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Excess Profits Tax

Volume 415: debated on Wednesday 31 October 1945

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Thirteenth Resolution read a Second time.

Motion made, and Question proposed, "That this House does agree with the Committee in the said Resolution."

I am afraid I shall detain the House rather longer than other speakers have done, but, having waited for 17 years since I last addressed the House, I think, perhaps, I may be excused for trespassing longer on its time. If I cannot, in such circumstances, ask for the indulgence which is accorded to a maiden speech, perhaps I can ask for that degree of toleration which I think the House would be willing to accord to a such a Rip Van Winkle as myself.

The Resolution now before the House is from the immediate point of view much the most important part of this Budget. Other aspects may be more important in the long run, but the immediate effect of the proposed changes in E.P.T. take pride of place, at any rate so far as industry is concerned. Everyone will agree with the Chancellor in wishing to be rid of this tax. It is the greatest dead weight on efficiency which industry has to bear. It is a tax which has always been full of unfairness and anomalies, and which grows worse as it grows older. Everyone will rejoice if it has become odious to the present Government, and certainly no one is going to object to its being cut by 20 per cent. I hardly think that the Chancellor expects to be congratulated on this decision. The absolute necessity for such minimum action has become universally apparent. In this connection, however, I should like to ask the Chancellor why the Resolution before the House contains no direct reference to the proposed reduction. No doubt there is some technical explanation, but, before the House passes the Resolution, which will presumably govern the scope of the discussion on the Finance Bill when it comes on later, I would like to know whether it sets any limit upon subsequent discussions regarding abolition or reduction of the tax.

7.0 p.m.

When I come to look at the specific proposals of the Chancellor regarding Excess Profits Tax, it seems to me that there is a good deal which has been omitted, and some things to be included, which will have to be considered very carefully before we raise a cheer for the right hon. Gentleman as the saviour of British industry. In the first place it is proposed that deficiency payments shall cease absolutely after December, 1946. I have studied this Resolution, the White

Paper and reports of the speeches of the Chancellor of the Exchequer and the Financial Secretary in this connection, and I still find myself in complete doubt as to what is actually proposed. The Resolution is in perfectly general terms. The White Paper says:

"It is proposed that deficiencies as from the 1st January, 1947, will not rank for set-off against excess profits for other periods."

Nowhere can I find any definition of "deficiency." There does not appear to be any qualification or limitation of the term "deficiency." Does that mean that any deficiency whatsoever which first appears in the balance sheet of a business after December, 1946, will be completely ruled out for ranking as set-off against payments of Excess Profits Tax previously made? If this is the intention, I submit that it will not only be unfair, but a very serious breach of public faith.

The whole scheme of E.P.T. has been to treat the period of the emergency as a whole; it is not properly an annual tax at all which can be varied at will from year to year. It is rather a scheme of attempting to ration profits over a whole abnormal period. If this is so we cannot in fairness just shut down on the scheme when it suits us to do so for purely financial purposes. We cannot say to the business concerns affected, "You threw all your resources into wartime production and we appreciate that for that very reason you are now left with an expensive period of reconstruction, but the war is over, so why should we care?" That seems to be the attitude which we should be adopting if the word "deficiency" is not to be qualified. We should be saying to these businesses, "You can go and stew in your own juice"—or rather "You can go and stew without any juice, because we have seen to it that all the available juice has been drained off." I do not believe that that is the attitude of the Government to these concerns. Many of them are concerns of small enterprising men who put everything into getting the greatest possible output during the war without the slightest prospect of any financial advantage to themselves. They were relying on the clear promise inherent in this scheme that their wartime surplus would be available to cover them against the losses which were bound to follow their wartime activities. I am not now speaking of the 20 per cent. refund; that was to be repayable in any event for what may be called industrial rehabilitation.

My point is that the essence of this scheme was that industry was given to understand that it could shape its plan to cover the whole period of war production, including the terminal period. Many concerns drastically altered the course of their production for war purposes, knowing that such alteration would require heavy expenditure and loss before they could reconvert for peace time production purposes—often much more than their 20 per cent. refund. It seems to me to be indefensible that we should suddenly bring down a guillotine upon the emergency period, whether or not the E.P.T. system is to be continued generally after 1946. I am not suggesting that E.P.T. should be kept on indefinitely; indeed, I would like to see it abolished right away now. I am merely asking the Chancellor that he should give special consideration to a special class of deficiency. Common fairness requires that deficiencies which can be proved to be due to the war period, at whatever date they actually appear in the balance sheets of the firms concerned, must be capable of being set off against those surpluses which were wholly taken away in respect of that period. I hope the Chancellor will be able to give some indication of the Government's intentions in this respect this evening. It is certainly a matter of urgency that industries should know how they stand in this matter. Will he reassure the House and the country that deficiencies which are genuinely attributable to war service—if I may adopt the phrase from another context—are not to be ruled out by his proposals?

I would like to say a word on another aspect—the 20 per cent. refund. Here, again, there is a great deal of disquiet in many quarters, and very little comfort is to be found from an examination of the Government's statement on this subject. I represent a North London constituency in which there are many people concerned in small industrial undertakings, particularly engineering undertakings. Often these small businesses have been built up by the skill and initiative of one or two men who have sunk practically all their capital in the business. During the war the greatest possible pressure was exerted upon these concerns by Government Departments to increase their output. They responded fully and gener ously—particularly generously, because, owing to the incidence of the 100 per cent. E.P.T., they could not stand to derive a halfpenny worth of benefit out of their efforts.

In order to meet demands which were made upon them it was essential to have the use of increased capital. They could not plough back into their businesses any substantial proportion of the profits which they were making, because practically the whole of those profits were being taken in taxation. I believe that E.P.T., the National Defence Contribution and the War Damage Contribution together took away over 90 per cent. of the total profits of this class of industry. Far and away the largest part of that was in respect of E.P.T. But the tax is not payable until the year after the year in respect of which it is assessed, and so many firms found themselves in the position of having substantial cash assets represented by unpaid E.P.T. The result was inevitable. Under pressure, that unpaid E.P.T. was used for the purposes of expansion. I do not say that that was sound or wise, but at any rate it enabled the country to get the production which it so urgently needed. I think it is impossible to say that there was anything ethically wrong in what these people did. So long as wartime conditions existed, gross profits continued high, and so there was usually cash available to keep the Inland Revenue wolf from the door or, if not from the door, at any rate from the larder. Now that profits are allowed to drop heavily there will be no liquid resources available to help them meet last year's E.P.T.

The House will understand that the money which should be available to pay this tax has not been squandered, that it has not been spent by the owners of these concerns upon themselves. It is merely represented by assets which are available not in liquid form, but in the shape of stock, tools and the like. If the present law were strictly enforced the inevitable result would be wholesale liquidation of many of these firms. This would be a disaster not only for them, but for the country as a whole. In this connection I have two questions which I would like to ask the Chancellor. The first is whether he will consider some special arrangement so as to ensure that when a concern is in arrears in respect of E.P.T., in the circumstances I have described, it will be allowed some definite period to enable it to meet its obligations without embarrassment. Could he say that they might perhaps be allowed five years—perhaps paying interest at some reasonable rate over that period—in order to find the money which they are willing to pay, and certainly ultimately will be able to find? The second question is more directly concerned with the actual proposals of this Budget. Will the Chancellor ensure that any instructions or conditions for the refund of the 20 per cent. will enable such refund to be made as a set off against unpaid arrears of E.P.T.? I do not think there should be any such compulsory set off, but there is the possibility that payment of those arrears would not be regarded as coming under conditions within the meaning of those that he might issue. At any rate, there should be an option given to concerns that are affected in this way to use their arrears for this very proper purpose if they choose to do so. If the Chancellor can say something about this I think it would go far to alleviate the very great fears of a large and deserving section of the community, and would certainly enable many small concerns to get going with their plans for peacetime production.

7.15 p.m.

I would like forcibly to endorse the practical and constructive speech which has just been made by my hon. and gallant Friend the Member for South Hendon (Sir H. Lucas-Tooth). I am sure that the Chancellor himself has realised by now that to fix the end of 1946 as the date for the completion of all deficiencies that will arise in relation to resettlement of a refund of E.P.T. is to fix an impossible date from a practical point of view. Small manufacturers, particularly, will be put into a very difficult situation. Although I do not think he was in the House at the time, I am sure the Chancellor will remember what happened after the last war. Firms were placed in the same difficult position in the winding up of their affairs following the close of that conflict. It was not a question of adjusting their difficulties and arranging with the Inland Revenue for the discharge of their obligations in the course of one year; the matter extended over three or four years.

The Chancellor indicated in his Budget speech—which I, who have a great per sonal regard for him, appreciated very much—that he had no love for E.P.T. He made an admirable propagandist speech. Two million taxpayers, he said, were to be relieved next year from tax. He further said that E.P.T. ought to be wiped out at the earliest possible moment from our whole system ofpublic finance. Curiously enough, he made no reference to what happened in America where, after the defeat of Japan, E.P.T. was wiped out from the industrial organisation of that country. Why did not the right hon. Gentleman, coming fresh to his great responsibility as director of the finances of this country, take his courage in his hands and do for Britain what the Chairman of the Finance Committee of the United States Senate did for America? Anyhow, he has not done it, and we have to wait until his next Budget to see in what respect he can modify the incidence of this tax. I want to put a question to the right hon. Gentleman. Where the reduction of 60 per cent. comes into operation, and deficiencies have to be adjusted for the preceding year, will the full allowance of 100 per cent. contribution be made instead of the adjustment being made on the 60 per cent. basis? I think we ought to have a clear assurance on that point for the benefit of industry.

We ought to know a little more about the limitations imposed by the Chancellor on the application of the refund to the purposes of industry. Of course, if the right hon. Gentleman says that the refund applies only to putting machinery back, and to refurbishing old plant, then that is a limitation which ought to be helpful to industry as a matter of cold, hard fact. Most industries, during the last 12 or 18 months, have had under constant consideration their post war reconstruction plans. Much work has been put into the organisation of research and the extension of productive capacity for peace purposes. They must be free on a much wider basis to apply the refund to which they become entitled under the arrangements made by this Resolution to the exploitation of markets, the development of business, and the encouragement of research, all of which must be done if our industries are to assert their competitive power in the world. I suggest that the Chancellor should take a more generous view of the extent to which the refund will be employed in the rehabilitation of industry. I would like the Chancellor of the Exchequer to realise that there are a great many firms which, following upon the war, will need fresh capital. Will the Chancellor allow the refund to be employed for capital purposes in the development of business enterprise, when it comes back to a particular firm? When one looks over the whole field of industry—[Interruption.] I am not consulting the interests of the hon. Member for West Fife (Mr. Gallacher); he has views all his own, on all these financial questions. Some £250,000,000 has come out of industry. Will the Chancellor tell the House that he will refund this money, spread over the whole of industry, so that it can be employed on a wider field of research, market exploitation and agencies abroad, and not merely confine it to the refurbishing and conditioning of necessary machinery. We have to face very acute competition in the near future from the United States. Controls were taken away there immediately the war was over. Two hundred were removed almost at once.

:I could sometimes wish that the hon. Gentleman were added to the happiness of that land. In America, during the war, the productive capacity of the country has been increased twenty-fold, and we have to compete against that in world markets. We have to face a vast organisation created by America during the war. I am sure that the Chancellor sees, from time to time, reports from Congress of the immense work which is in progress to convert munition production to peace production. Those of us who are concerned with the progress of industry in this country are a little staggered by the vast amount of effort made in the United States to collar the markets of the world. If rumour is to be trusted, something is being done in the United States which may embarrass enterprise in our Dominions and in our own country.

I do not want to press the Chancellor of the Exchequer too hard. He has a difficult row to hoe, and great responsibilities, but so long as taxation in this country stands at its present level—and even with the reduction of one shilling—our power to compete in the world markets against the United States will be very largely frustrated. We know that in the great Midland areas, numbers of small firms are looking to the Chancellor to make such concessions as he can, and to arrange, in his next Budget, relief, particularly for these small firms, so that the taxation falling upon them may be as little as possible, and that they may be enabled to compete and hold their place in the markets of the world. In Birmingham, we are manacled by controls.

We are dealing with Excess Profits Tax and not controls.

Excess Profits Tax is intimately related with this question of controls, and I could not help bringing them in. I am grateful to the Chancellor of the Exchequer for the concessions which he has made, but I hope that his conduct will improve in the future. I know that his sympathy is with the progress of industry, and I know the affection which he entertains for private enterprise. On all these grounds, I hope that we shall have, in the Budget next year, a fresh outlook, and that, surrounded as he is by people of experience in the Treasury and other Departments, and with the advice of the President of the Board of Trade, he will introduce a new ray of hope.

I feel that I cannot let this point pass with regard to the closing-down of rebates for Excess Profits Tax. We have in our large cities, particularly in places like Sheffield, numbers of small engineering works which have reconditioned their plant solely for the purposes of war production. They have had 100 per cent. E.P.T. taken from them, and they are now being told that the Government are going to shut down on repayment of E.P.T. on 31st December, 1946. In other words, the Government have taken from them 100 per cent. of their profits during the active war years, and are now giving them 12 months in which to put their house in order. I agree with the Chancellor of the Exchequer that he must fix a date, and not give too long for these repayments, because I remember, after the last war, the period was extended, and E.P.T. became an acute liability on the then Chancellor of the Exchequer. But I feel that he is shutting down too quickly now. I would point out—and this concerns every Member of every party in this House—that he may cause unemployment by shutting down and not allowing people to reclaim after a year, because they cannot bring their businesses up to date within that time, in order to compete in the export market.

I appeal to the right hon. Gentleman to give a last moment's thought to this, and extend that period at least for another year, if not for two, and I should like to see it three. I think that even two years would give these people a much better opportunity of putting their house in order. Twelve months is far too short. I know his difficulty, but in the interests of all small engineering businesses, which have contributed a great deal to the war effort, I would ask him to bear in mind particularly places like Sheffield, where there are dozens of these small businesses. He should extend the period and give them an opportunity of getting back a second year's rebate. I make a special appeal to the Chancellor not to make this period too short, otherwise he may ruin many of these businesses.

7.30 p.m.

May I respectfully agree with what was said by the hon. Member for Hallam (Mr. Jennings) that the Government, at some time or other, have to put a term on these payments. It is not as if one could afford to be generous. One has to be strictly practical, and having regard to the other concessions in connection with Excess Profits Tax, amounts and repayments, I respectfully impress upon the House the view that the traders referred to by hon. Members opposite have not been too badly done by. I should join willingly in what they say about the excellent work done by the traders who uncomplainingly submitted to the tax. I would not like to derogate from the extremely useful and valuable service they performed throughout the war period. All credit to them, and all credit to everyone else who made sacrifices in this way, or in life and limb. At some time or other one has to take the problem practically in one's hands, and say, "Here must be the stop. Here must be the guillotine."

I submit that the point at which the guillotine has been applied in this case is far from an unreasonable one. It ought to allow those concerned enough time to get on their feet sufficiently to meet the post war period, it being conceded that that is a problem which will affect every single citizen in this Empire—it will present him with difficulties and require strenuous effort on his part. The hon. Member for Moseley (Sir P. Hannon) was anxious lest the Chancellor's rules should, in some way, interfere with the ploughing back into industry of the Excess Profits Tax repayments. I can assure him, on the authority of my right hon. Friend, that the whole object of the rules which he proposes to introduce are precisely to ensure that the repayments are, in fact, ploughed back into industry, and in the most advantageous form in which that can be done. The object is to prevent their being distributed unnecessarily in dividends. The whole point is to see that these repayments are sensibly used when they come into the hands of the traders to whom they are due.

The hon. and gallant Member for South Hendon (Sir H. Lucas-Tooth) was anxious whether the repayments could be set off against arrears of Excess Profits Tax. That, I take it, is a matter for negotiation between the trader and the Treasury. I am sure that hon. Members will agree that in one's Income Tax or Surtax dealings one always finds them extremely reasonable when a case is fairly and squarely put to them. I, for one, do not apprehend that any trader will find any difficulty in coming to a satisfactory arrangement over the appropriate set-offs if he finds himself in a difficulty which can be alleviated by using Excess Profits Tax repayments for that purpose.

May I take it that undue pressure will not be brought to bear for arrears of Excess Profits Tax, in the sort of case illustrated by my hon. Friend the Member for Moseley (Sir P. Hannon), when lack of liquidity has been brought about by the development of the business?

That question rather assumes the premise that undue influence is, in fact, generally brought to bear. I am sorry to be so legalistic.

Will proof of inability to pay have to be produced at the same time?

I would recommend traders to address themselves to the good sense of the persons whose responsibility it is to collect the tax, and to contribute their share of good sense.

Can the refund be employed where a shortage of capital in a business prevents that business from expanding?

They must not expend the money in dividends, they must put it back in the business, that is the answer to the question. The whole object is to see that the businesses are again got on their feet. I commend the Resolution to the House, and ask them to say that it is a Resolution which should be acceded to.

With the experience of the last war in mind, it is generally accepted that there should be a reasonable time limit in respect of the period to which Excess Profits Tax repayment should run. There is one point which I do not think has been raised at all in this Debate, and which I regard with great concern. It is this: The right hon. Gentleman has fixed the final date upon which Excess Profits Tax will be recoverable, namely, 31st December of next year. He will be aware that a considerable number and variety of commodities are still controlled by the Government both in regard to quantity and the price at which those commodities are and will continue to be handed over to the manufacturer. My concern is that it may well be, when we arrive at the end of the financial year ending 31st December next, that companies may have a quantity of raw materials which have been supplied to them by Government Departments, the price of which commodities is fixed by the Government. Should the Government determine to release the control upon those commodities, let us say in the closing months of next year, it would then mean manufacturers would find themselves in the following position. They would have a quantity of raw materials supplied to them, let us say, by the Food Controller or the Controller of Oils and Fats, at a fixed price. They may well find, indeed, with my experience, I will go so far as to say that they will inevitably find that during the first half of 1947, when the controls over these raw materials to which I have referred may have been removed, the company will be faced with the difference between the price at which they have purchased the raw materials from the Government Department and the prevailing price of the day ultimately realised by the manufacturer. I ask the right hon. Gentleman if he will consider—and this is a point of substance about which many of us are gravely concerned—whether he can find any means of elasticity whereby the Excess Profits Tax could be offset against the stocks of commodities which were carried over from the end of next year, until these particular commodities have been consumed by the manufacturer. Unless we have that assurance, the position will be that manufacturers in many industries of great national importance which I could name to the right hon. Gentleman—I do not wish to burden the House with the details—will have gradually to reduce their output so that they can be assured that on 31st December next they are more or less free of their stock. That would be to the detriment of the country as a whole, and since the prices of those commodities to which I refer are fixed by the Government, at would surely be grossly unfair that merely in the process of conducting their business these manufacturers would inevitably be faced with a loss over which they have no power or control, and which they have no means of preventing other than by closing down their mills and using up those stocks before the Excess Profits Tax repayment comes to an end. I would seek to prevail upon the right hon. Gentleman, if he is unable to say anything in this regard now, to promise to give it the attention which it merits.

The country will hear with concern the statement by the Solicitor-General that reconsideration is not to be given to the extension of these deficiency payments. On this side very reasonable and powerful speeches, supported with facts, have been delivered to point out the harm that will be done to the country, in particular from the point of view of employment, by giving such a short term for these deficiency payments. We all agree that after the last war the period was too long, and that such things as sales at which deficiencies, which existed because of past E.P.T., were used up, and that sort of thing which is not to the general public advantage, ought to be stopped.

What does concern us very much is that this deficiency shortage will mean unemployment when employment is needed. Hon. Members opposite are committed to a programme of full employment. We know that during the next year or so there will be a shortage of goods and plenty of employment, but the time when employment will be wanted will be in two, three or four years' time, and it will be possible to give full employment only if industry at that time is sufficiently equipped, particularly the small firms which have not great financial resources. In the event of a fire a wise firm has a loss of profit insurance policy. I suggest that this question of deficiency payments should be looked at in this light. Small firms have to re-equip themselves. They have to turn from war to peace production, but for a year or two they may have to work with obsolete equipment. Anybody in industry knows that deliveries cannot begin for perhaps two years. Machines have to go abroad for our export trade. If these firms are to re-equip themselves in 1946 the benefit of the turnover to these new machines and so on will not be felt until 1947 or 1948. There will be a time, perhaps in 1947, when deficiency payments will no longer be available and when they will be really needed. If these deficiency payments are not extended for another year, there may be real unemployment which could have been avoided at that time in 1947 or roundabout then, when we shall find the present shortage of the goods most urgently needed will be overcome.

There is one point which cannot be emphasised too often, and that is with regard to the position in the United States of America and Canada. There they have much more generous allowances for writing off machinery than have existed in this country. The machinery is newer, more up to date and more efficient. If we have to compete with products from America and Canada our industries, and particularly our small ones, must be equipped with the most up-to-date machines. It is only by having some cash resources which would be made available from these deficiency payments that the small industries can be so equipped in order to develop our export trade which, as the right hon. Gentleman knows, we must do, and by which we can only provide that full employment which we on this side are just as desirous of seeing achieved as hon. Members opposite.

7.45 p.m.

I hope the Chancellor of the Exchequer will reconsider this matter. If he likes, he can make it 31st December, 1946, but let him make some provision for the industries which can show good cause why they have been delayed in turning over, such as not having had the machines and so on, and let him provide some opportunity for really genuine cases so that they may put forward their position for consideration. I hope this point will be reconsidered. It is of importance to the common man. We on this side have to find work for thousands of people. It has been our duty to do it, and we want to ensure that conditions are created by the Government, whether it is a party different from ours or not, so that the common man may have a higher standard of living. It is for that reason, and for no other, that we are bringing forward these suggestions. We want to see full employment and good wages, and we are putting forward constructive suggestions in order to assist the policies in which we believe, just as the Chancellor and hon. Members opposite also believe in them.

:I desire to reinforce the appeal made by my hon. Friend. This is a very important point which we all regard without any party feeling at all. The hon. and learned Gentleman the Solicitor-General put the matter in a nutshell. He said that what we all want to do is to give these people enough time to get on their feet, and the sole question is whether a year is enough time to enable all of them to get on their feet. It would be unfair to fix a time so that some fortunate people, because of their location and the supply of labour and material in their neighbourhood, might get through, whereas others differently placed could not. If it were a question of the managers of these industries being able, as they were in peacetime, to call for the immediate supply of everything they needed, and if the restoration of their industries depended entirely upon their own energy and skill, I would say that a year would be ample for them, and then if they were unable to do it within those twelve months they should pay the penalty. But that is not the case today. However efficient they may be, and however well their plans may have been laid, unless they can get the machinery, the labour and the building materials they require, with all the will in the world they may find that they may not be able to restore their position within a year.

If the right hon. Gentleman says that twelve months is enough time for them to get on their feet again will he guarantee that within that twelve months, under the controls which the right hon. Gentleman is extending for five years, their reason able demands for labour, materials and machinery will be met? If the right hon. Gentleman will give that guarantee I think a great deal of our case falls to the ground, but if he does not give that guarantee our case is emphasised. We all appreciate the Chancellor's desire to fix this date. We all realise that a year, although we think it is too short, may be sufficient for some people. But we do appeal to him, if he does not feel it is possible for him to extend the date, that lie will consider the suggestion made by my hon. Friend and provide some degree of flexibility and some right of appeal for people who have not been able to complete within that date, so that they can say to the Government that it was due to no tardiness and no fault on their part, but to their inability, owing to the right hon. Gentleman's own controls, to secure those things which it is necessary for them to have if reconversion is to take place. If between now and the Finance Bill the right hon. Gentleman can give an assurance that he will think it over—I am sure he sympathises with the position—

:The right hon. and gallant Gentleman wants more than sympathy. The Chancellor has given him plenty of sympathy.

:Yes, I want more than sympathy, just as, when the hon. Gentleman got up at Question time yesterday to speak about the dockers, he attacked his own front Bench. He wanted more than sympathy but he did not get it.

That is when the right hon. and gallant Member supported them against the dockers.

:I am more hopeful that the right hon. Gentleman will try to meet a legitimate claim, in the knowledge that we on this side of the House are not pressing for something which would reproduce the conditions of the last postwar period.

I think we might bring this particular discussion to an end. It has lasted for some time. Gradually, as the discussion has proceeded, there has been a certain modification of the case put from the other side of the House. Earlier speakers began by saying that it was wrong, in view of all the circumstances, to fix the date as early as the end of December, 1946.Initially I was asked by speakers on that side of the House to extend the date, but, as the Debate has proceeded, the request has been modified, and the request now is, the date being accepted, that there might be some machinery for considering, what I gather it is admitted there might be, quite a small number of exceptional cases within the total.

That is a different proposition. I do not want to underestimate the administrative difficulties which, if we cannot solve them properly, will be very vexatious for the firms concerned and for the Inland Revenue who are seeking to administer. I know that we are all aware here of the difficulties that very often arise when a superficially plausible and attractive proposition is sought to be translated into forms of rules and Regulations that can be operated over a number of cases, the details of which cannot exactly be foreseen.

For that reason I do not want to give any commitment which hereafter I might be held to have violated. I say that I must hold to the date, end of December 1946, as the appointed day, but it has been generally recognised that at the end of the last war the deficiency payment became the greatest scandal and that the Revenue were robbed by all sorts of people many of whom adopted methods which were definitely dishonest. It as perfectly possible, under the deficiency arrangement, if it is allowed to run forward beyond the end of December 1946. I think I indicated that in my Budget Speech and it was pointed out in an article in "The Times" by one of those writers who write the turnover leader, He pointed it out, and I quoted it in my Budget Speech, and gave instances—his argument appealed to me and I think it was important—of a firm which might have a deficiency claim or could, so to speak, cook up a deficiency claim, by selling below cost and do severe damage to others in the industry. That is the sort of case against which I think it is obviously proper to guard.

No, because the greatest rascals often present the greatest simplicity of outlook. It is very often impossible in these gross cases to track the offender down. I do not suppose anybody here would find it easy to track down the kind of case that the "Times" writer and I have in mind, but we must prevent the possibility of the scandalous misuse of these deficiency payments.

That being said, I do not want to commit myself in any way, because it might be administratively difficult to do, and I must adhere to the end of December, 1946, as the operative date. The question is, Can we devise, and I will go into it and see whether we can—I want to be perfectly honest and I do not want to give a commitment if it is not possible to carry it out—devise any arrangement whereby, in quite exceptional cases, and they must be exceptional, it might be possible to have some possibility of appeal to some suitable body. I will look into the matter. I am not very hopeful that we can do it, but I will look into it in all good faith to see whether, in this case and the others which we have been discussing, anything can be done. The whole thing will be looked at again in a different form of procedure when the Finance Act is going through Committee, and then I will have an opinion either pro or con having looked into this matter. It will depend upon inquiries which I will make, and I will then make my statement to the Committee.

I have no quarrel with the date, 31st December, 1946, at all. The point is that where a commodity is controlled by the Government, the industry may be compelled to carry beyond the end of the period, December, 1946, a portion of such stocks. There should be some means of setting Excess Profits against the difference in price, which the manufacturer may have to take, i.e., the difference between the purchase price and the Government controlled price at the time of sale and the realised price by the manufacturer—after the control has been removed.

:I cannot give a commitment on a very special and rather complicated case of that sort. We will look into the whole thing, including what the hon. Member has said.

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.