels. We all proclaim, in our election manifestoes and party literature, that we are for modernisation. But today the acid test is not whether a party or a Government is "for" modernisation, which it is all too easy to proclaim, but whether a Government or party achieves modernisation. This Clause is small in terms of cost, but considerable in terms of importance. The Government could accept it to prove their sincerity of purpose in this matter.
The Financial Secretary to the Treasury (Mr. Niall MacDermot): Hon. Gentlemen opposite who have supported the new Clause have said that its acceptance would help the cause to which we are all dedicated; to improve the standard of our management and salesmanship as part of the whole process of modernisation.
When one is asking for a special favour from the tax law it is not sufficient to establish that the cause one is arguing has, in itself, a laudable purpose. There are many other laudable purposes which will ask for the same kind of concession—that is, unless there is something exceptional about the one being sought.

1995
I congratulate the hon. and gallant Member for Carshalton (Captain W. Elliot) on having obtained a degree in economics. I am envious of him. He based his argument on the wide principle that because this money is being spent for education and training it should qualify for tax relief. That would be a wide principle, if accepted, with very wide implications, including, presumably, the payment of all school fees at private schools. That is not something which we could accept.
When one is considering the kind of courses which are in existence in management and salesmanship at business schools of one kind and another it is fair to point out that the majority of people who take those courses do so because they are sent there by the firm or business which employs them. It is that business which pays the fees and expenses of the course. In the usual case the firm itself will be able to treat that as an expense for tax purposes, so that would not fall within the provision of the new Clause.
The new Clause deals with the individual who holds an office or employment whereby he is taxable under Schedule E and who would himself be paying for the course he is attending. He would, under the new Clause, be allowed to make a deduction for the expense involved. It is provided in the new Clause that the course should be approved by the "appropriate Minister"—and I suppose that that would be the Minister of Education—although there might be some difficulty in drawing the dividing line between which courses should or should not be approved.
The real difficulty in accepting the new Clause is this. How is one to distinguish between a host of other types of training for which at least as good a case could be made out? All those who study science and technology could say that they make as great, if not greater, a contribution to the cause of modernisation as those who are doing courses in salesmanship. Teachers who wish to attend refresher courses could surely put forward at least as strong a case. There are many other spheres in which people attend either post-graduate or refresher courses at later stages in their careers. It occurs in accountancy, electronics, law and
1996
many branches of engineering. Many professional men, such as surgeons and physicians, do the same.
If we were to accept the principle of the new Clause it would be bound to lead to a general tax relief for the cost of training courses which were voluntarily undertaken by employees. Apart from this difficulty, it would make a major breach in our tax principles. The whole basis of the expenses law in relation to Schedule E—the expenses rule—is that they must be incurred in the performance of the duties of the office or employment. There is a whole line of cases establishing clearly that expenses of this kind, where an employee is training himself or undertaking further training to improve his ability to do his work, are expenses incurred in preparing himself to be able to perform his duties rather than being in performance of his duties.
5.45 p.m.
This may sound legalistic, but there is a clear distinction underlying it. It may be a distinction which does not appeal to hon. Gentlemen opposite, but we could not change it without making a major change in our tax law. One cannot make an exception in one narrow sphere like this if one is to keep that structure of principle which, as I have argued to the Committee a number of times, is essential to any proper system of taxation. If the principle is wrong, let that be argued and let us consider how we should change it.
What we are concerned with here is whether a particular case which has been made out is so important that it justifies an exception from our accepted principles of taxation and whether, if we made it, we should be able to follow the line without extending it to a much wider area. That is apart from the fact that the cost of such a wide change could not be contemplated at present. Without detracting from the importance of these courses, I must advise the Committee that it would not be proper, in the circumstances, to accept the new Clause.
Sir Edward Boyle: I was rather disappointed with the hon. and learned Gentleman's reply and later in my remarks I will deal with the principles he mentioned.
When he said at the start that he felt unable to accept a proposal that the cost

1997
of private education should rank for tax relief, I was a little reminded by that understatement of the remark in one of Swift's works describing a woman who had been run over by a carriage—"You would hardly believe how much it changed her appearance for the worse." Likewise, the hon. and learned Gentleman's comment must be one of the best understatements during our proceedings.
The new Clause recognises, as my hon. Friend the Member for Devizes (Mr. Charles Morrison) pointed out, the very great importance of courses in business management and salesmanship and the fact that there is a notable difference at present between the treatment of business firms and the individual. As the Financial Secretary confirmed, business firms can get allowances if their employees attend these courses at their expense. The new Clause would ensure that those who wish to take such courses at their own expense would not be penalised.
It may not always be realised just how wide today is the range of courses available for management training. There has been a considerable expansion in recent years and while I will not weary the Committee by dealing at great length with the progress which has been made, it should bear this in mind. In management studies alone, at the apex, as it were, there is the new diploma in management studies which was launched in the autumn of 1961 and which already has over 3,000 students enrolled and studying for the diploma. This is a post-graduate or post-qualification diploma, because students must possess a university degree, a Dip. Tech., a professional qualification or a higher national certificate.
Apart from management studies, the technical colleges now offer a wide range of management courses at other levels, ranging from courses leading to recognised qualifications in foremanship and supervision, to those for the more specialised qualifications, in works, personnel, or office management. The latest figures I have, for 1963–64, show that there are about 12,500 students following courses of this kind and that, in addition, there are a large number of ad hoc courses, including many for senior managers, which are attended by many thousands of students each session.
1998
Besides these courses which are available in management training there are, as my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) pointed out, courses leading to qualifications in business studies. He mentioned, at the apex again, the two new business schools which are being set up. But we also have the Dip. Tech. course and other technological courses at the technical colleges, all of which include the preliminary study of industrial organisation. And there is an expanding provision for general business education in England and Wales, leading to Higher National Certificates and Diplomas in Business Studies. So whether one looks at business studies or management studies, undoubtedly today the total number of courses available is very much greater than it was some years ago.
Mr. MacDermot: I am sure the right hon. Member would be the first to agree that all these courses to which he has referred are very heavily subsidised out of public funds. Although payment may be made, it is nothing like the full economic cost.
Sir E. Boyle: There is this very much wider provision of courses today. It seems to me that on economic grounds, from the point of view of making the maximum use of this provision as well as from that of the gain to the country, it is clearly important to have our fiscal system such that it encourages the full utilisation of these courses for which provision is made.
Regrettably, one cannot deny that the support from industry for quite a number of these courses is still not so high as it should be. There is no doubt at all that today, whereas industry certainly gives better support than it did before in many aspects of technical education, none the less, I am sure—this was something I was always told when I was in the Department of Education and Science—that support from industry for these courses is still relatively limited. That is why it is extremely important to encourage and assist young executives to take the initiative even if their companies will not or cannot help in this way.
In his objections to this proposal the Financial Secretary made three points. First, he said that there would be difficulties in trying to define which courses

1999
should qualify. One recognises that, but it is a point which constantly arises even now where technical education is concerned. We have 1¾ million students in technical colleges. Sorting out the various courses and deciding which qualify under which head, is a problem which is already familiar.
Secondly, in regard to Schedule E I was interested to hear the Financial Secretary make the point that expenses can be claimed only if the course is in pursuance of one's work and not as a means of training and qualifying for a particular occupation. Looking ahead I am quite certain that, sooner or later, this sharp distinction will not go on proving tenable. As my hon. Friend the Member for Devizes pointed out, management is not something which one can study once and for all. There is the question of middle management training as well. Also when visiting a technical college of standing I am always impressed by those I meet who are not merely doing a job in industry but having all the time to keep in touch with developments in the technical college at which they did their training. To an increasing extent training and qualifying are not things which one can do once for all at the start of one's career.
The third difficulty mentioned by the Financial Secretary was that of deciding where one should draw the line and make
a distinction as compared with other types of training. But this is another point to which the Committee and the Government will sooner or later have to address themselves more. Our present distinction between the treatment of a company and of an individual cannot be maintained indefinitely, bearing in mind the very great importance of these training courses to the nation and the fact that we still have not as much direct encouragement and help given by industry as we could wish.
For all these reasons my hon. Friends who have supported this Clause have clearly been concerned with a point of real substance. While we recognise the difficulties which the Financial Secretary pointed out, this matter is of such importance that it will have to be considered seriously in future. I think that my hon. Friends would be fully justified in voting for this new Clause in order to draw attention to the importance which we attach to it. We attach great importance both of the issue of management studies itself and to certain principles which we believe will have to be examined much more seriously by the Government for the future.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 137, Noes 143.

Division No. 202.]

AYES

[5.55 p.m.

Alison, Michael (Barkston Ash)

Curran, Charles

Hawkins, Paul

Allan, Robert (Paddington, S.)

d'Avigdor-Goldsmid, Sir Henry

Hay, John

Allason, James (Hemel Hempstead)

Deedes, Rt. Hn. W. F.

Heath, Rt. Hn. Edward

Anstruther-Gray, Rt. Hn. Sir W.

Doughty, Charles

Hendry, Forbes

Awdry, Daniel

Drayson, G. B.

Higgins, Terence L.

Baker, W. H. K.

Eden, Sir John

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

Balniel, Lord

Elliot, Capt. Walter (Carshalton)

Hooson, H. E.

Batsford, Brian

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

Hordern, Peter

Beamish, Col. Sir Tufton

Emery, Peter

Hornsby-Smith, Rt. Hn. Dame P.

Bessell, Peter

Errington, Sir Eric

Hunt, John (Bromley)

Biffen, John

Fell, Anthony

Iremonger, T. L.

Biggs-Davison, John

Fisher, Nigel

Jenkin, Patrick (Woodford)

Birch, Rt. Hn. Nigel

Fletcher-Cooke, Charles (Darwen)

Johnston, Russell (Inverness)

Black, Sir Cyril

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

Kerr, Sir Hamilton (Cambridge)

Blaker, Peter

Fraser, Ian (Plymouth, Sutton)

Kershaw, Anthony

Boyd-Carpenter, Rt. Hn. J.

Glover, Sir Douglas

Kimball, Marcus

Boyle, Rt. Hn. Sir Edward

Goodhew, Victor

Lagden, Godfrey

Braine, Bernard

Grant, Anthony

Legge-Bourke, Sir Harry

Brinton, Sir Tatton

Grant-Ferris, R.

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

Brooke, Rt. Hn. Henry

Gresham Cooke, R.

Longden, Gilbert

Burden, F. A.

Griffiths, Eldon (Bury St. Edmunds)

Lubbock, Eric

Buxton, Ronald

Griffiths, Peter (Smethwick)

Mackenzie, Alasdair (Ross&Crom'ty)

Carlisle, Mark

Grimond, Rt. Hn, J.

McLaren, Martin

Channon, H. P. G.

Gurden, Harold

Maclean, Sir Fitzroy

Clark, William (Nottingham, S.)

Hall, John (Wycombe)

McNair-Wilson, Patrick

Clarke, Brig. Terence (Portsmth, W.)

Hall-Davis, A. G. F.

Marples, Rt. Hn. Ernest

Cooke, Robert

Hamilton, M. (Salisbury)

Mathew, Robert

Cooper-Key, Sir Neill

Harris, Frederic (Croydon, N.W.)

Maude, Angus

Craddock, Sir Beresford (Spelthorne)

Harris, Reader (Heston)

Mawby, Ray

Crawley, Aidan

Harrison, Brian (Maldon)

Maxwell-Hyslop, R. J.

Crosthwaite-Eyre, Col. Sir Oliver

Harvey, John (Walthamstow, E.)

Meyer, Sir Anthony

Mills, Peter (Torrington)

Ridley, Hn. Nicholas

Walker-Smith, Rt. Hn. Sir Derek

Mills, Stratton (Belfast, N.)

Royle, Anthony

Walters, Dennis

More, Jasper

Sharples, Richard

Ward, Dame Irene

Morrison, Charles (Devizes)

Sinclair, Sir George

Weatherill, Bernard

Mott-Radclyffe, Sir Charles

Speir, Sir Rupert

Whitelaw, William

Munro-Lucas-Tooth, Sir Hugh

Steel, David (Roxburgh)

Williams, Sir Rolf Dudley (Exeter)

Onslow, Cranley

Stoddart-Scott, Col. Sir Malcolm

Wills, Sir Gerald (Bridgwater)

Orr-Ewing, Sir Ian

Studholme, Sir Henry

Wilson, Geoffrey (Truro)

Osborn, John (Hallam)

Summers, Sir Spencer

Woodhouse, Hon. Christopher

Osborne, Sir Cyril (Louth)

Taylor, Sir Charles (Eastbourne)

Wylie, N. R.

Page, R. Graham (Crosby)

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

Yates, William (The Wrekin)

Peel, John

Thompson, Sir Richard (Croydon, S.)

Younger, Hn. George

Prior, J. M. L.

Thorpe, Jeremy

Pym, Francis

Tilney, John (Wavertree)

TELLERS FOR THE NOES:

Redmayne, Rt. Hn. Sir Martin

van Straubenzee, W. R.

Mr. MacArthur and

Rees-Davies, W. R.

Vickers, Dame Joan

Mr. Dudley Smith.

NOES

Albu, Austen

Henderson, Rt. Hn. Arthur

Orbach, Maurice

Atkinson, Norman

Holman, Percy

Page, Derek (King's Lynn)

Bacon, Miss Alice

Horner, John

Paget, R. T.

Bishop, E. S.

Howarth, Harry (Wellingborough)

Parker, John

Boston, T. G.

Howarth, Robert L. (Bolton, E.)

Parkin, B. T.

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

Howell, Denis (Small Heath)

Pavitt, Laurence

Bradley, Tom

Howie, W.

Popplewell, Ernest

Bray, Dr. Jeremy

Hughes, Emrys (S. Ayrshire)

Prentice, R. E.

Brown, Rt. Hn. George (Belper)

Hughes, Hector (Aberdeen, N.)

Pursey, Cmdr. Harry

Brown, Hugh D. (Glasgow, Provan)

Hunter, Adam (Dunfermline)

Redhead, Edward

Brown, R. W. (Shoreditch & Fbury)

Hunter, A. E. (Feltham)

Rees, Merlyn

Buchanan, Richard

Hynd, H. (Accrington)

Reynolds, G. W.

Butler, Herbert (Hackney, C.)

Irving, Sydney (Dartford)

Rhodes, Geoffrey

Callaghan, Rt. Hn. James

Janner, Sir Barnett

Roberts, Albert (Normanton)

Carmichael, Neil

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

Roberts, Goronwy (Caernarvon)

Carter-Jones, Lewis

Jenkins, Hugh (Putney)

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

Chapman, Donald

Jenkins, Rt. Hn. Roy (Stetchford)

Rogers, George (Kensington, N.)

Cousins, Rt. Hn. Frank

Johnson, Carol (Lewisham, S.)

Rose, Paul B.

Crawshaw, Richard

Jones, J. Idwal (Wrexham)

Shore, Peter (Stepney)

Darling, George

Jones, T. W. (Merioneth)

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

Davies, Harold (Leek)

Kelley, Richard

Short, Mrs. Renée (W'hampton,N.E.)

Davies, Ifor (Gower)

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

Silkin, John (Deptford)

de Freitas, Sir Geoffrey

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

Silverman, Julius (Aston)

Delargy, Hugh

Lawson, George

Silverman, Sydney (Nelson)

Dell, Edmund

Leadbitter, Ted

Skeffington, Arthur

Diamond, Rt. Hn. John

Ledger, Ron

Slater, Mrs. Harriet (Stoke, N.)

Dodds, Norman

Lee, Miss Jennie (Cannock)

Snow, Julian

Driberg, Tom

Lewis, Arthur (West Ham, N.)

Stonehouse, John

Dunnett, Jack

Lipton, Marcus

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

English, Michael

Loughlin, Charles

Swain, Thomas

Ennals, David

McCann, J.

Symonds, J. B.

Evans, Albert (Islington, S.W.)

MacDermot, Niall

Taverne, Dick

Evans, Ioan (Birmingham, Yardley)

McInnes, James

Thomas, George (Cardiff, W.)

Fletcher, Sir Eric (Islington, E.)

McLeavy, Frank

Tomney, Frank

Fletcher, Raymond (Ilkeston)

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

Tuck, Raphael

Floud, Bernard

Marsh, Richard

Urwin, T. W.

Foley, Maurice

Mason, Roy

Varley, Eric G.

Foot, Michael (Ebbw Vale)

Mayhew, Christopher

Wallace, George

Freeson, Reginald

Mikardo, Ian

Warbey, William

Garrow, A.

Molloy, William

Weitzman, David

Gourlay, Harry

Morris, Alfred (Wythenshawe)

White, Mrs. Eirene

Grey, Charles

Morris, Charles (Openshaw)

Whitlock, William

Griffiths, Will (M'chester, Exchange)

Murray, Albert

Wilkins, W. A.

Gunter, Rt. Hn. R. J.

Newens, Stan

Wilson, William (Coventry, S.)

Hamling, William (Woolwich, W.)

Noel-Baker, Francis (Swindon)

Zilliacus, K.

Hannan, William

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

Harper, Joseph

Norwood, Christopher

TELLERS FOR THE NOES:

Hazell, Bert

Ogden, Eric

Mr. O'Malley and Mr. Grey.

Heffer, Eric S.

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

New Clause.—(POSTPONEMENT OF PAY- MENT OF ESTATE DUTY IN CERTAIN CIRCUMSTANCES.)
Where, in the case of a person dying after the 6th day of April 1965, estate duty is payable on the death of one of the parties to a marriage, the payment of such estate duty may, at the option of the surviving party to the marriage, be postponed subject to the following provisions and conditions, namely—

(a) the payment of estate duty may be postponed in relation only to freehold or
2002
leasehold property being the sole or principal dwelling house of the deceased and his spouse;

(b) payment of estate duty may be postponed for such time as the said property remains the sole or principal dwelling house of the surviving spouse;

(c) the option referred to in (a) shall be exercisable in writing to the Comptroller of Estate Duty by the relevant party to the marriage within three months of the death of the other party to the marriage;

2003

(d) the estate duty shall stand charged on the said property from the date of the exercise of the option referred to above until payment is made but no interest shall be payable to the Estate Duty Office in respect of such charge.—[Mr. Younger.]

Brought up, and read the First time.
Mr. George Younger: I beg to move, That the Clause be read a Second time.
I hope the Financial Secretary has come with a large and comprehensive brief clearly marked that he should accept this proposed new Clause. This is a matter which is not concerned with improving the taxation system as such. It is not concerned with technical matters of taxation. This Clause is concerned with making an improvement in the system of levying Estate Duty, a system which at present causes very great hardship to quite a number of people. I hope to show how this is so, and I hope also that the Financial Secretary will be moved by the appeal which I shall make.
I will start by explaining in outline what the Clause will do. Briefly, the idea is this. When one partner of a marriage dies and the other partner is left, it will be open under this Clause for the surviving partner to elect, in writing to the Commissioners, to postpone payment of Estate Duty on the freehold value of the home in which the two partners were living. In other words, the payment of Estate Duty on the home of the two people, one of whom has died, can be postponed until the second partner dies. The option will be exercisable within three months in writing and not thereafter, and the duty payable on the value of the home will have to be paid in full when the second partner eventually dies. Under this Clause there will also be no interest payable during the life of the second party to the marriage.
That, briefly, is what I intend the Clause to do, and I say straight away that if there is any fault in drafting which prevents it from achieving that purpose I shall be only too happy, if the Financial Secretary feels it advisable, to accept or consider any improvements to the drafting.
Now I come to the purpose of introducing the Clause. We hear a lot of arguments in favour of measures of one sort
2004
or another on the basis of sympathy and compassion for people who are put in difficult positions. I want to be absolutely open and frank about this and say that that is precisely the reason why I am moving this new Clause. I feel that people are suffering hardship now because of the way in which Estate Duty operates in these circumstances.
I must confess that Estate Duty is not a duty which in itself entirely commends itself to me. Personally, I much prefer the idea of an inheritance tax, because I think it operates much more fairly in that it recognises the means of the recipient and not the means of the donor. However, it would be out of order to go into that subject now, and it is no part of my argument that Estate Duty as such is a bad thing. But we should recognse that by its very nature Estate Duty operates at a time when people find circumstances most distressing, at a most difficult and complicated time in their lives. For that reason, if for no other, we all ought to look very sympathetically at any proposal which alleviates people's distress in these circumstances.
When one partner of a marriage dies—and in the majority of cases both partners will by that time be fairly advanced in years—it is obvious that the other party is in a very difficult position personally. Obviously that person is highly distressed and is suddenly faced with many problems. I remember being told some years ago by somebody on the death of a close relative that the thing which impressed him most about this experience was the vast number of problems with which a surviving partner has to deal—problems which have never arisen before. This is aggravated by the trouble which besets such people in connection with the assessment of Estate Duty.
It is probably common ground that one of the greatest worries of such a time is having to pay the Estate duty, having all one's possessions valued, having people go through the property, and so on, and, of course, this comes at a time when the surviving partner is feeling very upset. Probably the most difficult problems of all are centred on the home in which the married couple have been living. Many hon. Members will know this from their correspondence. Incidentally, if I had not been strongly in favour of the new

2005
Clause before it was tabled, I should certainly have been convinced afterwards. I should never have believed the amount of support I have received for the Clause, both oral and written, since it was tabled.
Very often, by the nature of things, an elderly married couple will be living in the home where they have been nearly all their lives or, at least, for a great number of years, and it will probably have become too big for them or in other ways a problem. The problem is greatly exacerbated the moment one partner dies. If the house was too big, it becomes that much bigger. If it was difficult to run, it is that much more difficult to run. In the circumstances, many reasons arise for the surviving partner to leave the home, because it is too big, because it is too far removed from other relatives who can help, or simply because the expense of running it is too great.
Paradoxically, when a move is made essential in this way, it often leads to even more expense than was incurred previously. All hon. Members know that, as soon as one moves house, an infinite number of other expenses seem to arise. Here is an extract from one letter which I have received which demonstrates this point and shows how difficult life can be. It is from a man who wrote to say that he and his brother are faced with this problem, their father having died and left their elderly mother living in a house which was really too big. It is not by any means a big house but it is too big for one old lady. He says:
"We know very well, of course, that we ought to force our mother to leave her home and move into a flat which would be more within her means, but I am quite sure that to do this would give her great distress and possibly hasten her end. I am determined that somehow we shall find the money to keep the home going until she eventually dies."
Many hon. Members will know of similar cases. We ought, if possible, to do something to make things easier for people in such circumstances. Exemption of the value of the home from immediate payment of Estate Duty will afford that bit of extra financial help which can turn the scale and make it unnecessary for the surviving old partner to move to a new home.
The benefit can be considerable. As an example, I take an estate worth £20,000 for Estate Duty purposes, which, for anyone who owns a home or has ever
2006
run even the smallest of businesses, is by no means out of the normal run. The house is valued at only £5,000—quite a reasonable house in my part of the country, though I know that in this area that amount of money would not buy much of a house—and if Estate Duty payable on that house were remitted until the death of the second partner £600 would be saved. For my second example I take a larger estate of £50,000, and in this case duty payable on a home valued at £10,000 could be as much as £3,100. Clearly, there is need for such a provision as I propose, which would be of considerable benefit to the surviving partner.
6.15 p.m.
I come now to the loss to the Exchequer, which always looms so large when we discuss tax changes of this kind. The loss in this case would be extremely small. We do not suggest that the duty should not be paid; we suggest merely that it be deferred. Admittedly, interest might have been charged in other circumstances, but it would be quite inappropriate to charge interest to the surviving partner for what might be quite a number of years. The value of the interest to the Exchequer would not be of great significance. It would certainly not be significant compared with the help given to the recipients of the concession.
There are precedents for the deferment of Estate Duty in certain circumstances. I understand that woodlands, although they are assessed with an estate at the time of death, are subject to a provision which makes it possible to postpone payment of the duty on the actual timber until such time as the timber is felled and realised. There is also facility for postponing payment of duty on agricultural land for a certain time. If we are looking for a precedent for bringing in only the home, we have in recent weeks established the principle that the home is something which should be exempt from the Capital Gains Tax, and we have done this because, of course, the home is used by the whole family and is of great importance to everyone in it.
We ought to do anything we can, however small, to help older people. For years we have heard about their difficulties. In this country now, we are moving slowly, too slowly, many of us

2007
would say, towards doing better for our old people, but they have recently suffered considerable extra difficulties. There have already been references to the fact that dividends are likely to produce less money in the months following the passage of this Bill. Old people who require home help have to pay more for it because of the abolition of exemption from National Insurance contributions in respect of home helps. Rising rates are a particularly heavy burden on old people who cannot vary their income. Old people are the most sensitive of all to rises in the cost of living, and we all know about the rises which have recently occurred and are likely to occur.
I emphasise that the reason behind the Clause is sympathy, sympathy for people who deserve consideration from both sides of the Committee. I very much hope that the interests of neatness in our financial legislation, the possibility of a small loss to the Exchequer, and the old feeling in this country that we always resist change whenever we can will be swept aside and not be used as a reason to resist a measure which could give very great relief, relief disproportionate to the amount which it might seem on paper, to the old people who certainly need it.
Mr. David Steel: I support the Clause and the case presented by the hon. Member for Ayr (Mr. Younger). Not the least of my reasons is that I was impressed by his conversion, expressed in an aside, to the Liberal Party's policy on an inheritance tax. I hope that in a future Finance Bill we shall abolish Estate Duty altogether and replace it by an inheritance tax. In the meantime, however, I welcome any measure of reform to remove the hardship which Estate Duty undoubtedly causes. Clearly, there is a case for removing the hardship which is borne by the surviving partner of a marriage.
It seems to be a convincing argument, particularly as the Clause, as worded, is proposing not the abolition of a certain income to the Treasury but merely its postponement. Also, the Clause makes clear that if after the death of one partner the survivor decides to sell the house the Estate Duty will then become payable. An important point is
2008
that no one will have finance reasons forcing them to sell their property immediately on the death of the partner, thus bringing additional distress. Therefore, on social grounds the principle of the Clause should be accepted by the Government.
The drafting of the Clause may not be acceptable, including the definition of the various properties, which might have to be clarified in relation to Scottish law on the holding of property, but I hope that the principle will be accepted.
Mr. Daniel Awdry: I support my hon. Friend the Member for Ayr (Mr. Younger). The Clause is humane. It will be kind to people just at the moment when they need kindness most. I was moved by the speech of my hon. Friend, and I noticed that the Financial Secretary was, too. I hope that the Government will show how humane they can be. We all agree that the rates of Estate Duty are extremely harsh. I speak with first-hand knowledge as a solicitor dealing with people at the time when they lose relatives, and I echo everything that my hon. Friend said.
The first advantage of the Clause is that it will cost very little. The Financial Secretary will no doubt tell us exactly how much. Compared with the figures that we have been discussing in the last few weeks, it is a very small amount. It is the loss of interest over a certain period.
The Clause is even more necessary in view of the Capital Gains Tax provision. I give an example of a typical case, that of a small businessman. Let us say he starts this year with £1,000 in cash and decides to buy his house on mortgage with an endowment scheme. Let us say that the business is successful over the next 10 years and he builds it up to a value of £15,000. He has a wife and family. Then he is killed in a motor accident. What will be the position of his estate in terms of Capital Gains Tax and Estate Duty?
First, unfortunately, the estate will have to pay £3,000 in Capital Gains Tax because it will be a disposal on death. There would have been a capital gain of £9,000 for assessment. About one-third of it will be taken by way of capital gain. The business will have to be sold. Let us say it fetches £15,000. Out of that the £3,000 will be paid, and we shall have an estate

2009
of £12,000 cash. The endowment policy will pay off the mortgage. Let us say that the house is then worth £6,000. That is a small estate especially when we are now thinking in terms of 10 years ahead. So there will be a total estate of about £18,000. The rate of duty at present—we do not know what it will be in 1970—is 12 per cent. Therefore, out of the cash another £1,400 has to be used for Estate Duty, and the amount on the house is £700. Altogether, therefore, the estate has to pay £5,000 in Capital Gains Tax and Estate Duty combined.
If the Clause were accepted, the £700 payable in respect of the dwelling-house could be postponed. That would have the effect of reducing the Estate Duty by a third. It would have been £2,100; now it will be £1,400. So the widow will be saved about £1 a week, on the basis of £700 invested at 6 to 6½ per cent., and that will be in circumstances in which she will need every help that she can get. This seems to be an overwhelming case. The Government need not worry, because upon the house there will be a charge of £700, and they will get their money anyhow, although they may have to wait a little for it.
My hon. Friend says that there are precedents for this. I am glad to hear that. Even if there were no precedents, I am sure that that would not stop the Financial Secretary helping us. The Government claim again and again that they are humane and interested in people's personal problems. Here is the test. Let them show that they are humane. Let them accept the Clause.
Mr. Ian Lloyd: Having been responsible this week for moving a number of highly technical and arid Amendments which have found the Financial Secretary's heart as stony as one might expect for that type of Amendment, it gives me pleasure to support my hon. Friend the Member for Ayr (Mr. Younger) in this Clause, which embodies in principle what I had hoped to succeed in obtaining with my Deferment of Estate Duty Bill which was seventh in the Ballot and has not been reached and is not likely to be reached.
This proposal is very humane for reasons which must be apparent. I am concerned that the Clause should be accep-
2010
ted and that the Financial Secretary should not turn it down purely on financial grounds, saying that the State cannot afford either now or in the foreseeable future a very large loss of duty. The loss of duty would not be much in terms of the current figures in our total national Budget.
The total number of estates subject to duty in the year 1963–64 was 316,000, of which 154,224 were the estates of surviving women. Of the total number, roughly 60,000 bore duty, and of those—they are all estates over £5,000–26,400 were the estates of surviving women. The total capital value of these estates was about £1,100 million, but the segment of the total capital value which applied to freehold and leasehold residential property was only £175 million, or 15 per cent. of all estates over £5,000.
The net receipt of all duty was £312 million, roughly £1,075 per estate, if all estates, including those exempted, are taken into consideration, and no less than £5,000 per estate if only those estates bearing duty are taken into consideration. This sets the spectrum in which the problem has to be considered.
As my hon. Friend the Member for Chippenham (Mr. Awdry) pointed out, the rates are rather penal. In the estates which just come into the duty bracket, £5,000 to £6,000, 1 per cent. can be ignored, because a charge of £50 or £60 is created on an estate of that size. When one reaches the figure of £8,000 to £10,000, which is by no means the vast sum nowadays that it might have been considered to be before the First World War, or even the Second World War, the 4 per cent. rate produces a duty of £320 to £400.
When we reach the level of estate given in the example by my hon. Friend the Member for Chippenham, £18,000 to £20,000, we reach duty levels of £2,160 to £2,400. This represents a real burden on what is, by common consent, a modest estate. One might suggest that at current levels of inflation practically all estates will be in this modest bracket by 1985. Thus, we do not have to look far forward to a situation where the average price of an average house will be £6,000 to £7,000, and those houses will be very much embraced by these proposals.

2011
I shall not weary the Committee any more with statistics, but I end by reminding hon. Members who may have read it of the distinguished book by the late President Kennedy, "Profiles in Courage", in which he quotes an incident in a quarrel between two distinguished United States senators—the late Senator Benton and the late Senator Calhoun.
6.30 p.m.
The two Senators conducted a lifelong quarrel with great virulence, much to the delight and amusement of the American public. When Senator Benton lay on his death bed, Senator Calhoun suddenly stopped the quarrel and someone asked him why, because the quarrel was very well known. His reply was most relevant to this Clause. It was:
"When God Almighty lays His hand on a man, Sir, I take mine off, Sir."
In the United Kingdom—and not alone here—when God Almighty lays his hand upon a man, that is the moment that the Inland Revenue chooses, with the full blessing of the State, to lay its hands on his wife. This is an uncivilised practice and its removal is something that a great many citizens, at every level of income, would be prepared to pay more tax in another direction in order to secure, knowing that they were postponing the date for the collection of this duty.
It would be only a relatively short period of five to seven years—the average difference in the life spans of men and women—after which the duty would automatically start coming back to the coffers of the State. That is all we ask. It is a matter of timing, of postponement. It would entail a loss of revenue, but I am sure that the country would be prepared to make it up in other ways.
Mr. MacDermot: The hon. Member for Ayr (Mr. Younger) and the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) made it clear that they do not view with any great favour our Estate Duty law and much of the hardship they say results from it. They followed through, quite logically, with an attack upon the system. I have a lot of sympathy with what they say and as a party we are committed to reform and to tax reform. Nevertheless, the Committee may feel that we have bitten
2012
off quite sufficient in the present Bill without tackling Estate Duty law as well.
No doubt, in the full course of time, in the years ahead, my right hon. Friend will turn his constructive mind to these problems, but, meanwhile, we have to consider whether it would be right to make the alteration in the law proposed by the Clause. I must say at once that it would be a departure in principle from the basis of the present duty. In technical language, the present Estate Duty is what is known as mutation duty, which means that the whole of the estate as such is charged at a given level of tax, depending on the size of the estate, without any regard to the circumstances of the beneficiaries.
No doubt this was one of the matters the hon. Member for Ayr had in mind when he said that he would like this duty replaced by an inheritance duty, but that is the law and it would be a departure from the principle to make this alteration. However, that is the sort of argument which I know does not greatly appeal to the Committee and, having made the point, I will leave it.
I come to more worth-while arguments. The first is that the proposal would be highly discriminatory as between one beneficiary and another. I concede that it is a class which commands great sympathy because, for the most part, this would benefit widows although, sometimes also widowers. It would, however, benefit only a limited sector of that class, namely, widows who were owner occupiers or whose husbands were owner occupiers. But even within that sector it would benefit only a limited number because it would affect only widows whose husbands were owner occupiers and who continued to live in what had been their home. These are the only people who would benefit.
The hon. Member for Chippenham (Mr. Awdry) gave a moving example of the man who has built up his business. Because the hon. Gentleman wanted to bring out the full iniquity, as he believes, of the Capital Gains Tax, his example was that of a man with a business where there would be a large capital gain element. The classic example of this would be the shopkeeper because of the large goodwill element within the value of the capital assets.

2013
A great many shopkeepers live above the shop and if we are envisaging an example where the business is sold—which is what the hon. Gentleman envisaged—then usually the premises above are sold with the shop and so the widow in many cases could not benefit from the Clause at all because she would have ceased to live in the matrimonial home. The relief under the Clause would thus be confined to the surviving spouse who remained living in the house and only for so long as she remained in it.
Of course, many widows succeed to an estate which is larger than the exemption. The estate up to £5,000 is exempt. Then there is a very low rate—1 per cent.—on estates between £5,000 and £6,000, 2 per cent. within the next £1,000 and 3 per cent. within the next £1,000, and so on. It builds up.
Assuming that a widow succeeds to an estate of £10,000 to £15,000, there is an appreciable sum to be paid in estate duty. There will be many such widows whose husbands were not owner-occupiers and they will be confronted with similar difficulties. Yet they would not benefit from the Clause. Thus, the Clause would make one widow feel that she had been deprived of a benefit granted to another. That situation would not assist in producing that sense of equality and fairness which we strive to achieve in our tax system.
The hon. Member for Ayr—at some peril to his argument—referred to the fact that many elderly people at the time of the death of one spouse are already living in a house that is too big for them and that that element of under-occupation, as it is called by housing experts, increases when there is only one spouse left. Of course, if the surviving spouse did move to accommodation of a size better suited to her needs, she would lose the benefit of the Clause.
I remember that, just before the election, I discussed the housing problems of Derby with the housing manager. He told me that if he could have 1,000 old people's bungalows he could solve Derby's housing problem overnight. This is because so many people live in under-occupied accommodation. Nearly all of them are widows and elderly people who have brought up a family in their home and one can fully understand the
2014
human reasons why they do not want to move.
Of course, for some particularly elderly people it would be a great shock to move. The hon. Gentleman quoted the instance where to try to move the person might imperil that person's whole future. Nevertheless, one wants to encourage movement wherever it can reasonably take place and to build into our tax law an inducement to remain in the house—which is what the Clause would do—when looked at from the wider social point of view would be of very dubious value.
The class of people who would be singled out for preferential treatment by the Clause are already getting some relief on Estate Duty compared with others because, while the Estate Duty on personal property must be paid when the probate is obtained, the duty on real property, which is what we are concerned with, can be spread by instalments over eight years. We should, therefore, be adding to an advantage which already exists. I would, in parenthesis, comment that this is the answer to the hon. Gentleman who referred to the favoured treatment of agriculture. The only way in which agricultural land is favoured is by spreading the liability.
A number of hon. Members have referred to cost. They say that the new Clause would not cost the Treasury anything because it would only defer payment. I do not base the argument primarily on cost, but I must correct the mistaken impression that if we defer permanently a tax for a period of years it does not cost the Treasury anything. It does. For the initial years, it costs the Treasury the whole amount. One can illustrate the point by imagining everybody's liability to tax being assessed at this moment but their being given two years before they need to pay. The result would be that the Treasury would get no taxes for two years.
This proposal would, in the first year, mean a loss of £10 million to the Treasury. The loss would decline over the years until it disappeared. From then on, there would be no further loss. However, at a time when my right hon. Friend the Chancellor has found it necessary to increase taxation very substantially, he cannot, even if he wanted

2015
to do so, accept a proposal which would mean a revenue reduction this year of £10 million.
As I have said, that is not the argument on which I ask the Committee to reject the Clause. We do not think it should be accepted because it proposes a relief which would single out a particular class within a particular class on a particular form of property.
For these reasons, I suggest that the Clause is unacceptable.
Mr. Peter Walker: I am sure that my hon. Friend the Member for Ayr (Mr. Younger) and my other hon. Friends who have spoken will be very disappointed with the Financial Secretary's reply. I give my sympathy to the hon. Gentleman, who, for 16 days, has had to speak to long Treasury briefs, most of them proposing the imposition of very bad taxes on the country. I should have thought that the Treasury would have had the kindness to give the hon. Gentleman one opportunity to do something pleasant and which would have shown that there is a spark of humanity even in this very hard Government.
Mr. MacDermot: When agreeing with the Motion to report Progress the other night, the right hon. Member for Bexley (Mr. Heath) said that for the previous two days we had been doing nothing but capitulate to the Opposition's demands.
6.45 p.m.
Mr. Walker: My right hon. Friend was perfectly right when he said that for two days the Government had been in a state of constant capitulation. But this was not because they were being generous to the taxpayer; it was because they had drafted the Bill badly and incompetently and recognised the superior attitude to these matters of my right hon. and hon. Friends. What we should like to have is a little human warmth on the part of the Government. Once again, it has been lacking.
During the Committee stage I have come to the conclusion that the Treasury prepares its briefs by giving the Ministers five or six pages of arguments, many of them differing arguments, and leaving it to the Ministers to decide which of them they should deploy. One of the difficulties is that, probably through being
2016
under great pressure, the Ministers have at times deployed contradictory arguments, all contained in the same Treasury brief. This afternoon was no exception.
We heard, first, the general argument that the new Clause involves a great change of principle in respect of Estate Duty. Later, it was said that there was a certain amount of discretion given on Estate Duty on real property in that the payment of the duty could be spread over a period. The principle which allows people to pay Estate Duty on real property over eight years is identical to the principle advocated in this Clause. We say, not that these people should not have to pay Estate Duty, but that the estate should pay when the widow or widower dies. This involves a spread of the period different from the eight year method, but in principle it is identical to the principle involved in allowing people to pay Estate Duty over eight years. I would argue that no change of principle was involved in the new Clause.
The second argument which the Financial Secretary endeavoured to deploy was that the Clause proposed a discriminatory concession which would not apply to everybody. This is surely true of almost every tax concession which is made. Estate Duty is a discriminatory form of taxation. There are discriminations within it. Any form of concession in Estate Duty obviously will apply in a different way at various levels of Estate Duty. This is not an argument for giving a concession in respect of something which involves real human hardship.
There is an easy solution to the argument about shopkeepers and the continuous under-occupation of property. I am sure that my hon. Friends would be willing for the Clause to be redrafted to fit the perfectly cogent argument of the Financial Secretary. He quoted the case of the shopkeeper. He asked what was the position if, as a result of Capital Gains Tax and Estate Duty, the family business has to be sold and the widow or widower has to move out of the premises into some other premises. He said that the Clause would not provide for such a person. He is perfectly right, and we shall be most grateful to him when he decides to include it in the Bill.
Perhaps he will add to the Clause a method similar to the replacement of

2017
business asset provisions of the capital gains section of the Bill whereby such a person could change the living accommodation part of the shop into a private dwelling-house. This same happy formula could be applied, and it would encourage people to move to smaller premises. It would be the responsibility not of the local authority, but of the individual concerned. If there were added to the Clause a provision that if the widow or widower decided to move to a smaller unit of accommodation the amount of money invested in that smaller unit would enjoy the privileges of the Clause, this would overcome the Financial Secretary's difficulty. Perhaps he will decide, on reflection, that his objections can be easily overcome and will go back to the Treasury and say that, in view of the cogent arguments of my hon. Friends he is willing to accept the new Clause.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) rightly argued the importance of the case. The action of the Treasury Bench today, after the blandishments of the Leader of the Liberal Party yesterday, must be disappointing to the Liberal Party. Within the space of three and a half hours, the Government have turned down a new Clause to encourage the spread of share ownership, a new Clause encouraging education and, now, the new Clause so ably advocated by the hon. Member for Roxburgh, Selkirk and Peebles. This is not the way to go on if the Government want 10 extra votes.
Mr. David Steel: Is the hon. Member now supporting the views of the Leader of the Liberal Party?
Mr. Walker: I am saying that this must be a day of bitter disappointment to the Leader of the Liberal Party, who will have to reconsider his position and make another speech at the weekend suggesting, perhaps, that he will join up with us, provided that we give him proportional representation.
In the long term, as the Financial Secretary admitted, the Clause would cost the Treasury nothing. In fact, if the Government continued in office, they would actually make money. Over a time of rising prices, property would be worth much more than at present and thus the Government would have a share of the inflation that they are causing. All that the Committee is asking is that a person should not have to pay Estate Duty upon the home if he or she continues to live in it.
My hon. Friends the Members for Ayr (Mr. Younger) and Chippenham (Mr. Awdry) have both given good examples of what an inhuman form of taxation is imposed upon a widow or widower. My hon. Friend the Member for Chippenham pointed out that the situation has now been aggravated by the imposition of the Capital Gains Tax at the time of death. Not only do people have to find immediate cash resources to meet their Estate Duty obligations, but they have to find immediate cash resources to meet any Capital Gains Tax which is imposed upon on estate.
At a time when the Government are increasing the incidence of taxation at death—and to a greater extent upon people with small estates than with larger estates—the least they could have done would be to accept our excellent and humane Clause to solve a problem which exists in many homes when a leading member of the family dies.
I am very disappointed at the Financial Secretary's reply. Unless he is willing, as I hope he is, to say, on reflection, that most of our arguments could easily be met by making slight Amendments to the Bill, I must ask my right hon. and hon. Friends to divide the Committee.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 122, Noes 128.

Division No. 203.]

AYES

[6.52 p.m.

Alison, Michael (Barkston Ash)

Blaker, Peter

Channon, H. P. G.

Allan, Robert (Paddington, S.)

Boyd-Carpenter, Rt. Hn. J.

Clarke, Brig. Terence (Portsmth, W.)

Allason, James (Hemel Hempstead)

Boyle, Rt. Hn. Sir Edward

Cooke, Robert

Anstruther-Gray, Rt. Hn. Sir W.

Braine, Bernard

Cooper-Key, Sir Neill

Baker, W. H. K.

Brinton, Sir Tatton

Craddock, Sir Beresford (Spelthorne)

Balniel, Lord

Brooke, Rt. Hn. Henry

Crawley, Aidan

Batsford, Brian

Burden, F. A.

Crosthwaite-Eyre, Col. Sir Oliver

Beamish, Col. Sir Tufton

Buxton, Ronald

Curran, Charles

Black, Sir Cyril

Carlisle, Mark

d'Avigdor-Goldsmid, Sir Henry

Deedes, Rt. Hn. W. F.

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

Prior, J. M. L.

Doughty, Charles

Hogg, Rt. Hn. Quintin

Rees-Davies, W. R.

Drayson, G. B.

Hooson, H. E.

Ridley, Hn. Nicholas

Eden, Sir John

Hordern, Peter

Royle, Anthony

Elliot, Capt. Walter (Carshalton)

Hornsby-Smith, Rt. Hn. Dame P.

Sharples, Richard

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

Hunt, John (Bromley)

Shepherd, William

Emery, Peter

Iremonger, T. L.

Sinclair, Sir George

Errington, Sir Eric

Jenkin, Patrick (Woodford)

Speir, Sir Rupert

Fell, Anthony

Johnston, Russell (Inverness)

Steel, David (Roxburgh)

Fletcher-Cooke, Charles (Darwen)

Kerr, Sir Hamilton (Cambridge)

Studholme, Sir Henry

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

Kershaw, Anthony

Summers, Sir Spencer

Fraser, Ian (Plymouth, Sutton)

Kimball, Marcus

Taylor, Sir Charles (Eastbourne)

Gardner, Edward

Lagden, Godfrey

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

Glover, Sir Douglas

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

Thompson, Sir Richard (Croydon, S.)

Goodhew, Victor

Longden, Gilbert

Thorpe, Jeremy

Grant, Anthony

Lubbock, Eric

van Straubenzee, W. R.

Gresham Cooke, R.

MacArthur, Ian

Vickers, Dame Joan

Griffiths, Eldon (Bury St. Edmunds)

Maclean, Sir Fitzroy

Walker-Smith, Rt. Hn. Sir Derek

Griffiths, Peter (Smethwick)

Marples, Rt. Hn. Ernest

Walters, Dennis

Grimond, Rt. Hn. J.

Mathew, Robert

Ward, Dame Irene

Gurden, Harold

Mawby, Ray

Weatherill, Bernard

Hall, John (Wycombe)

Maxwell-Hyslop, R. J.

Whitelaw, William

Hall-Davis, A. G. F.

Meyer, Sir Anthony

Williams, Sir Rolf Dudley (Exeter)

Harris, Frederic (Croydon, N.W.)

Mills, Peter (Torrington)

Wills, Sir Gerald (Bridgwater)

Harris, Reader (Heston)

Mills, Stratton (Belfast, N.)

Wilson, Geoffrey (Truro)

Harrison, Brian (Maldon)

More, Jasper

Woodhouse, Hon. Christopher

Harvey, John (Walthamstow, E.)

Morrison, Charles (Devizes)

Wylie, N. R.

Hastings, Stephen

Mott-Radclyffe, Sir Charles

Yates, William (The Wrekin)

Hawkins, Paul

Munro-Lucas-Tooth, Sir Hugh

Younger, Hn. George

Hay, John

Onslow, Cranley

Heath, Rt. Hn. Edward

Osborne, Sir Cyril (Louth)

TELLERS FOR THE NOES:

Hendry, Forbes

Page, R. Graham (Crosby)

Mr. Pym and Mr. Dudley Smith.

Higgins, Terence L.

Peel, John

NOES

Albu, Austen

Holman, Percy

Paget, R. T.

Atkinson, Norman

Horner, John

Parker, John

Bacon, Miss Alice

Howarth, Harry (Wellingborough)

Parkin, B. T.

Bishop, E. S.

Howarth, Robert L. (Bolton, E.)

Pavitt, Laurence

Boston, T. G.

Howell, Denis (Small Heath)

Popplewell, Ernest

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

Howie, W.

Prentice, R. E.

Bradley, Tom

Hughes, Emrys (S. Ayrshire)

Pursey, Cmdr. Harry

Bray, Dr. Jeremy

Hughes, Hector (Aberdeen, N.)

Rees, Merlyn

Brown, Rt. Hn. George (Belper)

Hunter, A. E. (Feltham)

Reynolds, G. W.

Brown, Hugh D. (Glasgow, Provan)

Irving, Sydney (Dartford)

Rhodes, Geoffrey

Brown, R. W. (Shoreditch & Fbury)

Janner, Sir Barnett

Roberts, Albert (Normanton)

Buchanan, Richard

Jenkins, Hugh (Putney)

Roberts, Goronwy (Caernarvon)

Butler, Herbert (Hackney, C.)

Jenkins, Rt. Hn. Roy (Stetchford)

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

Callaghan, Rt. Hn. James

Johnson, Carol (Lewisham, S.)

Rogers, George (Kensington, N.)

Carter-Jones, Lewis

Jones, J. Idwal (Wrexham)

Rose, Paul B.

Chapman, Donald

Jones, T. W. (Merioneth)

Shore, Peter (Stepney)

Cousins, Rt. Hn. Frank

Kelley, Richard

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

Crawshaw, Richard

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

Short, Mrs. Renée (W'hampton,N.E.)

Darling, George

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

Silkin, John (Deptford)

Davies, Harold (Leek)

Lawson, George

Silkin, S. C. (Camberwell, Dulwich)

Delargy, Hugh

Ledger, Ron

Silverman, Julius (Aston)

Dell, Edmund

Lee, Miss Jennie (Cannock)

Silverman, Sydney (Nelson)

Dodds, Norman

Lewis, Arthur (West Ham, N.)

Skeffington, Arthur

Driberg, Tom

Lipton, Marcus

Slater, Mrs. Harriet (Stoke, N.)

Dunnett, Jack

Loughlin, Charles

Snow, Julian

English, Michael

McCann, J.

Stonehouse, John

Evans, Albert (Islington, S.W.)

MacDermot, Niall

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

Evans, Ioan (Birmingham, Yardley)

McInnes, James

Swain, Thomas

Fitch, Alan (Wigan)

McLeavy, Frank

Thomas, George (Cardiff, W.)

Fletcher, Sir Eric (Islington, E.)

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

Tomnev, Frank

Fletcher, Raymond (Ilkeston)

Mason, Roy

Tuck, Raphael

Floud, Bernard

Mikardo, Ian

Urwin, T. W.

Foley, Maurice

Molloy, William

Varley, Eric G.

Freeson, Reginald

Morris, Alfred (Wythenshawe)

Wallace, George

Garrow, A.

Morris, Charles (Openshaw)

Warbey, William

Grey, Charles

Murray, Albert

Weitzman, David

Griffiths, Will (M'Chester, Exchange)

Newens, Stan

Whitlock, William

Gunter, Rt. Hn. R. J.

Noel-Baker, Francis (Swindon)

Wilkins, W. A.

Hamling, William (Woolwich, W.)

Norwood, Christopher

Wilson, William (Coventry, S.)

Hannan, William

Ogden, Eric

Zilliacus, K.

Harper, Joseph

O'Malley, Brian

Hazell, Bert

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

TELLERS FOR THE NOES:

Heffer, Eric S.

Orbach, Maurice

Mr. Ifor Davies and Mr. Gourlay.

Henderson, Rt. Hn. Arthur

Page, Derek (King's Lynn)

New Clause.—(STAMP DUTIES ON LIFE INSURANCE POLICIES.)
Stamp duties on policies of life insurance relating to death only shall be chargeable at the same rate as the duties applicable to policies relating to personal accidents in those cases where the period in which the specified contingency is to happen does not exceed five years.—[Mr. A. Royle.]
Brought up, and read the First time.
Mr. Anthony Royle: I beg to move, That the Clause be read a Second time.
I should, first declare an interest. I have been a marine insurance broker at Lloyd's for more than 15 years. I would add that at no time did I ever become an expert on short-term life insurance, and that I know little about it. I therefore hope to be forgiven by hon. Members if I do not appear to be as skilled in this matter as my experience might lead them to believe.
Unlike the previous new Clause, moved so ably by my hon Friend the Member for Ayr (Mr. Younger), this Clause has no emotional undertone at all. That being so, and because there has been a change in the Treasury spokesman, I hope that the Chief Secretary, who is very knowledgeable on this subject, will feel able to help the export trade by accepting a Clause which is designed to assist it. If the right hon. Gentleman does so, it will be the first time this afternoon that the Government have felt able to accept a new Clause.
The Clause deals only with short-term life insurance, for a period of five years or less. I seek to put right a very grave anomaly in the Stamp Act as it affects this type of insurance. There is no question of any party issue here; the sole issue is an anomaly which I think is affecting the invisible export trade, and one that I and many of my hon. Friends feel should be put right quickly.
This short-term life business has grown tremendously over the past few years; there is a much greater volume of it now than there was even 10 years ago. It provides cover against death resulting from accident, illness or natural causes. The present stamp duty on life policies is 1s. per cent. up to £500, followed by 10s. in full on the next £500–£1,000, followed by 10s. in full for each additional £1,000 or part thereof. The duty has greatly handicapped this type of business
2022
at Lloyd's and in the life market—particularly foreign business.
Why is this the case? The foreign client wishing to take out short-term life policy in the London market would not only have to pay duty in his own country of origin, but also the United Kingdom duty. That applies, not only to reinsurance business, but to direct business. This is the first very real disadvantage that the stamp duty puts on the London market. If the same business were placed abroad—in, say, France or Italy—the client would pay only a small local tax.
The present situation, therefore, has a very obvious detrimental effect on invisable exports—and we know, and we welcome the fact, that the Government and the Chief Secretary have been pressing very hard for an increase in our export trade. All hon. Members are 100 per cent. behind them in that aim.
On the other hand, the Stamp Duty does not greatly benefit the Chancellor of the Exchequer's pocket. It is very difficult to find out exactly what revenue it produces in one year—I have tried to find out, and I have failed; perhaps the right hon. Gentleman will be able to give us the answer. Nevertheless, it is certain that the revenue produced must be minimal as compared with the loss of business on the London market that the duty causes.
I should like to give an example of the type of temporary life business placed in the London market which is badly damaged by this duty. If a foreigner wishes to place insurance in the London market on his life for one year, and is aged, say, 30 or less, he will pay a premium of 4s. 2d. per cent. Of that 4s. 2d. per cent., 1s. per cent. is Stamp Duty—nearly 33⅓ per cent. of that premium. Without the duty, the rate would be 3s. 2d. per cent. Therefore, competing with the Continent, the British insurer has a loaded rate by 1s. per cent. Stamp Duty, thereby having to reduce the actual net premium charged for the risk to be covered in order to obtain the business. That is the very had situation that has developed. It means that a skilful overseas insurance company can beat us, in this market, even though we have prided ourselves for 200 or 300 years on being the world's greatest insurance experts.

2023
Let us take the case of a salesman—a young man going overseas to sell motor cars, and so help our export trade. If he has a wife and children, his company will have to take out short-term life insurance cover for him. He may be killed abroad. The policy may have been for £10,000 for one month. The premium would have been 1s. per cent., and the stamp duty would have been 6d. flat—just a 6d. stamp bought from the Post Office, because that cover would be classed as an accident policy. If, on the other hand, he goes abroad and dies in his bed from natural causes and the cover which he had taken out had been a short-term life policy of the type I have been describing, the premium which he would have paid would have been 2s. 9d. per cent. of which 1s. per cent. would have been for the stamp.
So we reach the position that on a £10,000 policy, if he is killed the stamp for the cover he is carrying would be 6d. in full: while if he dies in his bed, with a cover of the type I have described, the stamp would have cost £5. The difference in the risk carried by the underwriters is the difference between the net 1s. 9d. and 1s., that is, the difference between the 1s. per cent. for the one policy and the net 1s. 9d. per cent. for the other, so that to the underwriter 9d. represents the difference in risk between the insured dying in his bed and being killed in an accident, while to the Revenue the difference is between 6d. and £5. I am sure that the Chief Secretary will agree with me that this is something very wrong and damaging to the insurance market.
Let me, finally, quote another type of case, a combined type of policy which is being written at Lloyd's and which is an important type of cover has two sections, one section for life cover, for death from any cause, a period of one month, for instance, which for a man aged 30 would have a premium of 2s. 9d. per cent., of which 1s. per cent. is the stamp; the other section is cover for death from accident and which, as it would be an accident policy for one month, would have a rate of 3s. taking only a 6d. policy stamp and not the 1s. per cent. stamp.
Those are typical anomalies. I could go on for hours giving other similar ex-
2024
amples which, to put it vulgarly, are making a monkey out of the Stamp Act. I hope that it will be possible for the Chief Secretary to be very generous in a purely non-political sense and accept my Clause. All the Clause does is to bring short-term life assurance on to the same level for Stamp Duty, making the duty 6d. as with an ordinary accident policy. This gesture would have great benefit for the whole life market in this country and would certainly encourage the export drive and make it easier to attract foreign business. There would be another advantage in that it is important to help salesmen going overseas selling goods for us to be able to bring down their overheads and the cost of their insurance cover.
The Clause is widely welcomed throughout the insurance world, and I hope that the Chief Secretary will be able to accept it.
7.15 p.m.
Mr. Diamond: The hon. Member for Richmond, Surrey (Mr. A. Royle) said that he would not allow any emotional content to affect the logic of his argument. I do not think that his argument has suffered on that account. He has put forward a perfectly valid case which, on the face of it, would seem to show that not everything we would like to do has been done to make one part of our economy as fully competitive as we would like it to be. I would, therefore, like to examine the matter and to discuss it, as the hon. Gentleman did, with a completely non-party approach to see whether the difficulties are insuperable or can be overcome.
I begin by demonstrating that there is no partisan approach. I remind the Committee of previous exchanges on this topic. On 20th December, 1962, the hon. Member for Worcester (Mr. Peter Walker) asked the Chancellor of the Exchequer to consider the matter and the then Chief Secretary answered:
"I have noted my hon. Friend's suggestion."—[OFFICIAL REPORT, 20th December, 1962; Vol. 669, c. 211.]
However, when it came to 19th January, 1965, and we had had a change of Government, the same hon. Gentleman put the same Question and the Chief Secretary answered:
"I have noted the hon. Gentleman's suggestion."—[OFFICIAL REPORT, 19th January, 1965; Vol. 705, c. 15.]

2025
That demonstrates that both Governments have adopted the same "carefully noting" attitude on this matter.
The problem derives from the fact that foreign countries generally charge stamp duty on insurance policies by reference to the premium, whereas we charge by reference to the sum assured. When there is this class of insurance, when the rate is very small—and I gather that there can be a rate for one month short-term life policies as low as 3s. per cent., 3s. per £100, there is a duty of 1s. in relation to the 3s., which, admittedly, makes the stamp duty high, 25 per cent. of the total, or 33⅓ per cent. of the premium charged. Normally, one would not want a Stamp Duty of 33⅓ per cent. If a person selling a house had to pay Stamp Duty of 33⅓ per cent., some hon. Members would be writing some letters to some Chancellors of the Exchequer about it.
I recognise the problem, but there are many difficulties about complying with the hon. Gentleman's suggestion. First, it would be entirely unsuitable for the standard form of Lloyd's policy, because that provides for extension without limit. The suggestion is that there should be a special category of short-term policy
"in those cases where the period in which the specified contingency is to happen does not exceed five years."
However, if there is a policy which provides for extension without limit, even though the first date may be within the five years, the duty in effect would be avoided—
Mr. Peter Walker: The right hon. Gentleman will find that Lloyd's itself is unable to write life insurance for a period of more than five years.
Mr. Diamond: That is something to be considered. If that is the case, it is surprising that Lloyd's lawyers, who are as competent as may be, none more competent, would find it necessary to write a policy providing for an extension without limit.
Mr. Walker: Under its general charter, Lloyd's is unable to do life assurance. It can do only temporary life assurance. The definition which has been accepted is five years. Within that five years, within the policy, Lloyd's allow extension without limit.
Mr. Diamond: I understand what the hon. Gentleman is saying, and I am sure that he is accurate, as usual, but it is not inconceivable that the two things are not inconsistent and I would, therefore, like to look into it.
It is not inconceivable that it is possible to write a policy which is not for a period of longer than five years, but at the end of the five years to have another period, also not longer than five years, still not going outside the undertaking not to underwrite insurance for a period of longer than five years because the extension might be held to be not different from a new policy. I am saying only that that is something to be considered. It is one of the problems. I am advised that there is the possibility of avoidance by the issue of separate policies each for a specified period, but which, together, would give cover for a longer period. This is an obvious way of avoidance and so far no method has been discovered of preventing it.
There would be a very serious discrepancy between a duty of 6d. on a policy for the full specified period and the duty on a policy for a slightly longer period at the rate of 1s. per cent. One goes in this case from what would be a very small Stamp Duty to a very high Stamp Duty as one goes from four years, eleven months to five years, one month. The way to deal with this is to have some kind of tapering provision which would make it extremely difficult and hardly worth while. These are some of the difficulties which have been in the minds of Governments.
There is something more constructive I can say in drawing attention to the extra statutory concessions relating to group life policies. These extra statutory concessions are published so that every taxpayer knows about them and knows what the procedure is. This one is published in Appendix 9 to the 103rd Annual Report of the Commissioners of Inland Revenue, Cmnd. 1258. It applies where a company insures a group consisting of its directors and executives when abroad on business. This is one kind of business which is done and it is relevant to the question which is under consideration in this Clause. It does that provided that the names of the persons covered are not endorsed on the policy.

2027
The effect of that is that the duty is charged on the total risk in one sum instead of separately on the individual amounts and irrespective of changes in the persons covered so that one can get proportionately a much lower Stamp Duty by covering a large group of persons without identifying the person too closely. However, the cover is still valid and adequate.
That takes care of a good deal of the difficulty, but not all of the difficulty. I have been asked about the cost and I am advised it would be quite negligible. All I can suggest is that the Committee should allow me to look carefully into these difficulties. I do not think that it will be possible for me, with the best will in the world, to undertake to bring anything back on report. There is not the time. It is not an enormous difficulty, but it is one which has been with us some time. The hon. Gentleman the Member for Worcester (Mr. Peter Walker) asks me to look at this and see whether we can overcome these difficulties. If it could be dealt with on extra-statutory concessions then it is something which could be conceded between now and next year's Finance Bill. If it is something which would have to wait for a Clause in a Bill then it would have to wait until next year's Bill at least.
I cannot say that we would find the answer, because I have not been able to find the answer hitherto; nor has my predecessor. The Government are most anxious that we should be fully competitive and that we should not be denied our full competitive power because of administrative inconvenience in one way or another. It is far better that we should establish and maintain our ascendancy as underwriters, both in this country and the world as a whole, and I would suggest to the Committee they should allow me to look at it in this sympathetic way.
Mr. Peter Walker: The point that the Chief Secretary has missed is that whereas we would not argue against the imposition of Stamp Duty based upon the sum insured, in what is normally known to be life assurance, we do argue on the subject of temporary life assurance because it is much nearer to being an accident policy in which a Stamp Duty is
2028
imposed which is not linked with the sum assured. There is a fiat Stamp Duty upon the existence of a policy and the arguments contained within this new Clause deal with the temporary life assurance which is a fairly new feature of the insurance industry.
In previous years people who travelled abroad or decided to obtain, for a limited period, an insurance against death took out an accident policy because they considered it the right form of cover against the aeroplane crashing or some incident happening while they were abroad. In recent years people have recognised that while travelling abroad, and for other purposes, full life cover is a much better form of cover and this has become accepted in the national practice.
The tragedy of the present imposition of Stamp Duty is that this is the one aspect of the international insurance market, and it is an expanding one, from which London is completely cut out. It is quite impossible for London to compete on a cover where the rate of premium is 2s. per cent. and the Stamp Duty is 1s. per cent. so that there is a 50 per cent. taxation upon the premium. In persisting with this form of Stamp Duty, even for another year, in this developing market, the Government are ensuring that the British insurance industry shall not be able to participate internationally in this form of assurance.
I assure the Chief Secretary that this is a fast developing form of assurance and that he should recognise that if London is unable to go in for this form of contract for a further 12 months various re-insurers and insurers abroad will become accustomed to dealing with this form of insurance either on the Continent or in the United States. During that period they will establish further connections and links with these two other developing markets.
Even if, after a year, the Government decided that it would have been wise to have done this a great deal of goodwill would have been lost. The Chief Secretary mentioned the Lloyd's policy being drawn to have its extension Clause. I think if he looks into my intervention on this he will find the point is covered. The Chief Secretary also mentioned the possibility of avoidance by a series of policies. I must point out that if one has a life policy for a longer period the

2029
importance of the Stamp Duty is minute. On the normal life contract the payment of the Stamp Duty is of no importance at all. If one is taking out a £10,000 policy one pays at the beginning of that policy £5 Stamp Duty. Compared with the total of the benefits at the end of the period it is of minute importance and people are not going to go into complicated procedures to avoid it.
I can therefore assure the Chief Secretary that if he re-examines this point he will find that no one will be so concerned about the relatively small proportion of the premium and that the Stamp Duty for a 10 or 15 years' policy is such that people will not go into various methods of evasion. That is of little importance. It is of importance where the policy covers travel for one, two, or three weeks, or a month or perhaps even six months.
7.30 p.m.
This dismisses the right hon. Gentleman's fourth argument, that if the Clause were accepted the position would be that at four years and eleven months there would be a low Stamp Duty, and that at five years and one month there would be a high one. Even at five years and one month the Stamp Duty, compared with the five-year policy, becomes of little or less importance, and I assure the right hon. Gentleman that the insurance industry and those concerned would not be anxious to continue the existing level of Stamp Duty on policies for more than five years.
This period, as opposed to any other limit, was chosen because the one sphere where this is likely to develop internationally is the sphere of the Lloyd's market and the surrounding companies, and this would enable them, with their considerable international collections, to bring a considerable volume of premium income to this country.
The Government have said, and quite rightly, that their endeavour is to encourage exports. They have said that they will do all that is possible within our international agreements to encourage them. This is a form of assistance which they could give to exports. It will cost nothing, but it will bring premiums into this country. In addition, it will save premiums from going out of the country. Thus, the Government would save, not only by increasing exports, but by cutting down outgoings from, for example, international companies with
2030
their head offices in London, who, quite rightly, arrange their short-term temporary life assurance abroad because it is so much more reasonable in cost there than it is in this country because of this ridiculous imposition of the Stamp Duty.
The right hon. Gentleman has given us an assurance that he will consider this during the next 12 months, and I would not press the matter to a Division were it not for the fact that, knowing the technical aspects of the problem—as the right hon. Gentleman knows I am interested in Lloyd's broking, though my firm is unconnected with this form of assurance—I consider that it is in the interests of the country to do something about it to enable us to obtain the international premiums that are available. For this reason, I urge my hon. Friends to divide the Committee.
Mr. Diamond: Can the hon. Gentleman go further and explain what happened after 20th December, 1962, when he asked the then Chief Secretary about this important matter which he said would brook of no delay?
Mr. Walker: I tabled a new Clause to the Finance Bill of the following year, but, alas, it was not selected, so it was not possible to debate it. As the right hon. Gentleman knows, there are many items within our Stamp Duty and taxation systems in respect of which one finds anomalies such as this. I make no complaint that the Chancellor did not include this in the Bill. There are many other anomalies which could have been dealt with, but have not been. On this occasion, my hon. Friend has tabled this Clause and has been fortunate enough to have it selected for debate. We have discussed it, and taken up the time of the Committee in doing so.
Having taken up the Committee's time, I think that the Committee should come to a decision on it.
Mr. William Yates: I would have thought that the right hon. Gentleman would by now have come to the conclusion that this matter needed to be reviewed before the Report stage. Like my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle), I have an interest in this in that I am a Lloyd's underwriter. I believe that in the past I have had the honour of seeing the Chief

2031
Secretary engaged in the insurance world.
I would have thought that the Government would have been searching for ways in which to see that the premiums placed on the international market in London were increased. That being so, I would have thought that if this was a matter which required legislation, the Chief Secretary would say, "This is a matter to which the Government must give urgent consideration at once, because we do not see why the London market in this growing business should be prejudiced, while Paris, New York, Munich, and other centres are taking the sort of business which we, and the City, know how to run".
It astounds me that the Chief Secretary feels that he cannot give us an answer now. I realise that the Government have had a long and difficult Session, and a very tiring one. Perhaps they thought that this was one of the new Clauses which was interesting and rather technical, but nothing more. However technical it is, if it means that more insurance premiums will be paid into London to help the balance of payments position, it is the Government's duty to bring forward legislation to deal with the matter and not merely undertake to consider it during the next two or three months. If the matter were dealt with in the Bill, the Government would be able to say that they had done their duty.
If someone is competing in the international insurance markets of the world, his position should not be prejudiced by the imposition of some old-fashioned stamp tax which the right hon. Gentleman has admitted is of little value to the Treasury. I am astounded that at this stage of the Bill we have not been given a better answer than we have had from the right hon. Gentleman. If insurance means helping the balance of payments by bringing more premiums into London, and by providing more insurance for the London market, whether we have an interest in it or not.
I think that it is right to divide the Committee on the direct and clear issue of whether we intend to expand the life insurance markets in London, or to prejudice our position.
Mr. Diamond: I do not wish to deny the Committee the opportunity of dividing as a matter of principle if hon. Gentlemen wish to do so. It goes without saying that, whether they divide or not, I shall look into this to see how quickly it can be dealt with.
When sitting on the benches opposite, which I wore out for a long time, it is one's duty to put the case with one's best foot forward, but there are more technicalities in this matter than were brought to light during the debate. I did not undertake to do anything before Report, because of the complexities of this matter. I did not think that it would be possible to do anything about it in view of the variety of things which remain to be done before Report.
I realise that this is a matter which ought to be looked at with the full understanding that I have indicated. If I can do anything before Report, I shall, of course, do so. I shall look at it as soon as I can. I do not want to deceive the Committee into thinking that there is nothing left to do, and that we are all going to play golf between now and that stage of the Bill, because that would not be absolutely accurate. I do not want to affect the decision to divide the Committee. I shall look at the matter again, and if anything can be done before Report it will be done, but if it cannot be done by then, it will be done as soon as may be.
Mr. Peter Walker: I accept the right hon. Gentleman's reason for being hesitant about committing himself. I recognise that he was provided with a brief on this subject in which there appeared to be a series of technical arguments. As I said earlier, I would not urge my hon. Friend to press this matter to a Division were it not for the fact that I was convinced that the right hon. Gentleman's argument does not stand up to examination.
I recognise the urgency of this matter in terms of exports. Both sides of the Committee recognise that, because of the balance of payments situation, there is a need to increase exports, and to stress our feelings on this matter, I ask my hon. Friends to divide the Committee.
Mr. William Yates Mr. William Yates rose—
Hon. Members: Divide.
Mr. William Yates: I agree that the Committee should divide on this matter. I did not understand that the right hon. Gentleman had undertaken to examine this and report back on Report, with or without recommendations. I did not quite understand that he would do that. Can he make that clear?
Mr. Diamond: I shall do what every Minister speaking from this Box will do—look into the matter sympathetically and carefully and undertake precisely nothing.
Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 108, Noes 125.

Division No. 204.]

AYES

[7.40 p.m.

Alison, Michael (Barkston Ash)

Grimond, Rt. Hn. J.

Munro-Lucas-Tooth, Sir Hugh

Allan, Robert (Paddington, S.)

Gurden, Harold

Onslow, Cranley

Allason, James (Hemel Hempstead)

Hall, John (Wycombe)

Osborne, Sir Cyril (Louth)

Anstruther-Gray, Rt. Hn. Sir W.

Hall-Davis, A. G. F.

Page, R. Graham (Crosby)

Baker, W. H. K.

Hamilton, M. (Salisbury)

Peel, John

Batsford, Brian

Harris, Frederic (Croydon, N.W.)

Prior, J. M. L.

Beamish, Col. Sir Tufton

Harris, Reader (Heston)

Pym, Francis

Black, Sir Cyril

Harvey, John (Walthamstow, E.)

Redmayne, Rt. Hn. Sir Martin

Blaker, Peter

Hastings, Stephen

Rees-Davies, W. R.

Boyd-Carpenter, Rt. Hn. J.

Hawkins, Paul

Royle, Anthony

Boyle, Rt. Hn. Sir Edward

Hay, John

Sharples, Richard

Braine, Bernard

Heath, Rt. Hn. Edward

Shepherd, William

Brinton, Sir Tatton

Higgins, Terence L.

Sinclair, Sir George

Brooke, Rt. Hn. Henry

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

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

Burden, F. A.

Hogg, Rt. Hn. Quintin

Speir, Sir Rupert

Buxton, Ronald

Hooson, H. E.

Steel, David (Roxburgh)

Carlisle, Mark

Hordern, Peter

Studholme, Sir Henry

Cooper-Key, Sir Neill

Hornsby-Smith, Rt. Hn. Dame P.

Summers, Sir Spencer

Crawley, Aidan

Hunt, John (Bromley)

Taylor, Sir Charles (Eastbourne)

Crosthwaite-Eyre, Col. Sir Oliver

Iremonger, T. L.

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

Currie, G. B. H.

Jenkin, Patrick (Woodford)

Thompson, Sir Richard (Croydon, S.)

d'Avigdor-Goldsmid, Sir Henry

Johnston, Russell (Inverness)

van Straubenzee, W. R.

Deedes, Rt. Hn. W. F.

Kerr, Sir Hamilton (Cambridge)

Vickers, Dame Joan

Doughty, Charles

Kershaw, Anthony

Walker-Smith, Rt. Hn. Sir Derek

Ede, Sir John

Kimball, Marcus

Walters, Dennis

Elliot, Capt. Walter (Carshalton)

Lagden, Godfrey

Ward, Dame Irene

Emery, Peter

Lubbock, Eric

Weatherill, Bernard

Errington, Sir Eric

MacArthur, Ian

Whitelaw, William

Fletcher-Cooke, Charles (Darwen)

Maclean, Sir Fitzroy

Williams, Sir Rolf Dudley (Exeter)

Fraser, Ian (Plymouth, Sutton)

Mathew, Robert

Wills, Sir Gerald (Bridgwater)

Gardner, Edward

Mawby, Ray

Wilson, Geoffrey (Truro)

Glover, Sir Douglas

Maxwell-Hyslop, R. J.

Wylie, N. R.

Goodhew, Victor

Meyer, Sir Anthony

Yates, William (The Wrekin)

Grant, Anthony

Mills, Peter (Torrington)

Younger, Hn. George

Gresham Cooke, R.

Mills, Stratton (Belfast, N.)

Griffiths, Eldon (Bury St. Edmunds)

More, Jasper

TELLERS FOR THE NOES:

Griffiths, Peter (Smethwick)

Mott-Radclyffe, Sir Charles

Mr. R. W. Elliott and

Mr. G. Johnson Smith.

NOES

Albu, Austen

Edelman, Maurice

Hughes, Emrys (S. Ayrshire)

Allen, Scholefield (Crewe)

English, Michael

Hughes, Hector (Aberdeen, N.)

Atkinson, Norman

Evans, Albert (Islington, S.W.)

Hunter, A. E. (Feltham)

Bacon, Miss Alice

Evans, Ioan (Birmingham, Yardley)

Irving, Sydney (Dartford)

Bishop, E. S.

Fitch, Alan (Wigan)

Janner, Sir Barnett

Boston, T. G.

Fletcher, Sir Eric (Islington, E.)

Jenkins, Hugh (Putney)

Bradley, Tom

Fletcher, Raymond (Ilkeston)

Jenkins, Rt. Hn. Roy (Stetchford)

Bray, Dr. Jeremy

Floud, Bernard

Johnson, Carol (Lewisham, S.)

Brown, Hugh D. (Glasgow, Provan)

Foley, Maurice

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

Brown, R. W. (Shoreditch & Fbury)

Freeson, Reginald

Jones, J. Idwal (Wrexham)

Buchanan, Richard

Garrow, A.

Jones, T. W. (Merioneth)

Butler, Herbert (Hackney, C.)

Grey, Charles

Kelley, Richard

Butler, Mrs. Joyce (Wood Green)

Griffiths, Will (M'chester, Exchange)

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

Callaghan, Rt. Hn. James

Gunter, Rt. Hn. R. J.

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

Carter-Jones, Lewis

Hamling, William (Woolwich, W.)

Lawson, George

Chapman, Donald

Hannan, William

Ledger, Ron

Cousins, Rt. Hn. Frank

Harper, Joseph

Lee, Miss Jennie (Cannock)

Crawshaw, Richard

Hazell, Bert

Lewis, Arthur (West Ham, N.)

Cronin, John

Heffer, Eric S.

Loughlin, Charles

Davies, Harold (Leek)

Henderson, Rt. Hn. Arthur

McCann, J.

Delargy, Hugh

Holman, Percy

MacDermot, Niall

Dell, Edmund

Horner, John

McInnes, James

Diamond, Rt. Hn. John

Howarth, Harry (Wellingborough)

McLeavy, Frank

Dodds, Norman

Howarth, Robert L. (Bolton, E.)

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

Driberg, Tom

Howell, Denis (Small Heath)

Mason, Roy

Dunnett, Jack

Howie, W.

Molloy, William

Morris, Alfred (Wythenshawe)

Rees, Merlyn

Swain, Thomas

Morris, Charles (Openshaw)

Reynolds, G. W.

Thomas, George (Cardiff, W.)

Murray, Albert

Rhodes, Geoffrey

Tomney, Frank

Newens, Stan

Roberts, Goronwy (Caernarvon)

Tuck, Raphael

Noel-Baker, Francis (Swindon)

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

Urwin, T. W.

Norwood, Christopher

Rogers, George (Kensington, N.)

Varley, Eric G.

Ogden, Eric

Rose, Paul B.

Wallace, George

O'Malley, Brian

Shore, Peter (Stepney)

Warbey, William

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

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

Weitzman, David

Orbach, Maurice

Short, Mrs. Renée (W'hampton,N.E.)

Wells, William (Walsall, N.)

Page, Derek (King's Lynn)

Silkin, John (Deptford)

Whitlock, William

Parker, John

Silkin, S. C. (Camberwell, Dulwich)

Wilson, William (Coventry, S.)

Parkin, B. T.

Silverman, Julius (Aston)

Zilliacus, K.

Pavitt, Laurence

Silverman, Sydney (Nelson)

Popplewell, Ernest

Skeffington, Arthur

TELLERS FOR THE NOES:

Prentice, R. E.

Slater, Mrs. Harriet (Stoke, N.)

Mr. Ifor Dayies and Mr. Gourlay.

Pursey, Cmdr. Harry

Snow, Julian

New Clause.—(CLAIMANT DEPENDING ON SERVICES OF DAUGHTER.)
The amount of £40 specified for the purposes of section 217 of the Income Tax Act 1952, as amended by section 14 (4) of the Finance Act 1953, shall be increased to £100.—[Mr. Peter Walker.]
Brought up, and read the First time.
Motion made, and Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 108, Noes 124.

Division No. 205.]

AYES

[7.48 p.m.

Alison, Michael (Barkston Ash)

Grimond, Rt. Hn. J.

Munro-Lucas-Tooth, Sir Hugh

Allan, Robert (Paddington, S.)

Gurden, Harold

Onslow, Cranley

Allason, James (Hemel Hempstead)

Hall, John (Wycombe)

Osborne, Sir Cyril (Louth)

Anstruther-Gray, Rt. Hn. Sir W.

Hall-Davies, A. G. F.

Page, R. Graham (Crosby)

Baker, W. H. K.

Hamilton, Marquess of (Fermanagh)

Peel, John

Batsford, Brian

Harris, Frederic (Croydon, N.W.)

Prior, J. M. L.

Beamish, Col. Sir Tufton

Harris, Reader (Heston)

Pym, Francis

Black, Sir Cyril

Harvey, John (Walthamstow, E.)

Redmayne, Rt. Hn. Sir Martin

Blaker, Peter

Hastings, Stephen

Rees-Davies, W. R.

Boyd-Carpenter, Rt. Hn. J.

Hawkins, Paul

Royle, Anthony

Boyle, Rt. Hn. Sir Edward

Hay, John

Sharples, Richard

Braine, Bernard

Heath, Rt. Hn. Edward

Shepherd, William

Brinton, Sir Tatton

Higgins, Terence L.

Sinclair, Sir George

Brooke, Rt. Hn. Henry

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

Smith, Dudley (Br'ntfd & Chiswick)

Burden, F. A.

Hogg, Rt. Hn. Quintin

Speir, Sir Rupert

Buxton, Ronald

Hooson, H. E.

Steel, David (Roxburgh)

Carlisle, Mark

Hordern, Peter

Studholme, Sir Henry

Craddock, Sir Beresford (Spelthorne)

Hornsby-Smith, Rt. Hn. Dame P.

Summers, Sir Spencer

Crawley, Aidan

Hunt, John (Bromley)

Taylor, Sir Charles (Eastbourne)

Crosthwaite-Eyre, Col. Sir Oliver

Iremonger, T. L.

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

Currie, G. B. H.

Jenkin, Patrick (Woodford)

Thompson, Sir Richard (Croydon,S.)

d'Avigdor-Goldsmid, Sir Henry

Johnson Smith, G. (East Grinstead)

van Straubenzee, W. R.

Deedes, Rt. Hn. W. F.

Johnston, Russell (Inverness)

Vickers, Dame Joan

Doughty, Charles

Kerr, Sir Hamilton (Cambridge)

Walker-Smith, Rt. Hn. Sir Derek

Eden, Sir John

Kershaw, Anthony

Walters, Dennis

Elliot, Capt. Walter (Carshalton)

Kimball, Marcus

Ward, Dame Irene

Emery, Peter

Lagden, Godfrey

Weatherill, Bernard

Errington, Sir Eric

Lubbock, Eric

Whitelaw, William

Fletcher-Cooke, Charles (Darwen)

Maclean, Sir Fitzroy

Williams, Sir Rolf Dudley (Exeter)

Fraser, Ian (Plymouth, Sutton)

Mathew, Robert

Wills, Sir Gerald (Bridgwater)

Gardner, Edward

Mawby, Ray

Wilson, Geoffrey (Truro)

Glover, Sir Douglas

Maxwell-Hyslop, R. J.

Wylie, N. R.

Goodhew, Victor

Meyer, Sir Anthony

Yates, William (The Wrekin)

Grant, Anthony

Mills, Peter (Torrington)

Younger, Hn. George

Gresham Cooke, R.

Mills, Stratton (Belfast, N.)

Griffiths, Eldon (Bury St. Edmunds)

More, Jasper

TELLERS FOR THE NOES:

Griffiths, Peter (Smethwick)

Mott-Radclyffe, Sir Charles

Mr. MacArthur and

Mr. R. W. Elliott.

NOES

Albu, Austen

Butler, Herbert (Hackney, C.)

Dell, Edmund

Allen, Scholefield (Crewe)

Butler, Mrs. Joyce (Wood Green)

Dodds, Norman

Atkinson, Norman

Callaghan, Rt. Hn. James

Driberg, Tom

Bacon, Miss Alice

Carter-Jones, Lewis

Dunnett, Jack

Bishop, E. S.

Chapman, Donald

Edelman, Maurice

Boston, T. G.

Cousins, Rt. Hn. Frank

English, Michael

Bradley, Tom

Crawshaw, Richard

Evans, Albert (Islington, S.W.)

Bray, Dr. Jeremy

Cronin, John

Evans, Ioan (Birmingham, Yardley)

Brown, Hugh D. (Glasgow, Provan)

Davies, Harold (Leek)

Fletcher, Sir Eric (Islington, E.)

Brown, R. W. (Shoreditch & Fbury)

Davies, Ifor (Gower)

Fletcher, Raymond (Ilkeston)

Buchanan, Richard

Delargy, Hugh

Floud, Bernard

Foley, Maurice

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

Reynolds, G. W.

Freeson, Reginald

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

Rhodes, Geoffrey

Garrow, A.

Ledger, Ron

Roberts, Goronwy (Caernarvon)

Gourlay, Harry

Lee, Miss Jennie (Cannock)

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

Grey, Charles

Lewis, Arthur (West Ham, N.)

Rogers, George (Kensington, N.)

Griffiths, Will (M'chester, Exchange)

Loughlin, Charles

Rose, Paul B.

Gunter, Rt. Hn. R. J.

McCann, J.

Shore, Peter (Stepney)

Hamling, William (Woolwich, W.)

MacDermot, Niall

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

Hannan, William

McInnes, James

Short, Mrs. Renée (W'hampton.N.E.)

Harper, Joseph

McLeavy, Frank

Silkin, John (Deptford)

Hazell, Bert

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

Silkin, S. C. (Camberwell, Dulwich)

Heffer, Eric S.

Mason, Roy

Silverman, Julius (Aston)

Henderson, Rt. Hn. Arthur

Molloy, William

Silverman, Sydney (Nelson)

Holman, Percy

Morris, Alfred (Wythenshawe)

Skeffington, Arthur

Horner, John

Morris, Charles (Openshaw)

Slater, Mrs. Harriet (Stoke, N.)

Howarth, Harry (Wellingborough)

Murray, Albert

Snow, Julian

Howarth, Robert L. (Bolton, E.)

Newens, Stan

Swain, Thomas

Howell, Denis (Small Heath)

Noel-Baker, Francis (Swindon)

Thomas, George (Cardiff, W.)

Howie, W.

Norwood, Christopher

Tomney, Frank

Hughes, Emrys (S. Ayrshire)

Ogden, Eric

Tuck, Raphael

Hughes, Hector (Aberdeen, N.)

O'Malley, Brian

Urwin, T. W.

Hunter, A. E. (Feltham)

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

Varley, Eric G.

Irving, Sydney (Dartford)

Orbach, Maurice

Wallace, George

Janner, Sir Barnett

Page, Derek (King's Lynn)

Warbey, William

Jenkins, Hugh (Putney)

Parker, John

Weitzman, David

Jenkins, Rt. Hn. J. Roy (Stechford)

Parkin, B. T.

Wells, William (Walsall, N.)

Johnson, Carol (Lewisham, S.)

Pavitt, Laurence

Whitlock, William

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

Popplewell, Ernest

Wilson, William (Coventry, S.)

Jones, J. Idwal (Wrexham)

Prentice, R. E.

Zilliacus, K.

Jones, T. W (Merioneth)

Pursey, Cmdr. Harry

Kelley, Richard

Rees, Merlyn

TELLERS FOR THE NOES:

Mr. Lawson and Mr. Fitch.

New Clause.—(DISPOSAL OF ASSETS IN HUSBANDRY OR FORESTRY.)
Where a person carrying on a trade, or an enterprise in husbandry or forestry, disposes of, or of his interest in, assets and acquires other assets, or an interest in other assets, in circumstances to which section 31 of this Act applies, then if part only of the consideration obtained for the disposal is applied in acquiring assets, or an interest in assets, in Class 1 in subsection (6) of section 31 of this Act, and part is retained and applied within five years from the date of the acquisition, or an unconditional contract for the acquisition, of the new assets in carrying out additions or improvements to the new asset, which additions or improvements would qualify for allowances under Parts X or XI of the Income Tax Act, 1952, or under paragraph 16 of Schedule 4 of the Finance Act, 1963, the part so applied in carrying out those additions or improvements shall be deemed for the purposes of section 31 of this Act to be applied in acquiring an asset within the said Clause 1.—[Sir M. Redmayne.]
Brought up, and read the First time.
Sir Martin Redmayne: I beg to move, That the Clause be read a Second time.
I hope that I can explain this Clause briefly. It is fortunate for the Opposition and unfortunate for the Government that this long Committee stage has given us the chance to make some elaborations or modifications of matters which we have previously discussed. I hope that I would not be out of order in saying that this Clause stems from the Country Landowners' Association, or in paying my
2038
tribute to the work done by that body both in direct contact with the Treasury and the Inland Revenue and also, of course, in co-operation with the Opposition, in helping to clear some of the fog which hid the meaning and effect of the Bill when it was first published and which is not very much cleared now.
In our discussions on Clause 31, on the replacement of business assets, the Government accepted the need for some elasticity in the time allowed for the replacement of one asset by another. This was left to the discretion of the Inland Revenue and the Government also agreed to look again at considerations arising from the sale or purchase of goodwill. For that we look for something on Report.
8.0 p.m.
Equally—and this is relevant to the new Clause, although in an opposite sense—it was made clear when we discussed Clause 31 that the value of the asset acquired need not precisely match the value of the asset sold, with particular reference to the case in which the asset acquired—a farm, an estate or whatever it might be—might be in some respects larger than that required by the purchaser or contain elements unnecessary to the purchaser which must, therefore, be sold off at a subsequent sale.
This is a related but, in a sense, opposite proposition in that I want to

2039
discuss the situation in which a business asset in good condition is disposed of, voluntarily or compulsorily, and the sum realised is reinvested in a similar business, perhaps of equal size, but in less good condition and which, therefore, would not itself absorb the full sum realised from the sale of the asset and would not become an asset of equal value, which is the real sense of the new Clause, until a considerable sum—that is, a part of the proceeds of the disposal—had been invested in the improvement of it to make it an asset of equivalent value.
Perhaps I can best explain the position this way. Farm A is sold in tip-top condition, with first-class modern buildings and with land well drained. With the proceeds, Farm B is bought—a good farm but perhaps in poor condition although capable of being fully a match for farm A if the balance of the proceeds is spent on it, perhaps over a period of years. This is where it is related to the other point which the Government accepted when we discussed Clause 31.
At that time the Government accepted that the Inland Revenue must have some discretion as to the time that elapses between the sale of one asset and the purchase of another. I therefore ask the Government sympathetically to consider that the purchase should not be regarded as complete in itself if it can be shown that there is need for some investment of the proceeds for the improvement of the new asset before it can be said, in the terms of Clause 31, to be a complete replacement of the asset.
The new Clause seeks to define the improvements or expenditures, following Parts X and XI of the Income Tax Act, 1952, which deal with initial and annual allowances and with expenditure on scientific research. The relevant words in Section 314(1) of that Act are:
".. incurs any capital expenditure on the construction of farmhouses, farm or forestry buildings, cottages, fences or other works …"
If it were possible that discretion could be given or it could be written into the Bill that account should be taken of work of that type to bring the asset acquired up to the equivalent of the asset disposed of that would be of great assistance to men who find themselves in this situation.
Part XI of that Act includes a reference to scientific research, and has a par-
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ticular reference to sums paid to the Agricultural Research Council. That may be taking the matter wide, although it is a factor. Equally, there is a reference to Schedule 4 of the 1963 Act, which refers to protection against the overflowing of the sea or tidal rivers, although that would seem to take us even wider. However, the Financial Secretary will understand that, if this matter is to be considered at all, one must consider the various factors which might affect the improvement of a farm or estate under certain conditions so that there can be an equivalent exchange of assets.
As I say, possibly they could be defined more simply. Although I have little experience of these matters of definition, it seems that if the Government are willing for the point to be covered within the discretion of the Inland Revenue, when these general definitions would be of use in deciding what expenditures should be allowed under this provision, as amended by the new Clause or under the undertaking which I hope the Government will give. Without going further into the matter, although some of my hon. Friends may wish to comment on it, I hope that, since this is a sensible and logical elaboration on the point already accepted by the Government, they will be generous on this issue.
Sir Charles Mott-Radclyffe: As my right hon. Friend the Member for Rushcliffe (Sir M. Redmayne) clearly pointed out, the object of the Clause is to clarify the great deal of uncertainty which now exists about the application and interpretation of Clause 31 in the transfer of business assets.
I am neither a lawyer nor a Parliamentary draftsman, but unless I have misunderstood the position—and the Financial Secretary will put me right if I have—as the Bill is drafted Clause 31 states, in effect, that liability to tax is deferred only so long as the assets from the sale of the old property are reinvested in a corresponding asset of exactly the same price within 12 months. This may be all right in theory, but—
Mr. MacDermot: Perhaps we should be on common ground on this point. It need not be of exactly the same price. It could be a greater price and, pro tanto, one could get the benefit of the transfer.
Sir C. Mott-Radclyffe: It may be greater, of course, but it cannot be a lesser price.
Mr. MacDermot: No.
Sir C. Mott-Radclyffe: That is the point that we are endeavouring to clear up. This presupposes that the sale and purchase of agricultural property, whether a farm or woodland commercially managed, is a penny-in-the-slot machine process. It is not a question of selling for £X,000 one week and buying for £X,000 within a year, so that the two nicely balance up.
Mr. MacDermot: Or X-plus.
Sir C. Mott-Radclyffe: As the hon. and learned Gentleman knows, the realities of life are very much less simple. Consider what happens. First, it is difficult indeed—and that is an understatement—to find a farm, above all with vacant possession, to purchase within 12 months, no matter what the would-be purchaser might be prepared to pay. Secondly, it is highly unlikely that the vendor of the old farm and the would-be purchaser of the new one would be able to find a farm of the right size, type, character and location to suit all his requirements, let alone within 12 months.
Thirdly, he may decide that he wants to buy a different type of holding. He may have got fed up with all the problems of milk production—particularly after the last Price Review—and wants to get out of milk altogether, sell his dairy herd and his farm and buy an arable farm.
Suppose he finds one he likes and wants to buy it. It may require substantial improvements or repairs. He might want to extend a grain dryer, concrete the yards, and so on. It is ridiculous to suggest that he should not be able to retain a portion of the assets he realised for the sale of the old farm so that he can carry out those improvements without having to pay tax on the difference.
Suppose that a farm is sold for £50,000 and the seller finds a farm he likes for £40,000. Unless I have misunderstood the position, the vendor and the would-be purchaser, being one and the same man, would be liable for tax on the £10,000 difference, although he
2042
might require, even in the interests of good husbandry, to spend at least £10,000, perhaps spread over a number of years, on improving the farm, a farm of a different type and which he wishes to bring up to date. This is what is worrying almost everyone in the agricultural and forestry industries.
The odds against finding an agricultural holding or a block of commercially managed woodland for exactly the same price as that received for the sale of the old holding are a million to one. It would be in the interests both of husbandry and forestry if the Capital Gains Tax were not applied to the sum realised when it is slightly larger than the sum the vendor has to pay for the new holding. I hope that the hon. and learned Gentleman will appreciate that this is a serious point which deals with the difficulties of the sale and purchase of all agricultural holdings, that he will listen to our objections and see that in this new Clause there is not only obvious common sense, but experience.
Mr. J. E. B. Hill: I support this new Clause. Unless it is accepted, Government fiscal policy will be at variance with Government agricultural policy. We understood that the justification for Capital Gains Tax was to prevent people having fairly easy increments to their standard of living or spending power without proportionate exertion of effort, but we find that this would fall on people at difficult times of their earning career. This is characteristic in a change from one farm to another.
The Financial Secretary told us when we were discussing Clause 31 that a farmer could dispose of surplus assets arising out of the new purchase and not be caught for tax on that, but when we think of the pattern of purchase which is likely to be followed it is clear that, in most cases, in the move to the new farm there will be an indispensable requirement for further capital expenditure on new buildings and other works. If we consider the types of farms available we find that nearly all come into the market because the owner has died or someone has given up, often a non-viable holding. It is implicit in an examination of the agricultural situation by, I believe, all three political parties that there are many holdings which ought to be merged or amalgamated. Both main parties are

2043
not only urging a policy of amalgamation but speaking of grant-aiding amalgamations still further.
When two farms are amalgamated it is not simply a question of saying that they will run together and that production from both will be bigger, although then there will be only one farm. There always has to be far-reaching reconstruction to allow the amalgamated farms or pieces of land to reach their full potential. The National Agricultural Advisory Service and all expert opinion would say to a farmer—if he does not think of it himself—that he ought to overhaul the drainage arrangements, modernise the farm buildings and economise on labour to make the new production far more competitive than the old. For all these farm improvements Government grants will be available usually up to one-third of the expenditure.
8.15 p.m.
The farmer's difficulty very often, after paying the purchase money and meeting the expenses of the move and the temporary interruption to his business, is to finance the other two-thirds. Therefore, the incidence of Capital Gains Tax, if levied at that point of change, will be precisely at the point when the farmer is unusually short of capital and credit. This is an expense at a very difficult time. In the first years of the move to the new holding the farmer will have to draw in his horns as far as his own standard of living is concerned and concentrate on working up the potential of the new holding.
Mr. MacDermot: I am trying to follow the hon. Member's argument, but I confess that I am not following it in relation to amalgamation. If one is considering an amalgamation when a farm has come on to the market, say because the farmer has died, one imagines that it would be amalgamated with a neighbouring farm. The neighbouring farmer will not have sold his farm, nor, as it were, have a capital gain on which tax will be levied on the transfer under Clause 31. I am sure that I have misunderstood the hon. Member's point.
Mr. Hill: I beg the pardon of the Financial Secretary. I ought to have realised that he would naturally visualise the farmer remaining in one farm and buying another to add to it. I was thinking of the case where the farmer would
2044
have an opportunity of moving to obtain this or more new holdings and putting them together to make a new larger farm. Again, the new farm purchased may have been occupied by an old man and, in order to realise the potential, a great deal of capital would have to be spent in the early years. One of the proposals which the party opposite put forward at the election was to provide easier medium-term credit, say for 10 years, not to purchase the land but to finance essential improvements. It would be particularly unfortunate for Capital Gains Tax to be levied at that point of time.
We are not asking for remission of tax, but only for a postponement of its collection until the farmer is in a better position to pay it. It is not as though the scale of farming operations need necessarily be large to attract Capital Gains Tax, because there is no exemption limit of £5,000 as at death. There is a case in my constituency where someone occupied a small non-viable mixed farm, and was advised by the National Agricultural Advisory Service to change from uneconomic arable to intensive egg production. Undoubtedly the farm was bought for a few hundreds at the end of the war and it is perhaps now worth £X thousands. He was advised to buy a smaller area of land and equip it with specialised buildings. The form of farming production recommended would call for a great deal of capital expenditure after purchase of the land. It does not follow that this kind of work could be carried out in 12 months. A variety of factors may operate, in addition to the difficulty of deciding exactly what is needed, to postpone the new building. There may be difficulty in getting the site right or the drainage done. All of that might make a postponement for one, two or three more years before the work can be carried out.
I hope that the Treasury will realise the importance of not penalising farmers when carrying out the very operations we are trying to encourage at the moment of greatest need. If there is a fear in the Treasury mind that the construction might not be carried out and that the farmer might hold the balance of capital gains unexpended on new capital works, perhaps, if thought necessary, a way round that might be found by providing a system of drawback. If one puts up a farm

2045
building one is entitled, if the profits or the income are there, to have a repayment of Income Tax.
If the Financial Secretary has this difficulty in mind, it might well be that he can devise a system whereby, if there is a delay in erecting the buildings and the Treasury wishes to make sure of the tax, it can be collected but remitted against the execution of the buildings. The essential thing is that the farming business should not be deprived of its capital at the moment that it is most needed.
Mr. Peter Mills: I should like to place on record my appreciation of the valuable work that the C.L.A. has done. It has shown initiative and foresight and is to be congratulated.
I also support this proposed Clause because it could be of tremendous benefit to the West Country in which my constituency is situated. Over the last five years a large number of farmers, having sold their farms in other areas at a very high price, have come to the West Country, taken over a derelict and poor farm, and have started to build it up. Although I am a Devonian and it is said sometimes that we do not like "foreigners" to come into our part of the country, I can honestly say that these farmers have been of tremendous benefit to some of the poorer areas in the West Country. They have taken over these poorer farms and, with the extra capital that they have obtained from the sale of their better farms elsewhere, they have done a first-rate job.
Of course, this takes time. These improvements cannot be made overnight. Time and capital are needed. But these people have shown us how to do it. Some of the bigger farmers who have come into the West Country, with what I would call surplus capital from the sale of better farms, have shown what can be done with their knowledge and the extra capital available. But time is needed and they certainly do not want to be taxed in the early years when they are starting to build up and restore the poorer farms that they have taken over. This is a worthy Clause. It would enable the West Country to help these men who are injecting fresh capital and restoring these poorer farms.
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Another point is that when one co-operates with the N.A.A.S. and works under the farm improvement scheme it is always necessary for the farmer to pay the whole of the improvement cost right away. He gets his grant when the work is completed. He does not want to be taxed again in the early days, in the sense of being hindered in finding the necessary capital in order to convert some of these poorer farms into viable farms. I therefore hope the Minister will consider this Clause carefully.
Mr. Paul Hawkins: I am a chartered surveyor who is yearly—I should like to say "daily" but I am afraid that is not the case—selling farms, and I support this Clause.
I know of the practical difficulties involved in selling farms. Farm sales usually take place during the period May-September, and then probably no more farms become available until the next May-September period. It is very difficult to find another farm of the type one requires. One may go to one farm after another before one finds a farm which suits one's client. From bitter experience I can say how long it takes to get improvements done. The N.A.A.S. is an exceptionally good organisation, but it deals with public money and, therefore, has to be careful. We have to get out plans and estimates in triplicate, and very often it may take another two years to prepare the estimates and the plans and to carry out the work.
For these reasons, which I offer as a Member who deals frequently with the sale and purchase of land on behalf of clients, I hope that the Financial Secretary will be able to accept the Clause and find a way round these difficulties.
Mr. MacDermot: May I say sincerely that I have found this short debate very interesting. I am not a farmer, but for a number of years I have been a practising barrister on the Midland Circuit and we have some very litigious farmers on that circuit, as a result of which I have picked up a smattering of farming knowledge.
My father, who was also a barrister, used to say that the advantage of a career at the Bar was that one picked up what he called "Woolworth knowledge"—nothing worth over 6d., but it covered a very wide range. I have got a little

2047
beyond the 6d. range as a result of this and the earlier debates that we had on Clause 31.
This proposed new Clause is entitled "Disposal of assets in husbandry or forestry", but it has been framed very simply by the draftsmen so as not to appear to single out that industry for special favour, in wide and general terms which would cover any farm or trade. May I remind the Committee that the intention of Clause 31 is primarily to help the removal and expansion of industry. I said on 31st May—it seems a long time ago now—at column 1184 of the OFFICIAL REPORT that the object of the Clause was
"to try to afford relief in such a way as to ensure that the Capital Gains Tax does not inhibit the physical development and expansion of industry and commerce."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1184.]
I did not mention agriculture in that phrase—
Mr. J. E. B. Hill: It is the biggest industry.
Mr. MacDermot: Some say that it is the biggest industry, while others like to think of it as being something different from an industry. Be that as it may, agriculture benefits singularly well compared with others from the effects of Clause 31. The reason for this is a curious one, which is that the definition of the trade of agriculture is very wide and is accepted by the courts as being wide.
During our debates I was given an example of a shopkeeper who had a pharmacy and then took on a sweetshop. I was asked, whether he would be able to benefit from Clause 31. I had to say "No, because it is a different trade," whereas when I was asked "What about the big farmer?", or, as the hon. Member for Windsor (Sir C. Mott-Radclyffe) said, if a dairy farmer is tired of dairy farming because the Government decide to concentrate on arable farming, or for some other reason, I said that he can still benefit because it is the same trade. The trade of agriculture is exceedingly wide.
I use perhaps a rather tendentious phrase in talking about the ability of "switching" within the agricultural trade which is possible under this Clause, and the result of Clause 31—I confess it is not that we particularly intended it or set about trying to produce this result—is to
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give very great assistance of which others may indeed be envious.
8.30 p.m.
I stress that the purpose of Clause 31 is to give a relief to those people who realise one capital asset and reinvest in another. It is to the extent that the capital gain is reinvested during that operation that there is this relief, which is not an exemption but a deferment of the liability to the Capital Gains Tax. It is, therefore, a relief limited to a particular operation, a transfer of business assets. It is not to be looked upon as a relief in itself in abstract so that, if there is an unused part of the relief, one could set about trying to find some way in which the unused part can be absorbed.
We were talking a few minutes ago about the X figure, and it is a convenient way of discussing these questions. If a man sells his business, whatever it may be, a farm or any other business, for £X and he buys a new one for £X or £X-plus, he can enjoy the benefit of Clause 31 because he transfers his capital gain into a new investment. But if his new investment is not £X but is £X-minus, then, if he can benefit from the Clause at all, he can benefit to only a limited extent. It will depend on the extent to which the difference is related to the amount of the gain. If it is £X minus Y, and Y is less than the capital gain he realised on the disposal of the assets, he will still get some partial benefit; but otherwise not. So what one is looking at is the extent to which the old asset is reinvested in the new.
Right hon. and hon. Members concerned particularly with the interests of agriculture point out that a man may sell his old farm and buy a new farm for which the actual purchase price is less but he wants to invest the balance of the money in bringing up the standard of the new farm and making it a going asset. It may be a derelict farm which has been allowed to fall below proper standards and he wants to invest his money in it, bringing it up to a proper working asset. This may take some time.
Therefore, the new Clause is framed in terms of allowing a five-year period of set-off in respect of the balance of the proceeds of the sale of the business. I say "business," but let us assume that it is limited to farms, although, as I said, the

2049
new Clause is framed in wider terms. The proposal is, as I say, to allow the balance of the proceeds of the sale of the old farm to be set off against any expenditure during the five years which would qualify for capital allowances or the special allowances under Section 214 of the Income Tax Act for agriculture.
I remind hon. Members that we have agreed in Committee, on Clause 31, not to be tied rigidly to the 12 months' period, and there is a discretion in the Revenue now to extend it. I gave an assurance to the Committee about the way in which we contemplate that the Revenue will exercise that discretion, and, perhaps, in order to avoid any confusion, I might quote my own words, which were, naturally, carefully chosen:
"Our intention is that the Board's discretion will be exercised in special cases, but in the normal way one would expect replacement to take place within 12 months. The Board would be prepared to exercise its discretion in a case where it was shown that it was not possible to replace the asset within the ordinary time limit by the use of ordinary foresight and prudence. If that can be established, if the person can show that, acting reasonably with ordinary foresight and prudence, he was not able to replace within the 12 months period, the Revenue would be ready to use its power to allow a longer period."—[OFFICIAL REPORT, 31st May, 1965; Vol. 713, c. 1178.]
The point made is that that is all very well, but in farming the replacement of an asset includes the additional expenditure on bringing it up to standard, and this may be spread over a period of time; it cannot be done very quickly.
Perhaps I should explain generally, not limiting it to farming, but to supplement what I said earlier on Clause 31, that within the proper time limits the Board will take a broad view of what capital expenditure on the acquisition of an asset qualifies for the relief, and it will regard it as including not only the original costs of the acquisition but also any expenditure which is necessary to put the asset into going order. I think that that is a reasonable proposition and one of general application. That is why I put it generally, not only in terms of farming.
I would draw the distinction and make it clear that this is not intended to extend to the type of recurring annual expense which in the case of a trader would be allowed as a deduction in computing his income for the year in which the assets were purchased. We are talking only
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about capital expenditure in order to put the asset into proper-going order. On farming, all I can say is that if a farmer who is in the situation which has been described can make out his case and show that within the 12 months' period it was not possible for him, acting reasonably, and with reasonable prudence, to carry out that necessary capital expenditure in order to put the new farm which he had purchased into proper-going order, and that he needs a longer period, that application will be fairly considered on the basis of the principles I have stated. The test is in this sense: is it true capital expenditure to bring the farm up to the required standard, and is the period within which that was done a proper period with the use of reasonable prudence and foresight?
I hope I have made it clear that it is not that one needs to look upon this as an unused relief which can just be mopped up by any future capital expenditure, but if the actual operation of the transfer of the old asset to the new asset takes more than 12 months, once this is fairly established to the satisfaction of the inspector it will be accepted as being part of the transfer operation, and can include further capital expenditure beyond the original purchase price.
The example was given of a grain dryer. A farmer may have had a farm with a grain dryer and sold the farm and bought another and want to establish a grain dryer on it. One knows the time that it takes to get the necessary permits, permissions and building licences needed within a 12 month period.
Sir C. Mott-Radclyffe: Not a building licence.
Mr. MacDermot: The hon. Gentleman is correct, but the farmer still has to get the building inspector to look at it. All these things take time, but as long as they are done within a reasonable time I think people will find that the Revenue will treat the matter reasonably.
But that is as far as we think it would be right to go. For these reasons, I ask the Committee to be content to leave the matter within the field of this discretion that lies wihin the Revenue. I could not accept a Clause framed in these terms, which would allow a five-year period. Extended over the whole field of trade,

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it would not only be extremely difficult to supervise if as wide as that but would also have administrative complications, necessitating the reopening of tax assessments over past years. The Clause would go a great deal wider than hon. Gentlemen opposite intend.
Mr. J. E. B. Hill: Would the hon. and learned Gentleman clarify a point? He said that the Inland Revenue would consider whether or not the period put forward by the farmer was reasonable. He will appreciate that it may be very difficult for the farmer to have clear ideas about what he ought to do from an agricultural point of view at the very beginning. He may think that the new farm will support a dairy herd with modern dairy buildings, costing perhaps £5,000 to £10,000. It may not be certain that that is the right thing to do until he has been in the farm a year. He may just have a hunch about it.
At the same time, he has to decide to buy that farm and therefore I hope that, as soon as the sale has taken place and presumably there is liability to Capital Gains Tax, he should be able to give the Revenue a broad outline of his plans but not necessarily be expected to specify exact details.
This may depend upon advice from the Government. I hope that the hon. and learned Gentleman will meet the problem. Probably the farmer has to buy before he sells and is, therefore, heavily committed. I hope that the Revenue will be sympathetic and not expect to see a cut-and-dried plan within 12 months for, in many cases, it would be difficult to produce one.
Mr. James Scott-Hopkins: I am grateful to the Financial Secretary for his approach to the Clause. I hope, however, that we can get clarification on many of the points of substance put forward. The case argued by my right hon. and hon. Friends is very strong and the way in which the hon. and learned Gentleman has gone a long way to meet it shows that he accepts the point. However, clarification is needed of exactly how far the discretion of the Revenue will be able to be exercised.
Will it apply to forestry as well as agriculture? The new Clause would apply
2052
to enterprises in forestry as well and I should imagine that there would be no difficulty in that. State trading in forestry enterprises would be covered by the same discretion that the hon. and learned Gentleman has mentioned for agriculture.
Then again, there is the case of the farmer who buys a farm which is perhaps not in a very good state. It is very difficult and most unlikely that he will be able to know exactly what is wanted, certainly in the first few months. Then there is the question of how long and how far the discretion is to be operated. I hope that, if a farmer is able to give the Revenue a broad outline of the kind of improvements necessary, it will look sympathetically at the case and exercise discretion in his favour, even though it may be that it will take, say, five years to get improvements and to know just what expenditure will be needed.
The hon. and learned Gentleman must not forget that a farmer deals with Government Departments and it takes considerable time certainly for farm improvement grants to be arranged. Presumably, these would form the bulk of the improvements we are talking about. It would be wrong if, because of delay like that, a farmer were denied the ability to use Clause 31 for whatever remains of his capital from the selling of his old property for improving the new.
The hon. and learned Gentleman referred to putting the farm into going order. This would, of course, include all the necessary repairs and the bringing of the farm buildings, the cottages and the fences up to proper standard. I imagine that that is what is meant. Will this discretion also include the sort of farm mentioned by my hon. Friend the Member for Torrington (Mr. Peter Mills)? Farmers moving to the West Country somethimes get rather out-of-date farms and modernisation is needed. This has been done in the past with the spare assets which have come from the sale of a farm. I hope that if a farmer has modernisation plans the Inland Revenue will be able to accept this as a proper and right use of the remaining assets of the sale of the original farm. If the Financial Secretary can assure us on this point, we shall be able to go a long way in accommodating him in his request to us to withdraw the new Clause.

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8.45 p.m.
This is a vital matter for the farming industry. It is a pity that there is not a Minister from the Ministry of Agriculture, Fisheries and Food present. There are at least three Ministers in the Department, and I should have hoped that one would be able to sit, although mute, on the Government Front Bench to hear the strength of feeling which has been expressed on this Clause, and which will be expressed on subsequent Clauses.
The Financial Secretary has gone a long way to accepting the principle of what we are trying to do. If he can give assurances on the three points to which I have referred—forestry and agriculture, the length of time during which the Inland Revenue will exercise its discretion in respect of the outline plan for improvements and repairs, and modernisation—we shall be able to do what he has asked us to do.
Mr. MacDermot: I think that I can help to some extent. First, forestry and horticulture are clearly covered. Secondly, I do not think that it would be right for me to try to define the period further than I have done. We are here concerned essentially with something which we have agreed to entrust to the discretion of the Revenue, and it would not be right for me to try to define how it will use its discretion. It is its discretion and not mine. All I can do is to state the principles on which it is proposed that it should exercise its discretion. What the proper period is in any particular case must be decided in the light of the facts of the case. I think that it would be exceptional if it were to extend for five years. What one envisages is the work which is undertaken when the farmer moves into the new farm.
I was asked with reference to what I concede was a general phrase about putting the farm into going order whether that would include modernising. "Modernising" is also a somewhat vague term, but I know what the hon. Member for Cornwall, North (Mr. Scott-Hopkins) means. I can help him to this extent. If the programme of modernisation—I gave the example of a grain dryer, and farm buildings may be necessary for a modern dairy herd, and so on—is part of a plan on which the farmer embarks
2054
when he acquires the new farm—I agree that he may not be able to pinpoint precisely all the details of it, but if it is within the scope of a plan of capital expenditure to bring that farm up to the required standard, and it is obviously in the farmer's interest to establish this with the Revenue—the fact that it is not practicable for him to complete the programme within 12 months will be accepted by the Inland Revenue.
What we have in mind is not merely the repair and rectification of defects in the farm if it has been allowed to become derelict, but expenditure to add to the capital assets of the farm, where necessary, to bring it up to the required standard to enable it to be farmed properly.
I hope that I have not gone too far, but I also hope that I have gone far enough for hon. Members opposite.
Sir M. Redmayne: I do not hope that the Financial Secretary has not gone too far! We are, however, grateful to him. He has shown great understanding of the point. I know that what he has said will be much appreciated in the circles concerned. I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

New Clause.—(LEASES FOR EXTRACTION OF MINERALS.)
Where the person so entitled grants a lease or licence to extract minerals on terms which are such that payments made in accordance with the grant fall to be taken into account in computing his income for the purposes of the Income Tax Acts, there shall be allowed as a deduction in so computing his income an amount equal year by year to the allowance which would have been made to the lessee or licensee under section 37 of the Finance Act, 1963, if the lessee or licensee had incurred capital expenditure on the acquisition of the minerals equal to their value at the time of the grant:
Provided that if a premium is required to be paid to the grantor by the lessee or licensee in respect of the lease or licence, the amount of which is not to be taken into account in computing the income of the grantor, then the amount of that premium shall be deducted from the value of the minerals in computing the allowance to be made to the grantor under this section.—[Mr. More.]
Brought up, and read the First time.
Mr. Jasper More: I beg to move, That the Clause be read a Second time.

2055
We now move back from Capital Gains Tax to Income Tax. The new Clause is intended to clarify and, I hope, rectify an anomaly in Income Tax in that only too well trodden field of royalties. It has always been in the tradition of the Income Tax Acts that royalties have been regarded as income. As rates of taxation have increased, that has inevitably become an increasing source of grievance among those who receive royalties, because the royalty owner always has the feeling that what is being taxed is his own capital.
Two years ago, in the discussions on the 1963 Finance Bill, a good deal was said about allowances for mineral depletion. In the course of one of those debates, a precedent was set—which I hope will be continued by the Treasury Bench—that without accepting the Amendment in question, some useful advice was given from the Treasury Bench to those in receipt of royalties. I believe that that advice was much appreciated and that it has been of great use. I commend that precedent to the Chief Secretary as one which might well be followed in these debates.
The background to the new Clause is Section 37 of the Finance Act, 1963, which gives relief to those who are mineral operators, entrepreneurs or whatever the correct term is. The Section was confined to the operator and did not in any way cover the owner. It gave certain annual allowances at varying rates. These are set out in subsection (2) of the Section and are designed to give an Income Tax allowance to an operator who carries on his trade and who for the purpose of it has actually incurred capital expenditure on the acquisition of the minerals which he operates.
The object of the new Clause is to give a comparable concession to an owner who grants a licence to an operator under the terms of which—these are still the ordinary terms of such leases or licences—the owner gets a royalty for the minerals. The object of the Clause is to put the owner who enters into a lease or licence of that kind on the same footing for Income Tax as the operator who has launched on his own operation in the terms set out in Section 37 of the 1963 Act. The Chief Secretary may
2056
be able to convince me that in some way the owner is already covered to this extent. If so, I and those who have advised me have not been able to satisfy ourselves of it. Equally, he may be able to give advice that is as helpful as was that given two years ago by one of his predecessors on the Treasury Bench. I ask that the new Clause be accepted in this form so as to put the owner on a footing comparable with that of the operator.
The new Clause has a proviso, because there are different ways of carrying out these things. The proviso has regard to the case that can happen, in which the transaction is not wholly in terms of royalty but, perhaps, partly in terms of royalty and partly in terms of premium. It is not the object of the new Clause to harm, so to speak, the Revenue by getting an allowance twice over for the owner and the operator simultaneously. We are trying to get an allowance for either one or the other. It is really in order to remove what appears to be a present anomaly, in that the owner is not covered, that I ask the right hon. Gentleman to accept the new Clause.
Mr. J. E. B. Hill: As the asset in question is a wasting asset, it seems desirable that an allowance should be paid to whoever had the capital which is represented by the wasting asset. To some extent, this new Clause links up with the previous one. A farmer might well find that he had bought a new farm on which there was some gravel for which there was permission to extract. In buying the new farm, he would have to pay the full capital value of the gravel. He would not want to sell it off because, with the gravel gone, the land would have to be restored after extraction in order to be used for farming operations. In such circumstances, it would be undesirable if an allowance for the wasting of a capital asset were not given to the farmer.
Mr. Diamond: The hon. Member for Ludlow (Mr. More) expressed the hope that we would either accept the new Clause or be prepared to give some advice. At the Treasury, we always much prefer to give advice than anything else. I am sorry that I cannot accept the new Clause, for the simple reason, as I shall explain, that I do not think that the hon. Gentleman is wholly right in say-in that the person here concerned is on the

2057
same footing as the operator, which is the essence of his argument.
Since the 1963 legislation was passed we have regarded the operator as a trader, so to speak, who wins minerals in order to sell them. Anything that enters into that cost is just the same as anything which enters into the cost of any other goods that a trade acquires with a view to selling. The so-called capital costs to which the hon. Gentleman referred are, in effect, part of the costs of acquiring the goods which he is then in a position to sell—I am talking purely now of the operator. It is on that philosophy that an allowance is given for the capital cost spread so as to be appropriate.
I suggest that that is an entirely different situation from that situation of a lessor, because the lessor, by and large, and certainly not as part of his normal lease or licence, does not incur any capital costs at all. Does the hon. Member for Norfolk, South (Mr. J. E. B. Hill) wish to dissent from that suggestion?
Mr. J. E. B. Hill: In the case I cited, the man quite obviously incurred a capital cost. The farmer bought a farm that had workable gravel on it. He had to pay for the value of the gravel. He does not want it, but it is there. He wishes to get rid of the gravel, but does not want to sell the land, because he wants to retain the land when restored after the gravel has been extracted.
9.0 p.m.
Mr. Diamond: I am sorry that I have not made myself sufficiently clear. The capital costs which the operator incurs are the costs of providing buildings, plants and equipment on which allowances are granted. There is no comparable capital expenditure by the lessor or the landowner who leases or licences for these purposes. On that basis the two codes are not on all fours.
The hon. Gentleman asked whether we would offer any advice. Considering Capital Gains Tax, as opposed to Corporation Tax or Income Tax, and, to make it simple, taking the straightforward case of the landowner who after Budget day acquires a piece of land on which minerals of some kind are discovered, and assuming that he lets the mineral rights; the minerals are won and the value of the land is then diminished; if he then proceeds to sell the land, he will
2058
sell it at a loss and the loss will be equal to the diminution in value as a result of the royalties or part of the royalties.
The hon. Gentleman is suggesting that that part of the royalties should be allowed for and should not be subject to Income Tax as part of ordinary income and that it would reduce the value of the asset. However, the landowner would have made a loss which would be an allowable deduction from any realisable capital profit which he had made, or which he would make later on, not necessarily at identically the same rate. That is the way to look at it.
I can only repeat that there is no true comparison between the operator who incurs fresh capital costs which are divided over a period, so as to represent the true cost of acquiring goods which he then sells, and the landowner who receives royalties which are subject to Income Tax and Surtax in the same way and who incurs no capital costs and is therefore not entitled to any special allowance in that way. However, if as a result of the total operation the owner suffers a realisable capital loss, if he sells, that is available for set-off against future capital gains. In those circumstances, I imagine that I shall not be pressed to accept the new Clause.
Mr. Scott-Hopkins: Although the Chief Secretary has been his usual persuasive self, and I expect that he is as glad as the rest of the Committee and I am that this is the last new Clause which we are to discuss, I am sorry that he is not in as accommodating a mood as his hon. and learned Friend the Financial Secretary on the previous new Clause. Although he has been persuasive, his argument was not up to its usual standard of clarity and forcefulness.
I accept that the positions of the lessor and the operator are not exactly on all fours, but, as the right hon. Gentleman has accepted, the lessor has a diminishing or depreciating asset. Of course it is true that if the minerals had been worked out, he would have sustained a capital loss and been able to receive any allowance in operation at the time. But what the right hon. Gentleman is saying is that whenever mineral rights are worked out, the only way in which the lessor or owner can get any compensation is to sell immediately. But in many cases this will have

2059
been a diminishing asset for many years, as with the example of the working of china clay, tin or gravel. In many cases disposal will not take place and the diminished asset will remain the property of the original lessor or owner, in which case there is to be no allowance of any kind.
My hon. Friend the Member for Ludlow (Mr. More) made the point extremely cogently that we are trying to find some method whereby some small relief can be given to the lessor for the facet that over a period of many years he has been in possession of a dimishing asset. Although the Chief Secretary has obviously closed his mind to our suggestion in the new Clause, I hope that he will look at the matter again with his usual sympathy. Not long ago he said that there was nothing the Treasury Bench liked more than looking at something sympathetically and then doing nothing. I hope that he will do the former and not the latter.
I hope that he will give the assurance that he will look at this matter sympathetically yet again to see whether anything can be done, because there is a case for doing something for the lessor or owner of mineral rights, not necessarily on all fours with what is done for the operator, and I accept that, but something which would be only justice. I hope that the Chief Secretary will, in his accommodating way, come half way to meet us on this.
Mr. Diamond: I am glad to respond to the invitation of the hon. Member for Cornwall, North (Mr. Scott-Hopkins) to say a few more words. I am afraid I cannot hold out any hope of meeting the argument here, because what is being sought
here is fundamentally an allowance, a deduction, from the income in respect of a wasting asset for that part which wastes. This is a totally new principle and it is no part of our Income Tax at all. I am sorry that I cannot recommend its introduction in this one limited case.
It is, however, the case—although I do not say this is a full compensation—that as we now have a Capital Gains Tax a loss of this kind is ultimately represented by a capital loss, and that is a deduction from a realised capital gain. So, just as in the course of time a capital gain comes to be realised and becomes assessed for Capital Gains Tax, so in the course of time this diminution in capital value would be realised and would be a set-off. I hope that the hon. Gentleman the Member for Cornwall, North will feel that I have been as accommodating as I reasonably can be having regard to the structure of taxation in our system.
Question put and negatived.
The Chairman: We now come to new Clause No. 61 on which I promised a Division if it were to be moved formally.

New Clause.—(DEPENDENT RELATIVE ATTENDANCE RELIEF.)
A single person maintaining in her or his home a dependent relative or relatives unable through age or disablement to obtain employment and in receipt of a war disablement pension, industrial injury pension, retirement pension or National Assistance shall receive an attendance tax relief, in addition to the dependent relative's tax relief, of £50 in respect of each relative.—[Mr. Scott-Hopkins.]
Brought up, and read the First time.
Motion made, and Question put, That the Clause be read a Second time:—
The Committee divided: Ayes 114, Noes 124.

Division No. 206.]

AYES

[9.7 p.m.

Alison, Michael (Barkston Ash)

Burden, F. A.

Gardner, Edward

Allan, Robert (Paddington, S.)

Buxton, Ronald

Glover, Sir Douglas

Allason, James (Hemel Hempstead)

Carlisle, Mark

Goodhew, Victor

Anstruther-Gray, Rt. Hn. Sir W.

Clark, William (Nottingham, S.)

Grant, Anthony

Baker, W. H. K.

Cooke, Robert

Grant-Ferris, R.

Batsford, Brian

Crawley, Aidan

Gresham Cooke, R.

Beamish, Col. Sir Tufton

Crosthwaite-Eyre, Col. Sir Oliver

Griffiths, Peter (Smethwick)

Bessell, Peter

Curran, Charles

Grimond, Rt. Hn. J.

Biffen, John

Currie, G. B. H.

Gurden, Harold

Birch, Rt. Hn. Nigel

Deedes, Rt. Hn. W. F.

Hall, John (Wycombe)

Black, Sir Cyril

Doughty, Charles

Hall-Davis, A. G. F.

Blaker, Peter

Eden, Sir John

Hamilton, Marquess of (Fermanagh)

Boyd-Carpenter, Rt. Hn. J.

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

Harris, Frederic (Croydon, N.W.)

Boyle, Rt. Hn. Sir Edward

Emery, Peter

Harris, Reader (Heston)

Braine, Bernard

Errington, Sir Eric

Harvey, John (Walthamstow, E.)

Brinton, Sir Tatton

Fletcher-Cooke, Charles (Darwen)

Harvie Anderson, Miss

Brooke, Rt. Hn. Henry

Fraser, Ian (Plymouth, Sutton)

Hastings, Stephen

Hawkins, Paul

Mawby, Ray

Summers, Sir Spencer

Hay, John

Maxwell-Hyslop, R. J.

Taylor, Sir Charles (Eastbourne)

Heald, Rt. Hn. Sir Lionel

Meyer, Sir Anthony

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

Heath, Rt. Hn. Edward

Mills, Peter (Torrington)

Thompson, Sir Richard (Croydon, S.)

Higgins, Terence L.

Mills, Stratton (Belfast, N.)

Thorpe, Jeremy

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

Mott-Radclyffe, Sir Charles

Tilney, John (Wavertree)

Hirst, Geoffrey

Munro-Lucas-Tooth, Sir Hugh

van Straubenzee, W. R.

Hogg, Rt. Hn. Quintin

Onslow, Cranley

Vickers, Dame Joan

Hooson, H. E.

Osborne, Sir Cyril (Louth)

Walker-Smith, Rt. Hn. Sir Derek

Hordern, Peter

Page, R. Graham (Crosby)

Walters, Dennis

Hornsby-Smith, Rt. Hn. Dame P.

Peel, John

Ward, Dame Irene

Hunt, John (Bromley)

Prior, J. M. L.

Weatherill, Bernard

Iremonger, T. L.

Pym, Francis

Whitelaw, William

Johnston, Russell (Inverness)

Redmayne, Rt. Hn. Sir Martin

Williams, Sir Rolf Dudley (Exeter)

Kerr, Sir Hamilton (Cambridge)

Rees-Davies, W. R.

Wills, Sir Gerald (Bridgwater)

Kershaw, Anthony

Ridley, Hn. Nicholas

Wilson, Geoffrey (Truro)

Kimball, Marcus

Royle, Anthony

Wylie, N. R.

Lagden, Godfrey

Sharples, Richard

Yates, William (The Wrekin)

Lubbock, Eric

Sinclair, Sir George

Younger, Hn. George

MacArthur, Ian

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

Maclean, Sir Fitzroy

Steel, David (Roxburgh)

TELLERS FOR THE NOES:

Mathew, Robert

Studholme, Sir Henry

Mr More and

Mr. G. Johnson Smith.

NOES

Albu, Austen

Heffer, Eric S.

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

Atkinson, Norman

Henderson, Rt. Hn. Arthur

Orbach, Maurice

Bishop, E. S.

Holman, Percy

Page, Derek (King's Lynn)

Boston, T. G.

Horner, John

Parker, John

Bradley, Tom

Howarth, Harry (Wellingborough)

Parkin, B. T.

Brown, Rt. Hn. George (Belper)

Howarth, Robert L. (Bolton E.)

Pavitt, Laurence

Brown, Hugh D. (Glasgow, Provan)

Howell, Denis (Small Heath)

Popplewell, Ernest

Brown, R. W. (Shoreditch & Fbury)

Howle, W.

Prentice, R. E.

Buchanan, Richard

Hughes, Emrys (S. Ayrshire)

Pursey, Cmdr. Harry

Butler, Herbert (Hackney, C.)

Hughes, Hector (Aberdeen, N.)

Rees, Merlyn

Butler, Mrs. Joyce (Wood Green)

Irving, Sydney (Dartford)

Reynolds, G. W.

Callaghan, Rt. Hn. James

Janner, Sir Barnett

Rhodes, Geoffrey

Carter-Jones, Lewis

Jenkins, Hugh (Putney)

Roberts, Goronwy (Caernarvon)

Chapman, Donald

Jenkins, Rt. Hn. Roy (Stechford)

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

Cousins, Rt. Hn. Frank

Johnson, Carol (Lewisham, S.)

Rogers, George (Kensington, N.)

Crawshaw, Richard

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

Rose, Paul B.

Cronin, John

Jones, J. Idwal (Wrexham)

Shore, Peter (Stepney)

Davies, Harold (Leek)

Jones, T. w. (Merioneth)

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

Davies, Ifor (Gower)

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

Short, Mrs. Renée (W'hampton,N.E.)

de Freitas, Sir Geoffrey

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

Silkin, John (Deptford)

Delargy, Hugh

Lawson, George

Silkin, S. C. (Camberwell, Dulwich)

Dell, Edmund

Ledger, Ron

Silverman, Julius (Aston)

Diamond, John

Lee, Miss Jennie (Cannock)

Silverman, Sydney (Nelson)

Dodds, Norman

Lever, Harold (Cheetham)

Skeffington, Arthur

Driberg, Tom

Loughlin, Charles

Snow, Julian

Edelman, Maurice

McCann, J.

Stonehouse, John

English, Michael

MacDermot, Niall

Swain, Thomas

Evans, Albert (Islington, S.W.)

McInnes, James

Swingler, Stephen

Evans, Ioan (Birmingham, Yardley)

McLeavy, Frank

Symonds, J. B.

Fletcher, Sir Eric (Islington, E.)

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

Taverne, Dick

Fletcher, Raymond (Ilkeston)

Mason, Roy

Thomas, George (Cardiff, W.)

Floud, Bernard

Mellish, Robert

Tomney, Frank

Foley, Maurice

Molloy, William

Tuck, Raphael

Freeson, Reginald

Morris, Alfred (Wythenshawe)

Varley, Eric G.

Garrow, A.

Morris, Charles (Openshaw)

Wallace, George

Gourlay, Harry

Murray, Albert

Weitzman, David

Grey, Charles

Newens, Stan

Wells, William (Walsall, N.)

Gunter, Rt. Hn. R. J.

Noel-Baker, Francis (Swindon)

Whitlock, William

Hamling, William (Woolwich, W.)

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

Wilson, William (Coventry, S.)

Hannan, William

Norwood, Christopher

Zilliacus, K.

Harper, Joseph

Ogden, Eric

Hazell, Bert

O'Malley, Brian

TELLERS FOR THE NOES:

Mrs. Slater and Mr. Fitch.

Schedule 19.—(REPEALS.)
Mr. Heath: Would it be convenient, Dr. King, if the remaining Government Amendments in this Schedule were put en bloc.
The Chairman: It would be very convenient for the Chair. I was hoping that someone would suggest that. If it is convenient for both sides of the Com-
2062
mittee I will adopt the suggestion of the right hon. Member and put all the Amendments together.
Mr. MacDermot: I am very happy to accept that suggestion. I thought that it should not come from me.
Amendments made: In page 220, line 17, column 3, at end insert:
"in section 12(8) the words 'except as provided by section I4 of this Act'".
In line 22, column 3, at end insert:
"paragraph 3(4), and in paragraph 3(5) the words 'or Association' (twice),
in paragraph 5(4) the words from 'nor shall' to the end of the sub-paragraph".
In line 27, column 3, at end insert "paragraph 12(3)(4)".
In line 44, at beginning insert:

3 & 4 Geo. 6. c. 29.

The Finance Act 1940.

Section 49, except as provided by section 82(2) of this Act.

7 & 8 Geo. 6. c. 23.

The Finance Act 1944.

Sections 37 and 39, except as provided by section 82(1) of this Act.

In page 221, line 45, column 3, at end insert:
"In section 468 (1) the words from '(being classes' to 'profits tax)'".
In line 51, column 3, at end insert: Sections 493 and 494.
In page 221, leave out lines 58 and 59.
In page 222, line 17, column 3, at end insert:
"In section 30(3) the words from 'and in their estimation' onwards".
In column 3, leave out line 48.
In page 223, line 36, column 3, leave out "and" and insert "to".
In page 224, line 6, column 3, at end insert "Schedule 9".
In line 20, column 3, leave out "Sections 71 and" and insert "Section".
In line 24, column 3, at beginning insert "Section 348(7)".
In line 24, column 3, leave out "(5)" and insert "(3)".
In line 48, column 3, leave out "Part I" and insert "paragraph 1".
In page 225, line 22, leave out "under" and insert "or".
In line 46, column 3, leave out from beginning to "paragraph" in line 47.
In line 58, at end insert:
"or other proceedings relating thereto.".—Mr. MacDermot.]
Schedule, as amended, agreed to.

New Schedule.—(SUPPLEMENTARY PRO- VISIONS ABOUT DIVIDEND INCREASES IN 1965–66.)
Preliminary
1.—(1) This Schedule has effect for the modification of section 78 of this Act ("the principal section") in relation to companies,
2064
being bodies corporate, which are members of a group of companies.
(2) For purposes of this Schedule, save as otherwise provided therein,—

(a) two companies shall be deemed to be members of a group of companies if one is the subsidiary of the other or both are subsidiaries of a third company;

(b) "subsidiary" has the meaning assigned to it for certain purposes of the profits tax by section 42 of the Finance Act 1938, and subsections (2) and (3) of that section shall apply as they applied for purposes of that section;

(c) "dividend" does not include a capital dividend.

(3) References in this Schedule to a company apply only to companies resident in the United Kingdom; and in determining for purposes of this Schedule whether one company is a subsidiary of another, the other company shall be treated as not being the owner—

(a) of any share capital which it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade; or

(b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt; or

(c) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom.

Company paying dividends within the group
2. Where in the year 1965–66 a company pays a gross amount in dividends greater than the standard amount, but any of those dividends are paid to another member of the same group of companies, the amount to be treated under subsection (1) of the principal section as dividends paid in the year 1966–67 shall be such part only of the excess as is proportionate to the gross amount of the dividends (if any) paid otherwise than to members of the same group.
Company receiving dividends from within the group
3.—(1) Subject to paragraph 4 below, where a company's profits in the financial year 1965 (as ascertained for purposes of the principal section) include dividends paid in the year 1965–66 by a member of the same group of companies, and that member pays in the year 1965–66 a gross amount in dividends greater than its standard amount, then there shall, except as provided in sub-paragraph (2) below, be deducted from the said profits as so ascertained an amount equal to such part of the excess as bears to the whole the same proportion as the gross amount of the part of those dividends which is included in the profit bears to the gross amount of all the dividends paid by the said member in the year 1965–66.
(2) Sub-paragraph (1) above shall not apply to the computation of a company's profits in the financial year 1965 unless the profits include a gross amount of dividends received

2065
by it from members of the same group of companies in excess of one-third of the gross amount of the dividends received by the company in its standard period from companies then being members of the same group of companies (or if the standard period is less than three years, an amount bearing to the dividends last mentioned the same proportion as one year bears to the standard period); and where in computing a company's profits for the financial year 1965 a deduction would fall to be made under sub-paragraph (1) above, the company may elect that instead there shall he made a deduction equal to the excess referred to in this sub-paragraph.
(3) This paragraph shall apply where for purposes of the principal section a company's profits in the financial year 1965 are ascertained by reference to some period ending in that year, but not where its profits for another period are substituted for its profits in the financial year 1965
(4) Any election under this paragraph shall be made by notice in writing given to the inspector before the end of the year 1966–67.
Alternative treatment of company receiving dividends from within the group
4.—(1) Where in the year 1965–66 a company has one or more subsidiaries and is not itself the subsidiary of another company, the company may elect that the following provisions of this paragraph shall apply to it, and if it does so, paragraph 3 above shall not apply.
(2) Where this paragraph applies to a company, the company's standard amount of dividends for purposes of the principal section shall be arrived at—

(a) by aggregating the dividends paid by the company in its standard period with those then paid by the companies which are from time to time its subsidiaries in that period, but excluding such of those dividends as are paid by one of the companies concerned to another; and

(b) by aggregating the share capital of the company in any period with that of the companies which are from time to time its subsidiaries in that period, but excluding any share capital which is directly owned by any of the companies concerned (and disregarding any share capital so owned in the application of subsection 6(a) and (b) of the principal section); and

(c) by treating as profits or losses of the company in any period the profits or losses of the companies which are from time to time its subsidiaries in that period, but disregarding in the computation of any such profits or losses franked investment income (within the meaning of the profits tax) received from any of the companies concerned.

For purposes of paragraph (b) above the initial capital of a subsidiary in relation to any period, if it became a subsidiary during the period, shall be ascertained as at the time when it did so.
(3) There shall be aggregated the gross amount of the dividends paid in the year 1965–66 by a company to which this para-
2066
graph applies and by any companies which are its subsidiaries, but so that—

(a) there shall be excluded dividends paid by one of the companies concerned to another; and

(b) from the aggregate dividends paid by the subsidiaries otherwise than to any of the companies concerned there shall be deducted the amounts (if any) which under the principal section the subsidiaries are treated as paying in the year 1966–67;

and for purposes of the principal section the amount so arrived at shall be treated as the gross amount of the dividends paid in the year 1965–66 by the company to which this paragraph applies.
(4) Any election under this paragraph shall be made by notice in writing given to the inspector before the end of the year 1966–67.
Adjustments in respect of dividends received from overseas trade corporations
5.—(1) Where paragraph 3 or 4 above has effect in determining for purposes of the principal section whether in the year 1965–66 a company pays a gross amount in dividends greater than the standard amount, and the company's profits in the financial year 1965 include dividends paid out of exempt trading income by overseas trade corporations which are members of the same group of companies, then the gross amount of dividends which that company is apart from this paragraph to be treated under the principal section as paying in the year 1966–67 shall be reduced by the amount on which income tax at the standard rate for the year 1966–67 is equal to the income tax payable by those overseas trade corporations on exempt trading income in respect of dividends paid thereout to the company in the year 1965–66, subject, however, to the limitation imposed by subparagraph (2) below on the amount of the exempt trading income to be taken into account under this paragraph.
(2) The exempt trading income to be taken into account under this paragraph shall not exceed the following fraction of the gross amount of dividends which the company is apart from this paragraph to be treated under the principal section as paying in the year 1966–67, that is to say,—

(a) where paragraph 3 has effect in relation to the company, the fraction obtained by dividing by the amount of the company's profits in the financial year 1965 (as ascertained for purposes of the principal section) the gross amount of the dividends included therein which are paid by any such overseas trade corporations as aforesaid out of exempt trading income; and

(b) where paragraph (4) above has effect in relation to the company, the fraction obtained by dividing by the amount taken under paragraph 4(2)(c) above as the profits of the company in the financial year 1965 the amount included therein of exempt trading income of such overseas trade corporations as aforesaid.

(3) Where sub-paragraph (2) above has effect in the case of the company to exclude part

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of the exempt trading income of other members of the same group, the part to be taken into account shall be such as that company may select.
(4) In relation to a dividend paid partly out of exempt trading income and partly not, this paragraph shall apply as if the two parts were separate dividends, and any question how far a dividend is paid out of exempt trading income, or out of what exempt trading income a dividend is paid, shall be determined for purposes of this paragraph as it is determined for purposes of Part IV of the Finance Act 1957.
(5) Where for purposes of the principal section the company's profits in the financial year 1965 are ascertained by reference to some period ending in that year, references in this paragraph to the financial year 1965 shall be construed as referring to that period; but where the company's profits for another period are substituted for its profits in the financial year 1965, this paragraph shall not apply.—[Mr. Diamond.]
Brought up, and read the First time.
Mr. Diamond: I beg to move, That the Schedule be read a Second time.
I do not think that the Committee would expect a long explanation of this matter, because it is straightforward, the language is simple, and the notions underlying it are well understood by hon. Members on both sides of the Committee. It would, nevertheless, be courteous to refer to the matter shortly.
This Schedule relates to the Clause dealing with forestalling, that is to say the possibility of a company having decided to declare, in advance of Corporation Tax, a dividend in excess of what they would otherwise have done, with a view to escaping Income Tax which would otherwise be payable. The Schedule deals with the problem of subsidiary companies. Where a full subsidiary is concerned, it is not the philosophy of the Government to separate the subsidiary from the parent, but to regard a dividend paid by a subsidiary to a parent or a fellow subsidiary as an internal transaction, as it is.
The Schedule makes it clear that a dividend paid to a minority shareholder—not a dividend paid to a parent or a fellow subsidiary—would still, of course, be charged in respect of any excess dividend paid to that minority shareholder in the company if an excess dividend had been declared.
The Schedule goes on to describe the test of whether it is a subsidiary or fellow subsidiary and adopts the Profits
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Tax test of 75 per cent., direct or indirect ownership. This is a test which is adopted from Profits Tax, it is familiar to practitioners and it seems to be a reasonable test. There are other provisions with regard to grouping which are, perhaps, reasonably straightforward. The rest is in language which "he who runs may read", and it would not be right for me to detain the Committee any longer.
Mr. Higgins: I do not want to detain the Committee more than a few moments, but there is one important point which I think should be made. The Chief Secretary has said that the policy underlying the Clause and the new Schedule is that one should not separate the parent company from the subsidiary. It is also true that the idea of having a standard profit and relating this to the increase in profits and the standard dividend to the increase in dividend is to prevent forestalling. I should like to draw to his attention the fact that the principle which he has outlined—that we should not separate the parent company from the subsidiary—appears to have been applied only in the case of subsidiaries within the United Kingdom.
I should be glad if he would confirm whether it is the Government's intention to separate subsidiaries overseas from parent companies in the United Kingdom, or whether the principle which he has enunciated is of universal application. An individual subsidiary in this country may have a standard dividend of 100 which subsequently go up to 130. If there is the same relationship in its profits—also 100 to 130—it would not be regarded as forestalling and would not come within the scope of the Clause 78. On the other hand, for a subsidiary overseas the situation as the Schedule is now drafted appears to be different. The total profit of a concern with a subsidiary overseas may be 100 in the standard period, and then go up to 130 in the period 1966–67. It should then be permissible for the dividend to be increased from 100 to 130 in the same way.
But if the parent company in this country has an increase in profits overseas and they are not all remitted as dividends from the overseas country to this country, we may find that the United Kingdom parent company will be penalised because of the way the Schedule is now drafted.

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I will repeat the point because it is difficult to understand. The principal company in this country will be penalised if, although its profits have gone up from £100 to £130—both overseas and in this country—it does not remit all the profits to this country. It could be argued that in most instances it is possible to increase dividends from abroad, but that would result in the company being charged increased withholding tax in the country overseas.
In these circumstances, I suggest that the Chief Secretary should include in the Schedule a provision whereby if the parent company is located in this country overseas subsidiaries are treated in the same way as subsidiaries in this country. I hope that the right hon. Gentleman will clarify the position and say whether or not it is intended to treat overseas subsidiaries in the same way as United Kingdom subsidiaries.
Mr. William Clark: I was hoping that the Chief Secretary would reply to the point made by my right hon. Friend.
Mr. Diamond: I will, after the hon. Gentleman has spoken.
Mr. Clark: This is a new Schedule of 131 lines and the Government were kind enough at the commencement of the Corporation Tax to issue a White Paper, Cmnd. 2646, which I have no doubt all hon. Gentlemen opposite read with avid interest and have understood all its points. I cannot understand why the Committee has not had a proper explanation of these 131 lines. It is regrettable that a complicated Schedule such as this should come up at this stage of the Finance Bill without our being given an adequate explanation of it.
The Chief Secretary, probably alone, knows the purpose of the Schedule and that it is to prevent parent companies from taking excessive dividends from subsidiaries in the year 1965, thus improving their standard dividend. However, if we consider a company whose year ends at the end of the calendar year, 31st December, 1965, in this instance, it is only the dividend received during the calendar year which should affect its standard dividend and I cannot understand why sub-paragraph 3(1) refers to dividends up to 5th April, 1966.
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One could have the position where one is making up accounts to the end of December, 1965, for the standard dividend, but, as I read the Schedule, it takes it another three months from the point of view of dividends received. We have had a lot of talk about overspill in our discussion of the Bill. This, however, is taking a 12-month period, is taking dividends for 15 months, which is more like overkill than overspill. Will the Chief Secretary, between now and Report, have a look at this valid point to see whether in the new Schedule the year 1965–66 should not be deleted?
Sub-paragraph 5(1) refers to "income tax payable", but do those words mean only that the tax payable is the United Kingdom tax before the deduction of foreign tax credits? The right hon. Gentleman will appreciate that this could make a tremendous difference to the standard dividend of a particular group of companies. Sub-paragraph 4(2,c) states:
"… by treating as profits of the company as the profits of the companies in the year 1965."
I assume, and I would like confirmation of the fact, that this merely means that the profits of the company include those profits which are treated as profits because of that sub-paragraph.
I appreciate that these are technical points and that, at this hour, the right hon. Gentleman may not be able to answer them off the cuff. If not, I trust that he will consider them between now and Report and will, if there is any valadity in them, table an Amendment on Report.
9.30 p.m.
My hon. Friend the Member for Worthing (Mr. Higgins) raised a very valid point on this grouping Schedule. If there are five subsidiary companies, four of which are United Kingdom companies and one an overseas company, one can take only the four United Kingdom companies for the grouping. If one United Kingdom company has increased its dividend and another has decreased its dividend, the two are aggregated and, provided that does not increase the standard, it is all right.
As we read the Schedule the overseas company is excluded from the grouping. The reason for bringing forward this point is not at all for tax

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avoidance purposes. The whole question of forestalling under Clause 48 is a once-and-for-all standard set up under the Bill. If there are four United Kingdom companies and one overseas company and if we are to group the United Kingdom companies, there is no reason why we should not be able to group the five including the overseas company.
I have read paragraph 4 of the new Schedule many times, but I am still confused. Probably all other hon. Members understand it, but I find it extremely complicated. During the whole discussion on Corporation Tax the Chief Secretary and his colleagues on the Treasury Bench have made great play of the fact that this will simplify our tax system, but paragraph 4 is so complicated that if the Chief Secretary could give a brief explanation, not only would I be delighted, but I am sure that his hon. Friends and my hon. Friends would also be delighted to hear it.
Mr. Diamond: Perhaps I can deal first with the questions raised by the hon. Member for Nottingham, South (Mr. William Clark). He asked about the year 1965–66. The Schedule refers only to a proportion of 1965–66. There is no more than that and I do not think there is cause for any anxiety.
The hon. Member asked two other questions with his usual clarity, but, in order that I shall not possibly misunderstand a single syllable of what he said, I prefer to have the opportunity of reading very carefully the report of his speech in HANSARD. If there is any reason to do anything about it I shall, of course, either communicate with the hon. Member or put a clarifying, consequential Amendment down on Report.
On the point of substance raised by the hon. Member for Worthing (Mr. Higgins) one is not entitled to make the basic assumption implicit in his argument that dividends of an overseas company should be taken into account unless they are remitted. The hon. Member drew attention to the fact that we can have regard to a domestic company's dividends and asked why we should not include a non-domestic company's dividends and profits also. The non-domestic company's dividends may not affect the situation at
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all. Whether they are included or not it is a comparison of like with like.
What we are concerned with here is the possibility of forestalling for the purpose of tax avoidance in one year only. We are concerned only with one year, and because it is for one year only we were happy to accept the Amendment moved by the right hon. Member for Bexley (Mr. Heath) dealing with motive. Once we have dealt with the matter of motive we need not get bogged down with these considerations because that will solve the situation. Any dividend paid in the year that we are considering, which clearly was paid in good faith, is not a dividend to which the forestalling provisions would apply, where one would calculate the excess amount and charge tax in a way which otherwise would not arise—that is to say, account to the Revenue for tax because tax had already been deducted at source and paid in the ordinary way.
Therefore, in view of the Amendment to which I have referred, which has been incorporated in the Bill, all these problems are now put on one side. The complication of trying to take account of the tax legislation of foreign countries where subsidiaries might exist is far too difficult for us to bring into account, for a comparison which would be necessary, any of the figures involved. It would be far more simple and much more in the interests of the companies concerned that we should adopt the simple expedient—and I am grateful to the hon. Gentleman for reminding me of this—of having the motive test, and that will end the matter.
I repeat what I have said before, the businessman in future, once Corporation Tax is running, will for the first time know immediately and without any difficulty broadly what his tax liability is. He has never been able to know that up till now—never. He always had to consult professional colleagues to find out.
Mr. Geoffrey Hirst: He still will.
Mr. Diamond: My professional colleagues will be relieved in view of what the hon. Gentleman says.
I admit that this Schedule indicates by its length that there are one or two points to be taken into account in the transition from one system to another, and it is inevitable that in a transition of that kind

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there should be certain difficulties which one has to overcome, especially when we are dealing with it in a very short Bill—I repeat, a very short Bill—of taxation largely by reference. May I repeat yet again—for the future, when Corporation Tax is running, the life of the businessman for tax purposes will be simplicity itself.
Question put and agreed to.
Schedule read a Second time, and added to the Bill.

New Schedule.—(SUPPLEMENTARY PRO- VISIONS ABOUT TRANSITIONAL RELIEF FOR EXISTING COMPANIES WITH OVERSEAS TRADING INCOME.)
Application and interpretation of Schedule
1.—(1) This Schedule has effect for the modification of section 79 of this Act ("the principal section") in its application to companies which have been overseas trade corporations, and to companies (being bodies corporate) which are members of a group of companies or are otherwise associated with other companies; and in this Schedule "relief" (unless the context otherwise requires) means relief under the principal section.
(2) For purposes of this Schedule, save as otherwise provided therein,—

(a) two companies shall be deemed to be members of a group of companies if one is the subsidiary of the other or both are subsidiaries of a third company;

(b) a company shall be deemed to be a subsidiary of another if and so long as more than one-half of its ordinary share capital is owned by that other company, whether directly or through another body corporate or other bodies corporate, or partly directly and partly through another body corporate or other bodies corporate;

(c) the interest of one company in another shall be deemed to be proportionate to the part of the ordinary share capital of the other owned as aforesaid by that company.

(3) References in this Schedule to a company apply (unless otherwise stated) only to companies resident in the United Kingdom, and in determining for purposes of this Schedule whether one company is a subsidiary of another, or what interest in a company another company has, the other company shall be treated as not being the owner—

(a) of any share capital which it owns directly or indirectly in a body corporate not resident in the United Kingdom; or

(b) of any share capital which it owns indirectly, and which is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.

(4) References to ownership and to ordinary share capital in this Schedule shall be construed in accordance with section 42(3) of the Finance Act 1938; and, except in so far as sub-paragraph (3) provides otherwise, section 42(2) of that Act together with Part I
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of Schedule 4, shall apply for purposes of this Schedule as they applied for purposes of that section.
Overseas trade corporations
2.—(1) For purposes of the principal section a company which has at any time been an overseas trade corporation shall be treated as if it had never been an overseas trade corporation and, subject to sub-paragraph (2) below, as if it had been charged to income tax and profits tax, or corporation tax, and been given credit for foreign tax accordingly.
(2) Where a company is an overseas trade corporation in the year 1965–66, then

(a) in respect of any amount taken into account by virtue of sub-paragraph (1) above as income in the base year there shall be treated as allowed credit for foreign tax equal to the income tax and profits tax treated by virtue of that sub-paragraph as charged in respect of it; and

(b) in arriving for any year of assessment at the adjusted aggregate amount in the related period of the unused credit for foreign tax, the unused credit for foreign tax in respect of the income from each overseas source of trading income shall be computed as if the foreign tax were 56¼ per cent.

Groups of companies and associated companies
3.—(1) Where a company claiming relief for any year of assessment is a member of a group of companies, and in claiming the relief elects that this paragraph shall have effect in relation to a member of the group specified in the claim, then for the purposes of that claim the provisions of the principal section shall be modified in accordance with this paragraph.
(2) There shall be added to the relief (before abatement) that may be given to the company—

(a) the appropriate fraction of the difference, if any, between—

(i) the amount of the relief (before abatement) available to the other member of the group; and

(ii) the amount of the relief falling to be given to the other member, before abatement in respect of dividends paid without deduction of income tax; and

(b) if in the year of assessment the other member has paid to the company any dividends without deduction of income tax, such fraction of the amount at (a) (ii) above as the amount of those dividends is of the total amount of the dividends paid by the other member in the year.

(3) There shall be added to the adjusted aggregate amount in the company's related period of the unused credit for foreign tax the appropriate fraction of the amount, if any, by which the corresponding amount for the other member exceeds the amount of the relief (before abatement) falling to be given to the other member.
(4) The provisions of the principal section for reducing the relief by reference to the income tax deducted or deductible from dividends paid by the company claiming relief

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shall have effect subject to the following provisions:—

(a) there shall be treated as an amount of income tax so deducted or deductible any amount by which the income tax deducted from dividends paid to it by the other member of the group (and not repaid to the company by virtue of section 58 of this Act) exceeds the appropriate fraction of the relief falling to be given to the other member in that year, before abatement in respect of dividends paid without deduction of income tax; and

(b) there shall be taken into account in the case of the company as if it were its income charged to corporation tax, and as if it were its income so charged from overseas sources of trading income having an unused credit for foreign tax, the appropriate fraction of the amounts respectively falling to be taken into account as such in the case of the other member of the group, and there shall on the like principles be set against income of the company the appropriate fraction of any loss incurred by the other member of the group in a trade carried on by it so far as that loss is not taken into account as reducing the income of the other member.

(5) In applying this paragraph to a company and another member of a group of companies, account shall be taken of the operation of sub-paragraphs (2) to (4) above in relation to the other member in determining what, if any, relief might be given to the other member (or, if the other member does not claim relief for the year of assessment, then of the operation which this sub-paragraph would have on a claim by it containing an election duly made under this paragraph in relation to such companies as may be specified in this behalf in the company's claim); and for this purpose any amount falling by virtue of sub-paragraph (4) (a) above to be treated as income tax deducted or deductible from dividends paid by the other member shall be apportioned rateably between those dividends.
(6) For the purposes of this paragraph "the appropriate fraction" in relation to a company and to another member of the same group of companies is the fraction proportionate to the interest of the company in that other member, but for this purpose the company shall be treated as not being the owner of any share capital which it owns directly or indirectly in a third company if the other member and the third company are also members together of any group of companies; and, subject to sub-paragraph (5) above, "relief (before abatement)" means the full amount of the relief calculated in accordance with subsection (1) of the principal section apart from any reduction under the proviso to that subsection or under any later subsection, but reference to relief before abatement in respect of dividends paid without deduction of income tax are references to the relief calculated apart only from any reduction under that proviso or in respect of dividends so paid.
4.—(l) Where arrangements entered into between any companies make provision for relating to one another the amounts of the
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dividends paid to them respectively by companies under their joint control, relief shall not be given for any year of assessment to a company paying dividends regulated by that provision or to a subsidiary of it, except on condition that for the purposes of that provision the dividends are treated as not exceeding the amount (before deduction of income tax) of those dividends less the relief given to the company paying them and less the appropriate fraction of the relief given to any company of which that company owns ordinary share capital, whether directly or through another body corporate or other bodies corporate.
(2) In this paragraph "company" includes a company not resident in the United Kingdom, and "appropriate fraction" in relation to a company paying dividends regulated by any such arrangements and to another company means the fraction proportionate to the interest of the company paying the dividends in that other company.—[Mr. MacDermot.]
Brought up, and read the First time.
Mr. MacDermot: I beg to move, That the Schedule be read a Second time.
This is another series of somewhat complicated provisions which are required for the purpose of transition to lead us into the world of simplicity itself.
The provisions of general application in this new Schedule concerns the overspill relief for, firstly, the former overseas trading corporations and, secondly, groups of companies and associated companies. The Schedule also contains a revised version of the rules which were formerly found in Clause 79(5) which dealt with the case where companies have entered into arrangements providing for a particular relationship to be maintained between the dividends that each pays. I think these provisions will be of particular assistance to companies in the position, for example, of the Shell companies, which have been referred to a number of times during our debates, which have such an agreement, in their case with Dutch associates.
Hon. Members will have noticed that the Schedule as originally put down has been amended in a number of respects, and I should perhaps explain that the main reason for the amendment was to make the Schedule apply only if the company so elects. The automatic application of the grouping provisions could have worked to the disadvantage of some companies. The original Schedule also failed to allow an excess of unused credit in the related period to be carried out to a parent company, and this has now been provided for in paragraph 3(3).

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I think that is all I need say in introducing the new Schedule. If hon. Members have any points to raise, I shall be glad to try at least to answer them.
Mr. Peter Emery: This is the very last of the Amendments, new Clauses and Schedules which we have had to consider in Committee, and I am sure that this will be no cause for sorrow to many hon. Members. Dr. King, I am sure that everyone will wish to thank you very much for all that you have done during our proceedings in Committee. [HON. MEMBERS: "Hear, hear."] I know that all hon. and right hon. Members on both sides of the Committee feel this quite sincerely.
The point about automatic grouping which was raised on the original Schedule is dealt with quite adequately in the new Schedule, and we thank the Chancellor of the Exchequer for putting it down. However, the Chief Secretary's reference to "simplicity itself" allows me to draw the attention of the Committee—I had intended to do it anyway—to paragraph 2(1), which begins:
"For purposes of the principle section a company which has at any time been an overseas trade corporation shall be treated as if it had never been an overseas trade corporation …"
Obviously, this is simplicity itself, the sort of simplicity which, of course, keeps the Chief Secretary's profession well in business.
Seriously, on that point, I put this question to the Financial Secretary. Is it absolute that any O.T.C. may opt if it so desires? It has been put to me that there may be exceptions, and I should like it to be clearly stated that, as far as the Treasury knows, opting on grouping is definitely open.
This new Schedule means that the Treasury is now accepting the notional method of assessment in the calculation for transitional relief. Initially, we believed that the Government would not accept this. The question I put now is this: if they will have it in this case, why are they not willing to use the notional assessment in other cases where there is particular hardship? I shall not go over all the examples of hardship discussed during the debate on Clause 79, to which this Schedule relates, but we know of these cases, and it might well be that
2078
a notional assessment as an alternative would deal with the problem which they raise. As the Government have accepted notional assessment in regard to O.T.C.s for the purpose of transitional relief, why not get themselves out of their problem by accepting it in other instances particularly where hardship arises?
As I understand paragraph 3(1), it means that a company Z may, if it wishes, make an election in relation to company Y if company Y is one of a group of companies owned by company Z. This is plain enough as far as it goes, but what is not clear is whether company Y could elect to do exactly the same for one of its own subsidiaries, company M. I believe that this would be obvious if company M was directly related to the main company Z, but is it so if it could not be done directly between company Z and company M? This is a very technical point, but I have given the hon. and learned Gentleman notice of the question so that I am not taking him by storm in this instance.
9.45 p.m.
We have now had 153½ hours of debate in Committee on the Bill. For those who believe that one could glibly throw the Bill into Standing Committee, I suggest that if we did that with a Committee stage lasting 153 hours and the Standing Committee sat the normal two days a week and 2½ hours each of those days, it would take to the middle of December to get through the Committee stage.
Mr. Robert Maxwell: Although I have not been in the Chamber today until now, and had not intended to intervene—[HON. MEMBERS: "Oh."] I cannot let this point pass. It would have been perfectly all right, surely, to have sent the old part of the Bill to a Standing Committee and to have dealt with the new legislation in this Chamber. That might have saved a tremendous amount of time for the House, as well as a great amount of strain on hon. Members.
The Chairman: Order. A passing reference, which the hon. Gentleman has made, the Chair would tolerate, but we cannot debate the issue.
Mr. Emery: I had no intention of debating the matter, Dr. King, because I

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knew that I should immediately be out of order.
It is important to realise that the Schedule does not correct the two main criticisms which are being made about transitional relief. It should be quite definite that on the matter of transitional relief the Schedule does not meet the point of being able to deal with the long-term position of investment overseas, because investment overseas will still suffer according to the Schedule.
Also, the Schedule does not meet the second main point that we make about transitional relief, and that is that it is not fair all the way across the board the way it implies. That is why I come back to the initial question that I asked. Would the Chancellor consider in the cases of hardship the possibility of the notional assessment being used for transitional relief in these instances? If I could have an assurance on that, we should not wish to divide the Committee on the Schedule, because it gives easement compared with the original Bill.
Mr. MacDermot Mr. MacDermot rose—
Hon. Members: Hear, hear.
Mr. MacDermot: I can see that one has a measure of support when one comes to make one's swan song which is not always accorded on other occasions. I appreciate this. This is by far the most—
Mr. Heath: Do we understand that the hon. and learned Gentleman will be resigning before Report?
Mr. MacDermot: I feel like saying to the right hon. Gentleman, "No such luck". This is just the swan song for this particular chorus.
The hon. Member for Reading (Mr. Peter Emery) asked me a number of technical questions. He was kind enough to give me notice of one of them, and I think that on that I can give him a fairly precise answer, which is in the affirmative, that the relief to which he is referring can be followed through an intermediate holding company. I think that the provisions which secure this are to be found in paragraph (3,5) of the Schedule.
With regard to the powers of election of O.T.C.s, the hon. Gentleman referred
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to some fears that had been expressed about what the effect of the powers would be. He has not particularised the fears. All I can say in answering generally is that the intention, and, I believe, the effect, is to give the same kind of easement to O.T.C.s as provided for other companies. If the hon. Gentleman has some specific points in mind and cares to communicate them to me I would be glad to look at them further.
The hon. Gentleman also raised the question generally about the notional method of assessment for transitional relief. I do not see the need, from his remarks, for alteration but if he has any particular arguments that he would like me to look at, I will do so. The hon. Gentleman at the end reverted to some general remarks about the effect of the transitional relief, saying that it does not give permanent easement to overseas trading corporations. Of course, this would cease to be a Schedule dealing with transitional relief if it did.
One of the main questions which have divided us throughout the Committee stage concerns the effects of the Corporation Tax upon overseas investment. The Government feel, and have stated quite clearly, that it is necessary through the tax system to put some brake upon the extent of our overseas investment. We do not, of course, wish to dry up or stop in any sense overseas investment. It is a matter of the proper balance. I hope that these remarks may be sufficient in reply to the hon. Gentleman.
Question put and agreed to.
Schedule read a Second time, and added to the Bill.
The Chairman: The Question is, That I do report the Bill, as amended, to the House.
The Chancellor of the Exchequer (Mr. James Callaghan): I know that it is the practice of the Chair, Dr. King, to deprecate debate on this Motion and I would, therefore, not wish to risk incurring your displeasure. But I hope that you will allow me to say—and I know that I speak for all of us in saying this—that we thank you and your colleagues who have occupied the Chair for so long and for so many hours during this noteworthy Committee stage of the Bill.
We have reached a landmark in the passage of the Bill. We thank you and

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your colleagues and also, if I may say so, we extend our thanks to the staff for the services which they have rendered to us. I will say no more, because I do not wish to break the normal custom that debate on this Motion is to be deprecated.
Mr. Heath: I have already thanked the staff this afternoon, Dr. King, but I would like to join the Chancellor of the Exchequer in thanking you and your colleagues who have occupied the Chair during this long and complicated Committee stage.
I would not go so far as to say that this is a noteworthy point during the passage of the Bill—[HON. MEMBERS: "A landmark."]—or even a landmark. It may well be a rock or boulder for the future. We recognise that we still have further stages to go through, but that does not in any way lessen our gratitude to you and your colleagues for the way in which you have presided over our deliberations.
The Chairman: As the proceedings during the last two minutes have been out of order, perhaps the Chair can be out of order for a few moments so that I may say that I am happy to testify to the fact that the congratulations given by the two right hon. Gentlemen to the Chair I give to my deputy and to the team who have worked with me.
Hon. Members: Hear, hear.
Question put and agreed to.
Bill reported, with Amendments; as amended, to be considered Tomorrow; Parts IV and V and Schedules 10 to 19, as amended in Committee, and the added Schedules to be printed. [Bill 156.]

OVERSEAS DEVELOPMENT AND SERVICE BILL
As amended (in the Standing Committee), considered.

Clause 2.—(POWER TO MEET EXPENSES INCURRED IN CONNECTION WITH EM- PLOYMENT IN OVERSEAS TERRITORIES.)
9.55 p.m.
The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert E. Oram): I beg to move, in page 2, line 28, to leave out "person who" and insert "body which".
The extension of the Overseas Service Aid Scheme into the non-govern-
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mental field will involve the negotiation of agreements between the British Government and various employing bodies in each country in which the extension will operate. Authority for these negotiations is to be found in the latter part of subsection (2) which enables the British Government to make suitable arrangements with "the authority or other person who is the employer."
During the Committee stage there were criticisms from the Opposition of the words "or other person". It was suggested that, in so far as these would enable payments of taxpayers' money to be made to private individuals, they were undesirable and that it would be wrong to authorise payments to a private individual and risk the loss of public confidence which would follow, perhaps, a scandal involving aid misdirected into that individual's pocket. As I said in Committee, I very much doubt whether there was any real risk of any such misfortune. I think that the hon. Member for Liverpool, Wavertree (Mr. Tilney) will recognise that it was extremely unlikely that our Ministry would ever allow itself to get involved in this way.
Nevertheless, we have looked at what the hon. Gentleman said, as we promised to do, and we find that we can safely eliminate the reference to "person" but still preserve the desirable scope of agreement. We thought of the word "authority", but that is not wide enough in itself to cover the many employing bodies with which we shall be concerned. We felt that the expression "or other person" was a handy legal term covering everybody vested with a personality by law. But, recognising that there was the disadvantage to which hon. Members called attention if we used those words, I recommend to the House the substitution of the words "body which" for "person who".
Mr. John Tilney: In our many sessions in Committee upstairs the Parliamentary Secretary was charming and listened to our arguments. We appreciate that what appeared to be a very firm front has now dissolved, to some extent, as the result of the arguments which my hon. Friends and I put forward. Indeed, the hon. Gentleman has had a conversion to common sense.
We regret that the Minister, the right hon. Lady the Member for Blackburn

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(Mrs. Castle), was unable to be present during the Committee stage. We understand why she was away in the great sub-Continent of Asia and that when she returned she was ill; but we had hoped that she might have been present to ensure that this exciting barque of aid was launched on the sea to the benefit of overseas countries. We feel that this excellent figurehead which has appeared in so many of our deliberations should have been substantiated on the Government Front Bench tonight. However, I must say to my hon. Friends that the Parliamentary Secretary has been good enough to explain to me why the Minister could not be present tonight. She is engaged in conversations with some of the Commonwealth Prime Ministers, and I think that a record should be made of that.
Similarly, I should like to say how much my right hon. Friend the Member for Mitcham (Mr. R. Carr) regrets that he cannot be here tonight.
It being Ten o'clock, the debate stood adjourned.
Ordered,
That the Proceedings on the Overseas Development and Service Bill may be entered upon and proceeded with at this day's Sitting at any hour, though oppose.—[Mr. Fitch.]
Question again proposed, That "person who" stand part of the Bill.
Mr. Tilney: I was saying how much my right hon. Friend the Member for Mitcham regretted that he could not be present because he is in the United States of America. I am glad that his arguments have prevailed.
The Parliamentary Secretary will remember what he said in Committee, as reported at column 133 of the OFFICIAL REPORT. He said that the aid might, in an extreme case, be applied to an individual. My right hon. Friend said:
"we had the categorical statement that these words would give power to give money to individuals. I do not think that that is right or that Parliament should do it."—[OFFICIAL REPORT, Standing Committee A, 4th May, 1965; c. 136.]
My right hon. Friend urged that we should not underrate the seriousness of the point and, above all, that the public, who pay the taxes which enable this country to grant aid, should not be sus-
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picious that aid is given possibly in the wrong direction and that false concessions could easily arise therefrom. Surprisingly, in answer to my right hon. Friend, the Parliamentary Secretary said that he did not expect that any change would be made in the drafting. I am only too glad to think that he has had second thoughts and that the Amendment is now before us.
We spent many hours in Committee upstairs. We on this side have been accused of arguing at length and of fili-bustering, but the example of the Amendment is enough to prove that the Opposition has shown great vigilance, which has caused the Government to alter their views. I only regret that Parliamentary time, which, I believe, is valuable to the Government, could have been saved if a change of heart had been shown much earlier than at this Report stage. At least, although this is such a belated conversion, we on this side welcome what the Parliamentary Secretary has said.
Amendment agreed to.
Mr. Tilney: I beg to move, in page 2, line 30, to leave out "no person" and to insert:
"not more than five persons in respect of any one of the categories set out in subsection (5) of this section".
In moving the Amendment, I should like to assure the Parliamentary Secretary that we agree on the principles of good Treasury control and that we should give aid as effectively as possible. The Treasury must, of course, approve any agreement with any overseas Government and we hope that this will result in continuing expenditure of aid over a number of years. But we do not see why there should be minute, detailed Treasury administration.
It seems to us that once agreement has been reached on policy decisions, the actual organisation should be left to the Department concerned. We should get away from the candle-ends type of control. Nowadays, we have new management techniques. The whole scale of Government activity has grown. Government, overseas and at home, are one of the biggest employers of labour. They really are in big business. I cannot believe that the Treasury would wish to interfere in the day-to-day administration of the nationalised industries, so I do not

2085
see why it should interfere with the recruitment of single individuals, as is the case in the Bill as it stands.
I should like to quote part of paragraph 95 of the Sixth Report of the Select Committee on Estimates, 1957–58, which reads:
"Your Committee believe that one of the main objects of any 'system' of Treasury control should be to see that Departments have a proper 'system' of financial control within themselves."
That is to say, there should be a proper system of decentralisation. The paragraph also states:
"Your Committee are not convinced that this principle is fully acted upon by the Treasury."
I want to refer again, as my right hon. Friend did, to what is known as the Plowden Report—Command 1432. We read in paragraph 35:
"The primary responsibility of a Department is to conduct its policy effectively within the limits laid down by the Government. The Department is itself responsible for the efficiency with which it does its work: the Permanent Secretary, as Accounting Officer, is responsible for the financial management. It is important that these responsibilities should be clearly understood, fully accepted, and reflected in the Department's relations with the Treasury."
That Report was published after the passing of the Overseas Service Act, 1961, but it seems to me that the Treasury wish to retain absolute control; that, according to the Bill, individual submissions have to be submitted to the Treasury for its consent. Yet we live in what we hope to be a modernising Britain. My fear is that the Treasury is still a little archaic in its views.
We on this side would like to see the mantle of Abraham falling on either the right hon. Lady or her successors, so that in communing with the Treasury and referring to the various categories set out in subsection (5) it might be said, "Peradventure, five shall be found. Can I not have my own way?" It seems to me that the Parliamentary Secretary, in almost a Russian manner, will say "Niet" and will back up the Biblical patriarch of the Treasury.
Not only is this a matter of modernisation and of bringing the whole Treasury system up to date, but it also has an effect on the thinking of the recruits. Surely speed in selection and appointment is very important. When we discussed
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this matter in Standing Committee, the Parliamentary Secretary said that simultaneous action on behalf of his Department and the Treasury would be taken, but that has not really been proven and there is a danger that many qualified people whom we want to recruit for the benefit of the overseas developing countries may go elsewhere if they in their turn think that there might be undue delay.
I do not quite understand why there should be this needless duplication. We have highly qualified people, from the right hon. Lady, the Parliamentary Secretary, the Permanent Secretary and his admirable staff. Why are they not qualified themselves to say that they have the right people to do the jobs which are required to be done in the overseas countries? If they are unable to choose, surely it is cheaper in the end to remove or change those at the top rather than have this unnecessary duplication. I cannot believe that the financial director of any group of companies would insist that the managing directors of each subsidiary company should have to report to him what individual recruitment should be before those individuals were recruited. Does this happen in the nationalised industries? Of course not.
My right hon. Friend the Member for Mitcham (Mr. Carr) pointed out the difference between the Colombo Plan and schemes for Commonwealth education and co-operation. He said that he was far from satisfied when he held the right hon. Lady's post. A limit to the money has been set and we agree that this is right and, of course, we support having strict accounting. But having agreed that, surely it is better to decentralise to the right hon. Lady's administration and to make her and the Parliamentary Secretary decide who should be appointed, relieving the Treasury of this unnecessary duplication.
Sir George Sinclair: In Standing Committee we on this side of the House urged that responsibility for designating posts such as are covered by subsection (5) should be given fairly and squarely to the Minister of Overseas Development. The Government have enhanced this Ministry and its range of responsibilities. It is a pity that having a fully-fledged Minister, if I may so term it, of

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Cabinet rank, the Government are tending to spoil the clear symbolism of the appointment. They surely have no need to mention Treasury control in the very Bill which sets out some of these extended powers. We all accept the need for the watchdog functions of the Treasury. It does not mean that those controls need to be bared to the public.
10.15 p.m.
The Ministry now has a Permanent Secretary, what some people have called "the Castle's other half". But surely this formidable set-up should be capable of exercising full responsibility for the task handed to this Ministry. Of course, they have to carry out these tasks in consultation with the Treasury and with many other Ministries of the Overseas Departments, but they are not mentioned in the Bill. Why was it necessary to mention this matter of detailed Treasury control in the Bill? The Amendment to which I am speaking is designed to give the Minister some additional formal responsibility. Far more, it is designed as a protest against the naked exposure of what I would call, for this occasion only "the dog beneath the skin."
Sir John Fletcher-Cooke: I support the views put forward by my hon. Friends. I do not wish to rehearse all the arguments used at an earlier stage in support of the proposition that it is quite unnecessary that there should be this measure of detailed Treasury control. There is no difference of opinion between us as to the general control which it is appropriate for the Treasury to have and which it does have in the earlier parts of this Bill.
What puzzles me is that the Government have obviously accepted the principle that detailed Treasury control should be diminished, because we have a number of examples. I will quote only one to illustrate that they have accepted a change in this respect. I should like to draw the attention of the Parliamentary Secretary to the Museum of London Bill as it was then, which is now the Museum of London Act. When it was a Bill before this House the Government, in the name of the Financial Secretary to the Treasury, tabled a number of Amendments proposing that the word "Treasury" should be replaced by "Secretary of State".
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Among other Amendments there were some which related specifically to the appointments of officers.
In other words, the Treasury's control over such appointments was removed and the control was formally placed where we on this side think it should be, with the Secretary of State. I therefore feel that if the Government are disposed, in other parts of their activities to accept the policies to which my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) referred in terms of the recommendations of the Plowden Committee and the Estimates Committee, then the Ministry of Overseas Development should also follow the same lines.
A little earlier the Parliamentary Secretary in rebutting suggestions that had been made from this side that the Ministry, if it was left with a piece of legislation containing the words "person who" might get into difficulties, said, "It is unlikely that our Ministry will ever let itself get involved in this way". This was in explaining the Amendment which has just been agreed to, in page 2, line 28. I accept that, but I also believe that the Ministry of Overseas Development is unlikely to get itself involved in any difficulties in the appointment of these officers, and that it does not need to be told by the Treasury whether it should or should not appoint them.
I therefore appeal to the Parliamentary Secretary to reconsider the matter and to agree to accept the Amendment so that we can at least limit, if not remove, Treasury control in these matters of detail.
Mr. Henry Clark: The Amendment deals entirely with the question of Treasury control. As we have just finished the Committee stage of the longest Finance Bill in living memory, one would have though that this was the time when one could consider not only the interests of aid but the interests of the Treasury. Is it in the interests of the Treasury that every officer designated by a Cabinet Minister should have to have his designation approved by the Treasury? If Treasury Ministers had not had to waste their time answering questions like this, some of their staff might have been more ready to prepare the major changes which have been made in the tax arrangements of this

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country, and we might not have had the Government Amendments which appeared to the Finance Bill.
It is a well-known principle in business today that the time spent counting paper clips is time wasted. I believe that if we appoint a Cabinet Minister to a first-class Ministry such as this he should not have to run round to the Treasury every time he wants an appointment to be confirmed. I believe that the Treasury's time is being wasted by this sort of control and this sort of Clause in the Bill.
Aid today is still an art more than a science, and there is no question but that aid varies more in quality than in quantity. The giving of aid to underdeveloped countries is frequently a matter of a stitch in time, and giving it at the right time and finding the right man can make all the difference. The right man is frequently not prepared to hang about waiting while the Ministry sees whether the Treasury is prepared to give the O.K. to his appointment.
Only too often today the man with the qualifications which the Department wants has three or four commercial companies and possibly one or two other institutions looking for his services. If we are to get the right man to do the job, we must be in a position to offer him the job at once, and on the spot.
I wonder why the Minister and her civil servants have put this provision into the Bill. The obvious conclusion to be drawn, perhaps rather naively, is that they do not trust themselves, or perhaps it is that they know that the Bill will be operated largely by a Conservative Government, and they do not trust us. We, however, are prepared to trust the Minister, even in her absence, and the Parliamentary Secretary, and we feel that they might do the same for us.
Mr. Oram: The hon. Member for Liverpool, Wavertree (Mr. Tilney) reminded us that we had some lengthy debates on this point in Committee. He suggested that we complained about it. There was only one occasion on which I made a complaint, and the record will prove that I had some little justification for that complaint. I certainly made no complaint about the care with which we debated the principle of Treasury control in relation to the process of designation. I make no complaint, either, that, in a
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slightly different form, the hon. Member has seen fit to raise the matter again on Report. He will not be surprised to learn that the answer—although I will not say it in Russian; I will say it in plain English—is "No".
This provision is taken from the Act of 1961. That, in itself, does not give it justification, but we believe that there was full justification for including it in the 1961 Act and for carrying it forward into this Bill. The Opposition accept the principle of Treasury consent in relation to the conclusion of agreements. What they object to is the need for Treasury consent in relation to designation.
Here, I suggest, they miss a main point in the whole process of designating officers for service overseas. In this process the most significant financial act is not the conclusion of the permissive agreement in general with an overseas Government; the significant thing is the exercise of the Minister's discretionary power to designate officers who are eligible for benefits under this scheme. It is for this reason that the Bill provides that the Treasury can grant this consent not in relation to every individual but generally.
As I explained in Committee, in practice, officials—we in the Ministry of Overseas Development—agree with the Treasury general criteria for the designation of officers under certain agreements. Then individual cases are discussed with the Treasury—and I stress this—only when they fall clearly outside those general criteria and when new principles are brought up and need to be worked out.
The general criteria enable the process to work quite simply without—in the hon. Member's phrase—meticulous administration and without any delay, and I assure the House that the whole process works without the difficulties that the hon. Members envisaged.
Sir J. Fletcher-Cooke: If this procedure works so satisfactorily as an administrative exercise—and I have no doubt whatever that it does—why is it necessary to write it into the Bill? This creates the wrong impression. The Minister naturally consults the Treasury, as he consults all the other Departments involved. Why is it necessary to spell it out in black and white that the Treasury must be consulted by law?
Mr. Oram: I explained in Committee that on occasion one single act of designation can lead, in logic, to opening up the gateway to a vast category of other designated officers. It is for this reason that what may seem only a simple case may involve quite a huge financial expenditure as a result of one such decision.
In general, it is possible to do this in a straightforward administrative way without the detailed reference to the Treasury, but it is necessary in law to have this safeguard of Treasury consent in relation to cases of vast extensions with considerable financial implications.
Mr. Tilney: Surely any right hon. Lady worth her salt and any Parliamentary Secretary worth his would automatically get the Treasury to agree to any new development of this kind.
Mr. Oram: The hon. Gentleman recognised in his opening speech, as the Plowden Report—which he quoted—recognises, that it is right for the Treasury to have a final power in relation to large expenditures. It is because there is a possibility of large expenditures being involved in one simple-seeming act of designation that it is necessary, in our view, that this should be continued in the Bill.
That is why we propose to proceed by this means in respect of the extension of the scheme under the Bill. The Amendment accepts this general principle, but seeks to exclude the case of a handful of designations. I would suggest to the House that this Amendment is not defensible under the general principles which I have explained. In so far as this handful of people comes within the general criteria for designation, it would be unnecessary, in any case, to consult the Treasury, but in so far as they did not come within those general criteria, new principles, as I have explained, might be involved.
It is in such cases of new principles that consultation with the Treasury would be right and sensible. I can see no new valid point in the Amendment or in the arguments produced in its support. I advised the House to reject it.
Amendment negatived.
Mr. Oram: I beg to move, in page 2, line 42, to leave out "in any capacity".
Mr. Speaker: It would, perhaps, be convenient to discuss with this Amendment the one following, in page 2, line 45.
Mr. Oram: That would be convenient, Mr. Speaker.
These Amendments were designed to meet the points raised in Committee. It was pointed out by the right hon. Member for Mitcham (Mr. Carr) that these words "in any capacity" occur in some of the paragraphs, but not in others. He said that he was not particularly concerned whether they were included in all or in none, but he pointed out the desirability of uniformity in this matter. It was a point which I was willing to accept. We have looked at the matter since and we feel that it is better to produce uniformity by leaving out this phrase. The acceptance of these two Amendments would affect that change.
Mr. Tilney: This, once again, shows the value of the vigilance of the Opposition.
Amendment agreed to.
Further Amendment made: In line 45, leave out "in any capacity".—[Mr. Oram.]
Mr. Oram: I beg to move, in page 3, line 1, to leave out paragraphs (d) to (g) and to insert:
(d) he is employed by any authority, organisation or institution established for public purposes in an overseas territory, including any marketing board, co-operative society or other body providing benefits primarily for a particular section of the public, or
(e) he is employed (otherwise than by any authority, organisation or institution established as aforesaid) in any service provided, or in any other activities carried on, for public purposes in an overseas territory.
This Amendment is also designed to meet a number of points which were made in Committee. We had a long and protracted discussion on the question of the description of the organisations with which agreements might be sought. I think that it was in this connection that I was provoked on one occasion to suggest that we were being a little too meticulous.
I am satisfied that the wording of the Clause, with the inclusion of an Amendment which I moved in Committee, was sufficient to cover all the classes of people

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we ought to help. Nevertheless, hon. Gentlemen opposite raised some criticisms and we have produced this Amendment with the object of covering the whole sphere we have in mind and, at the same time, meeting their criticisms.
The main objection was that paragraphs (d) and (e) were unnecessary, because anything within them was covered by the general provision. The argument was that the general term "public services" must surely cover universities, education generally, health services and so on, and that it was unnecessary to have some of those public services especially mentioned in an earlier part of the Clause. There was no objection to the inclusion of the particular occupations mentioned in paragraphs (d) and (e), but it was suggested that in any Statute the inclusion of specified items inevitably tends to throw doubt on the generality of the later sweeping-up provisions because some meaning must be attached to the earlier specific references.
It was suggested, for example, that if it was necessary to mention doctors, it might be equally necessary to mention agriculturists. The argument was more sophisticated and architects and other categories came into the discussion. There are a number of sound reasons why the Clause was drafted in its original form, but I will not go over the arguments again now.
We have been able to redraft the provision in general terms which I hope the House will find acceptable. I am sure that the Amendment is free from the criticisms which were advanced, particularly by the hon. Member for Liverpool, Wavertree (Mr. Tilney). It covers the whole scope we wish to have covered. It gives us the full powers we seek and, therefore, in this spirit of cordiality which now prevails after the long Committee stage of the Finance Bill, I hope that the House will accept the Amendment.
Mr. Tilney: My hon. Friends may wish to comment on what the hon. Gentleman
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said at the beginning of his remarks. We believe that our long and protracted debate, to which he referred, has had an admirable result. We are pleased that the Government have had a change of thought. We believe that the complaints—only once, I think, from the hon. Gentleman but more than once from some of his hon. Friends—that we were filibustering and speaking for too long have been shown to be untrue. Indeed, the Bill has been improved remarkably by this Amendment. The Opposition should take credit for the long debate we had on the Clause.
I have only two questions to ask the Parliamentary Secretary. Possibly he can expatiate on the words, "particular section of the public". The Amendment says:
"primarily for a particular section of the public."
Does this include any help which may be given to a company in which the Commonwealth Development Corporation has a share? We would be grateful if he can comment on that.
Mr. Oram: I speak again with permission of the House.
The hon. Member will recall that we had discussions, for example, about co-operative societies and marketing boards. There may be some doubt whether the purposes they are serving are for the public as a whole. They are serving public purposes. Co-operative societies are serving a very wide membership who are members of the public and their purposes are to serve the public generally, but it is necessary to have this kind of wording to make sure that that kind of undertaking is included.
I can assure the hon. Member that operations under the auspices of the Commonwealth Development Corporation would be included.
Amendment agreed to.
10.43 p.m.
Mr. Oram: I beg to move, That the Bill be now read the Third time.
Since the Second Reading, the Bill has been subjected to an examination in Committee more detailed and protracted than any similar Bill has ever experienced. I accept the points of the hon. Member for Liverpool, Wavertree (Mr. Tilney) that the discussion has led to improvements in drafting, although I think he was inclined to exaggerate the amount of credit due to him and his hon. Friends; but I accept that one or two of those minor Amendments have made improvements.
The Bill is to provide means of furthering our overseas aid in directions to which both sides of the House attach a great deal of importance. The first Clause provides for further assistance towards Colonial development and is the latest stage in our long and continued contribution to the economic development of teriritories which are our direct responsibility. The period for which the present Bill provides money overlaps that for which the previous Act provided, and this is fortunate since already some three months of the first year have elapsed.
We shall, as soon as we are in a position to do so, tell the territories how much money they can expect from us for development over the next few years, and we shall then do all we can with the resources of our Ministry and of the Colonial Office to assist them in planning their economic development.
My right hon. Friend on 21st June announced her intention of making interest-free loans to selected overseas countries and the Colonies will, of course, be eligible for these on the same criteria as will be applied to other countries. As my right hon. Friend said, these criteria will have regard to the economic position of the territory and its capacity to achieve balanced and effective development. Already, the mixture of grant and loan in order in our aid to our colonies has resulted in their paying a very low interest rate on their development money looked at overall. In many cases already we have provided money only by grant, and this further concession will make development cheaper even in the territories which are able to borrow.
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I need not spend long on Clause 2, because it, too, was very thoroughly examined in Committee and we have had further close examination of it this evening. I should, however, again draw attention to its main purpose. The Clause supersedes the Overseas Service Act, 1961, but it retains the Overseas Service Aid Scheme for which that Act provided. The scheme continues to ensure at the expense of the British Government satisfactory emoluments, salary, education allowances, overseas passages and, where necessary, compensation for over 10,000 expatriate officers still in post under 41 different Governments and Administrations.
It is because the scheme has been of so much value and its work is now well understood, that we propose under this Bill to extend it beyond the central public services of Governments to which so far it has applied, to the many non-governmental bodies performing public or social services in overseas countries.
In moving the Second Reading of the Bill my right hon. Friend said that for financial reasons we should not expect to be able to offer assistance to all the bodies that might qualify for it under the Bill and we should, therefore, in due course attempt to establish priorities for this assistance. Consultations to establish these priorities are beginning. We estimated in the Explanatory Memorandum that, having regard to our financial position, we should expect this extension of the Overseas Service Aid Scheme to rise in cost to an ultimate total of about £1½ millions a year, and this continues to be our estimate.
My right hon. Friend also said that she intended to use this extension of the aid scheme as the means of discharging the undertaking given by the previous Government at the Ottawa Conference last year, that financial help would be offered towards the conditions of service of British expatriate staff in overseas universities. This, too, remains our intention and we hope to be able to give effect to it soon after the Bill becomes law.
It is natural that Clause 2 should have aroused interest and awakened anticipation in some of the bodies potentially eligible for the financial help which it

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contemplates, and in the British expatriate staff of those bodies. While, therefore, our help must still be limited by the general financial considerations that I have mentioned, we know that this help will be welcomed by many bodies, and we are anxious to get on with the job of providing it as soon as we can.
I am happy to know from the previous discussion of the Bill in the House and through our work in the Committee that while there has been most careful consideration of the detailed wording of this Clause, its general purpose is welcome on both sides of the House.
I am grateful for the understanding and detailed examination that the Clause received from both sides of the Committee, and I hope that the House will now be prepared to give the Bill a Third Reading. We hope that it may also be possible for it to have a speedy passage through another place so that the Government may soon possess and be able to use the powers for which the Bill provides.
10.49 p.m.
Mr. Tilney: We on this side of the House agree very much with what the Parliamentary Secretary has said. We had many long sittings in Standing Committee—in fact, there is quite a tome in HANSARD of our discussion—and the Chairman once had to use her casting vote. I think that the Parliamentary Secretary will agree that there was really no repetition of argument. We on this side did try to improve the Government's Bill. I am glad that the Parliamentary Secretary referred to the 10,000 expatriate officers. I believe that in this country we are inclined to forget, when we read about America's Peace Corps and what is happening about the help given by other countries, the wonderful work that is done overseas by Her Majesty's overseas civil servants, and those who are recruited on contract, in helping the developing countries overseas to try to improve their well-being and their overall happiness.
We on this side have tried to ensure greater flexibility. We have not always managed to succeed in our arguments with the Government. We never really wanted to spend more money. We hoped that we might get the Bill amended, so that when we on this side of the House
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are on the Parliamentary Secretary's side we shall have greater scope for manoeuvre. But, of course, we agree that this is a good Bill. This is an agreed Measure overall. It follows the policy whereby we on this side of the House for 13 years managed to expand, and, in fact, I believe we doubled the aid over comparatively few years. I only wish that we could have done more.
But I regret that in the atmosphere of the Finance Bill the private investment overseas may come down; and, therefore, that the Government have declined the chance that we endeavoured to give them, of giving themselves greater scope for using public aid in a particular year, either to help our own exports or to help overseas countries in what may be a limited period of difficulty. However, that has been the Government's decision and they have decided against our wish to give them greater flexibility.
Mr. Speaker, there have been many sittings in Committee and I believe that that has shown that the opposition has been worth while, in that the bulk of our points have now been met and the Bill has been very substantially improved. It carries on the policy of 13 fruitful years. The Parliamentary Secretary has referred to free loans and lower interest rates. We on this side are aware of the great difficulty of many of the developing countries in servicing the loans that they already have to service. It is not easy for some of these poor countries to raise enough money, in currency which to them is hard, to meet interest and repayment of capital. We on this side only wish that we were richer and were able to help them more.
We like to remember that it was in the very dark period of the war that the first of these Measures was passed by this House. I believe that history will say that we have, as a country, a great record. We have tried to help the poor countries. We are not as rich as we would like to be, but we are a resilient nation and we are determined, if possible, to close the gap between the rich and the poor nations. This is agreed between all parties in this House.
The Parliamentary Secretary said that he thought that this Measure would be welcomed by many. I suggest that it will be welcomed by all.
10.55 p.m.
Mr. Henry Clark: The Bill is welcomed throughout the House. But there are two points which the Parliamentary Secretary will not be surprised that I raise. I want to deal, first, with the recently announced granting of interest-free loans. We welcome this move. It gives the Minister increased flexibility in the way in which he can help countries.
There are many countries which are amazingly naive about world economics. It is no good suggesting to them that we are so rich that money is lying around and can be given away or lent free. I ask that when these loans are being given, every possible step should be taken to make clear to the recipients that we have to pay 6 or 7 per cent. or more for the capital that we have and that when we give them interest-free loans, we here are paying that percentage. It should be made quite clear that this is the case.
The other matter about which I feel strongly is that in Clause 2(1,a) the Minister is given power to compensate designated officers. The job of the designated officer of Her Majesty's Overseas Civil Service is nearly over. A considerable number of these officers serving in various territories will in due course find their territories becoming independent and will largely have lost their jobs. I am happy to say that in the past the vast majority of officers who have served this country and the other country were fairly, justly and even, in some cases, generously compensated.
But the Parliamentary Secretary knows from the correspondence that I have had with him that there are a minority of cases of men who have served this country, Her Majesty the Queen and the other country with great loyalty, but when independence has come they have found that they have lost their promotion prospects, their employer in the other country and, largely, their careers. Because some precedent or strange criterion was built up, they received no compensation whatever from this Government.
In Committee, I went to some length to demonstrate how this rather false criterion about compensation for these officers had been built up—officers who were never allowed to become
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members of H.M.O.C.S. The criterion was built up in a false way, and we now largely pay compensation on what might be called the accident of recruitment. Whether an officer gets compensation when his career, promotion prospects and, often, his way of life are taken away by a declaration of independence—though we welcome theindependence—often depends on the minutial of appointment years before. There are hard cases, and hard cases may perhaps make bad law, but I ask that when this provision is applied the Minister and the Parliamentary Secretary will remember that the real criterion is whether an officer suffers because of a grant of independence, and if he has suffered in the career that he was led to suppose that he would have when he entered the service, he is entitled to fair compensation.
Whether these officers were appointed by a special commission sitting in a foreign country appointed by the Secretary of State or the Crown Agents, whether they were appointed locally, whether they were appointed in any of the various ways in which officers may be appointed, if they were led to believe that they had a full career in front of them and if that career is taken away, they are entitled to compensation. That is the only criterion on which we can honestly and fairly administer the system of compensation.
I will not labour this, although I myself missed compensation. The vast majority of officers have been fairly and generously met, but the hard cases spoil the record, and I honestly feel that it will be the hard cases which will be remembered in the years to come and not the generosity.
11.0 p.m.
Sir Douglas Glover: I should like to reiterate and support what my hon. Friend the Member for Antrim, North (Mr. Henry Clark) has said. Hard cases make bad law, but we are dealing here with a number of people who had intended to devote their lives to a certain field of work and, because of changes in the Commonwealth and the Colonial Territories, they have found that work coming prematurely to an end. Some are in jobs where it is difficult to say that they

2101
qualify for compensation, but as this is a problem which is becoming smaller and smaller and is almost certain to come to an end in the foreseeable future I think that it is one of those situations which any Government, of whatever political party, should look at with sympathy and generosity.
I am not certain that there should not be a commission appointed to assess the hardship which these people have suffered, even if they do not legally qualify for compensation and pension, and that on that assessment the State should be recommended by the commission to recompense them to a certain extent. As for interest-free loans, I agree with what my hon. Friend the Member for Antrim, North said about the naïve attitude of mind of some countries overseas where it seems to me people believe that money grows on trees. They do not understand the market. They do not understand that money which is loaned to the State in this country and then loaned overseas is still money loaned by individuals who expect some return on it.
Since we are trying to lead these countries to a responsible form of government it would be far better if when we give an interest-free loan that that loan was made at present market rate from the point of view of interest but that we then waived the interest to the country concerned. This would enable us to make clear to the people of that country that the loan was not only being given by this country but that somebody here was having to pay the interest. It would then be understood that this was a deliberate act on the part of this country in waiving the interest, which we were paying. By this means we would build in those countries a greater sense of responsibility.
It will not be long before many of these countries will have to finance their own loans and, therefore, it is not helping them to be responsible if they think that they are getting money without somebody having to pay the interest on it.
A criticism of these interest-free loans is that we are helping to create the impression that there is some sort of milch cow which provides this money. The country concerned should know that the interest on the money is being paid—however much we like to ignore the fact—in many cases by people who are not
2102
very much better off than the people of the country to which we are giving the loan. The sooner the people of these countries realise that somebody somewhere is paying the interest the better for their own future development and responsibility. What I am saying is in the long run for the benefit of these countries.
11.5 p.m.
Sir G. Sinclair: At this stage, after our very long consideration of the Bill in Committee, I make three points. First, we had a long debate in Committee, trying to induce the Government to accept a slightly higher limit on their grants and loans for the territories to which Clause 1 applies. We did this because we thought that, in the light of the Finance Bill which was declared to discourage overseas investment, there should be a compensating rise in aid through grants and loans. The figures were slightly bigger than before, and we felt that the scope ought to be enlarged a bit more.
We thought this particularly important at a time when we ought to be attracting private capital to the smaller territories. It is always difficult. There has been a good deal of disinvestment in recent years, and this is the very time to try to encourage more. Since that encouragement had been withheld we felt it important to do what we wanted the Government to do, that is, make a symbolic raising of the limits for grants and loans. We were reassured by the Parliamentary Secretary that there was plenty of scope within the figures for giving the grants and loans which the smaller territories, under the Colonial Development and Welfare Act, would be able to use.
Secondly, the matter of interest-free loans. This is a debatable subject. It is most important not to overburden small territories which, in many cases, are already carrying a bigger burden than they can repay in the way of loans. Very often, they cannot even service their loans. Our Government have, on the whole, given a great part of their aid to territories in the form of grants, and they have done much better than many of the continental countries whose low rates of interest are always quoted against us. But we must be very selective in giving interest-free loans. There is room

2103
in nearly every territory for quite hard loans for specific projects which can be expected to carry the servicing of a loan within a short time. It is important that these loans should be made on hard commercial terms because, if they can be made in that way, it becomes far easier to get money for Governments or anybody else.
I want great care to be taken to ensure that we have hard loans available for projects which can carry the repayments even in quite small territories. I am sure that the Parliamentary Secretary and his right hon. Friend have this very much in mind. I beg him not to use soft loans without very careful consideration. Each one should be considered in the light of the total economy of the territory. I welcome the flexibility that these new interest-free loans give but I ask for very serious consideration to be given to the hard loans for projects that can carry them.
Thirdly, there is the question of Clause 2, concerning the extension of facilities to people from this country serving overseas who are outside what was known as the old establishment of the Civil Service. The most important form of aid we are giving to overseas territories is the trained manpower in technical assistance. This departure of being able to help people engaged in technical assistance in universities and para-governmental bodies is a real advance and a real service to those territories and I think that all of us on this side in the Committee welcomed it as a great help to the territories that need technical assistance.
All of us, although we have some points of detail over which we have argued, welcome the intention behind the Bill. I welcome the fact that the Bill is in the hands of an enhanced Ministry with enhanced hitting power.
Question put and agreed to.
Bill accordingly read the Third time and passed.

FARMING, NORTHERN IRELAND
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]
11.11 p.m.
The Marquess of Hamilton: Apart from the question of economic viability, the small farmer problem in Northern Ireland represents of a considerable amount of social distress and anxiety, with redundancy constantly hanging overhead. The problem is also charged with emotion through the deep-rooted desire for independence and of individualism. Since the average holding in Northern Ireland is 30·5 acres compared with 79·2 acres in England, the term "small farmer" has considerable difference in meaning between the two countries.
Although there are approximately 67,000 holdings in Northern Ireland, there are only 11,600 which have a size of over 50 acres, so we are literally a province of small farmers. In Fermanagh, out of a total of 7,800 holdings, there are only 239 of over 100 acres in size, with 4,900 holdings of under 30 acres.
The problem of farming income is so serious and so acute in Northern Ireland that there are approximately 13,000 farmers whose output of production is too low to provide an income equal to the minimum agricultural wage. Yet they have no alternative source of livelihood outside farming. The net income includes not only the work of the small farmer but also of his wife, his function as manager, and also the interest on his capital investment in the farm.
Because of rising costs and, to a large extent, falling prices, the Northern Ireland small farmer is just not in a position to absorb the greater part of the increased costs through increased earnings. The retail price index has risen by 4 per cent. in the last twelve months, yet the small farmer is battling to keep his end up. Somewhat naturally, he asks "Why should I be the victim of circumstances when the small farmer has played a vital role in an industry which, more than any other, has created the present climate of prosperity in Britain?" The small farmer now feels as though he is living on the edge of the industry, almost discarded, and in an atmosphere of uncertainty.

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Paragraph 12 of the Government's White Paper on the Annual Price Review mentions the amalgamation of farms. What are these arrangements for amalgamation? What will they involve? What will be the end result in Northern Ireland, with its consistently high unemployment level? Will the promise of a really viable industry refer only to the "big" farmers? Although I am in favour of co-operation between small farms, more detail is clearly needed, and I doubt if it will achieve more than marginal benefit for the small farmer.
I welcome the announcement in the last Price Review of the setting up of an agricultural trust, because I believe this is a development of significance and importance, for such a trust could encourage the growing of experimental crops and/or new processing ventures. Both of these could be of considerable benefit to the small farmer. For agriculture must share in the technological revolution and, like all other industries, must place stress on experimentation, development and research. We have already in Northern Ireland an intensive system of farming through the large number of small farms which are not only forced to have specialised but also intensified enterprises.
Yet, in spite of this intensive farming, the small farmer is becoming poorer each year, and I doubt whether his income has ever risen by 1 per cent. over the last twelve years, compared with the national average of 56 per cent. This is in no way due to inefficiency, or through lack of agricultural education, and to quote from an article in The Times, May, 1963, by their agricultural correspondent:
"The Northern Ireland farmer has a quicker appreciation of the opportunities that have come the way of the post-war farmer, both technical and financial, with a distinctly greater interest in agricultural education".
This article also stated—
"… that the optimism and evident skill of the fifty acre Ulsterman provides a wholesome corrective to the belief that farming in Britain is becoming a mere agricultural business dominated by tycoons".
I fully appreciate and realise that farm structure, like all our social and economic institutions, must be constantly modified in order to keep abreast of the economic situation. However, through the astonish-
2106
ing powers of survival, tenacity and adaptability, I am convinced that the family farm will continue to predominate in Northern Ireland.
I am also convinced that there is no single optimum size of farm in Northern Ireland and that they will continue to be financed by individuals, not by farming corporations. But, through voluntary amalgamation and increased mechanisation, an evolution, as opposed to a revolution, is taking place on the land, resulting in fewer people being employed in agriculture. Farms are becoming larger, both in terms of acres and of capital invested. In fact, ten thousand people have left the land in the last ten years.
I am fully aware that the problem of the small farmer is not unique to Northern Ireland, for it appears in Wales, North West Scotland and England. It exists on the Continent. However, because of the continuously high unemployment rate, the sociological problem is far more severe in Northern Ireland than in England, where there is more availability of alternative employment, thereby providing a better standard of living for redundant small farmers. In Northern Ireland it is extremely difficult to obtain alternative employment in rural areas, because the majority of small farms are situated in the outlying, more remote parts of the province where, in spite of intensive efforts by the Northern Ireland Ministry of Commerce, it is hard to attract light industry. These new industries are semi-automated requiring skilled labour which would require a most difficult readjustment for the middle-aged small farmer.
Mention has already been made in the House of the hardship which might be caused to a son who has to pay Capital Gains Tax on taking over a farm from his father. I understand that the Chancellor will reconsider this aspect, since it would not be in the national interest if a son were forced to sell part of his farm in order to find the necessary money to pay Capital Gains Tax. It would also not be in the national interest if the Capital Gains Tax would deter a small farmer from selling his farm to a neighbour who would thereby enlarge his farm.
Paragraph 7 of the White Paper on the 1965 Price Review states:
"Geographical location must therefore be taken into account in the formulation of agricultural policy."

2107
The minimum import price policy has depressed farm incomes among Northern Ireland small farmers because of our heavy dependence on importing essential feeding stuffs which we are importing at the rate of £20 million a year. As a result of this policy small farmers are being forced out of pig production, because grain which prior to 1963 cost £14 per ton is now costing £21 per ton to import. I ask the Government to examine this disparity with a view to making a special concession to Northern Ireland.
We realise in Northern Ireland that we can produce only as much as we can sell in the market. The three main commodities of the small farmer are eggs, pigs and milk. At present the market for eggs and pigs is in danger of overproduction and the small farmer is already up against the multi-laying and multi-breeding units. Eggs are the great stand-by of the small farmer and to the Northern Ireland agriculture industry worth £15 million a year in income. If the Government decided to give more security to the small farmer through special support adjustments, it would give both encouragement and help to the small farmer.
The small farmer will in no way be helped by the phasing out of premium payments for high price pigs. However, according to Press reports, the Minister of Agriculture recognises the special position in Northern Ireland pig production, in view of its importance and emphasis on bacon pig, and I trust he will take measures to alleviate this further hardship.
Since the Minister appears to pin his faith on the upward trend in larger milking herds and production units, life will be made even harder for the small farmer with his heavy dependence on the monthly milk cheque. There is, therefore, a strong argument for the introduction of a small farmers' milk quota scheme, which would be welcomed by the majority of farmers in Northern Ireland.
Our main assets in Northern Ireland are grassland and cattle, for grass is the principal crop of the individual farmer and during the last ten years output of production has risen by 50 per cent. I would welcome a special grant to be
2108
introduced to provide cheaper fertilisers and lime for small farmers.
I am convinced that the small farmer would be considerably benefited if the industry were given the opportunity and encouragement to fill a greater share of the British market. A high agricultural policy which would maximise British food production would undoubtedly aid the small farmer and did not the Prime Minister in a speech in May, 1964, say that we must expand industries which could save imports? Again I would accept that our farm prices must be kept more in line with those of other countries.
Finally, on a number of occasions the Secretary of State for Economic Affairs has expressed the view that the resources of all areas and regions of the United Kingdom must be fully developed and must be harnessed for full economic use. As I have already stressed, Northern Ireland has its unique and specific problems. Here is an ideal opportunity for the Government to demonstrate its sincerity when it refers to regional development by assistance to the Northern Ireland small farmer.
11.27 p.m.
The Joint Under-Secretary of State for the Home Department (Mr. George Thomas): The hon. Member for Fermanagh and South Tyrone (The Marquess of Hamilton) has made a very moving plea for Ulster, and I welcome the opportunity to reply to the hon. Gentleman on behalf of the Government. As the House knows, the Home Office has a very special interest in the affairs of Ulster, and it falls to us to keep a watchful eye on its interests. I have a very good acquaintance with the officers of the Ulster Farmers' Union, and I look forward to a visit which I hope to make to Ulster during the coming Recess. I have therefore listened with all the greater care and interest to what the hon. Gentleman has said, for the future of the small farmer in Northern Ireland is of major importance to that part of the United Kingdom.
The hon. Gentleman reminded us how many farms there are which are not viable. I understand that there are 46,000 farm businesses with an average size of 40 acres. Just over half of these holdings are large enough to provide full-time employment for one or more persons.

2109
The remainder are too small to provide full-time occupation by themselves, but there are part-time farmers who run the farm and also have an income from another source.
But the frightening aspect, the disturbing aspect, in Ulster is that there are 16,000 very small farm businesses which are too small to provide full-time employment and where the occupier has no alternative source of income. The hon. Gentleman was, therefore, quite right to remind us of the special problem which faces the Ulster people.
I say at once that we do not believe that we can solve the problem of the small farmer by raising the general level of price support right across the board for farmers as a whole. We believe there must be a selective approach, giving help where it is most needed. If we can single out the people who are in the greatest need and give them the greatest help, I am sure it would meet the wishes of the hon. Member. It is quite right that in the Review White Paper we announced our intention to help those who occupied holdings which are capable of providing a reasonable full-time livelihood but where difficulties are being experienced due to the character and the situation of the farm. We are also working on proposals to encourage the voluntary amalgamations of holdings which from their size and nature cannot yield a reasonable living.
It has been already announced in our Review White Paper that we are taking measures to help farmers whose businesses are viable, or potentially viable, to achieve more efficiency and a more satisfactory scale of production and marketing. I need not go into detail, but already 14,000 farmers in Northern Ireland have received grants under the old small farmer scheme. I hope that those who are eligible for the extended small farmer scheme will take advantage of the help which this can give them to increase the productivity and profitability of their farms.
Agricultural credit facilities are to be improved by arrangements for the provision of guarantees to banks so that they may make loans more readily available to those small farmers to improve their marketing activities and also to encourage co-operative marketing. All this is a help to the small farmer, to whom the hon. Gentleman referred. At the present time
2110
we are studying steps to promote agricultural co-operation and a working party of officials from Ulster and our own Ministry of Agriculture have been examining for some months (a) wider arrangements for encouraging agricultural co-operatives in group activities and (b) voluntary amalgamation. What arrangements should be made to encourage voluntary amalgamation of these small farms is a matter of concern to us all.
The hon. Gentleman made some reference to the structural reform of the industry and asked whether we could not raise the minimum import price arrangements on cereals so far as Northern Ireland was concerned. The difficulty here is that we would then have to introduce some system of control on the passage of goods of an agricultural nature from Northern Ireland to Great Britain. This would lead to very considerable difficulties. I can assure the hon. Gentleman and the farmers of Northern Ireland that it certainly is not our intention to raise the general level of prices. We can only have the same minimum import price arrangements for the whole of the United Kingdom and it is not practicable to have different arrangements for Northern Ireland.
The hon. Gentleman also welcomed the setting up of the Agricultural Trust, which was first proposed by the Minister of Agriculture in Northern Ireland and was welcomed by Her Majesty's Government. Its aim will be to overcome the disadvantage of remoteness and to improve the market prices received by Ulster farmers by securing greater efficiency in marketing, and by expanding the home and export markets for Northern Ireland farm produce. It might do this through the development of new crops, new products, and new uses of existing products, and through better sales promotion.
The hon. Gentleman asked about the interest on capital, and the Capital Gains Tax. I think he made the point that my hon. and learned Friend the Financial Secretary had told the House that the Government were now considering whether special arrangements were necessary in respect of the application of the Capital Gains Tax to agriculture. I assure the hon. Gentleman that the Government are well aware of the dire need of the Ulster farmers, as well as

2111
of small farmers in Wales and England, to strengthen their industry. The plain truth is that we must all encourage the voluntary amalgamation of farms to make them viable, and, happily, the outlook for employment in Ulster appears to be improving.
The Wilson Economic Report, of which the hon. Gentleman will be aware, indicated that 65,000 new jobs might ultimately be made available in Northern Ireland, and these will, we hope, offer employment to those who today are on holdings which cannot give them an adequate standard of life. They will also help to absorb the other unemployed who, unfortunately, add to Ulster's problems.
I should like to stress again the Government's intention to deal with this underlying problem of the organisation and structure of the agriculture industry in Northern Ireland. We believe that the greatest help can be given by trying to achieve a satisfactory scale of production and marketing, and by the voluntary amalgamation of farms which never can be viable, and these basic problems have at last begun to be tackled in a comprehensive way.
I hope that I have answered all the points which the hon. Gentleman raised.
2112
I assure him that it is our earnest desire, and my right hon. Friend's firm resolve, to do everything within our power to strengthen the agricultural economy of Northern Ireland. Already we are seeking to extend schemes which were introduced by the party opposite whereby financial assistance is being given to the small farmer in Northern Ireland. The hon. Gentleman will know, from speeches made in Ulster by the Minister of Agriculture there, and by his colleagues, that a great many farms have received help, and I hope that the future will be brighter as they realise that unless a farming unit is seen to be viable, unless keen attention is paid to business methods, and unless there is a readiness to co-operate with others, nobody else can help.
The hon. Gentleman has raised an economic problem, and a human one. I hope to study this at first hand when I go over to Ulster in a few weeks. I can assure the hon. Gentleman that we are not only keeping all the points he has raised in mind, but our working party is looking for solutions which will help us and help them.
Question put and agreed to.
Adjourned accordingly at twenty minutes to Twelve o'clock.

WALES
  Urban Roads (Expenditure)
  Urban Roads (Expenditure)
  Hughes-Parry Committee (Report)
  Hughes-Parry Committee (Report)
  Welsh Planning Board (Proposals)
  Welsh Planning Board (Proposals)
  South Wales (Depopulation of Valleys)
  South Wales (Depopulation of Valleys)
EDUCATION AND SCIENCE
  Programmed Learning
  Programmed Learning
  Supply and Training of Teachers (National Advisory Council)
  Supply and Training of Teachers (National Advisory Council)
  Art Galleries (Loan of Pictures)
  Art Galleries (Loan of Pictures)
  Arts Council Grants
  Arts Council Grants
  Prendergast Girls' Grammar School
  Prendergast Girls' Grammar School
  Hungary (Minister's Visit)
  Hungary (Minister's Visit)
  School Meals
  School Meals
  Kirkby Fields College of Education
  Kirkby Fields College of Education
  Management Education
  Management Education
  Pre-School Play-group Association
  Pre-School Play-group Association
  Grammar Schools (Early Leavers)
  Grammar Schools (Early Leavers)
  Books, Stationery and Classroom Equipment
  Books, Stationery and Classroom Equipment
  Further Education Building Programme, Kent
  Further Education Building Programme, Kent
HOME DEPARTMENT
  Civil Defence (Deep Shelters)
  Civil Defence (Deep Shelters)
  Prison Officers (Housing of Bereaved Families)
  Prison Officers (Housing of Bereaved Families)
  Parliamentary Boundary Commission for Wales
  Parliamentary Boundary Commission for Wales
  Unjustifiable Convictions (Ex Gratia Payments)
  Unjustifiable Convictions (Ex Gratia Payments)
  Young Offenders (Law Revision)
  Young Offenders (Law Revision)
  Murders, Attempted Murders and Manslaughter
  Murders, Attempted Murders and Manslaughter
HONG KONG
  Refugees from China
  Refugees from China
ADEN
  Guardsman Edge (Exhumation)
  Guardsman Edge (Exhumation)
SOUTH ARABIAN FEDERATION
  Unitary Sovereign State
  Unitary Sovereign State
  COLONIAL TERRITORIES
  COLONIAL TERRITORIES
ECONOMIC AFFAIRS
  Brewers (Incomes)
  Brewers (Incomes)
  Landlords, Scotland (Incomes)
  Landlords, Scotland (Incomes)
  British Railways (Refreshments)
  British Railways (Refreshments)
  West Riding (Under-Secretary's Visit)
  West Riding (Under-Secretary's Visit)
  National Board for Prices and Incomes (Report)
  National Board for Prices and Incomes (Report)
BOARD OF TRADE
  Shipyards (Capacity)
  Shipyards (Capacity)
  Middle East Trade
  Middle East Trade
  Norwegian Ship "Juny" (Salvage)
  Norwegian Ship "Juny" (Salvage)
  Cadco Group, Glenrothes (Inquiry)
  Cadco Group, Glenrothes (Inquiry)
  Dinners, Lunches and Receptions (Invitation to Members)
  Dinners, Lunches and Receptions (Invitation to Members)
  Monopolies Commission (Recommendations)
  Monopolies Commission (Recommendations)
  Peru (Supply of Arms)
  Peru (Supply of Arms)
  Jute Textile Imports
  Jute Textile Imports
  Rhodesian Tobacco (Dollar Cost of Replacement)
  Rhodesian Tobacco (Dollar Cost of Replacement)
  NEW PHILHARMONIA ORCHESTRA (TOUR)
  NEW PHILHARMONIA ORCHESTRA (TOUR)
  DOMINICA
  DOMINICA
MINISTRY OF LABOUR
  Retail Prices Index
  Retail Prices Index
  School Leavers (Registration at Youth Employment Office)
  School Leavers (Registration at Youth Employment Office)
POST OFFICE
  Stamps
  Stamps
NATIONAL FINANCE
  Westminster Hall (Furnishing and Decorating Cost)
  Westminster Hall (Furnishing and Decorating Cost)
  North American Loan Agreements
  North American Loan Agreements
  Sterling (Sources of Support)
  Sterling (Sources of Support)
  Defence Budget
  Defence Budget
  Dollar Holdings
  Dollar Holdings
  ANGLO-FRENCH RELATIONS
  ANGLO-FRENCH RELATIONS
  ROYAL VISIT (RUSSIA)
  ROYAL VISIT (RUSSIA)
  SECURITY COMMISSION
  SECURITY COMMISSION
  STERLING (PRIME MINISTER'S TELEVISION STATEMENT)
  STERLING (PRIME MINISTER'S TELEVISION STATEMENT)
  CAIRO RADIO (DIRECTOR'S VISIT)
  CAIRO RADIO (DIRECTOR'S VISIT)
  DISENGAGEMENT IN EUROPE
  DISENGAGEMENT IN EUROPE
  MINISTER OF STATE FOR ECONOMIC AFFAIRS (DUTIES)
  MINISTER OF STATE FOR ECONOMIC AFFAIRS (DUTIES)
AGRICULTURE, FISHERIES AND, FOOD
  Bulls
  Bulls
  Imported Potatoes (Tuber Moth)
  Imported Potatoes (Tuber Moth)
HOSPITALS
  Air Gun Casualties, Manchester
  Air Gun Casualties, Manchester
MINISTRY OF HEALTH
  Prescriptions
  Prescriptions
  UNIVERSITY OF THE WEST INDIES
  UNIVERSITY OF THE WEST INDIES
MINISTRY OF POWER
  Farms, Montgomery and Merioneth (Public Electricity Supply)
  Farms, Montgomery and Merioneth (Public Electricity Supply)
PUBLIC BUILDING AND WORKS
  Ministers (Official Cars)
  Ministers (Official Cars)
TECHNOLOGY
  Research Associations (Computers)
  Research Associations (Computers)
  Engineering Standards Practice (Inquiry)
  Engineering Standards Practice (Inquiry)
  Civil Servants
  Civil Servants
  Engineers and Technologists
  Engineers and Technologists
TRANSPORT
  Road Accidents
  Road Accidents
  London Transport Bus Crews (Pay Increase)
  London Transport Bus Crews (Pay Increase)
Preamble
The House met at three of the clock, (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Manchester): The LORD CHANCELLOR on the Woolsack.

CONTROL OF MOTOR VEHICLE FUMES
THE EARL OF KINNOULL: 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 whether they view existing powers of controlling motor traffic fumes as adequate; what results have been achieved under these powers; and whether they consider any further powers are necessary.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD LINDGREN): My Lords, until recently research indicated that existing means of controlling motor vehicles' fumes were adequate. Roadside checks by the Department's vehicle examiners and police enforcement are reducing the nuisance caused by diesel-engined vehicles. If medical evidence confirms, that additional controls are necessary over fumes from petrol-driven vehicles, Her Majesty's Government will consider what action to take.
THE EARL OF KINNOULL: My Lords, while thanking the noble Lord for his reply, may I ask whether he would agree that if certain modifications were made by manufacturers of motor vehicles there would be a considerable reduction in the quantity of carbon monoxide that at present pollutes the air?
LORD LINDGREN: My Lords, chemistry was not in the curriculum of the school I went to and therefore I am in danger of getting into deep water here. But I am informed that so far as diesel-engine fumes are concerned carbon monoxide is absent. The danger arises
610
from petrol-engined vehicles. Until comparatively recently it was not felt to be a serious problem, but recent investigations in London have shown that some danger is likely to arise, and in conjunction with the various departments and medical research laboratories we are watching this very closely. The Americans, too, have legislation which they are introducing in Califoria shortly, and we are watching that as well.
LORD CARRINGTON: My Lords, would the noble Lord not agree that when motoring around London it is noticeable that almost the worst offenders are the diesel taxis? Would it not be possible to see that the engines are so adjusted that they do not emit quite so much fumes?
LORD LINDGREN: My Lords, again I must make it clear that from the chemical or engineering point of view I cannot answer definitely, but I am informed that the danger to health arises not from diesel fumes, from which carbon monoxide is absent, but from petrol-driven engines. In Oxford Street, for instance, on a recent test the level of carbon monoxide was quite serious from the Department's point of view.
LORD CARRINGTON: But the diesel is very disagreeable.
LORD LINDGREN: Yes, my Lords. But not everything that is disagreeable is necessarily dangerous to health.
VISCOUNT BRENTFORD: My Lords, quite apart from the question of danger to health, would the noble Lord not agree that the present exit provided by the manufacturers for exhaust fumes from petrol-engined vehicles and diesel vehicles, is just about as inconvenient to the public as it can be? Not only are they sprayed with an offensive matter out of these exhaust pipes, but they are also saturated with an unpleasant gas, whatever it may be, whether dangerous or not.
LORD LINDGREN: Yes, my Lords; and both the manufacturers of diesel vehicles and the manufacturers of the normal petrol-engined vehicles are cooperating most effectively with the Department on the question of vehicle construction. This is particularly so with

611
the car manufacturers, because the new regulations in California may affect our export of cars to that State.
LORD DERWENT: My Lords, the noble Lord has talked about the manufacturers; and, of course, he is right. But is not the trouble very often bad adjustment by the operators of the vehicles?
LORD LINDGREN: That is so, my Lords. I do not want to go into too much detail, but the fact is that very little trouble occurs with the best operators. It is with the small operators, where the standards of maintenance are not quite as high as they should be, that we have the most trouble.
LORD DERWENT: My Lords, may I pursue the matter—I am sorry to keep the House—one stage further on the question that my noble Leader raised? Who is responsible among the taxi operators for seeing that their vehicles are always in good shape?
LORD LINDGREN: My Lords, the first responsibility, of course, rests with the owner. So far as the examination of lorries is concerned, that is the responsibility of the vehicle examiners of the Ministry of Transport. But as taxis are mainly dealt with by the Home Office, I should not like to answer "off the cuff".

SELF-DETERMINATION FOR WEST IRIAN
3.6 p.m.
THE EARL OF DUNDEE: 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 whether any arrangements have yet been made for the fulfilment of Articles 18–21 of the Treaty between the Netherlands and Indonesia of August 17, 1962, under which self-determination is promised to the people of West Irian before the end of 1969, and in which the United Nations Representative is to report to the Secretary-General on the conduct of the Act of Self-determination and the results thereof.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR FOREIGN AFFAIRS (LORD WALSTON): My Lords, Her Majesty's Government are not aware that Indonesia has yet made any such arrangements. There are, however, well over four years to go before the expiry of the time limit for self-determination, and Indonesia is not required under the terms of her Agreement with the Netherlands to make these arrangements at this stage unless she wishes to.
THE EARL OF DUNDEE: My Lords, do the Government consider that the withdrawal of Indonesia from the United Nations has made any difference to her obligations under this Treaty, under which the United Nations has to be consulted about the arrangements for the Act of Self-determination and also to report upon its conduct after it has been carried out?
LORD WALSTON: No, my Lords. This is primarily a bilateral Agreement between the Netherlands Government and the Indonesian Government, with the United Nations standing in the role of, as it were, a third party. The withdrawal of Indonesia from the United Nations makes no difference to this at all.

WELSH OFFICE PROVISIONAL ORDER (LLANELLY) BILL
House in Committee (on Recommitment) (according to Order).
House resumed: Bill reported without amendment; Report received.

PROCEDURE OF THE HOUSE COMMITTEE
THE CHAIRMAN OF COMMITTEES (LORD MERTHYR): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Baroness Wootton of Abinger be added to the Committee.—(Lord Merthyr.)
On Question, Motion agreed to.

CRIMINAL JUSTICE BILL
House in Committee (according to Order).
House resumed: Bill reported without amendment: Report received.

SHOPS (EARLY CLOSING DAYS) BILL
3.10 p.m.
Order of the Day for the Second Reading read.
LORD HAIRE OF WHITEABBEY: My Lords, I beg to move that this Bill be now read a second time. This Bill has come to us from the other place, where it was very ably introduced by my old colleague, the Member for the Brightside Division of Sheffield, who has wide experience of the distributive trade in this country. I can only hope that it will have an equally unadventurous journey through your Lordships' House.
This short Bill, the Shops (Early Closing Days) Bill, really represents amending legislation in respect of one or two points in the 1950 Act. That is not to say that it is unimportant. Several of the points are very much demanded by the distributive trade in this country, especially in the light of the change in circumstances since the earlier Act of 1950, and will remove some of the uncertainties of the existing Act. For example, it may well be that the application of a five-day working week in the distributive trade, in common with other industries, is being held up by too strict a legal interpretation of the 1950 Act. I should perhaps say at this early stage of our discussion that there is nothing in this small Bill which will in any way affect the shopping facilities being offered to the general public. In fact, one of its objects is to improve them.
The main purpose of the Bill—and there is only one main purpose—is to give the occupier of a shop, the trader, the freedom to choose which day he wants as his weekly early closing day. Under the Act as it stands, the power rests with a local authority to fix a weekly half-day for shops in its area, with certain exceptions, if it wishes. Not every local authority exercises this power, but those that do must be satisfied that the majority of traders approve the order which they make. The Act of 1950, of course, as your Lordships will be aware, provides that every shop shall be closed for the service of customers not later than 1 o'clock in the afternoon on one weekday in every week. This provision, of course, continues, with the exception of
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the exempted trades as hitherto. With the proposed repeal of Section 1(2) of the 1950 Act, the local authority will no longer issue an order fixing the early closing day. Instead, each occupier of a shop, or unexempted trader, will be required, under Clause 1(2) of this Bill, to display in a conspicuous position outside his shop, at the entrance most used by his customers, a notice specifying the early closing day of his choice.
While the Bill before us gives any trader the right to be the odd man out, experience and the general practice which has grown up since the earlier Act shows that traders working through their local chamber of commerce, or co-operating in some other way, normally select the same early closing day. Once a trader has selected his early closing day, he is not necessarily stuck with that day for all time. Clause 1(3) enables the occupier of a shop to vary the selected day, but he may not vary it more frequently than once every three months, with one minor exception. If, within one month, or before the expiration of one month, he decides to revert to the closing day which he had earlier selected he need not be delayed in his choice for the required three months.
There are only two other matters arising in the Bill. Under the 1950 Act the local authority may fix an early closing hour later than 1 p.m. but not later than 2 p.m. Experience has shown that this power has been very rarely used, and it is felt that it no longer needed. Also under the 1950 Act, a local authority can extend the requirements of early closing days to certain exempted trades provided that two-thirds of the occupiers in their area approve. This power, again, has been extremely rarely used, and it is proposed by this small Bill that it should be dropped. Under the Bill, however, it will not be possible to increase the number of trades exempted from the Shops Act, which are listed in the First Schedule to the 1950 Act.
Under this Bill a trader may, if he wishes, close his shop all day on a so-called early closing day, thus introducing a five-day week; and it may well be that in fact many traders will take the opportunity of this Bill, which clarifies the position, to do so. Under Clause 1(4) all orders made by a local authority under the 1950 Act as regards the early closing

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day shall cease to have effect three months after this Bill becomes law unless, of course, they are revoked previously; and, where no order has been introduced by a local authority this Bill shall be immediately effective from the date of commencement. Your Lordships will have noticed that in this Bill the term "half-holiday" has given way to the newer term "early closing day", which is defined in Clause 3 of the Bill. This is the term which has come into general usage to-day; it is the term used in local directories and in holiday brochures and guides, and it is now generally accepted.
The remainder of the Bill deals with only a few minor, consequential amendments arising from the main proposal of the Bill, which is to give the occupier freedom to choose his early closing day. Otherwise, the 1950 Shops Act continues; and I get the feeling that the public would like the 1950 Shops Act to be even more fully used, especially with regard to the late day. One has only to see the crowds in Oxford Street shopping until 9 o'clock on a Thursday evening to be certain that occasional later hours for shopping are decidedly popular. But, of course, that is already possible under the 1950 Act, and it only remains for traders to take full advantage of it. It is because this small Bill before us, the Shops (Early Closing Days) Bill, opens the way for further progress for the traders and for the workers in the very useful distributive trades in this country that I beg to commend it to the House. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Haire of Whiteabbey.)
3.20 p.m.
LORD DERWENT: My Lords, I must first, I think, declare an interest, because I happen to be President of the Institute of Shops Act Administration. May I start by thanking the noble Lord for the clarity with which he has explained this Bill? I welcome it. In its limited field, it is obviously going to serve a very useful purpose. It will help many shopkeepers; it will be of great convenience to the public; and, as the noble Lord has indicated, I believe that, in a comparatively short time, it will be of great benefit to the employees, the shop assistants. Where
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suitable it will lead to a five-day week; in other places it will not. Nevertheless, I think it will help them, too. When this Bill was first introduced into the other place there was rather a serious gap in it which would have made enforcement extraordinarly difficult. The Bill was amended in another place and that is now all right. Speaking, if I may, for my inspectors who, poor devils, have to see that the Shops Acts are enforced, they are very happy about the feasibility of enforcement of this Bill.
During the passage of the Bill in another place, I believe that the Joint Parliamentary Under-Secretary of State said that the Government would be introducing legislation shortly—I am not sure that he said "shortly". I believe he said that the Government intended to introduce legislation over a much wider field than that of the Shops Act amending the existing legislation and introducing a certain amount of new legislation. He said that some announcement would be made shortly. I see that the noble Lord, Lord Stonham, is to speak in a moment and I would ask him whether he can tell us anything to-day about how soon such an announcement may be made and what form it will take: whether it will be a White Paper, a draft Bill or an actual Bill. I think it will be very helpful to people who work in this sphere to have some indication of a timetable, if possible. May I again welcome the Bill.
3.22 p.m.
LORD MONTAGU OF BEAULIEU: My Lords, I intervene for a moment to raise a point and I must declare an interest. I refer to shops connected with or on the same premises as museums, permanent exhibitions and, particularly, houses open to the public. I am sure that noble Lords will appreciate that they are very much seasonal establishments. Many of them are covered, I believe, by the Shops Act, 1950, and are combined with ticket offices. So far as I can see, these establishments were recognised up to a point in the Fifth Schedule to the Shops Act, 1950, so far as Sunday closing is concerned, and that is of tremendous help, but it would be of enormous inconvenience and could be damaging if one had to close these souvenirs stores or shops in the grounds of such exhibitions for half a day a week.

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Noble Lords will recognise that it would be an absurd situation for the general public to go in and buy a ticket at a counter and not be allowed to buy souvenir books and postcards and so forth. I raise the point with the object of receiving guidance and clarification, because although I have studied the Shops Act for a long time, I am not completely clear whether the exemptions for these shops do come under the First Schedule to the Act, but I do not think they do. I am asking the Government to look into this matter, and if they feel something can be done to clarify the position regarding shops which are connected with museums and stately homes perhaps some clarifying Amendment can be put down at a later stage.
3.24 p.m.
LORD ROYLE: My Lords, as one who has been engaged in the retail trade over the larger part of my life, perhaps I may be forgiven if I occupy a moment or two in expressing my views on the matter. I want to give my support to this Bill, without going into any detail. It seems to me that it is nothing but common sense that, provided the shopkeeper allows his assistants to have the requisite time off, in the form of half-day or full-day holidays, he should be the person to decide what the closing day or half-day shall he. In the past there have been many difficulties in this respect. My noble friend Lord Haire of Whiteabbey referred to the two-thirds majority which has been necessary in the past for one particular trade to declare itself in favour of a particular half-day. In my much earlier days as honorary secretary of a retail trade organisation, I remember the difficulties that we always faced in finding that two-thirds majority. This Bill will overcome that difficulty completely, and in future it will be the retailer himself who will decide what the day shall be.
In general, I am not in favour of longer shopping hours. I agree that the late evening has been of advantage to many people who have not been able to get off work to shop; but at the same time I have never believed—obviously, having been a member of the retail trade—that the shopkeeper should be the slave of the public in that way. In these days of full employment it is difficult for shop owners to obtain staff and it
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is quite impossible for assistants to work reasonable hours and yet provide the public with longer shop opening hours. I feel that this Bill is the way out of the difficulty. The other thing which strikes me is that this is an opportunity for the owner of a shop to close it for a whole day, if he so wishes. I notice that some of the shops of my noble friend Lord Sainsbury close for the whole of Mondays. I think that this would be a tremendous advantage for the shop owner and a great help for the shop assistants.
I have only one small reservation about the Bill, and again it concerns the convenience of the public. I live in a town where it seems to me that the shop half-days are divided into four zones. People in that town do not seem to know where to go on a particular day to do their shopping. On balance, I am quite sure that the Bill is right and that the decision should be left to the shopkeeper himself rather than to the local authority. Surely he is the person best able to judge. Therefore I welcome my noble friend's Bill with enthusiasm, and I hope your Lordships will see that it gets a Second Reading.
BARONESS GAITSKELL: My Lords, may I put in one word for the housewife? I am in favour of some shops' closing on Monday mornings; but to close for the whole Monday seems to me rather a hardship for the housewife when she has been unable to shop for most of the time during the week-end.
3.28 p.m.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE, HOME OFFICE (LORD STONHAM): My Lords, the House and I are greatly indebted to my noble friend Lord Haire of Whiteabbey for the able manner in which he has introduced and explained this Bill. His ability is no surprise to those of us who had the opportunity in another place to assess his qualities. I am sure your Lordships will join with me in rejoicing on his return, with unimpaired powers, from what we regard as an overlong respite from Parliamentary labours.
The Bill, as my noble friend has said, is a modest but very useful measure which it is obvious, from what has already

619
been said, will commend itself to your Lordships. The noble Lord, Lord Derwent, raised a point with regard to the introduction of legislation over a much wider field, and he referred to the statement made by my honourable friend, the Joint Under-Secretary of State for the Home Office, in another place. It may have escaped the noble Lord's notice that on March 17 I informed your Lordships' House that the Government were hoping to publish within the next few months—and that was a slightly more exact statement as to time than the one to which he referred—outline proposals for a comprehensive review of the provisions of the Shops Act, 1950, in relation not only to Sunday hours of trading but also week-days. These proposals are almost ready. Although I cannot at the moment give a definite date for their publication, I am hopeful that it may be possible to publish them before the Summer Recess.
I should like—I welcome the opportunity to do so—to make two points about these forthcoming proposals. First, their object is to secure greater flexibility in retail trading arrangements, rather than to impose further restrictions. Secondly, they are designed solely to test the reactions and to secure the comments of employers, traders, local authorities and the general public. The proposals are not in legal form and will therefore, I trust, be intelligible to all. In the past, this field has been a largely controversial one. As your Lordships are aware, so far there is little evidence of widespread agreement on the form the change may take, apart from isolated instances such as are illustrated by the Bill, and therefore the Government, although the originators of the proposals which it is hoped shortly to produce, are not wedded to them. Nor, indeed, are they in any sense committed to their implementation.
When reactions to these proposals are ascertainable, then, and only then, will the Government be able to consider how far it is possible to give effect to them and to introduce legislation accordingly. I am sure that the noble Lord, Lord Derwent, in his capacity as President of the Institute of Shops Acts Administration, will be able to express a helpful, authoritative and expert opinion.
LORD DERWENT: I am obliged to the noble Lord.
LORD STONHAM: May I take the opportunity to confirm that the provisions of the Bill which has been introduced by my noble friend will not conflict with anything which will appear in the new proposals on the subject of the early closing day.
The noble Lord, Lord Montagu of Beaulieu, raised a point about shops connected with permanent museums, and mentioned the sale of souvenirs and so on. Such establishments are outside the scope of the Bill which we are now considering, but will be dealt with, and taken into account, in the wider legislation that will follow the proposals to which I have just referred. I can give the noble Lord an assurance that the views he has expressed will be borne in mind.
With regard to my noble friend's Bill, in effect, it proposes that the obstacle to the five-day working and trading week which can exist in areas where the local authority have fixed the early closing day be removed, but without in any way affecting the statutory right of a shop assistant to a weekly half-holiday. It may appear to those noble Lords who, like myself, are not gifted with a legal mind that the Bill expresses its simple purpose in a somewhat roundabout fashion. I am afraid that this is inevitable. The reason is to be found in the history of legislation on shop hours. Traditionally, this has been a sphere for Private Members' Bills and, as a result, the existing law, contained in the Shops Act, 1950, is a veritable hotch-potch of miscellaneous provisions. The 1950 Act did not alter the law, it merely consolidated into a single Statute sundry earlier Acts dating back to the Shops Act, 1912.
A relatively simple Amendment to give the shopkeeper the responsibility of selecting the day on which he will close his shop not later than 1 p.m. (a responsibility which he in fact already enjoys under Section 1(3) of the 1950 Act in the areas where the local authority has not made an order under Section 1(2) fixing the early closing day) has repercussions in several other parts of the 1950 Act. This, as my noble friend mentioned, is illustrated by Clause 4 of this Bill.
There may be some people, if I may judge from the remarks of my noble friend Lord Royle and the noble

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Baroness, Lady Gaitskell, who fear, that if and when this Bill becomes law, difficulties may be created and a chaotic state of affairs may result, with every shopkeeper choosing a different week-day for his early closing day. I am convinced that these fears will prove groundless. As I have already indicated, there are many areas where for years past the shopkeeper has been able to choose his early closing day. It is a simple economic fact that traders will wish to close their shops and give their assistants their statutory half-day at a time when potential trading is at its lowest. When the majority of shops are closed, other premises of a similar kind will naturally wish to close as well, because at such times the shopping centre is likely to be largely denuded of potential customers.
What may well happen in practice with this new freedom is that hairdressers, for example, may find it is more profitable to observe a different early closing day from, say, the operators of food shops, for the very good reason that people may wish to get their hair attended to on a different day from that on which they purchase the bulk of their food. Quite apart from that, shop assistants would have the chance to get their hair done.
With regard to the point raised by the noble Baroness, Lady Gaitskell, about closing all day, shopkeepers are bound, of course, to consider the convenience of the housewife. I cannot really imagine any shopkeeper wishing to close all day on Monday if there is a substantial demand for his goods. I am confident that the selection of the most suitable early closing day can be left to the sound economic sense of the traders concerned, assisted, perhaps, by discussion in their local chamber of commerce, with their own individual trading organisation, or even among a group of neighbouring shopkeepers.
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I believe that my noble friend Lord Sainsbury, in the light of his great experience, at one time favoured an Amendment which would have given occupiers of shops a choice of either Saturday, as at present, or Monday as two alternative early closing days to the one day fixed by the local authority. The Bill was drafted with this object in mind, and, I think, achieves it in a more logical way. Monday as an early closing day may not suit many trades, and to give an occupier a choice of three days out of the six possible days in some areas, when in many other areas he has a choice of all six, would not, in my opinion, be entirely fair. I am most grateful to my noble friend, to other noble Lords and to the noble Baroness, Lady Gaitskell, for their interest and the support which they have expressed for this measure. I trust that your Lordships will ensure its speedy passage through the House.
3.40 p.m.
LORD HAIRE OF WHITEABBEY: My Lords, I have no wish to delay the proceedings longer, in view of the fact that we have had almost unanimous support from both sides of the House. I am particularly grateful to the noble Lord. Lord Derwent, for his very capable support and most pleased to have the support of and kind personal remarks of my noble friend the Joint Parliamentary Under-Secretary of State for the Home Office, Lord Stonham. I was particularly glad that my old colleague, Lord Royle, gave us the benefit of his great experience in the distributive trades and welcomed the Bill. I trust that, without further delay, your Lordships will give the Bill a Second Reading.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

TRADE DISPUTES BILL
3.40 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Lindgren.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 1:
Certain acts not actionable in tort or as delicts.1906 c. 47
1.—(1) An act done after the passing of this Act by a person in contemplation or furtherance of a trade dispute (within the meaning of the Trade Disputes Act 1906) shall not be actionable in tort on the ground only that it consists in his threatening—

(a) that a contract of employment (whether one to which he is a party or not) will be broken, or

(b) that he will induce another to break a contract of employment to which that other is a party;

or be capable of giving rise to an action of reparation on the ground only that it so consists.
(2) An act done as aforesaid by a person before the passing of this Act shall not be actionable in tort as mentioned in the foregoing subsection unless proceedings in respect thereof have been instituted either before or within the period of six months beginning with the date of the passing of this Act or be capable of giving rise to an action of reparation as so mentioned unless proceedings in respect thereof have been so instituted.
VISCOUNT DILHORNE VISCOUNT DILHORNE moved at the beginning of the clause to insert:
"( ) This Act shall not apply if it is shown that a threat of the character specified in the next following subsection was made to secure the termination of the employment of any person."
The noble and learned Viscount said: I beg to move the Amendment standing in my name. I think that it would probably be to the convenience of the Committee, subject to the agreement of my noble friends, for discussion to take place now upon the Amendments in the names of the noble Lords, Lord Henley and Lord Wade, and my noble friend Lord Conesford. The other two Amendments in my name are purely consequential. I do not think that the same could be said for the second Amendment in the name of my noble friend Lord Conesford, but I apprehend that it would
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be convenient to the Committee to have one discussion upon all the Amendments to which I have referred. In moving my Amendment, I do not propose to say anything about the other Amendments, although it is the case that the subject matter is the same.
In commending the Amendment in my name to your Lordships, I would remind your Lordships of the case put forward by the noble Lord, Lord Lindgren, and the noble and learned Lord the Lord Chancellor, speaking on behalf of the Government, in support of the Bill. I do not propose to read all that they said on Second Reading—even if invited to do so by the noble Lord, Lord Byers—but I shall endeavour to summarise its effect and to do so fairly and accurately. As I see it, the main theme of their speeches was that the decision of your Lordships' House in Rookes v.Barnard had created such uncertainty in the minds of trade unionists as to what they could or could not lawfully do, that the position could not be left until the Report of the Royal Commission but must be clarified without delay. If I may, I would quote one or two passages. The noble Lord, Lord Lindgren, said:
"…no one could really say how far its "—
that is, the Rookes v.Barnard decision's—
"repercussions might extend".—[OFFICIAL REPORT, Vol. 267 (No. 85), col. 18, June 15, 1965.]
A little later he said:
"What I want to emphasise more particularly is the doubts and confusion which the decision created in the minds of ordinary trade unionists and trade union officials." [Col. 19.]
Further on he said:
"All they know is that they may be sued for intimidation. This is bound to hinder trade unions in their normal day-to-day activities." [Col. 19.]
The noble and learned Lord, the Lord Chancellor, said:
"The difficulty of Rookes v.Barnard has been that nobody quite knows what it was that it decided." [Col. 77.]
I do not agree with that. I do not think that there is any difficulty in knowing what that case decided. But I am prepared to agree that there is room for argument and for differences of opinion as to the extent of the repercussions of that decision. I myself think that they have been greatly exaggerated. I do not think it is the case that since the decision in January, 1964, in

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Rookes v.Barnard the activities of trade unions and their members have been in any way inhibited. In fact, if they had been no doubt the noble Lord, Lord Lindgren, would have told us of a case or cases where trade union officials or members wanted to take some action and did not do so because of this decision. He has not done so and I conclude that he cannot do so. Threats of strike action and unofficial strikes seem to occur with just as much, even more, frequency, since January, 1964.
If there are differences of opinion as to the effect of Rookes v.Barnard on trade union activities—though not, I think, as to what the case actually decided—a case can be made for making it clear that the decision does not inhibit trade unions (to quote the noble Lord) "in their normal day-to-day activities". What are their normal day-to-day activities? Surely to deal with wage questions, piece rates, hours of work and other problems which arise in industrial relations, like questions of redundancy. Surely it is not part of the normal day-to-day activities of trade unions to seek to secure by intimidation the dismissal of a man from his employment, either because he has been expelled from his union or because he does not wish to be a member of a union. I hope that that, which can properly be called victimisation, is not part of the normal day-to-day activities of trade unions. I find support for this view in the statement of the noble Lord, Lord Lindgren, on Second Reading when he said that the closed shop issue
"gives rise to only a fraction of the disputes that occur ". [Col. 21.]
I ask the noble Lord, Lord Lindgren, this question. It is one, which I think is a fair question, to which he or the noble and learned Lord the Lord Chancellor, if he is going to reply to this debate, should give a definite and clear answer. Does he regard the intimidation of employers to secure the dismissal of an employee or workman part of the normal day-to-day activities of trade unions? If he does not, it follows that this Amendment, if carried, will not defeat the main purpose of this Bill—namely, to resolve whatever doubts there may be about what the trade unions can do in their normal day-to-day activities. It will be clear that they can conduct their ordinary, normal activities with impunity.
On the other hand, if he says that he does regard intimidation with that object—to secure the dismissal of a workman—as part of the normal day-to-day activities of trade unions, then I think that we should still press this Amendment, to ensure that individuals are not victimised in this way by trade unions. I would like to remind your Lordships of something that the Minister of Labour said in moving the Second Reading of this Bill. It was quoted on Second Reading by the noble Lord, Lord Wade, and I hope that the noble Lord and your Lordships will forgive me if I quote it again. The Minister of Labour said:
"Rookes v.Barnard was, of course, a closed shop case. There are arguments on both sides of the closed shop issue. It is true, and I say it openly, and I have said it in public before, that the closed shop has sometimes been used to cause unnecessary hardship to individuals. There are cases where a man has been driven out of his job because he has quarrelled with his local union branch. There are cases where a man has suffered because he has genuine conscientious objections to joining a union. I condemn it. The trade union movement has a great and inspiring history, and a vital contribution to make to our modern society, and it ought to be above victimisation of this kind."—[OFFICIAL REPORT, Commons, Vol. 706 (No. 58), col. 1019, February 16, 1965.]
So we have it on the authority of the Minister of Labour that trade unions ought to be above victimisation of this kind. The Amendment which I am moving gives effect to that view, for the effect of the Amendment is that victimisation of the kind that took place in the Rookes v.Barnard case will still continue to be unlawful. If this Amendment is resisted, we have the curious situation that the Minister of Labour who says that trade unions ought to be above victimisation of this kind, is seeking statutory authority to enable them to engage in it.
On Second Reading my noble friend Lord Conesford drew attention to Article 20 of the Universal Declaration of Human Rights, approved by the General Assembly of the United Nations in 1948 and supported by this country. That Article reads:
"No-one may be compelled to belong to an association."
This Government, who always seek to represent that they are wholehearted and enthusiastic supporters of the United Nations, and who, indeed, think there is nothing wrong in this country's taking part in discussions on matters which the

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Government regard as clearly outside the purview of the United Nations and contrary to the Charter, if they now oppose this Amendment will make it clear that they only pay lip service to this Declaration. For if this Amendment is not carried, the Government, unnecessarily and of their own volition, will be making it lawful to compel, by intimidation, someone to join a trade union.
The argument has been advanced that we should put the law back to what it was thought to be before the Rookes v.Barnard decision in 1964. If this Amendment is carried, it can be said that we are doing that. We shall be making it clear that the normal day-to-day activities of trade unions remain unaffected. That always was the case. As Mr. Citrine said in his book, if I may remind your Lordships, and his father, of the passage:
"If there is some ground of action other than the mere fact of interfering with contractual relations, the section"—
and it is Section 3 of the 1906 Act—
"does not afford protection."
What was new, or at least novel, to many people about the decision in Rookes v.Barnard was not its interpretation of Section 3 of the Trade Dispute Act, 1906, but the decision that the tort of intimidation would be committed if there were threats to break contracts, made to induce the employer to do an act to the injury of one of his workmen. If this Amendment is not accepted, then the effect is to enlarge the protection which trade unions have enjoyed since 1906, at the expense of the individual, and to deprive individuals of the right to compensation for the loss they suffer as a result of tortious acts on the part of those taking part in trade disputes.
Surely it is not necessary to go so far as that now, before the Royal Commission has reported. Surely, at the most, all that is required is that it should be made clear that the decision in Rookes v.Barnard in no way inhibits the normal day-to-day activities of trade unions. if this Amendment is carried, it will also be clear—and I think it is right that it should be clear—that if trade union members or officials, who ought to be above victimisation of this kind, according to the Minister of Labour, engage in
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tortious victimisation by intimidation of a fellow employee, the wronged employee will still be entitled to compensation for the loss he has suffered. I beg to move.
Amendment moved—
Page 1, line 5, at beginning insert the said subsection.—(Viscount Dilhorne.)
LORD LINDGREN: May I rise on a question of procedure and the convenience of the Committee? The noble and learned Viscount suggested that we should take Amendments Nos. 1 to 5 together. I think there are two different issues, and if it meets with his approval and that of the Committee I suggest that we take Nos. 1, 2 and 5 together, and then Nos. 3 and 4, which are not legal points and which raise a different issue.
VISCOUNT DILHORNE: I find it a little difficult to follow the noble Lord, because my Amendments are not numbered. I have now been handed a different Marshalled List of Amendments. So far as I am concerned, my second Amendment is purely a drafting Amendment. Which Amendments is it that the noble Lord suggests we discuss?
LORD LINDGREN: I suggest that we discuss Nos. 1, 2 and 5 together, and then Nos. 3 and 4.
VISCOUNT DILHORNE: I am entirely in the hands of your Lordships. I have moved only my Amendment. However, I thought that the area to be covered by Amendments Nos. 3 and 4 was very much the same as the area to be covered by the Amendment in my name. I should have thought that it would be for the convenience of the Committee to have a discussion on the three Amendments, and then we can have a Division, unless the Government are reasonable, on my Amendment at the end of that discussion.
LORD LINDGREN: As I have said, I am not a lawyer but only a trade unionist, and to me the two points are different. However, if it is convenient to the Committee, I am only too happy to join in.
VISCOUNT DILHORNE: So far as I am concerned, it makes no difference to me. I am only moving, and have only spoken to, the first Amendment. Perhaps we ought to find out what the noble Lords who have tabled other Amendments wish.
3.57 p.m.
LORD WADE: Perhaps at this stage I may make a few observations, and at a later stage my noble friend Lord Henley will move the Liberal Amendment in his and my names.
LORD CONESFORD: May I suggest to the noble Lord that he should answer the question whether he would like to take all the main Amendments together or to have the separation that the Minister suggested? It would probably be convenient to all parties to decide that first.
LORD WADE: With respect, I should have thought that it would be convenient to refer to Amendments 3 and 4 in this discussion on the first Amendment. However, it is as the Committee wishes. I feel that it would be a little difficult not to refer to those Amendments. If I may make a few brief comments now, perhaps we can see how we go on.
LORD CONESFORD: I should like to say that that is perfectly agreeable to me. If I may say so, my own guess had been the same as the Minister's, but I think it would be necessary both for the noble Lord, Lord Wade, and for myself to say something on the Amendment that has just been moved, and it would probably be to the convenience of the Committee if we take the three Amendments together.
LORD WADE: I hope that will prove helpful to the Committee. I would say, at the outset, that I have some hesitation in taking part, as I may not be present for the whole of this afternoon. I therefore apologise in advance if I am not here at the conclusion of the debate. My noble friend Lord Henley will, at the appropriate time, move the Amendment in his and my names, and I am hoping that my noble friend Lord McNair will take part in the debate.
Although the words "closed shop" are not mentioned, either in the Bill or in the Amendment, "closed shop" is very much in the minds of those who have introduced this Bill and those who have tabled these Amendments. I wonder whether I may make one general point, commenting on some remarks of the noble and learned Lord the Lord Chancellor on Second Reading. He said that it depends very much on where one stands in this matter; and, of course, I agree with him. There are those mem
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bers of trade unions who say, "Why should non-members reap the advantages that have been earned by the efforts of trade unionists?" I know that is said; I have often heard it said. But I think it is a little unfair to trade unionism to use that argument. The trade union movement came into being to help members and fellow-workers generally to raise their standards at a time when the standards were very low. I do not think it was intended to benefit solely those who were members of a particular union. I always feel that it is not entirely fair to the movement as a whole to suggest that trade unionists want to benefit only those who are actually members of their union. That is a general point.
Now, turning to the Bill and the Amendment, the argument for the Bill is to restore the law to what it was thought to be before the decision in Rookes v.Barnard. I must say that after studying the decision in Rookes v.Barnard there is considerable doubt as to what the law was before that case came before the court, and greater doubt as to the effect of the decision in that case. Certainly the subject is very complex, and there is something to be said for waiting until the Royal Commission reports before introducing any legislation at all. In my opinion—and I expressed this on the Second Reading—the only reason for introducing legislation is that some officials of trade unions may feel that they are in jeopardy in carrying on their ordinary duties. It is for that reason only, and in order to clarify the law, that any legislation at all should be introduced.
It has been suggested that the introduction of this Bill was necessary as a condition to satisfy the trade union leaders, the T.U.C., before they would agree to take any part in the proceedings of the Royal Commission. I think that is unfair and I hope it is not correct. I am sure that there are prominent members of the T.U.C., and of leading trade unions, who are willing that the Royal Commission should study this very complex subject. I should not like to think that this Bill is introduced solely as part of a bargain. As I have said, the best justification for the Bill is that there is need for some clarification for the benefit of trade union officials doing their ordinary duty. But if that is so,

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I think we must try to be as fair as possible, both to individual officials and to independent third parties. That is the reason for the Liberal Amendment.
I am not entirely happy with the wording of the Amendment that has been moved by the noble and learned Viscount, Lord Dilhorne. The material words of his Amendment are as follows:
"This Act shall not apply if it is shown that a threat of the character specified in the next following subsection was made to secure the termination of the employment of any person."
I should have thought that that would be going rather too wide. Those words, "the termination of the employment of any person", could be construed very widely. At any rate, it does not cover the point contained in the Liberal Amendment, which may be moved later. In that Amendment the words are as follows:
"Provided that an act as aforesaid is not done with the sole intention of forcing another person to become, to remain or to cease to be a member of a trade union."
I think that if you are going to attempt to do anything at all you must cover those three points—to become, to remain or to cease to be a member of a trade union.
I do not know whether the Amendment which has been moved by the noble and learned Viscount will be pressed to a Division. It may be that after some discussion he will prefer our Amendment to his. But if the first Amendment is pressed to a Division, and subject to anything that may be said during the debate, we are inclined to support the first Amendment. But I should like to make it clear that in our view the aim should be to try to hold the balance as fairly as possible until the Royal Commission have reported.
4.5 p.m.
LORD CONESFORD: As the remaining Amendment is down in my name, it may perhaps be convenient to all the Committee that I should express my views now. I agree entirely with the view expressed in both the speeches that we have heard—that the reasonable aim is that we should leave as much as possible of this very difficult problem to the Royal Commission, and make the minimum change in the law in advance of the Report of the Royal Commission. I think
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that, irrespective of our views on trade union matters, that will be thought to be reasonable, and I am sure it will be thought to be reasonable by those who have really studied the very difficult problems raised by Rookes v.Barnard
My noble and learned friend Lord Dilhorne has devised a short and neat Amendment to safeguard normal negotiations, and it certainly gives some protection against intimidation. It gives protection, for instance, against the sort of intimidation that was involved directly in Rookes v.Barnard. Like the noble Lord, Lord Wade, I, too, find it possible to support my noble and learned friend Lord Dilhorne, but I am not clear that his Amendment goes far enough. As has been pointed out, the intimidation may not be to secure the termination of the employment of any person. I quite agree that that is one of the important possibilities, and I think my noble and learned friend is quite right to try to stop it. But, of course, the intimidation may not be for the purpose of terminating the employment; it may be for the purpose of punishing the man aimed at in another way: that his employment, perhaps, should continue but under worse terms and lower wages, and there are many other matters that we can think of. Therefore, like the noble Lord, Lord Wade, T will certainly listen with the greatest interest to all points raised in the debate on both sides, but my first view is that, while the Amendment of my noble and learned friend is one that I can unhesitatingly support, it does not seem to me to afford ground for not also asking the Committee to accept one or other of the other two Amendments—that down in the name of the noble Lord, Lord Wade, the mine.
I agree with the noble Lord, Lord Lindgren, that those Amendments fall in a natural group, and I think it is the duty of the Committee to decide which of those two Amendments they prefer. I am going to give certain reasons why I hope that the noble Lords on the Liberal Benches, after considering what I am now saying, may prefer mine. I shall be particularly interested to hear, and will treat with the greatest respect, what the noble and learned Lord, Lord McNair, may think on this matter. The aim of the Liberal Amendment is clearly very much the same as the aim of my Amendment,

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but I think mine has three advantages over the Amendment which stands in the name of the noble Lord, Lord Henley, and the noble Lord, Lord Wade.
Let me state briefly the three shortcomings of that Amendment, as I see them. First of all, it makes no mention of associations other than trade unions. I certainly do not wish any Amendment to be passed to the effect that it is any worse to try to use intimidation for the purpose of compelling a person to join a trade union rather than any other association. To take an example which I hope will never become a relevant example in this country, suppose there were an organisation such as the Hitler Youth. That would be an association for which it would be entirely improper to use intimidation to compel people to join. On the other hand, it would not be a trade union, nor should we be following the words to which I attach great importance, the words of the Universal Declaration of Human Rights, to which reference has been made. So the first advantage of my Amendment over the Liberal Amendment is that I do not confine it to trade unions, but say "a trade union or other association".
The second advantage of my Amendment is that it is not the same as anything that was put before the other place. The Liberal Amendment is in identical terms to one already considered in the other place and rejected. Let me say at once that it is not at all improper to put it down again so that it can be given further consideration in the other place after they have heard our views, but I think it is the experience of all of us that another place may be more sympathetic to an Amendment which it has not already considered in identical form and which comes to it as a new Amendment.
The third point of superiority, in my opinion, of my Amendment is that it will be seen that in the Liberal Amendment the proviso runs as follows:
"Provided that an act as aforesaid is not done with the sole intention of forcing another person to become, to remain or to cease to be a member of a trade union".
The words "the sole intention" frankly make it possible to drive a coach-and-four through the protection that the Liberal Amendment is designed to secure, because it is only necessary to couple some other intention in the -threat and the pur-
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pose of the Liberal Amendment would be wholly defeated. For those reasons, I very much hope that the noble Lord, Lord Henley, and his noble friends, after consideration, will not press their Amendment but will agree that their purpose in putting it down would be better served by supporting mine, which has similar objects and which I believe avoids these particular objections.
I come now to my own Amendment. As the Committee knows, this is prompted by my concern for individual freedom and for the express terms of the Universal Declaration of Human Rights. It would be quite wrong for me to put myself forward as an uncritical admirer of declarations of this kind. I am not; I have criticised some of these declarations before, and shall doubtless do so again. Nor am I under the illusion that this Universal Declaration of Human Rights constitutes a treaty. But let me remind the Committee that Article 20, which has been mentioned by my noble and learned friend Lord Dilhorne, is one that expresses a principle which Her Majesty's Government have told me, in answer to my Parliamentary Question of February 23, that they accept. There is no doubt at all, therefore, that they do not wish to do something contrary to that principle.
Here is a case in which we know by a judicial decision of the highest court that in some cases intimidation designed to compel a man to belong to an association or to punish him for his refusal is an actionable wrong; that is to say, he will have a remedy if that is done. That remedy is precisely in accordance with what the Universal Declaration of Human Rights says is the principle. Can we be happy, when our law at present gives some protection to a man who is treated in a way that is inconsistent with Article 20, that we should sweep away that protection? I could mention other Articles of the Universal Declaration of Human Rights, but remembering that the principle that I think we all wish to follow is to leave as much as possible to be decided in connection with these difficult matters by the Royal Commission and to do the minimum that is required for the proper functioning of trade unions, ought we not really to try to preserve such rights as a man already has in English law when he is the victim

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of the sort of conduct that was practised in the case of Rookes v. Barnard?
For those reasons, I support the Amendment of my noble and learned friend Lord Dilhorne. I have not heard everything that will be said during the debate, but my present intention is to support the Amendment because so far as it goes it appears to me to be right. I do not think that it covers the field sufficiently and I think something more may be necessary. Indeed, the further thing that is necessary is the principle embodied, or intended to be embodied, in the Amendment put down by the noble Lords on the Liberal Benches and mine. Of the two, for the reasons I have given, I greatly prefer my own and I hope it may commend itself also to the noble and learned Lord, Lord McNair, and his friends.
I have tried to make my view clear on all three Amendments. After we have heard the Government's point of view, it may be that all of us will wish to say something further, but I trust I have indicated broadly what my view is on all three Amendments.
4.20 p.m.
LORD CITRINE: So far in the debate we have had the views submitted of two eminent lawyers, both of them Queen's Counsel, one of them an ex-Attorney General and ex-Lord Chancellor, and both of them pillars of the Conservative Party. We have had also the views of another lawyer who perhaps would not claim the same eminence and who was the Deputy Leader of the Liberal Party in the House of Commons, the other place that we talk so much about and do not seem to know where it is.
I want now to put the view of a trade unionist and I want to deal with the substance. I have never either wanted to be or been a Member of the other place. In that sense, of course, I have suffered some disadvantage, particularly in the art of debate, and therefore I hope allowances will be made for that point in what I am saying. It seems to me that none of the speakers brought out in relief the real point at issue here. There are six Amendments, two of them consequential and the remainder of some substance. But what are these Amendments designed to do? These Amend-
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ments are designed to thwart the will of the House of Commons. None of these Amendments in substance are new. All of them were put forward in the House of Commons, either in the Committee stage or during the Third Reading debate. So what we are doing in substance—and your Lordships have been asked to support this view—is to say that, despite the fact that the House of Commons has come to a conclusion on this matter, we claim the right, on a very broad issue which affects many millions of people, to throw it out and supplant it by our own views as set forward in the Amendments.
None of these Amendments is constructive in character; let us try to remember that. On a former occasion, when the War Damage Bill was before this House, some doubt was expressed whether the views I put forward did not mean in substance that this House had no right to pass Amendments at all. I tried to correct that. I have never taken that attitude. But I do take the attitude that where the House of Commons has committed itself to a serious measure of principle, this House is taking a very great risk and a very great liberty, however it may feel for constitutional reasons it is right to take that liberty, in challenging that view.
Most trade unionists will call these Amendments, if they are carried into law, the "blackleg's charter." For years the trade union movement has been striving to gain 100 per cent. organisation. Sometimes it is able to do it by persuasion. Sometimes it comes across a man or men who find a conscientious objection to paying the normal contributions of the union for the upkeep of the conditions that they are then enjoying. I have not heard of cases, although I do not say they do not exist, where a non-unionist has gone to his employer and said, "I do not wish to take these advances in wages which have been secured by the trade union by the process of collective bargaining at great expense. I do not wish to do that. My objections to trade unionism are so strong that I should infinitely prefer to forgo the advances, considerable as they may be, that I now enjoy through their efforts".
Of course, if this matter comes to a head, not only will the House of Lords

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be challenging the Government of the day; it will also be challenging the trade union movement. I am not suggesting for one second that in a purely constitutional matter trade unionists are in the same category as the House of Lords. So far as I know, none of the noble Lords who has taken part in this debate up till now have any practical experience of this subject, certainly not when we come to deal with hundreds of thousands of men. They will not be in the front line at all; they will not be in the trenches; it will be the employers' organisations who will be there. And if the trade unions take up this challenge I know of no means in law—and although I am not a lawyer I know something about it—which can restrain bodies of men in sufficient numbers from fighting out an issue of this kind with their employers.
So what we are really being invited to do is to disrupt the relations which have been built up with organised employers over many years past. Many of those very employers operate the same rule requiring men to be in a trade union before they will risk, as it were, or before they consider it proper that they should engage in, a struggle with the trade unions representing their employees generally. I say this could lead to widespread strife, far wider than anybody here outside the industrial movement can appreciate.
Let me make it clear, having regard to the Rookes v.Barnard decision, that I am not offering a threat; I am giving a warning. I am not suggesting the dismissal of the noble Lords who seek to support these Amendments; in fact some of them I regard with a measure of affection, much as I detest some of their political and industrial views. If we look at the Amendment by the noble and learned Viscount, Lord Dilhorne, what do we find? We find that it is wider than any of the others. It introduces a principle which, so far as I know, has not yet been contested, either in the other place or here; it has not been advocated, so far as I am aware. The particular phrasing that is used, although the general intention is similar to the Amendments discussed in the House of Commons, goes much wider than Amendments 3 and 4. This Amendment refers to any action which is made to secure "the termination of the employment of any person".
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There is no suggestion of reasons, no talk about closed shops, nothing of that kind; it is that the mere fact of taking action which leads to the dismissal of a man would make the persons taking part liable.
VISCOUNT DILHORNE: When the noble Lord says "taking action of that kind", I hope he will make it clear that the action referred to is action that constitutes the tort of intimidation. It is not merely doing something to bring about a termination of employment. It is the fact of intimidation to bring about the termination of employment.
LORD CITRINE: This is what one expects with eminent lawyers, playing with words. If a body of men combine together and say to their employer, "We will not work with So-and-so and you should dismiss him", that will constitute an action for tort. Why should we play about with these things? We are dealing with serious issues. It may be that these debates will even get to the eyes of working people—I do not know whether they will—and it is just as well that we should use language that those working people understand.
I say that the Amendment moved by the noble and learned Viscount, Lord Dilhorne, is the widest that has yet come before either House. Are we to be put in the position that a body of men who have been consistently bullied by a manager can make no protests; cannot decline to work under that manager? If so, perhaps wording could be employed that would make that point clear. But from the Amendment it seems quite evident that it would be so. Any act of tyranny in the workshop which was resisted by the men to the point of the dismissal of the person concerned would bring those people within the position of being sued in an action for tort. I do not think there is any doubt about that.
Suppose, for example, there had been a succession of thefts in a particular office or works—and I am speaking of something that is a reality. I regret to say that it is a common occurrence in large businesses to find that some employees steal from other employees. Handbags of girls in offices are lifted out, and nobody knows where they have gone to. Even the greatest vigilance can scarcely

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avoid that sort of action. I myself have been employed within recent years in circumstances where that has occurred. Lockers have been forced open by other employees. I have seen the evidence of that, and I have been ashamed that anybody calling himself a worker should resort to that sort of thing. But it takes place. It is one thing to know that a thing is taking place, but quite another to amass the evidence to prove it. Are we to say to the trade unions that the men who resent that kind of action, and who have good grounds for believing that a particular person is responsible, shall have as their only remedy the taking of action in court against him, and that they must be required to go on working with him? I say that that is utter nonsense. It will never take place, and nothing that this House or the other House can do will prevent men from resisting that kind of thing, when they are convinced that that is the only remedy open to them.
This sort of thing would apply whether a concerted action, a strike or whatever it might be, or the threat of a strike, was official or unofficial. I have never yet heard in the debates a suggestion that unofficial strikes and official strikes should be put in exactly the same category. There has been some measure of respect for the rights of those who are driven to official strike. There is far less respect—which I share—for those who instigate unofficial strikes. But this particular Amendment would not touch that point. Anybody, whether officially or unofficially engaged in such an action, would be liable for an action in tort. It is perfectly true that in those circumstances the employer could remove the manager from the department as the result of some so-called threat or, as I would prefer to call it, a warning. He could put him in another department, and still the workers would escape any danger from this. He could be demoted in various ways. But if he were dismissed, then it would follow that those regarded as responsible for his dismissal would be liable to an action in tort.
The noble and learned Viscount, Lord Dilhorne, said at the outset that he had not noticed that the trade unions were inhibited in any way since the decision in Rookes v. Barnard. In point of fact, I think he used language which seemed
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to imply that unofficial strikes, for example, may have been rather more frequent; certainly, there is no suggestion that they have diminished: in other words, that contracts had been broken on these occasions as they were broken before, and apparently no one had suffered—no one had been prosecuted under Rookes v. Barnard. But that is no proof at all. The mere fact that a prosecution, or an action, has not followed, say, a strike of that kind, unofficial or whatever it may be, is no proof at all that it has not been the result of the coercion which the noble and learned Viscount so much deprecates. As I have said previously in this House, why do not the employers pluck up their courage, if they feel so indignant about unofficial strikes and about people breaking contracts, and sue the workers? Why do they not do that? Your Lordships all know the reason. I myself have attested it, and it shows the weakness of the law: that in practice it is quite incapable of widespread enforcement.
The Minister of Labour, Mr. Gunter, was quoted as having attested that victimisation had occurred, that trade unions have been involved in one way or another in this sort of thing. He went on to say that the trade unions should be above this. I am one of those people who like to see the cases that are referred to. When I was a trade union official I always tried to be sure of the merits of the case that had caused the trouble. It may be that there have been some cases without merit of any kind justifying strike action, or coercion may have existed; but it may be that in other cases there was an adequate explanation for the so-called victimisation.
Then, of course, we had, in the House of Commons and twice here, the repeated reference to Article 20 of the Declaration of Human Rights. I have said on previous occasions that when Article 20 was under consideration in Paris in 1948, prior to the Declaration becoming a fact, Her Majesty's Government's representatives voted against it, because they said it was incapable of enforcement. I did not hear any reference to that point, either from the noble Lord, Lord Conesford, or from the noble and learned Viscount, Lord Dilhorne. With their adequate facilities for research, surely they could have tested whether that was true or not.
VISCOUNT DILHORNE: Whether it is true or not, it does not seem to me in the least relevant. The fact is that the Government of that time accepted, and this Government accept, Article 20.
LORD CITRINE: I generally believe that a person who votes against a thing does not believe that that thing is a good thing. Perhaps I am wrong about that. If the noble and learned Viscount and I get cross talking over this Table I shall say some quite direct things that probably this House has not heard before. They may be enlivening our proceedings, but I will not be subjected to intimidation and interruption, which in point of fact are pointless.
I did not hear any reference at all from the noble Lord, Lord Conesford, whose diligence and capacity I deeply respect, to Article 22 of that Declaration. I cited it. I said that there was no reference whatever to trade unions in Article 20, and yet in Article 22 there were references to trade unions. Why the distinction? If it was intended that the Declaration of Human Rights, Article 22, should apply to the trade unions, why was it not so stated?
LORD CONESFORD: My Lords, just to correct the noble Lord, I think that when he says "22" he means in fact Article 23. It is paragraph (4) which mentions trade unions. I say, in all friendliness, that he is on a bad point if he suggests that the word "association" in Article 20 does not include a trade union. I should be most surprised if the advice of the noble and learned Lord the Lord Chancellor differed from mine on that point.
LORD CITRINE: That might be a quite proper strictly legal interpretation of Article 20. So far as my reference to Article 22 is concerned, I regret to say that I saw notice that this Bill was to come before your Lordships' House today when I was out of London and I had to hasten back, and I have no papers whatever to refer to. Even if I was in error in mentioning Article 22 instead of Article 23, my point remains a substantial one, whatever the number of the article may be. It is manifest that if it had been intended that trade unions should come within the purview of Article 20 they would have been referred to specifically. That is a matter of opinion, but
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I hope that it is a matter of general importance.
Nobody has spoken about the freedom of the other men. They were terribly worked up about the question of the individual trade unionist, this noble fellow who is sometimes supported by Conservative Party funds. That has happened in my lifetime. Sometimes these individuals are able to fight a case right from the Law Courts up to the House of Lords on their own slender resources. God knows how they manage it! Some inquiry on that matter might prove interesting. Are you going to try to compel other men to work with people to whom they have a rooted objection? Where is your machinery for doing it? Do you want to put some declaration in an Act of Parliament with the knowledge that it cannot be carried into practice except in very limited circumstances? The more the law is brought into contempt by this kind of thing, the more likely it is that people will disregard the law. There are a good many people who do it nowadays, not in the trade union sphere but in other spheres. I do not believe that it is within the power of the law to deal with a number of these questions.
What is the position of the employer who makes it a condition of employment that all his workpeople must belong to a trade union, and that he will not start a man unless in fact he is a member of a union—what action can the law take against him? If a man to be taken into employment is told that before he enters employment he must join a trade union, what is the law going to do about that? Can it tackle that problem too? If so, the Opposition have a great deal on their hands. The union can make an agreement with the employees—and some do so—whereby an employer will employ only men who are members of the union. Are those agreements to be set on one side? If the Draughtsmen's Union had been better advised they could have avoided the consequences of Rookes v. Barnard, the case would never have arisen. However, they were not so advised. They had an agreement which, unfortunately, contained an escape clause—a clause which some of us, had we been handling the matter, would not have included. A union can make out a case for collective bargaining which is not related to an individual at all—not directed against any particular man—but

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just lays down the principle that men in a particular shop shall be members of a trade union. I cannot see anything wrong at all with that principle. B.O.A.C. came near to doing so in an agreement they made which was subsequently brought into the Rookes v. Barnard action.
Do we want the trade unions to resort to all kinds of means to frustrate the effect of any such Amendment as is now before us? Do we want the unions to say to their members in plain language "Boys, give notice in the proper way. If it is a week's notice give notice and then walk out, and let the employer find out afterwards why you have walked out"? I do not want that. I have spent such a large part of my life in trying to build up a good relationship between employers and trade unions. I have tried in the past to get first-class, one hundred per cent. organisation on the employers' side as well as on the trade unions' side. How can one possibly enforce voluntary agreements to which the courts will not give backing unless there is an adequate organisation on both sides? For that reason I make no apology for being an advocate of one hundred per cent. trade unionism.
We have always in mind the position of the so-called conscientious objector. He is not envisaged in any of the Amendments. There is no limitation on the operation of the Amendments. If a man chooses to join a trade union and is dismissed these Amendments would make that a ground for action. There is no question that the man must be a conscientious objector. He may be a contribution-shirker, and if one man is to be allowed to get away with it how is one to differentiate between that case and half-a-dozen other men who suddenly evolve a conscience and think that they are not required to be members of a union? I must confess that from time to time I have been troubled in my mind about those religious people, whether they be Plymouth Brethren or whoever they may be, who by some fantastic reasoning think that it is against their religion to join a trade union. I do not know how provision could be made for them. I think that provision ought to be made for them to contribute to certain funds, which could be agreed to by central
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employers' organisations and the T.U.C. In this way the real conscientious objector could be exempted from joining a trade union but would not escape the payment of an equivalent sum to some benevolent object.
Great play has been made about men being driven out of their employment, the door being closed against them, and the poor beggars trailing through the world with no prospect of ever working again. Let us get their position into perspective. Trade unionists number about nine million; the working population numbers over 24 million. Is there no avenue of employment left open to a man who is put out of work for not belonging to a trade union? Is he out of employment for ever with no means of sustenance?
Are we not hypocritical when we talk about the use of coercion by trade unions? Are we not all coerced in modern society, and rightly coerced in the majority of cases? I am coerced to pay taxes to be spent by a Government—not the present Government—which I bitterly resent, a Government which spends money in a way to which I very much object. Similarly, a man may object strongly to paying rates. As a matter of fact, all over the country in recent months groups of people have formed associations of ratepayers because they object to paying increased rates. But does anybody doubt that in the long run they will have to pay them? The whole mechanism of the law is geared to coercion. In a modern society it cannot help itself. All government, the anarchists say, rests on force. So it does. Ultimately the power of Government depends on the Army, the Navy, the Air Force, and police force or other force. But when it comes to the trade unions, well, they just have to shed any power of this kind: they have to be persuasive only. However convinced they may be that a man is a shirker in the sense in which I use the word, they cannot take action because the noble Viscount's Amendment and the Amendments of the noble Lord, Lord Conesford, and others would make that impossible. I make no bones about it. I know that throughout my trade union work coercion had to be used against certain people. I do not apologise for it at all—whether I apologise for it or not, it will go on just the same.

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The State will coerce people to take life. What could be worse than that. In two wars, men who genuinely and consciously believed that it was wrong to take life were hauled up before all sorts of committees and courts and their motives were tested, tested in a way that sometimes seemed to me to be rather extraordinary. If it was so decreed, off they went and they had to participate in the job of taking the lives of people, when they had no feelings in their hearts either of the necessity or of what I would' call the justification for that. I am not joining that group; I am simply pointing a fact. So do let us think about the trade unions when we talk about coercion and the reasonable grounds for its exercise.
You cannot effectively maintain collective bargaining without very adequate trade union organisation, and my experience is that other countries have seen this and have been ready to adopt this coercion by law. New Zealand had an Act of Parliament for years which required workers who were subject to an arbitration award to be members of the appropriate union. The United States of America in the late war, and throughout the New Deal legislation, had a similar condition requiring men in a given shop to be members of the trade union catering for it. Also, as I said on the last occasion and I repeat now, Australia, while accepting the view of the conscientious objector, requires a conscientious objector to contribute a sum equal to his normal trade union contributions to the State funds, the national consolidated funds.
I conclude by hoping that this House is not going to challenge the House of Commons. We have enough constitutional trouble on our shoulders. I see faces opposite which, individually, I regard as genial and kindly, but in the mass I do not quite know. I sometimes wonder whether the doctrine which I detested, the doctrine of Karl Marx, of class struggle and class consciousness, is not instinctively applied by people who are not in the Labour movement and, perhaps, have never heard of it. Let us, after all, be a bit objective. If anyone here were in a trade union, would he be standing out for Amendments of this kind? I think not, and I hope the House will not do it. The noble Lord, Lord Conesford, has evidently changed his
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view. On the last occasion he told us that he was not sure whether in fact this Bill that is brought before us would, as it were, completely remove the effects of the Rookes v. Barnard decision—I am paraphrasing and not quoting actual words. He referred to the use of the word "only"
"shall not be actionable … on the ground only".
Those are the words he quoted and the words I endorse—
LORD CONESFORD: I think that the noble Lord misunderstood me, but I am sure that the noble and learned Lord the Lord Chancellor did not. I quoted the right honourable gentleman the Minister of Labour in another place, who stated that the object of this Bill was to reverse Rookes v. Barnard. I gave a technical reason why I was not quite certain that it did so. I did that because I think it is the duty of any lawyer to try to explain to the House what he thinks is the effect of the Bill as it stands. I also said that I did not propose to try to improve the Bill on this point, but I thought it my duty to bring the point to the attention of the Lord Chancellor.
LORD CITRINE: I entirely accept what the noble Lord, Lord Conesford, said. I know how conscientious he is in this matter. But if the word "only" appears in the Bill, as it does now, it follows there are other grounds besides that of inducement to break a contract or the actual contract of employment. I shall not argue that as I do not want to weary the Committee. But, believe me, feelings run deep in some of us when we see what may be the serious consequences of this change, and I implore noble Lords opposite to think twice before this challenge is laid down.
4.54 p.m.
VISCOUNT MASSEREENE AND FERRARD: May I just intervene for three minutes, as I spoke on the Second Reading? The noble Lord who has just sat down, said that if these Amendments are carried this Bill will become known as the "Blacklegs' Charter". I would say that if these Amendments are not carried it will become known as the Blackmail Bill.
SEVERAL NOBLE LORDS: No.
VISCOUNT MASSEREENE AND FERRARD: Yes it will—the blackmail that enables the unions to force an employer to injure a third party. The noble Lord raised another matter, and I see his point there, when he said that a great many trade unionists feel that it is unfair that a man who is a non-union man should have all the benefits of pay and everything else which the unionists have achieved in their long fight. But surely the employer has something to say. After all, the man who pays the piper should choose some of the tune. In all the speech of the noble Lord, Lord Citrine, he appears to have completely left out the rights of the employer. The employer can surely employ anyone he likes and, if he wants to, pay him £100 or even £500 a week. After all, it is the employer who has to find the wages. I really cannot understand the arguments of the noble Lord.
He also asked: why do employers never sue the workers if they break their contracts? What on earth would be the point of doing that? You would only run yourself into great expense, and you would get nothing out of it at all; and, of course, you would also create bad feeling. I should like to ask the noble and learned Lord the Lord Chancellor to clarify something. He was extremely kind when I made my Second Reading speech, and he replied at very great length. Perhaps I may quote from Hansard what the noble and learned Lord said when he was speaking regarding my observations on the closed shop. He said:
"It depends on where you are standing. If you are standing with that one man in the corner who does not choose to join a trade union, your view may be: 'It is a free country, and it is intolerable that this man should be sent to Coventry or lose his job simply because he does not choose to join a trade union.' But it may be that you are standing with the 99 others who hazard the view that the majority also have some rights."
After some further remarks the noble and learned Lord went on to say:
"If the men say: 'We are not going to work with a chap like that,' the courts have had to realise (and I suggest that we must all recognise the fact: it is always wise to recognise facts) that you cannot make men work with a man with whom they will not work. If 1,000 men will not work, and we send them to prison, what shall we do with 10,000?—"[OFFICIAL REPORT, Vol. 267 (No. 85), cols. 80–81, June 15, 1965.]
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My Lords, I have always thought that the law was impartial regarding the rich or the poor, the strong or the weak.
LORD LINDGREN: Provided you can pay for it.
VISCOUNT MASSEREENE AND FERRARD: I would say, by that reasoning, that if the majority wish to commit a felony, a sin, you must therefore alter the law to oblige them. I think you might as well say that, if the majority want to steal, you must therefore legislate to make stealing legal. I must apologise for keeping the Committee so long, but I should be extremely grateful if the noble and learned Lord could clarify these points for me. If the noble and learned Lord says that the majority must always be right, I have completely misunderstood the object of the law.
5.2 p.m.
LORD BLYTON: I should just like to intervene in this debate to say to the previous speaker that he is far removed from the trade union world. I do not think he has ever participated in it, and—
VISCOUNT MASSEREENE AND FERRARD: But I employ them.
LORD BLYTON:—he therefore speaks on this issue with a great lack of knowledge compared with those of us who have spent our lifetimes in the movement. He talks about the law being equal. The law is not equal. If the noble Viscount steals a loaf of bread to throw it at his chauffeur in vexation, he may get fined £10; but if, during my lifetime, I had stolen a loaf of bread to eat, I should have got fined £10, too. I am sure the law is not equal in that respect.
He says the employers never sue. He must live in a different world from me. I have been in court twenty times in my lifetime through the old coalowners suing us for damages because we made the pits idle in a trade or a wages dispute; and, naturally, as it was under a breach of contract, the judge had to award the damages they asked for. In the 'twenties, when they asked for £2 a day and we were getting only 6s. 6½d. a day for working the pits, we had to pay it back at 1s. a week, by judge's order. So it is silly to say that we have

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not been charged with a breach of contract in the past, because in my lifetime I have paid many times; and sometimes it was proved justified, because we got a better settlement.
In my opinion this Amendment gives a licence to the blackleg to damage the trade unions in their fight against the employers to get decent wages. Do not let us be mealy-mouthed about this. That is what it means: that you are going to encourage the man who will not pay his union dues and who, if there is a trade dispute, will blackleg his fellow men. You are going to say that he has the right to go to the court and claim damages. This is an attack on the closed shop. Why should that be? If a closed shop agreement between the trade unions and the employers is negotiated—and, as I remember, the Opposition have always argued the sanctity of agreements; in the twenty years I was in the House of Commons the sanctity of agreements was the main thing of the argument against us—and if it is agreed that everyone should be a member of a trade union, why should there be a law to protect one individual from being a rebel and saying, "I am not accepting this negotiated agreement"? How can you expect industry to go on if you take up that attitude? I think that, in this respect, the whole Amendment is really not right.
I want to say to your Lordships' Committee now that if this Bill does not go through there will be trouble in the trade union field. They will not lie down to this—and I think the noble and learned Lord the Lord Chancellor was absolutely right in the last speech he made. If there are 2,000 men in a union and one is going to be awkward, you can expect the 1,999 to say, "We are not going to work with him; we are not going down the pit with him". What can the Opposition do? What can the employers do? I have known many a time when I have been faced with this situation, and the employer has said to me, "We are not having the pits stopped for one man." And, if he did not catch him on that, he could always catch him for a breach of the Mines Act. He would give him his notice, he would automatically disappear, and harmony would reign. I think that the Amendment moved by the Opposition is a destructive one, and I hope
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your Lordships' Committee will defeat it today.
5.6 p.m.
LORD MCNAIR: I have little to add to what has been said by my noble and learned friend Lord Wade. I have listened with great interest and attention to the speech of the noble Lord, Lord Citrine, because I know there is no man who has rendered greater services to the trade union movement than he has. He will forgive me, I hope, if I do not enter into argument with him on the constitutional relations of this House and another place, but I could not help feeling that if his view of that constitutional relation was widely shared by your Lordships, there are few of us who would trouble to turn up and take part in your Lordships' debates.
SEVERAL NOBLE LORDS: Hear, hear!
LORD MCNAIR: The greater part of the argument put forward by the noble Lord, Lord Citrine, was devoted to the closed shop. Now I am not going to argue the question of the closed shop, because I consider that that is one of the matters which will be discussed by the Royal Commission on Trade Unions which has been set up by the present Government. It is some time since we had a Royal Commission on trade unions, and I think that the present Royal Commission has some very valuable work to do.
As the Government have decided to establish that Royal Commission, and to refer all the questions affecting the relations between trade unions and employers' associations, and kindred matters, to a Commission of that character, my feeling is that the less that is said now, before that Royal Commission gets to work, the better. If I may use the expression sub judice in a somewhat extensive sense, the sort of matters we have been discussing to-day are within the scope of the matters which will be discussed by the Royal Commission. Therefore, the ideal thing would be to abstain from discussing issues that have been referred to that body. Nevertheless, I am absolutely persuaded by my experience that co-operation between trade unions of workmen and associations of employers is absolutely essential to the smooth working of industry in this country.

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I spent four years of my life in the closest possible contact with the coal-mining industry. I have attended numerous meetings between the two sides of industry for the purpose of settling industrial disputes, and I have no hostility whatsoever to trade unions. I regard them as an integral part of the machinery of industry in this country. If it can be shown that the results of the Rookes v. Barnard decision is hampering this co-operation between the trade unions, on the one side, and the employers' associations, on the other, that it is having a bad effect on our industries, then there would be something to be said for a sort of emergency measure to remove that friction. But I am not aware that it can be said that the result of Rookes v. Barnard is causing that friction, and therefore I am not persuaded of the necessity of all the provisions in this Bill.
Much as I should like to talk about Rookes v. Barnard (because, as your your Lordships will understand, to a lawyer it is a fascinating decision) I will not do so. It is an extremely complicated decision. The issues raised by it, and even more those revealed by it, particularly in the speech of the noble and learned Lord, Lord Devlin, will require the closest possible examination by the Royal Commission; and I think it would be wrong in any way to attempt to forestall their scrutiny of the present state of the law.
The Government have taken the view that it is necessary for the smooth working of industry to introduce this Bill. I should be prepared to accept that, provided that I felt sure that we had some guarantee that there would not be another Mr. Rookes treated in the same way as the Mr. Rookes who will now go down to history as the plaintiff in Rookes v. Barnard. If the Royal Commission should eventually decide that all the other Mr. Rookes's must be treated in the same way, a different situation would arise. But, unless and until the Royal Commission endorse the treatment that was received by this Mr. Rookes, I am not prepared to be a party to anything that might facilitate a repetition.
If any noble Lord will read the speeches of the noble and learned Lords
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in deciding the case of Rookes v. Barnard in this House, I think he will come to the conclusion that there is only one word that describes the action of the trade union in question towards Mr. Rookes. That is the word that was used by the Minister of Labour on the Second Reading of this Bill in another place, and used to-day by the noble and learned Viscount, Lord Dilhorne, in his opening speech—namely, victimisation. There is no other word for it. In the hope of preventing repetition of that treatment, unless and until it should be endorsed by the Royal Commission on Trade Unions and Employers' Associations, I would urge the Committee to adopt the Amendment moved by the noble and learned Viscount, Lord Dilhorne, which will have the support of my noble friends on these Benches.
5.14 p.m.
LORD LINDGREN: We have had a wide-ranging debate. The noble and learned Viscount's Amendment would mean that the Bill would not apply to any threat which was intended to secure the dismissal of any person from employment. The Amendments of the noble Lords, Lord Henley, Lord Wade, and Lord Conesford, are similar, as has been stated already, in that a threat to force a person to belong to a trade union would normally involve a threat to secure his dismissal from his employer. Therefore, with the Committee's permission I shall try to deal with the debate in a general manner but if any noble Lord wishes to interject I shall be only too happy to try to deal with the interjection.
I would certainly agree that we ought to look carefully at cases which involve the use of the strike weapon against an individual. I think we all feel that there are dangers in a situation where a powerful institution like a trade union can exercise its power against a single person. Of course, such cases are not at all common, but the issues they raise are of wide significance. But that does not mean that it would be sensible to try to deal with this particular issue in isolation. The feeling that the relationship between trade unions and the individual ought to be examined was one of the Government's main reasons, as the noble and learned Lord, Lord McNair, has just suggested, for setting up the Royal Commission on Trade Unions and Employers'

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Associations. The question will undoubtedly play a large part in the Royal Commission's work and it is closely connected with other matters which will also bulk large in its inquiries. I would urge the Committee that it would not be advisable to pick out this one point and attempt to deal with it out of context in this Bill. We ought to await the Royal Commission's report so that action can be taken over the whole field, with proper regard to all the problems that arise.
We must remember that the problem of disputes between trade unions and individuals is not a simple one. Of course, individuals have their rights: I would never deny that. But, as has been already pointed out, not only on Second Reading but here to-day, majorities also have their rights. When some of us, as trade unionists, suffered victimisation at the hands of the employers, we never heard any squeals about it. I have sympathy with a man who has religious objections to joining a trade union. I do not share those objections and I do not think them right. But I have no sympathy for the individual who in most cases is too mean to pay contributions. In 99 cases out of a 100 on the shop floor, in the office, in the workshop and in the mine, the non-unionist is the mean "blighter" who will take everything that everybody else gets for him and will make no contribution towards their cost; and there are heavy costs involved in trade union organisation. If there is to be legislation to deal with these issues of industrial relations it must strike a balance between the two: the rights of the individual and the rights of the majority. It is going to be a poor world if in a large number of cases the minority are going to rule the majority.
I think, too, that there are a number of difficulties which the noble and learned Viscount's Amendment would raise. I have said before that the effects of Rookes v. Barnard are not confined to strikes to enforce the closed shop. The same applies to this Amendment. It would extend wider than to disputes over the closed shop. For instance, when demarcation disputes arise, very often they take the form that one group of workers demand that certain work should be reserved for them and not given to other workers. This may involve the
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termination of the employment of other workers. The Amendment might therefore come to apply in the case of some demarcation disputes. I am not saying that demarcation disputes are a good thing, or that they do not need to be examined, but I am not at all sure that it would be wise for the law to be brought into demarcation disputes. If that is what the noble and learned Viscount is suggesting, I should require a lot of convincing that it is right. Here, again, is not the sensible thing to do to let the Royal Commission have a chance to study the problem?
There is another point. Even if the noble and learned Viscount's Amendment were adopted, it would by no means give complete protection to the individual. This has been suggested by a number of noble Lords on this side of the Committee to-day. The effect would be that it would be actionable to try to procure the dismissal of a person by the threat of a breach of contract. What about the threat of something which is not a breach of contract for—instance, working to rule? Evidently the noble and learned Viscount is not concerned with what is equally penalising, an action by a group of workers against an employer which is not a breach of contract, because the employer has set the rules to which the workers work. It may be a more effective way even than a strike for compelling an employer to dismiss a man, but the man would not have any right of action because there would not have been the threat of a breach of contract. I think this demonstrates how much better it would be to deal with these questions as a whole instead of attempting to prejudge them now, and that we should wait for the Report of the Royal Commission.
The noble and learned Viscount asked whether it was part of the normal day-to-day activities of a trade union to secure the termination of an individual's employment by intimidation. When I am asking the Committee to reject an Amendment, it is part of my job to be as passive as I can, but I wish that a good many lawyers who ask these academic questions could have spent a couple of years on the shop floor; then perhaps they would not be so pedantic about it. Certainly it is not something

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that trade unionists are constantly engaged in.
I said before that disputes of this kind are very few in number. I think that the noble and learned Viscount forgets that the effects of the Rookes v. Barnard dispute are not confined to closed shop disputes but extend to other disputes as well. To-day many trade union leaders believe that when in negotiation, if by chance, or by a slip of the tongue, they threaten to call a strike, or suggest that a refusal by the employer to concede would mean the withdrawal of labour, that would create the intimidation which might lead to an action of this kind. We are dealing only with the main Amendment. I hope that it will be rejected, if it is pressed, and that we can deal with the other Amendments subsequently.
5.25 p.m.
VISCOUNT DILHORNE: I should like to reply shortly to those who have criticised this Amendment. I would say first to the noble Lord, Lord Lindgren, that if the Amendment is accepted it is still left in the Bill and made perfectly clear that the threat of breaking a contract made in the course of ordinary negotiations about wages, hours and all that, will be perfectly lawful. This Amendment bites only on cases where there is intimidation and intimidation by threats. My Amendment has been criticised in some quarters as being too wide and in others as being too narrow. I drafted it deliberately in the hope that it would not give rise to general controversy about closed shop or demarcation disputes, or matters of that kind, because all I am seeking to-day, pending the Report of the Royal Commission, is to preserve the status quo.
Your Lordships will remember that the complaint of Mr. Rookes was that he had suffered the loss of his employment by reason of threats made by employees to his employer to terminate their employment in breach of contract unless Mr. Rookes was dismissed. That conduct
was held to constitute the tort of intimidation and not to be protected by Section 3 of the Trade Disputes Act. I have drawn this Amendment to seek to ensure that between now and the Report of the Royal Commission other "Mr. Rookeses", if they are treated in the same way, will not be deprived of a remedy similar to that obtained by Mr. Rookes. That is the issue on which we are now to vote, and nothing else. There is no question of demarcation disputes, or closed shops, but there is this question that when an employer is intimidated into terminating a contract of employment with one of his workmen, that workman shall not be without redress.
I have listened with the greatest interest to what was said by the noble Lord, Lord Citrine. I do not wish to tempt him to rise to his feet again, but I must say that I ask your Lordships to join with me in not being intimidated by his threats or warnings of the consequences of accepting this Amendment—
LORD CITRINE: I am not—
VISCOUNT DILHORNE: I wish I could intimidate the noble Lord to keep his seat for a moment.
LORD CITRINE: I am not suggesting that we are threatening the noble and learned Viscount's pension. He will not suffer loss.
VISCOUNT DILHORNE: I think I should be wiser to ignore that interruption.
What I am asking your Lordships to do is to vote in support of what I think is an important principle, and at the same time to preserve what is the present legal position until we get the Report of the Royal Commission.
5.30 p.m.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided:—
Contents, 77; Not-Contents, 53.

CONTENTS

Aberdeen and Temair, M.

Auckland, L.

Brecon, L.

Abinger, L.

Baden-Powell, L.

Brocket, L.

Ailwyn, L.

Barrington, V.

Brooke of Ystradfellte, B.

Albemarle, E.

Bessborough, E.

Byers, L.

Ampthill, L.

Bossom, L.

Carrington, L.

Amulree, L.

Boston, L.

Clwyd, L.

Conesford, L.

Fraser of North Cape, L.

Ogmore, L.

Craigton, L.

Goschen, V. [Teller.]

Powis, E.

Cromartie, E.

Greenway, L.

Ridley, V.

Cullen of Ashbourne, L.

Grenfell, L.

Rowallan, L.

Denham, L.

Hastings, L.

St. Aldwyn, E. [Teller.]

Derwent, L.

Henley, L.

St. Helens, L.

Dilhorne, V.

Horsbrugh, B.

St. Oswald, L.

Drumalbyn, L.

Howard of Glossop, L.

Sandys, L.

Dudley, L.

Hurd, L.

Selkirk, E.

Dundee, E.

Lambert, V.

Sinha, L.

Ebbisham, L.

Latymer, L.

Somers, L.

Eccles, V.

Lothian, M.

Soulbury, V.

Egremont, L.

McCorquodale of Newton, L.

Strang, L.

Elliot of Harwood, B.

McNair, L.

Strange of Knokin, B.

Emmet of Amberley, B.

Massereene and Ferrard, V.

Suffield, L.

Erroll of Hale, L.

Merrivale, L.

Swinton, E.

Exeter, M.

Milverton, L.

Terrington, L.

Falkland, V.

Molson, L.

Teynham, L.

Forster of Harraby, L.

Montgomery of Alamein, V.

Wolverton, L.

Fortescue, E.

Moyne, L.

NOT-CONTENTS

Addison, V.

Greenhill, L.

Phillips, B.

Archibald, L.

Haire of Whiteabbey, L.

Plummer, B.

Attlee, E.

Hampton, L.

Rhodes, L.

Beswick, L. [Teller.]

Henderson, L.

Royle, L.

Blyton, L.

Hilton of Upton, L.

St. Davids, V.

Bowden, L.

Iddesleigh, E.

Samuel, V.

Bowles, L. [Teller.]

Kennet, L.

Segal, L.

Brockway, L.

Kirkwood, L.

Shannon, E.

Brown, L.

Latham, L.

Shepherd, L.

Burden, L.

Leatherland, L.

Snow, L.

Burton of Coventry, B.

Lindgren, L.

Stonham, L.

Champion, L.

Llewelyn-Davies, L.

Taylor, L.

Chorley, L.

Lloyd of Hampstead, L.

Walston, L.

Citrine, L.

Longford, E. (L. Privy Seal.)

Wells-Pestell, L.

Crook, L.

Mitchison, L.

Williams, L.

Francis-Williams, L.

Morris of Kenwood, L.

Williamson, L.

Gaitskell, B.

Morrison, L.

Winterbottom, L.

Gardiner, L. (L. Chancellor.)

Peddie, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
VISCOUNT DILHORNE: This Amendment is consequential. I beg to move.
Amendment moved—
Page 1, line 5, at beginning insert ("Save as aforesaid").—(Viscount Dilhorne.)
LORD LINDGREN: In view of the previous vote, and the fact that this is consequential on that vote, the Amendment will not be opposed.
LORD CONESFORD LORD CONESFORD had given notice to move, after subsection (1) to insert:
"( ) Notwithstanding anything contained in the last foregoing subsection, an act done as aforesaid shall not cease to be actionable, if done for the purpose of compelling a person to become, to continue or to cease to be a member of a trade union or other association, or of punishing him for his refusal so to do; nor, if done for that purpose, shall it cease to be capable of giving rise to an action of reparation."
The noble Lord said: In view of the fact that we have made an important change in the Bill, I think we should consider the Bill in its present form between now and the Report stage, and on the present occasion I do not propose to move this Amendment.
VISCOUNT DILHORNE: This is a consequential Amendment, and I imagine the same view will apply.
LORD LINDGREN: Yes.
VISCOUNT DILHORNE: I beg to move.
Amendment moved—
Page 1, line 15, at beginning insert ("Save as aforesaid").—(Viscount Dilhorne.)
5.42 p.m.
LORD CONESFORD LORD CONESFORD moved, in subsection (2), to leave out "six months" and insert "one year". The noble Lord said: This is a small Amendment on a

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different point. The Bill as originally drawn would have applied to all proceedings commenced after the Royal Assent, even if the cause of action had already arisen. By an Amendment moved by the learned Attorney General on the Report stage in another place, the plaintiff is given six months' grace to start his action. But the cause of action must, of course, have arisen before the passing of the Bill into law. This was an eminently proper Amendment to prevent the Bill from being in effect retrospective. Noble Lords will find the brief discussion in which only the Attorney General and his immediate predecessor took part, in cols. 1293 to 1301 of the Commons Hansard of May 18, 1965.
We welcome, as did the Opposition in another place, the action of the Government in putting this into the Bill. The sole question raised is whether the proposed period of six months is enough or whether a longer period ought to be provided. My right honourable and learned friend Sir John Hobson thought that three years would have been the proper period. I am not proposing anything of that kind. I am proposing a compromise period of one year, and I hope the Government may be willing to accept it. On balance, I believe it will do more justice to possible plaintiffs, without detriment to the aims of Her Majesty's Government.
I have no intention of engaging in a long discussion of the principles underlying the proper period of limitation. I will merely point out what I do not think will be disputed in any quarter, that the period of six months, though not unprecedented, is an exceptionally short period to lay down. It is true that there is a precedent set by the Law Reform (Miscellaneous Provisions) Act, 1934, which provided that proceedings in tort against the estate of a deceased person shall have this period of limitation. There is also a precedent under the Truck Acts. There was another precedent, but we have wisely swept it away. There used to be a six months period protecting public authorities, but that was widely found to produce some injustice and bad consequences, and that period has been done away with for that purpose.
The normal period for personal injuries is now three years, plus additional time that can be added in certain cases,
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should persons be under disability or the cause of action have been concealed and things of that kind. I can fully sympathise with the view of the Government that to provide in this case the period of three years, though incapable of extension on the grounds I have mentioned, would be too long a period, but I suggest that six months may be too short. If I may remind the Committee of the steps that have to be taken, not only must the plaintiff become aware of all the facts, but explore whether he is entitled to or can obtain legal aid, and find a solicitor who thereupon conducts further investigation.
All that takes time, and I think that six months may be so little for this purpose that, should the Government insist on this limit, it may result in defeating their own purpose, because so many of these enquiries may be incomplete and there may be a number of what I may call protective writs, the plaintiff taking out a writ before the six months expires and before he has fully investigated the difficult problems of law and fact to decide whether he is entitled to an action. That may produce a number of writs which, if there were more time given, up to a year, would in many cases be avoided, because further investigation might reveal the fact that there was not a case which the plaintiff would be well advised to pursue.
I move this particular Amendment in no spirit hostile to the Government or to the Bill, but in the hope that the noble and learned Lord the Lord Chancellor will consider this matter fully, if he has not already done so, and that if he comes to the conclusion that there is something in my point, he may give effect to it. Should be agree with my point I think my Amendment is apt. I may say that I have no intention on this occasion of pressing it to a Division. I move it in order to bring the matter fully to the attention of the Lord Chancellor; and it is a genuine attempt to improve the Bill. I beg to move.
Amendment moved—
Page 1, line 18, leave out ("six months") and insert ("one year").—Lord Conesford.)
5.47 p.m.
THE LORD CHANCELLOR (LORD GARDINER): As the noble Lord, Lord Conesford, has rightly said, it was originally considered that the Bill should apply

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to all proceedings commenced after it had received the Royal Assent. This would have had the advantage that the present uncertainty about the legal position of trade unions which has arisen from the Rookes v. Barnard decision would have been cleared up as soon as the Bill become law. But the Bill was amended to provide the six months period of grace in a desire to be absolutely fair to potential plaintiffs. It was pointed out that if a right of action accrued to a plaintiff shortly before Royal Assent he might lose that right of action under the Bill as originally drafted because he had not had time to obtain legal advice and pursue his right before the Bill passed into law. This possibility was eliminated by the Amendment adopted in another place.
On the question of whether six months is long enough to free potential plaintiffs from this possible difficulty, this is a matter which the Government have considered with great care. Even if the plaintiff has not obtained a legal aid certificate before commencing his action, I am advised that six months is a fully sufficient allowance of time, and that in any ordinary case six weeks is enough for the obtaining of a legal aid certificate. I am fully satisfied, therefore, that there is no question of any potential plaintiff losing his right of action because the period of six months is not enough. After all, all he is required to do in the six months is simply to issue his writ.
But we have to consider not only the position of potential plantiffs; we have to be fair to potential defendants. The principal object of the Bill, after all, is to dispel the uncertainty, particularly in trade union circles, about the present state of the law, which is liable to hamper trade union officials in their activities. It is desirable that the period of grace should not be made longer than is reasonably necessary, so as to avoid prolonging unnecessarily the time during which trade union officials may still be in doubt as to whether legal actions might be brought against them.
The period of grace, of course, applies only to proceedings in respect of acts done before the Bill receives the Royal Assent. But the anxiety that actions might be brought in respect of such acts—perhaps acts long past—is liable to have a disturbing influence on industrial relations. As my right honourable and
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learned friend the Attorney-General said in another place, the principle that long dormant claims have more of cruelty than justice in them ought to be particularly applicable to industrial relations matters. So in order to ensure that the Bill will achieve its purpose, I suggest it is better to confine the period of grace to six months, rather than to extend it to a year. As the noble Lord, Lord Conesford, has already pointed out, there are existing precedents for a limitation period of six months in the Law Reform (Miscellaneous Provisions) Act, 1934, and also in the Truck Acts, 1896. It may be particularly desirable, from the point of view of the difficulties of potential defendants, to limit it to six months rather than twelve months because of the Amendment which has now been carried.
I remember a strike which took place because the men refused to go on working with a particular man. He had interfered with a little girl who was the daughter of one of his mates. He was not sent to prison; he was either put on probation or fined, I forget which. But industrial relations are like that. No doubt the men ought to have said, "Of course, we must accept that whatever a court has decided is the right thing to do is in fact the right thing to do", and no doubt they should have shaken his hand when he came back from the court. But they just said that they were not going to go on working with that man. That, the noble and learned Viscount, Lord Dilhorne, says, was intimidation, and the law will now be in this curious state as the result of the Amendment: that if in a case like that the men simply strike, that is all right, but if the trade union official tells the employers, "The men are going to go on strike if you do not get rid of that man", then not the men who are striking, but he who has told the employers what the position is, is liable to unlimited damages in tort and, particularly in view of the fact that the strange results which this Amendment will have and the difficulties it will cause, it is all the more desirable that those who have to work in this field should achieve some degree of certainty that if the plaintiff is given six months after the Bill receives the Royal Assent in which to issue a writ, that is being perfectly fair to him. It is on those

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grounds that the Government are unable to accept this Amendment.
LORD CONESFORD: I thank the noble and learned Lord the Lord Chancellor for his considered reply. I think perhaps I ought to say, in the interests of my noble and learned friend Lord Dilhorne, that I imagine that neither he nor I accept quite what he said about the result of the last Amendment. But as regards the Amendment which we are at present discussing, my fear was that the Bill, as it stands, might not quite have the effect the noble and learned Lord thought, because I thought it might cause a good many protective writs, as I might put it, to be put in at the last moment. Nevertheless, I am grateful to the noble and learned Lord, who has obviously considered the matter. As I said originally, I do not propose to press my Amendment and I ask leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 1, as amended, agreed to.
Remaining clause agreed to.
House resumed: Bill reported with the Amendment.

MATRIMONIAL CAUSES BILL [H.L.]
Read 2a (according to Order), and referred to the Joint Committee on Consolidation Bills.
SUPERANNUATION BILL [H.L.]
Read 2a (according to Order), and referred to the Joint Committee on Consolidation Bills.
FLINTSHIRE COUNTY COUNCIL (HIGHER FERRY SALTNEY FOOT BRIDGE) BILL
Reported, with Amendments.

MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (MELTON MOWBRAY) BILL MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (NEWTON LE-WILLOWS) BILL MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (ROTHERHAM) BILL
Reported, without amendment, and re-committed to a Committee of the Whole House.
House adjourned at four minutes before six o'clock.