Skip to main content

Orders Of The Day

Volume 416: debated on Thursday 29 November 1945

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Finance Bill

Considered in Committee. [ Progress, 28th November.]

[Mr. HUBERT BEAUMONT in the Chair.]

New Clause— (Reduced Rates Of Entertainments Duty)

On and after tie first clay of January, nineteen hundred and forty-six, all indoor and outdoor sports and games events to which the public is charged for admission, except those involving the use or participation of horses, dogs or other animals or the use of mechanically propelled vehicles, shall pay the same reduced rate of entertainments duty as is for the time being payable in respect of entertainments covered by Subsection (3) of Section one of the Finance Act, 1935.[ Sir J. Stanley Holmes.]

Brought up, and read the First time.

3.30 p.m.

I beg to move, "That the Clause be read a Second time."

The object of the new Clause is to seek the reduction of the rate of Entertainments Duty charged on games and sports events. This is asked for by 137 national bodies who are concerned wholly or in part with physical recreation. They include the governing body of nearly every sport, game and outdoor activity. To mention one or two well-known bodies, there are the M.C.C., the Football Association, the Scottish Football Association, and to avoid any idea that the Principality is being neglected, the Football Association of Wales, the Rugby Football League, the Royal and Ancient, the Amateur Athletic Association, the Amateur Boxing Association, and 129 other similar bodies. These national bodies an all promoting the development of physical recreation in Great Britain, and they find themselves hampered and frustrated by the rate of Entertainments Duty.

I think it should be pointed out that the governing bodies of most amateur games and sports are run by honorary officials, and depend for their revenue on the donations and subscriptions of enthusiasts, and on the profit derived from occasional events to which the public are charged for admission. Further, their whole resources are devoted to the extension and development of the game or sport in question. Let me compare these games and sports with cinemas, horseracing, and greyhound racing. The latter provide entertainment for the people and profit for the promoters. They do nothing to aid in the physical development of the men, women and children of the nation. On the other hand, the games and sports events for which the public pay for admission have a threefold purpose: firstly, to stimulate public interest in the game or sport by staging events in which a high level of skill is displayed, with the definite educational purpose of extending and developing interest in the particular game or sport; secondly, to give individual players the opportunity of developing their skill by meeting other players of front rank; and thirdly, and I think most important of all, to raise funds to enable the central or local organisation of the game or sport to develop its work, to extend its activities, and to help to meet the normal running expenses.

I will give an illustration. The M.C.C. are one of the best examples. They devote nearly the whole of their surplus to promoting cricket throughout the country. They send their teams to the public schools and to local clubs, paying all the expenses and charging nothing whatever, and, of course, they send their teams abroad to the Dominions, getting their share of the gates there; they are prepared to use the whole of their surplus funds for the purpose of developing cricket. Take the Amateur Swimming Association. The whole of their surplus funds are used for the purpose of teaching boys and girls, in the schools and elsewhere, to swim. The Amateur Boxing Association devotes its spare funds to the purpose of enabling the young people of this country to learn the art of self-defence. Even if there were no precedent for asking for the reduction of the Entertainments Duty on Sports and games, I feel that what I have already said will have satisfied the Committee that there is a good case for a reduction, and that games and sports should not pay as high an Entertainments Duty as cinemas or horse racing and dog racing.

But there is a precedent. Under Section r of the Finance Act, 1935, as subsequently amended, it is provided that the rates of duty in respect of entertain-ments—
"where all the performers whose words or actions constitute the entertainment are actually present and performing, and the entertainment consists solely of one or more of the following items, namely, a stage play, a ballet (whether a stage play or not), a performance of music (whether vocal or instrumental), a lecture, a recitation, a music hall or other variety entertainment, a circus or a travelling show "—
shall be at a lower scale. If, for example, there is a variety show with Flanagan and Allen, and a shilling is charged for admission, the Entertainments Duty is a halfpenny, and the proprietors, say the London Palladium, take 'Lid. of the is. But if the M.C.C. arrange a match between England and Australia at Lords, or the Glasgow Rangers play the Dynamos at Ibrox Park, or the Amateur Boxing Association arranges a championship meeting, and the admission 1s., the Chancellor of the Exchequer takes 3½d. of that is., and only 8½d. goes to the club or association. I want to point out that the championship meeting of the Amateur Boxing Association, or the game yesterday at Ibrox Park, or a test match at Lords, complies with the words in Section 1 of the Finance Act, 1935, namely, in respect of entertainments
"where all the performers whose actions constitute the entertainment are actually present and performing."
I could go on with examples of many other sporting associations, but there are many of my hon. Friends on both sides of the House who want to speak with regard to cricket, football and other games, and I hope I may leave it for them to carry on and endeavour to persuade the Chancellor of the Exchequer to give this concession, because we believe it is not only in accordance with the spirit of the law which has existed since 1935, but it is a matter on which an appeal should not entirely fail.

I am glad to support this Motion. As my hon. Friend has said, this is a subject which covers an extremely wide field, but I propose to confine the submissions I desire to make to the Committee, to football and cricket, the two sports which probably command the largest number of spectators of any in this country. As this subject is somewhat complicated, I hope the Committee will be patient if I make use of unusually copious notes, because a good deal of detail is necessary and I have not been able to persuade my hon. Friend the Member for Bath (Mr. Pitman) to produce the necessary graph which might shorten the discussion.

The first point I want to urge is this. When the Entertainments Duty was first levied on football and cricket clubs in 1916, the House was assured by; the Chancellor of the Exchequer at that date that entertainments tax was an emergency war imposition, and that it would be removed when war taxation was no longer required. Facilis descensus Averno. All Chancellors of the Exchequer—although I hope the present holder of that office will be an exception—are reluctant to let go emergency wartime taxation. Far from being removed, this Entertainments Duty has from time to time been increased in time of peace, despite protests from sports organisations of all kinds that it was unfair to levy so heavy a tax upon gross receipts rather than upon profits. Before the war broke out in 1939, the Entertainments Duty on a 10d. admission ticket was 2d. Professional football clubs charged Is. at the gate inclusive of tax. During the war the tax has been increased from 2d. upon a rod. entrance fee to 7½d. on a 10½d. entrance fee. That represents the war time increase in the Entertainments Duty since 1939. Three years ago the leading clubs in the South of England charged is admission, and to that figure added 6d. for tax, making a total is. 6d. When the last increase in tax was made, the clubs did not add the extra 1½d. to the inclusive admission charge. This meant that on the lowest admission charge—and it is on this that the clubs mainly depend for their support and income—they lost one-eighth of their net receipts, and they are losing that today.

3.45 p.m.

It may be contended, in the course of the Debate, that the clubs do not in fact pay the tax, but that it is passed on to the public. That is a generalisation which is not in accordance with the facts. I have take the case of a very well-known London professional club, Tottenham Hotspur, with which the hon. Gentleman who is Parliamentary Private Secretary to the Chancellor will be familiar, since they play very near to his constituency. I think their case is a good example. In 1916, when Entertainments Duty was first levied, the Tottenham Hotspur club charged 5s. for the best seats in their stand, to which I have no doubt the hon. Gentleman goes when he watches a match. That 5s. went direct into the club's coffers. There has never been any increase in that sum for League games since 1916. The whole of the tax on stand seats since then has been borne by the clubs, and not one penny of it has been passed on to the public. At the present time the charges for stand seats at most grounds are 4s. 6d. and 3s. On a 4s. 6d. seat the tax is 2s., and on a 3s.seat it is is. 3d. If a club desires to obtain 5s. for itself today through selling a stand seat, as in the pre-Entertainments Duty times, the charge would have to be 9s. 7d., as the tax on a 5s. admission charge is 4s. 7d. Naturally, the public will not pay such a figure, and today the club gets only 2S. 6d. from a 5s. inclusive charge, and the Exchequer take the other 2s. 6d. The tax on a 2S. 6d. admission' charge, therefore, is now 100 per cent. The balance sheet of the Tottenham Hotspur Club, which I have, shows that last season the amount paid to the players who drew the crowds was an aggregate of £1,12o for the whole season, but the amount paid in rates and taxes to the municipal exchequer and to the Chancellor was £12,000.

I would like to be sure whether £120 was the total sum paid to the players. To me it sounds a rather small figure.

It is a small figure for the reason that in wartime conditions the Football Association fixed a maximum payment of 30s. per match, because the players came from Service units, war work and so on, as opposed to £8a week which could be got by the best professionals in peacetime as regular employment. I do not think anybody would describe the figures I have given as a fair distribution of the receipts taken at the gate. Now that the war is over, the players are demanding higher remuneration, and the clubs reply to those demands with the plea that they cannot pay what the players are worth because of the exactions of the Government. They say they will be delighted to meet the player's demands if the Government will leave enough money in the clubs' tills to enable those higher wages to be paid.

When the question was last raised in a Debate on the Finance Bill and an Amendment was moved, to include football clubs in what is generally described as the "living performers' schedule," an opponent of the Amendment urged that before any concession was made to the clubs the Chancellor of the Exchequer should demand two things: first, that directors' fees should not be increased, and secondly, that dividends should not be increased as a result of such concessions. Such statements betray ignorance of the facts. The directors of football clubs in England do not receive, never have received, and it would be illegal for them to. receive, under the Football Association's rules any directors' fees or any payment. The Football Association does not allow directors fees, which are expressly forbidden in the articles of association of every professional club. Directors are directors on account of their interest in the game, and for some of them it is a Costly interest.

I do not suggest that the examples I am about to give are typical of what happens all over the country, but I want to rebut the idea that professional football is a profitable industry for the directors. I will give examples of four London clubs. I will not name them, but I will supply the names to the Chancellor privately if he wishes. I think it is not desirable to disclose across the Floor the financial circumstances of certain individuals. One club owes its directors £65,000, which they advanced to help the club to carry on through the war period. Another club owes its chairman £24,000. Within the past two years an ex-chairman of one club forgave the club £ £21,000 which he had lent it, while in another case, when the director died leaving a club £23,000 in debt to him, his heirs at law, with astonishing generosity, wiped out the £23,000. During the war many clubs were kept going only because the money necessary to enable them to function was found by the directors from their private pockets. I think those facts are not generally known, and that is why I mention them. They should be known if only because they are a powerful argument in favour of an amelioration of the enormous Entertainments Duty.

Can the hon. and gallant Gentleman tell me at what rate of interest the directors lent the money?

I imagine it varied. I know that in one case where £21,000 was written off by the chairman of the club, he did really make a gift of it, because he was not drawing interest upon it. I am not in a position to say that in no case was any interest charged.

The only point I want to make is that it might be suggested—;I hope it is not a fact—that the directors of clubs might be in a position to lend money to the clubs at a high rate of interest.

I think the fact that in many cases very large sums have been written off, and that in one case the heirs of the director wiped out £23,000, shows that there has been no usury in this matter. I would like now to give the Committee an example of how much of the gate receipts find their way into the Exchequer. Last April there was played at Wembley Stadium the Final of the League South Cup. The sum of £29,000 was taken at the gate, £13,000 of which found its way into the Exchequer in Entertainments Duty, leaving £16,000. The expenses of the match—hiring the ground, printing, and so on—took £4,000, leaving approximately £12,000 to be divided into three equal portions, £4,000 to each of the two clubs which took part, and £4,000 to the League, which takes one-third of the gate receipts. That left each club with £4,000. But of course, the story did not end there. The Chancellor appeared again in the role of Income Tax collector, which meant that, at l0s. in the £, £2,000 was taken from each club. Therefore, with gate receipts of £29,000, each club participated to the extent of £2,000.

I will now be a little more topical and up to date. My hon. Friend the Member for Harwich (Sir J. Stanley Holmes) referred to the match which took place yesterday between the Glasgow Rangers and the Moscow Dynamos, that excellent team which has done so much to provide enjoyment for football spectators in this country. I have not got the figures of yesterday's match, but I have the figures for the match that was played at Tottenham a week ago between the Arsenal football club and the Moscow Dynamos. I think it would have been a gracious act if the Chancellor had been invited to kick off on that occasion. The conditions were particularly congenial for that. The ground was wrapped in an impenetrable fog, visibility was almost nil, and I must say that I think it might well have been described as "Dalton's benefit match," for the reason I am going to give. The gate receipts were £7,734, of which £3,400 went into the Exchequer by way of Entertainments Duty. As I want to be accurate, I will_ point out that there are still a few pre-sale tickets which do not come into those figures. I find that the Moscow Dynamos, Who have played four matches in this country, have been mulcted in about £6,600, which was their share of the Entertainments Duty on the gate money taken. I want to impress upon the Committee that the Moscow Dynamos are handing over the profits of their tour to the Stalingrad Rebuilding Fund. Whatever may be the merits or demerits of the proposed new Clause, I suggest that it would be a graceful gesture if the Chancellor would hand back that money to the Moscow Dynamos, firstly, because it is for the Stalingrad Rebuilding Fund, a fact which strikes a sentimental and sympathetic chord in all our hearts. I suggest that by so doing the Chancellor would do far more for Anglo-Russian friendship than would any number of pontifical utterances from the Treasury Bench.

4.0 p.m.

Another point which needs to be dealt with is the oft repeated statement that huge dividends are paid to the shareholders in these professional football clubs. I come again to the balance sheet of Tottenham Hotspur. Their last balance sheet shows that a dividend of 5 per cent. was paid last year, and that the amount required to pay it was 245. It may astonish the right hon. Gentleman and the Committee to find that the number of shareholders is so small that to pay 5 per cent. cost only £245. For every pound paid to the shareholders £50 was paid in rates and taxes, and I am told that the dividend was entirely pro- vided by the sale of programmes on the ground throughout the season, and that the gate money was not touched at all. I am assured by the vice-chairman of Tottenham Hotspur Club, with whom I had the pleasure of a talk in the House about a week ago, that not a penny of the gate receipts ever reach the shareholders. The Football Association rules prohibit the payment of a dividend of more than 7½percent., less tax, or 5 per cent., free of tax. Those are the maximum sums, but the majority of professional clubs never pay any dividend at all. There are well known clubs in this country, with a history going back forty or fifty years who have never paid a penny to their shareholders, nor did their shareholders ever expect it.

It needs to be emphasised that professional clubs are not commercial concerns in the ordinary sense of that word, although they are treated far more severely than ordinary commercial businesses, because an inordinately heavy tax is levied upon their gross receipts in addition to Income Tax at the standard rate on any profits which they may make. I think that is the gravamen of the complaint that it is a tax upon gross receipts rather than a tax upon profits. The receipts of the big clubs from gate money are used in the first place to meet Government demands, the Government taking the biggest share of those receipts, secondly, to pay their players, and, thirdly, to pay the permanent staff and their other establishment charges of one kind or another. It is important to emphasise that professional football cannot be exploited for profit by those who control it, nor do they receive the smallest coin of the realm for their services.

Amateur football is, of course, on an entirely different plane and I now want to say a word about that. I am dealing only with Association football; my hon. Friend the Member for St. Marylebone (Sir W. Wakefield), whose name is so well known in the world of Rugby football, hopes to catch your eye later, Major Milner. Amateur Association football has been treated in an extremely churlish manner by successive Governments; this is not a party question at all in normal pre-war times there were some 40,000 amateur clubs under the jurisdiction of the Football Association. The 40,000 secretaries of those clubs and the others who run them are all honorary officials, men doing their best for sheer love of the game. I suggest that they are engaged in a work of vast national importance, the promotion of healthy amateur sport, the provision of facilities for participation in an excellent arid healthy game which builds up the physical side of our youth; but so far from the Government encouraging them every one of those 40,000 clubs which charges for admission to matches has to pay 3½d. in the shilling as Entertainments Duty. I suggest that so far from the Government taking 3½d. in the shilling from these clubs, which are promoting amateur sport, a very strong case could be made for a subsidy from the National Exchequer on account of the valuable work they are doing in helping to promote the physical development of the rising generation.

Before the Entertainments Duty was introduced the majority of amateur clubs which had stands on their grounds used to charge 1s and keep the whole of the is. The majority still charge Is., but the Government compel them to hand over 3½d. That Government exaction is the chief reason why so many thousands of clubs have to resort to all kinds of other activities, whist drives, concerts, dances and the like, in order to remain solvent. Here again, in amateur football, the members of the committee of a club frequently put their hands into their pockets to provide the money to balance the club accounts. In spite of this situation these amateur clubs do not ask to be entirely exempt from taxes, but they do feel that if they do manage to make a profit it should be sufficient for the Government to levy Income Tax at the standard rate upon that profit and not to demand Entertainments Duty in addition. It can be urged that the tax on an admission charge of 6d., which is the average admission figure, is only ½d. and that is true, but it is enough to make the many thousands of honorary secretaries and treasurers into unpaid tax collectors, running the risk of heavy pains and penalties if they do anything wrong in connection with the obligations thrust upon them by the various Finance Acts.

I suggest to the right hon. Gentleman that now that we have gone through another long and terrible war the time has come to abolish Entertainments Duty on amateur games where the admission charge does not exceed is. The loss to the National Exchequer would be considerably less than a drop in the bucket as compared with our present post-war expenditure. Such a decision would give immense satisfaction to those running amateur sport, and relieve thousands of earnest hard-working officials from what is an ever-present nightmare, the fear that they may be doing something which exposes them to the pains and penalties I have mentioned. Those who are engaged in football cannot understand why there should be such an unfair differentiation against their game as compared with the theatre, the music hall, the circus, concerts and other activities. The hon. Member who moved the new Clause pointed out that on these other forms of amusement an admission charge of is. carries only ½d. in taxation, but if a football club makes a charge of '11½d. for admission another 8½d. must be added for tax. Why should a football club pay 17 times as much tax as a theatre? The living theatre, as the right hon. Gentleman knows, has received certain concessions in recent Finance Acts in respect of what is regarded as cultural entertainment. I wonder whether he is aware that the play, which I hope he enjoyed as much as I enjoyed it in my youth, and since, called "Charley's Aunt," comes within that category, that it is regarded as cultural entertainment for the purpose of the right hon. Gentleman's tax-collecting arrangements. I suggest that there is as much cultural uplift in watching first-class or even amateur football as is to be found in seeing that fine old play. The distinction really is fantastic and nonsense, hut it is the law. In "Oliver Twist," when Mr. Bumble was informed that he was responsible for his wife's actions, he remarked, as the right hon. Gentleman will remember, "Then the law is a hass." I am bound to say that 1 think "the law is a hass" in this particular connection. It is small wonder that those who run football take the view that they have had a raw deal.

During the war many thousands of football clubs have had to close down, not for financial reasons but because their grounds were requisitioned or their players called up, or because they could not find the money with which to carry on—very often for all three of these reasons. Now, thousands of enthusiasts who are anxious to restart their beloved sport find themselves quite unable to do so for lack of grounds and lack of funds, or both. The grounds are derelict, the buildings are in a state of disrepair, and equipment cannot be obtained at reasonable prices, if, indeed, it can be obtained at all. Many clubs are pluckily making an effort to; cage a come-back but find themselves crippled to a tremendous extent by the tax demands upon them. Why, if a club charges only 4d. for admission, should the State demand that shall be handed over even today? Surely now that we arc at peace what I would describe as such a pernicious imposition, should be removed.

The Committee have been extremely kind and patient with me, and I am sorry if my speech has been a little long, but this is not a party matter and I feel that I ought to put these matters forward. Now I ask for a little further indulgence while I pass from football to another game. I put football first because we are in the football season, but next May the long "cold winter of our discontent," as nationally planned by the Minister of Fuel and Power, will be over and cricket will be with us once more. I want to say a word about cricket. I hear a suggestion from behind me that the Socialist Party need a little instruction about playing cricket, but 1 did not want to make that point. For the facts which I shall place before the Committee I am indebted to the M.C.C. I thought it best to go to the fountain head.of cricket. With the approach of the reconstruction period it is hoped to restart county cricket next May, and the financial crisis with which the game is faced justifies the formulation here, again, of very strong representations for relief from Entertainments Duty. It will be a very difficult period. Clubs will be faced with exceptionally heavy expenditure. Many have a reduced membership and no possible means of recovery unless every effort is made to increase the attendance at matches. Cricket is subject to various hazards from which football is immune. Rain can prevent play where a football match carries on, and in the case of county cricket there is evidence to suggest that any attempt to pass on the Entertainments Duty to the spectators reduces rather than fosters public interest in the game.

An increased admission charge in order to meet the burdens of Entertainments Duty can only delay the re-establishment of a game which is not only national but, I suggest, is also imperial in the best sense of the word. It seems doubtful whether, when this taxation was introduced in 1916, the authorities could possibly have realised that it would operate as onerously as it does upon county cricket, which can claim a wide social and cultural value and which, long before the introduction of this taxation, was struggling for existence, very often in straitened financial circumstances. In 1933 the competition of the cinema and broadcasting directed the attention of a small section of the public towards the plight of the theatre. Action was then taken, and the Living Stage Schedule appeared after that, but I think it is no exaggeration to say that the development of interest in cricket which has taken place not only in this country but throughout the Dominions has been arrested here in Britain by the Entertainments Duty.

4.15 p.m.

It is this fact alone which has prevented the equipment and maintenance of county grounds in a manner calculated to increase public interest. It might be argued that to reduce the tax would undoubtedly have led to prosperity in the cricket world, and that ultimately the Treasury might be the gainer rather than the loser. There are many figures, with which I will not weary the Committee, which could be used in argument that the crippling effect of Entertainments Duty on county cricket between the two wars was perhaps the most important factor. In 1937, of the 17 first-class counties, the average aggregate annual loss was £10,500, after the payment of £15,800 annually in Entertainments Duty. At the present rate now ruling, without altering the total charges for admission, the payment on that account would have been increased by nearly £12,000 with a corresponding increase in the aggregate annual deficit. In addition to the payment of Entertainments Duty, during the same period, clubs paid an average annual duty amounting to £1,183 of their membership subscriptions. That gives a combined total of 17,000, which indicates the same effect that even the total relief of Entertainments Duty would have on the National Revenue receipts.

In 1939 the admission charged was Is. 2d. for the Treasury and rod. for the club. Today the increasing costs reduce the club's share to 8½d., which means a loss of 15 per cent. in total revenue. Today, with certain increases of expenses which are inevitable, such as players' wages, and so on, clubs will have to look to an increase of 33½ per cent. in revenue, which implies a 2s. admission or a 100 per cent. increase of the prewar charge to spectators, which will entail a loss rather than a gain to the Exchequer.

From the earliest days, county cricket has struggled against financial difficulties, which have prevented the development of grounds and amenities on the scale expected by the public. I suggest that the time has come for early sympathetic consideration of this particular problem. In 1937 the investigation which the M.C.C. then conducted disclosed that of 17 first-class county clubs, only three were in a condition to raise any substantial sum in an emergency without having recourse to special appeals or to borrowing. The same inquiry failed to discover any kind of extravagance in administration, and their plight now is indeed sad. Precedent has already been established for preferential treatment of certain entertainments both in regard to total exemption and reduced taxation.

We differentiate between the employment of human performers as distinct from animals or performances on the screen, and profits put back into the game as against dividends distributed to shareholders. In the Customs Act of 1885, Corporation Duty is payable by cricket clubs, which escape Legacy Duty, but limited companies are exempt. It is a differentiation which might assist the right hon. Gentleman in assessing liability for entertainment duty. It is economically preferable to maintain a struggling institution rather than to contemplate its decay, particularly if such an institution is the game of cricket. If it be correct that discrimination between different classes of entertainment is both practicable and justifiable, the M.C.C. wishes to advance certain proposals to the right hon. Gentleman to aid county cricket and to put certain considerations in front of him.

I will summarise them briefly before I resume my scat. The failure to revive county cricket as a national institution would affect the game adversely not only nationally but throughout the Empire, where it plays such an important part in our relations; the existing resources of county clubs will not be adequate to meet the liabilities with which they are faced, and at the conclusion of war county cricket will qualify as again requiring revival; cricket is a form of entertainment necessitating living performers, it has never been connected with profit, and is completely divorced from sensational money prizes or betting. It is difficult to believe that when the duty was first imposed it was ever intended to inflict such hardship on a non-profit making game. It is more susceptible than any other game to the vagaries of the English climate, it has an educational and cultural value, and provides employment during the summer months for players and staff on the ground. The Entertainments Duty is very small in terms of money but extremely damaging in its effect upon the game.

I hope that the right hon. Gentleman will examine the possibility of providing relief here and now. In this connection relief in time in the first postwar season will be particularly valuable. The first postwar season will be with us in May. I ask that cricket may be placed high on the list of the priorities of the right hon. Gentleman, and high on the list for consideration, here and now, on the Committee stage of the Finance Bill. I am grateful to hon. Members in all parts of the Committee. This has been a very long speech for a Committee stage and they have listened with great attention, for which I am very grateful.

I would add a final word leaving football and cricket on one side. I have always felt that here, in Great Britain, sport is a social cement which stands us well in times of stress and strain, and when confronted' with two vast wars, as we have been, the love of sport enables Tories and Socialists to fight in politics yet play on a Saturday afternoon on the football field in a manner which is free from the violence and hitter hatreds which so often typify politics in other lands. One of the most remarkable incidents between the two wars was when, during the General Strike of 1926, at Plymouth, there was played a football match between strikers and special constables, at which I believe the Chief Constable of Plymouth kicked off. This is something in British life well worth preserving. It acts as a cement which enables us to be a nation to pull together in times of stress, and who can forget our soldiers at the Battle of Loos dribbling footballs before them on that terrible day. Sport means more than a matter of finance, and I ask the right hon. Gentleman to consider the new Clause from that new angle and make the concession.

Those of us who are interested in this matter were encouraged to go forward with it owing to the very sympathetic way in which the Chancellor, and the Financial Secretary listened to what we had to say earlier on this Bill. The mover and supporters of the new Clause gave abundant evidence to the Committee and I only want to underline one or two things which they said. The facts and figures put forward by my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) in connection with Association football, cricket, boxing and swimming, can all be amplified in the case of Rugby football. I will not give the detailed figures to the Committee because they would only weary the Committee. The figures I could give would be precisely of the same kind and nature as those given by my hon. and gallant Friend.

Where do the funds go that are collected by Rugby football clubs? Rugby football clubs have no paid players. They are composed entirely of amateurs. Many of the players pay their own expenses. Where do the funds go from the big matches held at Twickenham? The answer is that these funds go towards the provision of grounds for clubs. Almost the whole of the surplus funds obtained from Rugby football, after the payment of the expenses of players, who come to play in big matches from different parts of the country, go towards the upkeep and maintenance of grounds. It is a most laudable object. With so much money taken away in Entertainments Duty clubs will not have the money available to rehabilitate their grounds and to get going again. They will not have the funds available with which to purchase new grounds. Let us not forget that, prior to the outbreak of war, the National Fitness Council was set up to which substantial funds were contributed to help in the provision of playing fields and other recreational facilities. It is to that end that so much of the money col- lected from the playing of Rugby football is devoted. The money is used not only for Rugby football, but for cricket as well. Many Rugby football clubs join with cricket clubs. Some of this money is used for the provision of grounds for schools.

I urge the Financial Secretary to translate the sympathetic consideration which he has previously given to this subject into action. If he does this, he will be furthering a very valuable object. Grounds are wanted as near as possible to the cities so that players and spectators have not far to travel. We want, therefore, to be in a position to have funds available to secure fields, recreation and playing grounds for our amateur clubs for all time. The imposition of this crippling Entertainments Duty will not only prevent the acquisition of these grounds, but it will also, I fear, prevent the rehabilitation and re-establishment of so many clubs which, because of the war, have not been able to carry on. I press upon the Financial Secretary to take action now. It is now that help and funds are needed. If he does this, his action, without any shadow of doubt at all, will be more than acceptable to millions of people throughout the country.

I rise to take part in the Debate because of certain observations that were made regarding the funds of the Tottenham Hotspur Football Club. I do not wish to go into the figures, but I am concerned to have the Entertainments Duty made clear to us. I have been listening very carefully and attentively and I wonder if I am right in my conclusion, that the payment of Entertainments Duty is made by the individual who attends the particular sport. if the Entertainments Duty is removed, then, surely, those who pay the Entertainments Duty should benefit. But it appears to me that the people who benefit in this case will be the Association football clubs. It seems clear that the case which has been built up, was for the removal of the Entertainments Duly Tax for the benefit of the football clubs.

I do want to make the point that in wartime the players' wages do not come into the picture so much as they will when peacetime conditions are restored.

I quite appreciate that and that the running of these clubs will demand financial assistance greater than that which was available during the war. What I want to say is that the whole of the argument was based on Association football clubs because, so far as amateur clubs are concerned, they would not pay anything like the same volume of Entertainments Duty as the professional clubs. It is perfectly true that the amateur clubs deserve special treatment, and I am -speaking as one who has played in the amateur world, and with some knowledge of the amateur's difficulties. The payment of this Entertainments Duty is something which was imposed during the war period to help the national funds for a particular purpose, and as a person pays a tax on many things that he purchases, so he paid a tax for watching football. I can, therefore, understand the Chancellor refusing to give way on this tax during the period of war. He has explained to the Committee how he has given the utmost concessions in his Budget and that he has refused Amendments because they would at this period unbalance his Budget. However, I hope that the Chancellor will give serious consideration to the matter of Entertainments Duty as it affects amateur athletics so that when the next Finance Bill is introduced they may have the benefit proposed in this new Clause.

Some reference has been made to swimming. Let us see the difference as compared with Association football. Swimming events, in the main, are competitions between individual members and between clubs, and the buildings in which they take place are Then there are gymnastic exhibitions and, of course, amateur boxing, which has an even bigger appeal. Those are the cases which deserve consideration, but as far as Association football is concerned, it has developed into a business. As one who often stands behind the goal posts at Tottenham Hotspur ground and who, in the past, paid the nimble shilling—now is. 6d—to see matches, I object to paying tax in order to subsidise the Spurs football club as such. If there is to be any relief in the tax then the people who pay it should have that relief. So far as the finances of Tottenham Hotspur are concerned, I do not dispute the figures given but I do feel that some explanation should be given regarding the money paid for players' wages during the war period, and the amount paid in rates and taxes. I do not want to be misunderstood. We in North London have a great regard for the Spurs, because we feel that it is the only club that gives those who pay the lower prices three sides around the field, to see the play. But I was surprised to hear that it is we who have. been subsidising the 5s. seat-holders. If the Entertainments Duty on this side has been increased, it must have come from the volume of money which has been paid by us on the is. 6d. side. There may be a reason for it, because the tax must be paid.

As regards rates and taxes, I may say that I am a member of the M.C.C.[Interruption]—do not misunderstand me, I mean of the Middlesex County Council's assessment and valuation authority, of whose area Tottenham is a part. I did hope that I had got on the right school tie. As I have said, I am on the valuation committee of the local authority. The figure has -been given of something like £12,000. Tottenham Hotspur are assessed on their football ground, in so far as a particular area is covered and so on, and in relation to revenue. If they pay £12,000 in rates and taxes, that amount is distinct from Entertainments Duty and is based upon the rateable value so that they pay the same as other people pay. However, I hope that the Chancellor will give deep consideration of the question of Entertainments Duty specifically in connection with amateur organisations and if some relief can be given in the next Finance Bill, it will be of physical and cultural benefit to a concerned. Physical instruction is needed, and it will be stimulated by watching and also taking part in games. For this reason I ask the Chancellor to look into the matter very seriously.

The proposalhere is a limited one. It is that all sports events and games for which an admission charge is made, except horse racing, motor racing and dog racing, should be given the preferential treatment now accorded to the living theatre. That is the proposition of the new Clause. This has been considered on many occasions in the past, and up to now no Chancellor has seen his way to accepting the various suggestions that have been made. I think all will agree that sport should come first, if any change is made in the law and as the Chancellor has indicated, both privately to Members who have written to him and in the House in reply to Questions, this is a matter which is receiving his most earnest and sympathetic consideration, but he cannot see his way now to accepting this new Clause.

The preference given to the living theatre dates back, as the hon. Member for Harwich (Sir J. Stanley Holmes) stated, to 1935. It was then given at a certain rate and that rate has been extended several times since—the last time I think in 1943. The exception was made in 1935 in favour of the living theatre, which then and since—not perhaps so much during the war years but most certainly before the war—had suffered as compared with the cinema. The concession was made to the living theatre, riot because the living theatre is a good thing in itself although we are all agreed that it is—and I am not resisting this Clause now on the ground that sports and particularly amateur sports are not good things—but for the simple reason that the living theatre was up against a competition which sports and games are not up against today. It had the competition of the cinema to meet, in circumstances which were altogether different from those connected with sports and games. The arguments used by the hon. Members who have spoken in favour of this Amendment were four or five in number, and contained much that cannot be contradicted. The first was that sports and games are good in themselves and we will agree as to that. It was also stated that the financial position of the various sports clubs was precarious and that again may be so, in fact undoubtedly it is so. But, the financial position of the sports club is not entirely due, in fact is possibly not due at all, to the incidence of the Entertainments Duty. During the war certain troubles have fallen on sports clubs, football and cricket clubs, in common with the rest of mankind. They have had to meet the incidence of a very high rate of Income Tax and to this has to be added all their other troubles. We must, however, keep a sense of balance in this matter and although I was extremely interested in the speech of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) and in the figures he gave, with which I do not quarrel, it showed only one side of the picture, and he must, as we all must, keep a sense of balance.

So far as the events for which admission is charged are concerned, it is doubtful whether it can be said that the public gain anything except entertainment from watching these events. So far as they are getting any improvement in their health, I think it can only be argued that they get this to the extent that their minds are taken off their work, and they are given good entertainment and they like to pay to watch it. But except for this there does not seem to be anything in the points put forward by the hon. Gentleman opposite, who pleaded that we were penalising the health-giving activities of the sports in question.

If the hon. Gentleman will permit me to interrupt, may I say that without the assistance of the public watching and paying for these games, many sports could not exist? It is by the public paying to watch these games that it is possible for most of these clubs to carry on. They could not carry on otherwise, and it is the provision of the physical side of this entertainment that is desired.

4.45 p.m.

I was trying to make a distinction between those who watch and those who are playing the game because, as I have said, no real point has been made that it affects anything but the entertainment of the people who pay to watch these games. Therefore, it is open to anyone, if it is a question of having sport, to indulge in that sport without having to pay all that duty. The point I am making, for what it is worth, is that it cannot be said that we are, by the Entertainments Duty, penalising the healthy recreation of the ordinary working man. Nor can it be said, as was said, that preference was given to the living theatre, or that sports clubs suffered by competition with the cinema. So far as the analogy of the living theatre is concerned, I think that it breaks down on all counts. No one has said during the discussion that, if the sports clubs who charge for admission—the professional clubs—are in great financial difficulties, there is any reason why they should not increase their charges. Other forms of entertainment during 'the war have increased their charges—

I am sure the hon. Gentleman is not correct when he says that. The matter is within the recollection of the Committee. It was pointed out that, when the charges were increased, the attendances fell away.

It is a legitimate argument that, if a thing does not pay, the charges must be increased in order to try to make ends meet. It cannot be argued that, because professional clubs cannot, under existing conditions, make money in the way some of them did in the days before the war, the one thing they must not do is to increase the cost of entry to a game. As a matter of fact, 1 believe the cost has been increased. The hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) gave us figures to show just how the incidence of Entertainments Duty was divided up and how it fell as between one club and one price of seat and another. The average price of a seat at most matches is 1s. 6d. It is true there are higher priced seats in the stands, and there are also lower priced seats on the bank, or for boys and those under a certain age. It varies from club to club, but about 40 or 50per cent. of the people who go to football matches now pay 1s. 6d. Before the war, it was is., on which 2d. Entertainments Duty was paid. The proprietors of these various clubs put the Is. seats up to 1s. 6d., and that is the average price now for most of the grounds. The duty on that is 7½d. Before the war, out of the is., with 2d. duty charge, the proprietors or club retained 10½d. Now, the charge is 1s. 6d., with 7½d. duty, and they retain 'old. so that it is right to say, taking the average, that the incidence of Entertainments Duty today is not very much greater than it was in the prewar days. The price of the seats has gone up, but the net loss to the proprietors of the grounds is nil, and, actually, on balance, they gain a ½-d. on every is. 6d. seat. However sympathetic we were to the general idea of helping sports and games in this way, the difficulty is that, if you exempt sports and games, immediately other forms of sport not included in this proposal will want to be included, and it would be difficult to know just where it would stop. It would mean, too, that the cinema would havea definite grievance—

:I am sure the hon. Gentleman is anxious to address himself to the new Clause. We have been at great pains to point out that the whole burden of the new Clause rests upon the fact that non-profit making sports are those which we seek to help, and we are in no sense trying to help horse racing and greyhound racing, which are run as business concerns for profit.

I am aware of that, and it is a good point to make, but, if we take other forms of sport, except the cinema, they would feel that there was a case for taking the Duty off in their case, and it may well be that, in the fulness of time, this is the kind of tax that may be remitted. I do not know. But it is a tax on gross receipts, which normally is a bad form of taxation. The financial effect, if the Chancellor of the Exchequer accepted this Clause, would be £2,000,000. Hon. Members may say that that is not a great amount, but, at any rate, much can be done even with £2,000,000.

Yes. Therefore, the conclusion I come to is this. Whilst we are, as the Chancellor has indicated several times, extremely sympathetic to the new Clause, it cannot be accepted now. My right hon. Friend will, however, between now and next April, look into this matter with the utmost sympathy to see if something cannot be done to meet the point put forward this afternoon and in previous Debates on this subject. Hon. Members may say that it would be better now than next April, but I would like to point out to them that next April will still be in time for the football season of 1946–47, and also in time for part, at any rate, of the forthcoming cricket season.

I, therefore, ask the supporters of this new Clause to withdraw it on the understanding that the Chancellor of the Exchequer, without commitment or promise, will examine the matter sympathetically to see if anything can be done in the direction we have been discussing.

I want to say how disappointed I am with the reply of the hon. Gentleman. I think this is one of the first proposals from this side of the Committee with which he has dealt, and I must say that, although I regarded the Chancellor of the Exchequer during the last three days as chastising us with whips, I now find the hon. Gentleman is chastising us with scorpions, because he has really held out no hope that any relief will be given in this matter. 1 must say that 1 was singularly unimpressed with his argument that, if a concession were given to sports, which everyone agrees are not run for commercial interests, and, if in fact, are almost all non-profit-making, we would inevitably be forced to extend to the cinemas, clog racing, horse racing and so on, all industries definitely run for profit, and, in most cases, succeeding in making profit. The moment when that was likely to happen, was when the concession was given to the living theatre, because it is run for profit, and, on some occasions, makes a profit, and yet something like to years have elapsed and the argument has never been raised to extend the same concession to horse racing or dog racing.

I am particularly interested in the amateur side of this problem, and I feel that the next few months may, indeed, be critical. As I understand it, the case is that many of these boxing and swimming functions and football and cricket matches are run either by indiviual clubs or by associations. These in many cases run one or two shows or matches, for admission to which payment has to be made, during the course of the year, and out of that, they expect to make enough, not only to meet their own expenses for the year, but, in the case of associations, to make enough money to he able to distribute sums to branches or clubs in other parts of the country, which, otherwise, would be unable to survive. It does seem to me that that is a laudable thing to encourage, and, when the Financial Secretary says that this tax makes no difference to their receipts, I cannot believe that it is all passed on to the spectator. I do not believe that, in the amateur case, that is possible. There is a limit to what you can charge for entertainments which often depend for their value rather on the loyalty of the spectators than on the intrinsic merits of the show to be witnessed. If the right hon. Gentleman had been able to say that, before the Report stage, he would offer to redraft this new Clause, in order to confine it to amateur undertakings to ensure that that branch of sport, at any rate, had a chance to recover from the war, I should have advised my hon. Friends to accept it. But, faced as we are with a cold douche, I shall be quite prepared to go into the Lobby on this new Clause.

I want to say that lovers of sport, not only in this Committee but all over the country, will be deeply disappointed with the very unfavourable reply of the Financial Secretary to this Amendment. I feel that, in putting forward at this time the cause of sport, we are essentially supporting what I would call the people's cause. The hon. Member for Harborough (Mr. Attewell), and, to some extent, the Financial Secretary, gave me the impression that, as far as football is concerned, they have been brought up on Tom Webster cartoons and think that every director is a man with a top hat, smoking a cigar and with a large gold pin in his scarf. That is far from being the case, and it is not the fact with regard to sport generally. The Clause covers all branches of sport played by men and women—cricket, football and many other games. I think of the game of water polo, which I have played myself. Before I had the honour of representing Blackpool in this House, I equally had the honour of representing Blackpool in their water polo team, and I want to go on helping them now, as in the past. I think we should do something more for them than the Financial Secretary visualises. This is not a problem that will arise only after the war. There should be no confusion in anyone's mind between greyhound racing and other commercial sports, and the sports which we have been talking about. It is a well known fact that there is practically no profit in these sports, anyway. Very rarely do we hear of any football or cricket club paying a dividend, but we do hear of supporters' clubs appealing for money all round. So much so, in fact, that we have been hearing reports of a possible strike because professional players feel that they cannot now maintain a satisfactory living.

In sport now, as we have seen in this last week, we have got into the field of international competition. Hon. Members on the other side may say that they do not like competition, but it is in the world and always will be. In the old days, when Yorkshire and Lancashire differed, they fought the Wars of the Roses, and people gave their lives. Now they meet on Bank Holidays at cricket, and when we, of the Red Rose, win, we know our cause is just and right

5.0 p.m.

I hope the hon. and gallant Gentleman will correct my history if I have it wrong, but I always thought that the Wars of the Roses were wars between titled gentlemen who drew their titles from Lancashire and Yorkshire and that actually Lancashire and Yorkshire had nothing to do with it, except to fight.

At any rate the hon. Gentleman will concede that the war was fought by men from Lancashire and Yorkshire. Now we fight our battles on the field of sport. If we win we go away sappy; if we lose, we know in our hearts that we shall win next year. Sport is the place where competition may well come into the international sphere and we want to be represented by players that are good. If the Treasury takes the attitude that it will rob all these sporting organisations of their money, where are we to get the money from to provide the necessary coaching so that we can achieve in our country good international standards of sport?

One more thing Cannot we get way from the old-fashioned idea that sport is a luxury to be taxed? I say that sport is one of the necessities of the people. I have heard it said that one of the great lungs of London is Epping Forest; it is quite true, but there are hundreds of other Lungs of London in the sports fields which lie in and all round our great cities. Not only is benefit being given to the people who play, but to the hundreds and thousands of spectators who tramp to the field, who gather together—instead of being in the factories—in the open air, shouting and cheering, and who go away from that field very much better physically. I think we should help them to achieve something that is a real and valuable change from their work, which helps them to equip themselves for the struggle for life in the week that follows.

I hold a mandate from a Lancashire constituency, and I propose to say—in spite of the animal noises that are being made opposite—that the extremely unsympathetic reception which the Financial Secretary has given to this proposal will not be received with very favourable comment in Lancashire. His sympathy is with the good old principle of "Jam yesterday, jam tomorrow, but never jam today." Sport means a great deal to everybody in Lancashire. Even hon. Members opposite who, by some incomprehensible mischance also represent Lancashire constituencies, will agree with me in this: that to Lancashire sport is an absolutely vital part of their daily life. It is a thoroughly democratic thing, and it is a health-giving thing. Reference was made to the necessity for a sense of. balance and I believe, if we had altered the Clause to include acrobatics, gymnastics and prestidigitation, we would have had more sympathy from the Chancellor of the Exchequer. He is a great expert on balance. He was complimented yesterday on balancing the Budget, and we have seen him in the House, time and time again, demonstrating balancing with his—

I am afraid that is not relevant to the new Clause. Being a Yorkshire man myself I gave the hon. Gentleman a little latitude, but I do not think that he ought to trespass upon it.

I must apologise, Major Milner. I will only say in conclusion that I believe the hon. Gentleman should reconsider what he has said and instead of adding to the heap of gifts and promises that he has piling up for next April he will, I hope, decide at the last moment to give us the relief which I believe every man in the street in this country feels is necessary

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 149; Noes, 224.

Division No. 34.]

AYES.

[5.5 p.m.

Aitken, Hon. M.Gridley, Sir A.Osborne, C.
Allen, Lt.-Col. Sir W. (Armagh)Grimston, R. V.Peake, Rt. Hon. O.
Amory, Lt.-Col. D. H.Hannon, Sir P. (Moseley)Peto, Brig. C. H. M.
Baldwin, A. E.Hare, Lt.-Col. Hon. J. H. (Woodbridge)Pitman, I. J.
Baxter, A. B.Haughton, Maj. S. G.Ponsonby, Col. C. E.
Beamish, Maj. T. V. H.Headlam, Lt.-Col. Rt. Hon. Sir C.Poole, Col. O. B. S. (Oswestry)
Bennett, Sir P.Hinchingbrooke, ViscountPrice-White, Lt.-Col. D.
Birch, LI.-Col. NigelHogg, Hon. Q.Raikes, H. V.
Boles, Lt.-Col. D. C. (Wells)Hollis, Sqn.-Ldr. M. C.Reed, Sir S. (Aylesbury)
Boothby, R.Holmes, Sir J. StanleyRoberts, Sqn.-Ldr. E. O. (Merioneth)
Bowen, R.Hope, Lt.-Col. Lord J.Roberts, Maj. P. G. (Ecclesall)
Bower, N.Hulbert, Wing-Comdr. N. J.Robinson, Wing-Comdr. Roland
Boyd-Carpenter, Maj. J. A.Hurd, A.Ropner, Col. L.
Braithwaite, Lieut.-Cmdr. J. G.Hutchison, Lt.-Cdr. Clark (Edin'gh, W.)Ross, Sir R.
Bromley-Davenport, Lieut.-Col. W.Joynson Hicks, Lt.-Cmdr. Hon. L, W.Scott, Lord W.
Buchan-Hepburn, P. G. T.Kendall, W. DSmiles, Lt.-Col. Sir W.
Bullock, Capt. M.Kerr, Sir J. GrahamSmith, E. P, (Ashford)
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)Lambert, G.Smithers, Sir W.
Byers, Lt.-Col. F.Lancaster, Col. C. G.Snadden, W. M.
Chalien, Fit. Lieut. C.Legge-Bourke, Maj. E. A. H.Spearman, A. C. M.
Channon, H.Lindsay, Lt.-Col. M. (Solihull)Spence, Maj. H. R.
Clarke, Col. R. S.Linstead, H. N.Stanley, Col. Rt. Hon. O.
Cole, T. L.Lipson, D. L.Stephen, C.
Cooper-Key, Maj. E. M.Lloyd, Maj. Guy (Renfrew, E.)Stoddart-Scott, Col. M.
Crookshank, Capt. Rt. Hon. H. F.Lloyd, Brig. J. S. B. (Wirral)Stuart, Rt. Hon. J.
Crosthwaite-Eyre, Col. O. E.Lucas, Major Sir J.Sludholme, H. G.
Crowder, Capt J. F. E.Lucas-Tooth, Sir H.Sutcliffe, H.
Cuthbert, W. M.Lyttelton, Rt. Hon. O.Taylor, C. S. (Eastbourne)
Darling, Sir W. Y.MacAndrew, Col, Sir C.Taylor, Vice-Adm. E. A. (P'dd't'n, s)
Davidson, ViscountessMcGovern, J.Teeling, Fit. Lieut. W.
Digby, Maj. S. WingfieldMackensen, Lieut.-Col. H, R.Thomson, Sir D. (Aberdeen,S.)
Dodds Parker, Col. A. D.McKie, J. H. (Galloway)Thorneycroft, G. E. P. (Monmouth)
Dower, Lt.-Col. A. V. G. (Penrith)MacLeod, Capt. JThorp, Lieut.-Col. R. A. F.
Drayson, Capt. G. B.Manningham-Buller, R. E.Touche, G. C.
Duthie, W. S.Marlowe, A. A. H.Turton, R. H.
Eccles, D. M.Marples, Capt. A. E.Vane, Lt.-Col. W. M. T.
Eden, Rt. Hon. A.Marshall, Cmdr. O. (Bodmin)Wadsworth, G.
Erroll, Col. F. J.Maude, J. C.Wakefieid, Sir W, W.
Fleming, Sqn.-Ldr. E. L.Maxton, J.Walker-Smith, Lieut.-Col. D.
Fletcher, W. (Bury)Medlicott, Brig. F.Ward, Hon. G. R.
Foster, J. G. (Northwich)Maller, Sir J.Watt, Sir G. S. Harvie
Fox, Sqn.-Ldr. Sir G.Millington, Wing-Comdr. E. R.Webbe, Sir H.(Abbey)
Fraser, Maj. H. C. P. (Stone)Moore, Lt.-Col. Sir T.Whealley, Lieut.-Col. M. J.
Gage, Lieut,-Col. C.Morris, Hopkin (Carmarthen)Williams, C. (Torquay)
Galbraith, Cmdr. T. D.Morrison, Maj. J. G. (Salisbury)Williams, Lt.-Cdr. G. W. (T'nbr'ge)
Gammans, Capt. L. D.Morrison, Rt. Hon. W. S. (Cirencester)Willink, Rt. Hon. H. U.
Gates, Maj. E. E.Mott-Radclyffe, Maj. C. E.Young, Maj. Sir A. S. L. (Partick)
George, Lady M. Lloyd (Anglesey)Neven-Spencer, Major Sir B.
Glossop, C. W. H.Nicholson, G.

TELLERS FOR THE AYES:

Gomme-Duncan, Col. A. G.Noble, Comdr. A. H. P.Mr. Drewe and CommanderAgnew
Granville, E. (Eye)Nutting, Anthony

NOES.

Adams, W. T. (Hammersmith, South)Butler, H. W. (Hackney, S.)Dumpleton, C. W.
Adamson, Mrs. J. L.Castle, Mrs. B. A.Dye, S.
Allen, A. C. (Bosworth)Champion, A. J.Edelman, M.
Allen, Scholefield (Crewe)Chater, D.Edwards, John (Blackburn)
Allighan, GarryChelwynd, Capt. C. R.Evans, S. N. (Wednesbury)
Anderson, A. (Motherwell)Clitherow, R.Fairhurst, F.
Attewell, H. C.Cobb, F. A.Foot, M. M.
Awbery, S. S.Cocks, F. S.Forman, J, C.
Ayles, W. H.Colindridge, F.Foster, W. (Wigan)
Bacon, Miss A.Colman, Miss G. M.Freeman, Maj. J. (Watford)
Baird, Capt. J.Cooper, Wing-Comdr. G.Freeman, P. (Newport)
Balfour, A.Corbet, Mrs. F. K. (Camb'well, N.W.)Gaitskell, H. T. N.
Barstow, P. G.Corlett, Dr. J.Gallacher, W.
Barton, C.Cove, W. G.Gibson, C. W.
Battley, J. R.Daines, P.Gilzean, A.
Bechervaise, A. E.Dalton, Rt. Hon. H.Glanville, J. E. (Consett)
Belcher, J. W.Davies, Edward (Burslem)Goodrich, H. E.
Berry, H.Davies, Ernest (Enfield)Grenfell, D. R.
Beswick, Fit.-Lieut. F.Davies, Harold (Leek)Grey, C. F.
Binns, J.Davies, Haydn (St. Pancras, S.W.)Grierson, E.
Blenkinsop. Capt. A.Davies, S. O. (Merthyr)Gunter, Capt. R. J.
Bottomley, A. G.Deer, G.Guy, W. H.
Bowden, Flg.-Offr. H. W.Delargy, Capt. H. J.Hall, W. G. (Colne Valley)
Bowles, F. G. (Nuneaton)Diamond, J.Hamilton, Lieut.-Col. R.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)Dobbie, W.Hannan, W. (Maryhill)
Braddock, T. (Mitcham)Dodds, N. N.Hardy, E. A.
Brook D. (Halifax)Douglas, F. C. R.Hastings, Dr. Somerville
Burke, W. A.Driberg, T. E. N.Haworth, J.

Henderson, A. (Kingswinford)Naylor, T. E.Sparks, J. A.
Hewitson, Captain M.Nicholls, H. R. (Stratford)Stamford, W.
Hicks, G.Noel-Baker, Capt. F. E. (Brentford)Stewart, Capt. M. (Fulham, E.)
Hobson, C. R.Noel-Buxton, LadyStokes, R. R.
Holman, P.O'Brien, T.Summerskill, Dr. Edith
Hudson, J. H. (Ealing, W.)Oldfield, W. H.Swingler, Capt. S.
Hughes, Hector (Aberdeen, N.)Orbach, M.Symonds, Maj. A. L.
Hynd, H. (Hackney, C.)Paget, R. T.Taylor, H. B. (Mansfield)
Janner, B.Pargiter, G. A.Taylor, R. J. (Morpeth)
Jeger, Dr. S. W. (St. Pancras, S.E.)Parker, J.Taylor, Dr. S. (Barnet)
Jones, A. C. (Shipley)Parkin, Flt.-Lieut. B. T.Thomas, I. O. (Wrekin)
Jones, D. T. (Hartlepools)Paton, Mrs. F. (Rushcliffe)Thomas, John R. (Dover)
Jones, J. H. (Bolton)Paton, J. (Norwich)Thomas, George (Cardiff)
Jones, Maj. P. Asterley, Hitchin)Peart, Capt. T. F.Thomson, Rt. Hon. G. R. (E'b'gh, E.)
Keenan, W.Perrins, W.Thorneycroft, H..
Kenyon, C.Piratin, P.Tiffany, S.
Kinghorn, Sqn.-Ldr. E.Platts-Mills, J. F. F.Tolley, L.
Lang, G.Popplewell, E.Tomlinson, Rt. Hon. G.
Lavers, S.Porter, G. (Leeds)Turner-Samuels, M.
Lawson, Rt. Hon. J. J.Pritt, D. N.Vernon, Maj. W. F.
Lee, Miss J. (Cannock)Proctor, W. T.Viant, S. P.
Leslie, J. R.Pryde, D. J.Walkden, E.
Levy, B. W.Pursey, Cmdr. H.Walker, G. H.
Lewis, A. W. J. (Upton)Ranger, J.Wallace, G. D. (Chislehurst)
Lewis, T. (Southampton)Rankin, J.Wallace, H. W. (Walthamstow, E.)
Lindgren, G. S.Rees-Williams, Lieut.-Col. D. R.Watson, W. M.
Lyne, A. W.Reeves, J.Webb, M. (Bradford, C.)
McAdam, W.Reid, T. (Swindon)Weitzman, D.
McEntee, V. La T.Richards, R.Wells, P. L. (Faversham)
McLeavy, F.Ridealgh, Mrs. M.White, H. (Derbyshire, N.E.)
MacMillan, M. K.Robens, A.Whiteley, Rt. Hon. W.
Mainwaring, W. H.Rogers, G. H. R.Whittaker, J. E.
Mann, Mrs. J.Royle, C.Wilkes, Maj. L.
Manning, C. (Camberwell, N.)Sargood, R.Wilkins, W. A.
Manning, Mrs. L. (Epping)Scott-Elliot, W.Willey, F. T. (Sunderland)
Mathers, G.Segal, Sqn.-Ldr. S.Willey, O. G. (Cleveland)
Mayhew, Maj. C. P.Sharp, Lieut.-Col. G. M.Williams, Rt. Hon. E. J. (Ogmore)
Medland, H. M.Silverman, J. (Erdington)Williams, J. L. (Kelvingrove)
Messer, F.Silverman, S. S. (Nelson)Willis, E.
Middleton, Mrs. L.Simmons, C. J.Wilmot, Rt. Hon. J.
Mitchison, Maj. G. R.Skeffington, A. M.Yates, V. F.
Monslow, W.Smith, Capt. C. (Colchester)Young, Sir R. (Newton)
Montague, F.Smith, S. H. (Hull, S.W.)Younger, Maj. Hon. K. G.
Moody, A. S.Smith, T. (Normanton)Zilliacus, K.
Morley, R.Snow, Capt. J. W.
Morris, Lt.-Col. H. (Sheffield, C.)Solley, L. J.

TELLERS FOR THE NOES

Moyle, A.Sorensen, R. W.Mr. Pearson and
Nally, W.Soskice, Maj. Sir F.Mr. J. Henderson.

I think it would be for the convenience of the Committee if the three new Clauses on the Paper dealing with the subject of housekeeping and attendant allowances were considered together.

New Clause—(Housekeeping Allowance)

Where a taxpayer through any circumstances is obliged to employ the services of a house keeper the taxpayer shall be entitled to a tax allowance of fifty pounds per annum.— [ Mr. Eccles.]

5.15 p.m.

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I know that this business of the house keeper allowance is a hardy annual, but it is none the worse for that. I am sure that there are many provisions in the In come Tax law which have been pressed on former Chancellors of the Exchequer, year after year, before some right hon. Gentleman saw the light and amended the law. I want to press again for a widening of the definition of those who are to be allowed to receive an allowance in respect of a housekeeper. The law as it stands now is that an allowance of £50 a year is paid, in respect of a house keeper, to a widow or widower whether he or she has children or not; and to a single person who has charge of a child. In all cases, the housekeeper has to be resident in the house which she is looking after, if the allowance is to be granted. The new Clause which' my hon. Friends and I have put upon the Order Paper is rather wide. I recognise that the words
"is obliged to employ the services of a house keeper"
would cover a very wide range of cases. In fact the Chancellor might argue in regard to the male sex who employ housekeepers that it would cover any body, because any man could pitch a tale that he needed to have a woman to look after him. We have drawn this new Clause very wide, so that all the hard cases can be discussed.

I would first direct the attention of the Committee to married couples. If both partners of a marriage are alive they arc not allowed to get the allowance. That, I think, creates a serious hardship. There are many instances where a wife is infirm, or for some other reason cannot look after the house; but the man has to go out to earn the family's income, and he has to have someone to do the cooking and cleaning; and in this case the allowance is not paid. If the man were a widower he would get the allowance. There are other married couples and they are on the increase in the modern world—where both husband and wife work. There are many professional women—for instance doctors—who are married, and they would have to neglect their professional duties if they were not to have a housekeeper, because there can be scarcely any of them with a husband so talented that he can do the cooking and cleaning. We want to encourage women of this kind who give great service to society.

I would especially draw the attention of the Financial Secretary to this class of person: I think that we are all wondering who are to be the new local government councillors. Are we going to get enough of the right people to sit on local government bodies? I know two or three women in my county who, when I said, "Will you stand for the rural district council or the county council?" said, "We cannot do that because we have got to look after the house." Being a local government councillor does not bring in any money and therefore quite a small relief towards the housekeeping expenses might encourage more people to stand for local government bodies who, at the present time, will not do so. I think that we ought to consider carefully any means by which we can widen the field of candidates for local government.

Turning to the single people, one finds that the widow is preferred to the bachelor, and the widow is put in a better position than the spinster. That may be a good thing. I am not arguing that the law should give a little prize to those who have been through the trials of marriage; but I do not think the present position is fair with regard to this question of housekeeping. Let me give one instance: There is a girl in my constituency whose father died during the war. She then took on the management of the family farm, and she has mach- an exceedingly good farmer, respected by all her male colleagues. She has to be about her business on the land, or at the market, and so she has had to engage a resident housekeeper to look after the farmhouse. About a year ago, she wrote and asked if she could have an allowance, and I consulted my right hon. Friend the Member for the City of London (Mr. Assheton), who was then the Financial Secretary to the Treasury. He replied—and I have permission to quote his letter—as follows:
"In framing the legislation extending the allowance, Sir Kingsley Wood considered the case of the bachelor or spinster who employs a housekeeper, but he felt that any extension. of the sphere of allowance must be founded on the presence in the home of any children."
That put me in the position of having to write to my constituent arid tell her that, if she could procure a child, by one means or another, she could have the allowance. I really do not think the law ought to be such that Members of Parliament have to tender that sort of advice. We want these single women to work, and it is not right that they should only get the allowance if there happens to be a child under their care.

I come to my third point, the question of whether a housekeeper should be resident or not. As the law is now, no allowance is paid if the housekeeper does not live in the house. Former Chancellors of the Exchequer have argued that it would be invidious to ask the tax collector to ascertain whether a non-resident housekeeper was in fact a genuine housekeeper, or a woman who came in for an hour or two to do a bit of cleaning. I see some force in that argument, but I think there is much more force in stressing the injustice that is created by being so tender to this administrative difficulty. The Committee will realise that this injustice has been greatly aggravated by the housing shortage. There are now hundreds of thousands of dwellings in which there is not a spare bed. I wonder whether it is right that we should leave the law in the position where, if a man can rind a bed in his house for his housekeeper, he is entitled to the allowance but if she lives more comfortably—and it may be with more propriety—in a neighbouring house, then he is not entitled to the allowance. I think that is a most unsatisfactory thing, and I would urge this upon the Financial Secretary for his consideration. The whole condition of domestic service has changed, and we are very glad that it has. The pay and conditions of domestic workers are being raised, and in this respect we are following the American practice, where many more domestic workers live out. That is a good thing. We do not want them to go on living in damp basements or draughty attics, and there is a greater sense of freedom if a woman lives out in her own rooms, and comes in to do the work. That is the way things are going in domestic service. I believe that the Labour Party is against the principle of the tied cottage, and they ought also to be against the principle of the tied bedroom, because that is the position of the law as it is now. Therefore, I put forward this new Clause, and I hope that the Financial Secretary will not repeat the stern and Scottish "No," which we got when we last raised this question.

You were good enough to say, Major Milner, that the new Clause (Constant Attendant Allowance) standing on the Paper in my name could be considered at the same time as this Clause. The point I wish to raise is slightly different from that raised by the hon. Member for Chippenham (Mr. Eccles). I agree entirely with his argument in favour of the allowance in respect of the housekeeper, but in my Clause, I am not thinking of the housekeeper, but of someone in the position of an attendant or nurse-companion to a crippled person. I feel that there should be some relief for a person who requires the services of an attendant to wheel about a bath chair and generally assist in the domestic tasks. I do not suppose that a very large number of persons in the aggregate in the country would qualify for this allowance; so that I cannot believe that the expense that would fall upon the Exchequer would be very great.

The people I have in mind are those who, unfortunately, have been the victims of railway or street accidents, or perhaps have been smitten by some terrible disease, such as cerebro-spinal meningitis, and who are unable to do much for themselves. I am notconsidering, for the moment, the question of disabled Servicemen and workers disabled in industry. In the case of those who are victims of accidents probably they will receive some compensation payment and that money will have been invested in an annuity or gilt edged security which will bring them in a small, fixed income. But take the case, of someone who was a cripple before the war, when Income Tax was 5s. in the £. It might be that from the income derived from that compensation money that person would be able to get someone to assist during part of the day, or as a whole-time attendant. Now that Income Tax has risen to l0s. in the£and has taken away a large slice of the money coming into the home—this is not possible and furthermore money derived from that source of compensation is not treated as earned income but is taxed as unearned income—I think some relief should be given to people who require the services of an attendant.

5.30 p.m.

So far as men disabled in the Services are concerned, I am asking for an increase in the constant attendance allowance. It happens that under the Royal Warrant, men who are totally disabled as a result of war injuries receive a tax-free allowance of 20s. a week, called constant attendance allowance, which is of some assistance. A few weeks ago, we discussed the National Insurance (Industrial Injuries) Bill, at present before one of the Standing Committees, and in that. Bill provision is made for payment of 20s. a week constant attendance allowance if a worker is completely disabled by injury. I should like to quote very briefly a passage from the speech made by the right hon. Gentleman the Minister of National Insurance during the Second Reading Debate. He said:

"An additional allowance of up to I a week may be paid if constant attendance is required. This will be paid even if the necessary care is given by the injured worker's wife. In other words, it will not be necessary to prove that somebody from outside is coming in. The wife herself can get the Li per week.'— [OFFICIAL REPORT, l0th October, 1945; Vol. 414, c. 278.]

I assume that this £1 is free of Income Tax, although the right hon. Gentleman did not specifically mention that. The position at the present day is that people who are totally disabled are in two distinct categories so far as taxation is concerned. On the one hand, there is the man or woman in the Services who is disabled, and who receives a constant attendance allowance, and alongside them is the workman who is disabled in industry, and who is to receive a similar allowance, whilst on the other hand there is this body of members of the general public, who may be the victims of a railway accident or sonic other misfortune, for whom there is no relief at all. Naturally, there is no pension scheme for them. Therefore, the only way in which their particular case can be tackled is by some Income Tax relief.

This matter was first brought to my notice about a year ago by a constituent, quite a young woman, who had the misfortune to become totally paralysed as the result of a motor accident. She is still in her twenties, and will unfortunately have to spend the rest of her life in a wheel chair, unable to do anything for herself. In compensation for this accident she received a certain sum of money, which was invested, and before the War she was able to get somebody to assist her. With the rise in taxation she is now unable to do so, and is dependent on such casual help and assistance from relatives and neighbours as' she can get. I feel that it is a hard case, and there must be quite a number of similar cases throughout the country. I took this matter up with the former Chancellor of the Exchequer, the right hon. Member for the Scottish Universities (Sir J. Anderson) last December. He was very sympathetic about it, he said, but he referred me to the Report of the Royal Commission on Income Tax, 1920, which indicated that there were difficulties in dealing with a point of this nature.

It had been my intention to raise this matter on the Finance Act passed earlier this year, but that Measure had to be passed through rather hurriedly because of the advent of the General Election, and the opportunity did not arise. However, after the Election, when the new Government was formed, I took this matter up again with the present Chancellor, in correspondence. He also 'referred me to the Report of the Royal Commission on Income Tax, 1920, but he did say, in a letter to me, dated 4th September, that he would bear this point in mind when he came to consider the question of Income Tax allowances. I submit that the question of Income Tax allowances has now been considered, to some extent, at any rate, by the right hon. Gentleman. I would ask him to consider this point still further between now and Report stage, if he is not able to accept the new Clause. The chief difficulty, as I have said, to which both the Chancellor and the former Chancellor drew my attention, was the Report of the Royal Commission on Income Tax, 1920, Paragraph 271, which reads as follows:

"Nor can we accept the suggestion that the allowances should be varied in accordance with the private or individual circumstances of the person to whom or in respect of whom they are made. It is not possible in any scheme to adjust taxation so closely as to take into consideration the purely personal circumstances of each taxpayer. The feeble health of a man who has to maintain a family and the feeble health of a wife whom the husband has to maintain are individual considerations to which no general scheme of taxation can be adapted."

The particular sentence to which both right hon. Gentlemen drew my attention was that which says:

"It is not possible in any scheme to adjust taxation so closely as to take into consideration the purely personal circumstances of each taxpayer."

I submit that there is a loophole, and that that declaration does not perhaps entirely apply in present-day circumstances. Since 1920there have been many modifications to the machinery of taxation, and to some extent taxation has been adjusted to meet the needs of different categories of people, by allowances or in other ways. I have cited the constant attendance allowance, both for the disabled ex-Serviceman and the industrial worker. I would draw the attention of the Financial Secretary to the Pay-as-you-earn scheme, a system adapted to meet the circumstances of many groups of taxpayers. Today, in 1945, when I understand the Chancellor has many and large schemes in contemplation, he is surely not going to stand on the obsolete dictum of a Royal Commission Report of the year 1920? I ask him to look into this matter very carefully, and to try to meet me on it, because I am sure that Members in all parts of the Committee will agree that a strong case can he made out for some assistance being given to those who are physically crippled and unable to fend for themselves.

The case which has been put by my hon. and gallant Friend the Mem- ber for West Edinburgh (Lieut.-Commander Clark Hutchison) is deserving of great sympathy, and I subscribe to every word he has said. The object of his new Clause, as I understand it, falls well within the scope of the new Clause which has been moved by my hon. Friend the Member for Chippenham (Mr. Eccles), and if the Financial Secretary could be induced to accept that Clause we should all be satisfied. I should be satisfied as regards the new Clause which stands in my name— (Housekeeping allowances for certain occupiers)—and which provides:

"Where a taxpayer, unmarried or divorced, is the occupier of premises and employs the services of a resident housekeeper, the taxpayer shall be entitled to a tax allowance of fifty pounds per annum."
I devised it because I thought that possibly a second line of defence against the Government might be a good thing in case they weighed in with a counterattack against my hon. Friend. The housekeeper allowance has had what might be called 'a chequered career, or perhaps it would be better to call it an expansive career. I trust- that the Committee will not object if for a few moments I go back a little into its past history. It was in 1920 that, on the recommendation of the Royal Commission on Income Tax, this housekeeper allowance was granted to a widow or a widower in respect of a family nurse or attendant for young children, and also to a single person in respect of a female relative to look after a younger brother or sister in the home. In 1924 the widow or widower was allowed to claim for himself or herself alone. In other words, children were no longer made a condition of the allowance.

Then, in 1943, the scope was widened to include any taxpayer, not only a widow or a widower, who was entitled to claim Income Tax relief in respect of a child or adopted child, with the proviso that the taxpayer had either to be entitled to a single personal allowance, or, where he was entitled to a married personal allowance, he must show that his wife was permanently incapacitated. That change of 1943 brought in for the first time the divorced or separated spouse with children. As a result, we are in the position stated by my hon. Friend the Member for Chippenham, that as the law now stands a widow or widower may claim a housekeeper's allowance, even though there are no children, and where there are children any class of taxpayer may claim, except that large class in which the wife is not permanently incapacitated. What I seek to do, in the Clause standing in my name—and I only ask that due consideration be given to it by the Financial Secretary in- the event of his not being disposed to accept the Clause moved by my hon. Friend the Member for Chippenham—is to extend the housekeeping concession to the single or divorced taxpayer, but without the qualification of children.

Why is the widow or widower more worthy of State assistance than the unmarried or divorced man or woman? The only reason I can see for the 1924 concession to the widow and widower without children—and I searched back through the Debates and could not find that Lord Snowden, who made the concession, ever argued the point in the House, so far as the records show—is that that concession is regarded in some measure as compensation for bereavement. Is that the position? If it is, then the allowance cannot also be regarded as a financial inducement to remarry. Therefore, I am armed against anybody who might suggest that to refuse this concession to a divorced or unmarried person is to constitute such an inducement. To be unmarried or divorced is to be most unfortunate. Not all the national savings, which, in spite of my injunction, are laid on the Treasury doorstep, can make up for the calamity. Nevertheless, we should try to do something for those unfortunate people. I am suggesting a £5o a year allowance to help the lonely soul in his or her own premises.

The right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) said in 1944 that he did not think that the single taxpayer without dependants had a strong case, but if it is tied down to residence, as is done in my Clause, and all that class who live boarded out in lodgings is excluded, is there not a strong case? Is it any weaker than the case of the widow or widower, who so far as I can find out, can claim the £5o allowance for a housekeeper living in the country, while the widower maintains himself in style all the year round at a London hotel? I do not think I need enter in any detail into the possibilities of life, under the 1924 provision, for the merry widow. Sir Kingsley Wood said in 1943 that the 1924 Act was a great source of complaint on the part of other taxpayers that they had not the same allowance as the childless widow or widower, if they employed a housekeeper. I maintain that that complaint is abundantly justified so far as the limited class described in my little Clause is concerned and, therefore, I ask the Committee for sympathy with the object of this Clause and I hope we shall get a satisfactory reply from the right hon. Gentleman.

5.45 p.m.

I take it that though we are discussing these three new Clauses together, we will if necessary, vote separately upon them.

I must make the position clear. It is within the discretion of the Chair which Clause is called but I have called the first one and, if desired, there will be a Division on that, and then I should not propose to select the two following Clauses.

What will happen if the Financial Secretary to the Treasury is willing, as I hope he is, to accept one of the two following Clauses?

Shall we take that point when it arises? It might save the time of the Committee if we argued it then and not now. The first proposal of the hon. Member for Chippenham (Mr. Eccles), who coined a new phrase, the "tied bedroom," is to give any taxpayer, obliged through any circumstances, to keep a housekeeper, the ordinary £50 housekeeper allowance and, as he said, the phrasing of the new Clause is extremely wide. For that reason alone I would have to ask the Committee to reject it, because the word "obliged" might cover almost any conceivable circumstance and the additional words "under any circumstances," might quite conceivably mean anything. Therefore the wording of the Clause is far too wide for any Government however sympathetic—and we are sympathetic to the point of view put forward—to accept. As hon. Members have said, at the present moment the £50allowance is given in respect of a widower or widow, whether they have children or not living in the home, who have with them a resident housekeeper. It is also given, since 1943, to any other taxpayer, whether single or not, who has a female person resident with him or her looking after a child. It is not given to a married man who gets the £140 personal allowance, even if he has a wife completely incapacitated, unless she is incapacitated in the whole year of her assessment, and it is not given to a woman taxpayer, generally speaking, unless she, also, is incapacitated, or is working full time earning her own living.

That is the position it is today, and I frankly admit that, after all, with many of the instances brought forward, it is not satisfactory. On some grounds, one cannot justify giving a widower the £50 housekeeper allowance if he has no young children in the home, but the point is that it has been done by Chancellors of the Exchequer in years past and at the moment, it is not suggested that the concession should be taken away. But that is an entirely different thing from inviting the Chancellor of the Exchequer to extend it. If it were extended, in the directions asked for in the new Clause under discussion it would open the door wide, and no one recognises more clearly than the hon. Member for Chippenham (Mr. Eccles) who agreed that the 'words he used in his new Clause "obliged" and "under any circumstances" would enable anyone to employ anybody and to ask for, and probably get, the £50 allowance in respect of a housekeeper. It would mean that any young sister living in the home, could be considered as a housekeeper. It would certainly mean that any domestic help who came in for however short a period during the week, might be described as a housekeeper looking after the home. For those reasons, and others which I will not go into, the Chancellor of the Exchequer is unable to accept the new Clause.

The suggestion put forward by the hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison) is, I agree, in a different category and we can all have a great deal of sympathy with the individuals he visualised who have need of care and attention and who for that reason might be considered to have an equal claim with others to an allowance for someone who is to look after them. The difficulty there, again, is where to draw the line. You may have someone who is completely incapacitated and you give him, if the suggestion were accepted, the allowance for the constant attendance of an individual. What about the person only partially incapacitated, who might equally claim that, although not in the medical sense wholly incapacitated, he was to some extent incapacitated?

:A line is drawn in the Royal Warrant and I think it should be drawn in the National Insurance (Industrial Injuries) Bill, and it could be carried into civil life to deal with accident cases.

I agree that it is so under the Royal Warrant—andin passing may I say that is a diminishing number of a special class. We are all anxious to treat the returned soldier who has been disabled, in a different way from others. We give special treatment and we do know there before we start the percentage of disability under which they suffer. In addition, many of us have tried in the past, when sitting on the other side of the Committee, to get the Minister of Pensions to give the constant attendance allowance but the Minister of Pensions thought differently. It led to difficulties and troubles. The same would apply here only on a much bigger scale, and that is one of the difficulties we see in accepting this suggestion. We have the utmost sympathy with it, but just what we can do we do not know, and it would open the door very widely. The hon. and gallant Member for West Edinburgh himself quoted from the Royal Commission of 1920 which made perfectly clear that once you embark on allowances for this and that type of disability, you never know where you are going to stop. Therefore the situation or the conditions of the individual cannot be taken as any guide. We have to go by general principles and, although the principles may appear to some people to work out unjustly as between one individual and another, nevertheless they are embedded in the present law and as far as the proposals put forward today are concerned, I am sorry to say the Chancellor of the Exchequer cannot accept them.

:As the Noble Lord himself said, his Clause was only a second line of defence. I thought at the time he used the word "defence" he might have said "attack" as I gathered that the whole burden of his speech was simply to follow up what had been said by hon. Members who preceded him and that if the Chancellor of the Exchequer accepted the first Clause in the name of the hon. Member for Chippenham, the greater would include the less.

The point is that I am asking for a much more limited application of this allowance. I submitted that if the hon. Gentleman would not accept the Clause in the name of the hon. Member for Chippenham (Mr. Eccles) there was a case for accepting this far more limited Clause.

:I am sorry to say there is no case for accepting any of these new Clauses, for the general reasons I have given. The Noble Lord wants to see taxpayers, unmarried or divorced, who are occupiers of premises and who employ the services of a resident housekeeper, getting the£ 5o and the answer is quite shortly that the Chancellor of the Exchequer cannot see his way to accept even that proposal, modified though it is as compared with the Clause put forward by the hon. Member for Chippenham. For one thing, ark occupier of premises may not necessarily by the kind of person whom the Noble Lord wishes to benefit. A man may live in premises and not be, technically, their occupier. It would lead us into an amazing situation and we cannot accept either this Clause or the other Clauses which have been put forward.

The Financial Secretary started off with so much reluctance to refuse, and so much sympathy, that I am not clear whether he is completely refusing to consider any part of the proposals. Will he consider some part of this proposal before Report stage, particularly in regard to the speech of the hon. Member for Chippenham (Mr. Eccles) about the man with an invalid wife, who would get an allowance but for the fact that he has not a room to put her in?

I really do not know whether we ought to allow the Financial Secretary to get away quite so easily with the reasons he has given for his refusal to accept the constant attendance allowance. I could only find two precedents in his speech. The first was to refer back to the Royal Commission of 1920, and that after all, is evading the question on its merits and the other referred back to a 25-year-old Report in which the subject is only dealt with almost in passing and in a very vague way. The second reason he gave was, to use his own words, "What we can do we do not know." I am not sure that I know what that means, but I think what the Financial Secretary was intending to imply by that was simply that the Government did not propose to do it.

:Exactly. But this is a very small section of the community, namely, elderly people living lonely lives on very small incomes. Those are the people who have been hit more than any others by increased taxation and the increased cost of living. It is surely desirable that we should try to keep these people out of infirmaries and homes for the aged and so on, if we possibly can, This extra allowance of £5o a year might make all the difference in many of these cases between being able to lead their own lives in their own homes and going to a home for the aged. I think the right hon. Gentleman has not given any reason why this cannot be done for the ordinary member of the population, as it is in fact going to be done for anybody who happens to be injured by an industrial accident. If it can be done in the case of a person who is injured in an industrial accident, there is no ground for the hon. Gentleman to say that he cannot do it for the other members of the community.

6.0 p.m.

I think it is a good point which we are trying to persuade the Financial Secretary to accept, and he is not treating it as we expect him to treat it although he says he is full of sympathy with the case. Admittedly the state of the law is bad and there are any number of anomalies, but the hon. Gentleman can do nothing at all about it.

I appreciate the Financial Secretary's point, but surely, with all the resources at his disposal, he could, without much difficulty, find a way to express his sympathy without creating an anomaly, I do ask him, with all the the opportunities he has, even if he cannot do it during the course of this Bill, to hold out some hope that this matter, which I can assure him from my professional knowledge is a very pressing one indeed, may receive some consideration at the hands of the Government.

:Perhaps the Clause is too wide, but I did think we would get some sympathy with some of these cases. It comes to this, that the Financial Secretary has admitted there are a number of anomalies, but because he cannot put l00of them right, he is not prepared to put 90 right. I think that is unreasonable, and I want to ask this question. Did he say that the woman who was employed in a full time job could get a housekeeper's allowance? Because my information is that a single woman, however hard she works, cannot get the housekeeper's allowance, whereas a well-endowed widow can get it just for the asking. It is most unfair.

I certainly would ask my hon. Friends to divide on this new Clause as a protest against the way in which it has been received. [Laughter.] Hon. Members opposite laugh, but they know quite well that cases coming under these Clauses are numerous and sometimes very painful. The hon. Gentleman has not attempted to prove that there are no hardships involved. All he said was that it is too difficult to remedy.' I thought the benches opposite were full of people now able to do things which the previous Government were not able to do, things which we found too difficult arid which are now going to be done by them, and that precedents which we followed are now to be torn in pieces by them. We have had this evening an example of the fact that they admit themselves, not only incapable of solving these problems, but unwilling to try to solve problems which, admittedly, cause hardship to those whom they claim to represent.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 137; Noes, 250.

Division No. 35.]

AYES.

[6.04 p.m.

Agnew, Cmdr. P. G.George, Maj. Rt. Hn. G. Lloyd (P'br'ke)Morrison, Maj. J. G. (Salisbury)
Aitken, Hon. M.George, Lady M. Lloyd (Anglesey)Neven-Spence, Major Sir B.
Allen, Lt.-Col. Sir W. (Armagh)Gomme-Duncan, Col. A. G.Nicholson, G.
Amory, Lt.-Col. D. H.Granville, E. (Eye)Nutting, Anthony
Assheton, Rt. Hon. R.Gridley, Sir A.Osborne, C.
Baldwin, A. E.Grimston, R. V.Peake, Rt. Hon. O.
Baxter, A. B.Hannon, Sir P. (Moseley)Peto, Brig. C. H. M.
Beamish, Maj. T. V. H.Hare, Lt.-Col. Hon. J. H. (Woodbridge)Pitman, I. J.
Bennett, Sir P.Haughton, Maj. S. G.Ponsonby, Col. C. E.
Birch, Lt.-Col. NigelHeadlam, Lt.-Col. Rt. Hon. Sir C.Poole, Col. O. B. S. (Oswestry)
Boles, Lt.-Col. D. C. (Wells)Hinchingbrooke, ViscountPrice-White, Lt.-Col. D.
Boothby, R.Hollis, Sqn.-Ldr. M. C.Raikes, H. V.
Bowen, R.Holmes, Sir J. StanleyReed, Sir S. (Aylesbury)
Bower, N.Howard, Hon. A.Robinson, Wing-Comdr. Roland
Boyd-Carpenter, Maj. J. A.Hulbert, Wing-Comdr. N. J.Ropner, Col. L.
Braithwaite, Lt.-Comdr. J. G.Hurd, A.Ross, Sir R.
Bromley-Davenport, Lt.-Col. W.Hutchison, Lt.-Cdr- Clark (Edin'gh, W.)Scott, Lord W.
Buchan-Hepburn, P. G. T.Jeffreys, General Sir G.Smiles, Lt.-Col. Sir W.
Bullock, Capt. M.Joynson-Hicks, Lt.-Cdr. Hon. L. W.Smith, E. P. (Ashford)
Butcher, H. W.Keeling, E. H.Snadden, W. M.
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n)Kerr, Sir J. Graham.Spearman, A. C. M.
Byers, Lt.-Col. F.Lambert, G.Spence, Maj. H. R.
Challen, Flt.-Lieut. C.Lancaster, Col. C. G.Stanley, Col. Rt. Hon. O.
Channon, H.Law, Rt. Hon. R. K.Stephen, C.
Clarke, Col. R. S.Legge-Bourke, Maj. E. A. H.Stoddart-Scott, Col. M.
Cole, T. L.Lindsay, Lt.-Col. M. (Solihull)Stuart, Rt. Hon. J.
Cooper-Key, Maj. E. M.Linstead, H. N.Studholme, H. G.
Crookshank, Capt. Rt. Hon. H. F. C.Lipson, D. L.Sutcliffe, H.
Crosthwaite-Eyre, Col. O. E.Little, Dr. J.Taylor, C. S. (Eastbourne)
Crowder, Capt. J. F. E.Lloyd, Maj. Guy (Renfrew, E.)Teeling, Flt.-Lieut. W.
Cuthbert, W. N.Lloyd, Brig. J. S. B. (Wirrall)Thomson, Sir D. (Aberdeen,S.)
Darling, Sir W. Y.Lucas, Maj, Sir J.Thorneycroft, G. E. (Monmouth)
De la Bere, R.Lucas-Tooth, Sir H.Thorp, Lt.-Col. R. A. F.
Digby, Maj. S. WingfieldLyttelton, Rt. Hon. O.Vane, Lt.-Col. W. M. T.
Dodds-Parker, Col. A. D.McGovern, J.Wakefleld, Sir W. W
Dower, Lt.-Col. A. V. G. (Penrith)Mackeson, Lt.-Col. H. R.Waker-Smith, Lt.-Col. D.
Drayson, Capt. G. B.McKie, J. H. (Galloway)Ward, Hon. G. R.
Eccles, D. M.MacLeod, Capt. J.Watt, Sir G. S. Harvie
Erroll, Col. F. J.Manningham-Buller, R. E.Wheat'ey, Lt.-Col. M. J.
Fleming, Sqn.-Ldr. E. L.Marlowe, A. A. H.Wi'liams, C. (Torquay)
Fletcher, W. (Bury)Marples, Capt. A. E.Wil'iams, Lt.-Cdr. G. W. (T'nbr'ge)
Foster, J. G. (Northwich)Marshall, Comdr. D. (Bodmin)Willink, Rt. Hon. H. U.
Fraser, Maj. H. C. P. (Stone)Maude, J. C.Young, Maj. Sir A. S. L. (Partick)
Gage, Lt.-Col. C.Maxton, J.
Galbraith, Cmdr. T. D.Mellor, Sir J.

TELLERS FOR THE AYES:

Gammans, Capt. L. D.Moore, Lt.-Col. Sir T.Mr. Drewe and Major Mott-Radclyffe
Gates, Maj. E. E.Morris, Hopkin (Carmarthen)

NOES.

Adamson, Mrs. J. L.Castle, Mrs. B. A.Evans, S. N. (Wednesbury)
Allen, A. C. (Bosworth)Champion, A. J.Ewart, R.
Allighan, GarryChetwynl Capt. G. R.Fairhurst, F.
Alpass, J. H.Cluse, W. S.Farthing, W. J.
Anderson, A. (Motherwell)Cobb, F. A.Follick, M.
Attewell, H. C.Cocks, F. S.Foot, M. M.
Awbery, S. S.Colman, Miss G. M.Forman, J. C.
Ayles, W. H.Cooper, Wing-Comdr. G.Foster, W. (Wigan)
Ayrton Gould, Mrs. B.Corlett, Dr. J.Freeman, Maj. J. (Watford)
Bacon, Miss A.Corvedale, ViscountGaitskell, H. T. N.
Baird, Capt. J.Cove, W. G.Gallacher, W.
Balfour, A.Crossman, R. H. S.Gan'ey, Mrs. C. S.
Barstow, P. G.Daines, P.Gibson, C. W.
Barton, C.Dalton, Rt. Hon. H.Gilzean, A.
Battley, J. R.Davies, Edward (Burslem)Glanville, J. E. (Consett)
Bechervaise, A. E.Davies, Ernest (Enfield)Goodrich, H. E.
Belcher, J. W.Davies, Harold (Leek)Grenfell, D. R.
Benson, G.Davies, Haydn (St. Pancras, S.W.)Grierson, E.
Berry, H.Davies, S. O. (Merthyr)Griffiths, D. (Rother Valley)
Beswick, Flt.-Lieut. F.Deer, G.Gunter, Capt. R. J.
Binns, J.Delargy, Captain H. J.Guy, W. H.
Blackburn, Capt. A. R.Diamond, J.Hall, W. G. (Colne Valley)
Blenkinsop, Capt. A.Dobbie, W.Hamilton, Lieut.-Col. R.
Bottomley, A. G.Dodds, N. N.Hannan, W. (Maryhill)
Bowden, Flg.-Offr. H. W.Douglas, F. C. R.Hardman, D. R.
Bowles, F. G. (Nuneaton)Driberg, T. E. NHardy, E. A.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)Dugdale, J, (W.Bromwich)Hastings, Dr. Somerville
Brook, D. (Halifax)Dumpleton, C. W.Haworth, J.
Brooks, T. J. (Rothwell)Durbin, E. F. M.Hewitson, Captain M.
Burden, T. W.Dye, S.Hobson, C. R.
Burke. W. A.Edwards, John (Blackburn)Ho'man, P.
Butler, H. W. (Hackney, S.)Edwards, N. (Caerphilly)Hoy, J.

Hudson, J. H. (Ealing, W.)Naylor, T. E.Soskice, Maj. Sir F.
Hughes, Hector (Aberdeen, N.)Neal, H. (Claycross)Sparks, J. A.
Hughes, Lt. H. D. (W'lhampton, W.)Nichol, Mrs. M. E. (Bradford, N.)Stamford, W.
Hynd, J. B. (Attercliffe)Nicholls, H. R. (Stratford)Stewart, Cap. M. (Fulham)
Janner, B.Noel-Baker, Capt. F. E. (Brentford)Summerskill, Dr. Editn
Jeger, Dr. S. W. (St. Pancras, S.E.)Noel-Buxton, LadySwingler, Capt. s.
Jones, D. T. (Hartlepools)O'Brien, T.Symonds, Maj. A L.
Jones, J. H. (Bolton)Oldfield, W. H.Taylor, H. B. (Mansfield)
Jones, Maj. P. Asterley (Hitchin)Orbach, M.Taylor, R. J. (Morpeth)
Keenan, W.Paling, Will T. (Dewsbury)Taylor, Dr. S. (Barnet)
Kenyon, C.Palmer, A. M. F.Thomas, I. O. (Wrekin)
Key, C. W.Parker, J.Thomas, John R. (Dover)
Kinghorn, Sqn.-Ldr. E.Parkin, Flt.-Lieut. B. T.Thomas, George (Cardiff)
Lang, G.Paton, Mrs. F. (Rushcliffe)Thomson, Rt. Hon. G. R. (E'b'gh, E.)
Lavers, S.Paton, J. (Norwich)Thorneycroft, H.
Lee, Miss J. (Cannock)Pearson, A.Tiffany, S.
Leslie, J. R.Peart, Capt. T. F.Tolley, L.
Levy, B. W.Perrins, W.Tomlinson, Rt. Hon. G.
Lewis, A. W. J. (Upton)Piratin, P.Turner-Samuels, M.
Lewis, J. (Bolton)Platts-Mills, J. F. F.Ungoed-Thomas, Maj. L.
Lewis, T (Southampton)Popplewell, E.Vernon, Maj. W. F.
Lindgren, G. S.Porter, G. (Leeds)Viant, S. P.
Lyne, A. W.Pritt, D. N.Walkden, E.
McAdam, W.Proctor, W. T.Walker, G. H.
McAllister, G.Pursey, Cmdr. H.Wallace, G. D. (Chislehurst)
McEntee, V. La T.Ranger, J.Wallace, H. W. (Walthamstow, E.)
Mack, J. D.Rankin, J.Watson, W. M.
McKay, J. (Wallsend)Rees-Williams, Lt.-Col. D. R.Webb, M. (Bradford, C.)
Maclean, N. (Govan)Reeves, J.Wetzman, D.
McLeavy, F.Reid, T. (Swindon)Wells, P. L. (Faversham)
Maopherson, T. (Romford)Rhodes, H.Wells, Maj. W. T. (Walsall)
Mainwaring, W. H.Ridealgh, Mrs. M.White, H. (Derbyshire, N.E.)
Mann, Mrs. J.Robens, A.Whiteley, Rt. Hon. W.
Manning, C. (Camberwell, N.)Roberts, G. O. (Caernarvonshire)Whittaker, J. E.
Manning, Mrs. L. (Epping)Robertson, J. J. (Berwick)Wigg, G. E. C.
Marquand, H. A.Rogers, G. H. R.Wilkes, Maj. L.
Mathers, G.Royle, C.Wilkins, W A.
Mayhew, Maj. C. P.Sargood, R.Willey, F. T. (Sunderland)
Medland, H. MScott-Elliot, W.Willey, O. G. (Cleveland)
Messer, F.Sharp, Lt.-Col. G. MWilliams, Rt. Hon. E. J. (Ogmore)
Middleton, Mrs. L.Shinwell, Rt. Hon. E.Williams, J. L. (Kelvingrove)
Mikardo, lanShurmer, P.Williamson, T.
Millington, Wing-Comdr. E. R.Silverman, J. (Erdington)Willis, E.
Mitchison, Maj. G. R.Silverman, S. S. (Nelson)Wyatt, Maj. W.
Monslow, W.Simmons, C. J.Yates, V. F.
Montague, F.Skeffington, A. M.Young, Sir R. (Newton)
Moody, A. S.Smith, Capt. C. (Colchester)Younger, Maj. Hon. K. G.
Morgan, Dr. H. B.Smith, Norman (Nottingham, S.)Zilliacus, K.
Morley, R.Smith, S. H. (Hull, S.W.)
Morris, Lt. Col. H. (Sheffield, C.)Smith, T. (Normanton)

TELLERS FOR THE NOES:

Morris, P. (Swansea, W.)Snow, Capt. J. W.Mr. J. Henderson and Mr.Collindridge.
Moyle, A.Solley, L. J.
Nally, W.Sorensen, R. W.

On a point of Order. Might I ask you, Major Milner, if you approve of the way in which the Government Tellers announce the figures? May we not have the announcement in the ordinary way, by saying "Two hundred and fifty" instead of "Two, five oh"?

6.15 p.m.

New Clause—(Cesser Of Charge Of Pur Chase Tax In Respect Of Motor Cars For Use By Registered Medical Practitioners And By Veterinary Surgeons)

In the third column of the Seventh Schedule to the Finance (No. 2) Act, 1940, immediately after the entry relating to ambulances, invalid carriages and perambulators, there shall be inserted the words.—

" motor cars for use by registered medical practitioners or by veterinary surgeons in their professional duties."— [ Major Tufton Beamish.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I hope that all sides of the Committee will agree that this is a simple, clear, straightforward and—I hope hon. Members will agree to this—desirable proposal. I would like briefly to explain the history of how I came to put this Clause on the Paper. It is a short history which filled me with gloom and I would like to pass on a little of that gloom to hon. Members on both sides of the Committee. I wrote some three months ago to the Minister of Health, asking him to support me in this matter. After some throe orfour weeks 1 had a reply to the effect that I could not have his support and that, indeed. I had been misinformed. This answer went on to say that doctors were not being unfairly treated in this matter. I submit that that statement bears no relation to the facts. I wrote then to the Minister of War Transport, to whom this baby had been passed, and, after a further considerable delay, I was told that there were many administrative difficulties in the way of bringing in such an amendment. The next thing I did was to put down a question to the Chancellor of the Exchequer. I asked him some time early in November whether he would arrange for medical practitioners to buy motor cars free of Purchase Tax for their professional duties. He replied:
"No, Sir. All motor cars sold in this country are subject to purchase tax regardless of user."
I asked him whether he could give the House any good reason why a doctor who required a car for use in his work should pay Purchase Tax, whereas a trader who required a van for the delivery of groceries did not have to pay this tax. The right hon. Gentleman, looking, I thought somewhat groggy, uncurled himself and said:
"A private car is clearly defined."
I would not argue with that statement, the right hon. Gentleman wenton:
"It would, administratively, be very difficult, and I would not advise the House to attempt it, to remit the tax on certain classes of user. Administratively it is very troublesome. "— [OFFICAL REPORT, 6th NOVEMBER,1945;Vol.415,C.1088]
I feel that these administrative difficulties are being very much exaggerated and I suggest to the right hon. Gentleman.that if he lacks the courage to face these difficulties he could re-read "Let us Face the Future," which provided him with such courage when he was bringing in the Measure to nationalise the Bank of England.

Next in this short history, I asked the same right hon. Gentleman:
"What administrative difficulties prevent the removal of the Purchase Tax on motor cars when used by qualified medical practitioners in their professional duties? "
He replied:
"This tax is charged at the wholesale stage when the ultimate purchaser is unknown."
What if it is? Surely it would not be insuperably difficult to remit the tax to those doctors if they had bought cars subject to Purchase Tax. The right hon. Gentleman went on:
"Nor could the use of a tax-free car be limited to professional duties."
I entirely agree. In fact, it is obvious that if doctors did buy these cars they would use them for pleasure.Doctors have little enough leisure, as I am sure hon. Members on both sides of the Committee will agree. Surely we could not grudge them, in all conscience, what little petrol is available to them if they did use their cars in their very small leisure hours.

Finally, the right hon. Gentleman, in his reply to me, said:
"If special exemption were given to doctors, others would claim it too, and no reasonable limit could be set to this concession. "— OFFICIAL REPORT, l0th November, 1945; Vol. 416, C. 228.]
Admittedly the right hon. Gentleman is on fairly good ground. It might fairly be argued that district nurses, midwives, or even Members of Parliament, should be allowed to buy cars free of Purchase Tax. In fact, I think they should. If that is desirable, the Government should bring that in too, but I am only concerned at the moment with doctors and vets. Admittedly we have to stop somewhere. We have stopped somewhere already, and I cannot see why we should not stop somewhere else. I cannot sec that that is a very valid argument, after all. I cannot see what would be the good of a grocer delivering a vanload of vegetables to, say, Mr. Snooks if when he arrived he found that Mr. Snooks had passed out in the night for lack of medical attention because the doctor who would have attended him felt unable to afford the very high Purchase Tax required for a new car. The same argument might be applied to vets.

I would like to make another rather important point. Doctors are being demobilised—I am afraid all too slowly from the Forces and they have a very great deal of work to do, much more work than they have ever had to do before. Let me give the Committee a.few figures. In the Army, 2.57 doctors are available for every L000 men. In the Air Force, there are 2.27 for every 1000 men. In civilian life there is only.74 of a doctor, whatever that may be, per L000. Put in more simple terms, it means that there is one doctor to approximately 1,30o or 1,40o in civilian life. That is proof, if proof were needed, that there is a great deal of ground to be covered and that a car is indispensable to a doctor.

How many people would be affected by the proposed new Clause? I would not hazard a guess, beyond saying that perhaps 200 or 300doctors might want to buy a new car, or 500, or even a thousand. The loss to the Treasury would be infinitesimal. We are not to be fobbed off here with any argument about balance or ceiling. Those might be sound arguments when applied to very big figures like those we have been talking of during the last few days. It might be argued that doctors who bought these cars might resell them at a considerable profit, as we know that there is a very big price for second-hand cars. That is not a valid argument at all, because I know that these cars can only be bought subject to very stringent conditions of resale. A further question might be, How are we to ensure that only practising doctors, "registered" as I have deliberately called them, would be allowed to buy these cars, if this taxrelief were afforded? It would be a perfectly simple thing to do, because we have county medical, comittees whose advice in these matters could always be taken. The same would apply to veterinary surgeons.

It will he no comfort to doctors or vets who wish to buy these cars to be told that relief may be afforded next April. They are coming out of the Forces now, and have been doing so for months past. If this is a desirable proposal I very much hope that the Chancellor will accept it. Administrative difficulties, if there are such—and there must be some—could surely be overcome. I hope, at any rate, that the Chancellor of the Exchequer will tell us exactly what those difficulties really are, and, if this is a proposal which hon. Members on both sides of the Committee agree is desirable, that it will be accepted.

In conclusion, I would like to say that me "mandate" argument that we have heard all too often when Measures have come before us in the past, is getting very threadbare now. I am not suggesting that it is going to be produced now, over a very small matter like this, but that is not an argument against the introduction of a little badly-needed commonsense into the whole question of the Purchase Tax. Is this new Clause desirable? I hopehon. Members will agree that it is definitely desirable. Secondly, can we afford it? I think nobody will deny that we can easily afford it and that the loss to the Exchequer would be infinitesimal. Is it timely? That question has been asked about many of these things. It is certainly timely, if we are agreed that it is desirable. I do not think anyone would disagree with that point.

:I hope the Committee will agree to give a Second Reading to the Clause standing in my name.

:I would ask the Committee to reject the Clause because, as drafted, it is completely unworkable. The suggestion here is that motor cars, if used by registered medical practitioners or veterinary surgeons in their professional duties, should not be subject to Purchase Tax. That means quite definitely that if a doctor wants to go anywhere otherwise than on a professional visit he must either have two cars, or walk. No one is going to tell me that it is likely to appeal to a doctor that he must keep two cars, one for his professional duties not subject to tax and the other upon which he has paid Purchase Tax and which he uses for pleasure visits.

The trouble with the Purchase Tax is the same trouble which the Conservative Chancellor of the Exchequer encountered who imposed this tax, and who refused claims of a similar kind in the years that followed. The same difficult exists today that existed then, namely that this tax is imposed at the wholesale stage, when it is quite impossible to know who is going to buy the car or who is going to use it. Therefore it would be entirely unworkable to adopt the suggestion made by the hon. and gallant Member although we quite realise that he wants to do a good turn to doctors, who deserve all the sympathy and help that we can give to them; but we cannot do it this way. I ask the Committee to reject the proposed new Clause.

Question put, and negatived.

New Clause—(Repayment Of Postwar Credits In Certain Cases)

The amount of tax credited to any taxpayer under the provisions of Section seven of the Finance Act, 1941, shall be repaid to that taxpayer on the thirty-first day of December, nineteen hundred and forty-five, provided always that he has attained the age of sixty years on or before that date—[ Lieut.Commander Clark Hutchison.]

Brought up, and read the First time.

On a point of Order. Before the Second Reading of this Clause is moved, Mr. Douglas, I would draw your attention to the fact that I have Amendments on the Order Paper in relation to it. I understand that you cannot call an Amendment to a proposed new Clause which has not yet been accepted. I therefore ask whether it would be in Order to discuss the points raised in the Amendments during the discussion on the Second Reading of the proposed new Clause.

:So long as the discussion is within the limits of the Clause, it will be in order to take the course which the hon. Member suggests.

:I beg to move, "That the Clause be read a Second time."

For some time I have been very much impressed with the difficulties which older people, living on fixed incomes, are encountering owing to the increase in the cost of living. This is especially true of those who are old age pensioners or who are in recept of superannuation or retirement pensions. We have been talking of sport this afternoon, upon an earlier Amendment. It seems that a very large number of people are attending sporting events and that a fair amount of money must be in circulation in the world of entertainment. I am convinced from what I have seen and heard, and I am in very close touch with associations of old people, that the money is in the hands of the younger and the middle-aged people and that the old people have very little money with which to purchase anything except essentials.

I feel that it is the duty of Parliament and of the Government to make provision for these old people. We ought to make a start by repaying to them at the earliest possible moment the, debt which is owed them by the State in the form of postwar credits. I put a Question to the Chancellor of the Exchequer on this matter on 11th October. I asked him if he would now authorise payment of these postwar credits to old age pensioners, and in reply the Chancellor referred me to the Budget statement which he was shortly going to make. The Chancellor of the Exchequer did refer to this matter in his Budget statement when he made a reference to the postwar credits and estimated that the total due to the taxpayer would be £800,00o,000. As far as repayment was concerned the Chancellor said this in his statement:
"The repayment of the credits already created, either in whole or in part, cannot as yet be safely undertaken, until the supply of goods is increased and the risk of inflation is correspondingly diminished or lifted. So much for the postwar credit."—[OFFICIAL REPORT, 23rd October, 1945; Vol. 414, C. 1892.]
Later on in the Debate on the Budget Resolutions the Financial Secretary referred also to the matter of repayments as follows:
"Even today there are countless people who believe they will never get the postwar credits anyway. Nevertheless, they are there, and the Government have indicated that they mean to pay them at the proper moment." £[OFFICIAL REPORT, 24th October, 1945; Vol. 414, c. 2097.]
The position which we have arrived at is that these credits are to be repaid at some unspecified date in the future. At the same time it -was evident during the Second Reading Debate on the Finance Bill that a good many Members were not satisfied with the somewhat vague position in which this matter was left and it was referred to forcibly in an admirable maiden speech by the hon. and gallant Member for Tonbridge (Lieut.-Commander Williams). I think the argument put forward by him and other Members must have made some little impression on the Chancellor of the Exchequer because in his speech on the Second Reading of the FinanceBill he indicated that he would consider the matter further next April. I and my hon. Friends on this side of the House feel that they must get something more definite and try to get this money repaid at the earliesepossible moment. It is for that reason that we put down this Clause, which is drawn in fairly wide terms, to cover everybody from the age of 6o and over. I have selected the age of 6o because it is at that age that a woman, insured in her own right, is entitled to draw the old age pension.

I would like to advance very briefly some cogent reasons why the repayment should be made to these old people. First there is the possibility that some of these old people will never live to receive the debt owed to them by the State. Secondly, there is, we understand, to be no increase in the basic rate of old age pensions this winter, and I think the least the Government could do therefore is to repay their debt to these old people. Thirdly, there is the question of the severe winter which is apparently coming upon us. I am no weather prophet but there are those experienced in weather matters who predict that the winter may be rather severe in the months after Christmas. This may bring with it a necessity for people to spend more money on fuel, if they can get it and also unfortunately a possible expenditure to meet illness, and it is the repayment of these credits which will go some little way to meet these possible and indeed probable contingencies.

Another reason I advance for the almost immediate repayment of these credits is that the repayment will have to be made on the instalment system. The Chancellor himself said that, speaking on an Amendment yesterday, and I would suggest that we ought to start with the oldest age groups for this repayment for the justice of that will I think be agreed to by everybody.

The Chancellor may raise objection to this repayment on the ground of the danger of inflation. I quite agree that this is a matter which must be treated with due respect, but I do not think that that argument would be entirely valid because as every Member of this Committee knows at the present moment negotiations are going on for an increase of wage rates in various industries, the effect of which will be to give extra purchasing power to certain sections of the community. If this is so, why should extra purchasing power be denied to the old people who are in such need at the present time? There is one other possible objection. The Chancellor may say that this repayment will involve complicated and large financial operations. Surely that is not a very impressive argument. Surely the repayment of the postwar credits to a limited section of the population would be a mere pin prick, or, if it is a permitted Parliamentary expression, a mere flea bite compared to the tremendous and intricate operations which my right hon. Friend contemplates in carrying through the Government's nationalisation proposals. I am sure this Committee will not be impressed by any argument that it will be difficult to arrange the necessary financial operations. I do not want to keep the Committee any further. I think I have made out a case for this matter to be tackled and I ask the Government to accept this Clause.

I am afraid I cannot congratulate the hon. and gallant Member who has just spoken on any improvement in the technique of Opposition. He could of course—

All I have asked for is for the repayment of postwar credits to old people.

It has been done by legitimate Parliamentary method but I repeat I cannot congratulate him on any improvement in the Opposition technique. [HON. MEMBERS: "Nobody asked you."] I cannot do it whether they ask me or not. There was a way in which they could have embarrassed the Government and myself and my friends. They could have put down an Amendment which would have had some connection with or some relevance to the speech which the hon. and gallant Member has just made. In fact the speech he has made has no bearing whatever on the new Clause that he moved. Therefore I, for one, cannot support it. There are a great many people over 60in this country who are not in need at all, and this class would under this new Clause get a priority in the repayment of their postwar credits which there would be no reason to grant them. There is no limitation in the Clause which has been moved, no qualification, no attempt to include in the proposed legislation anything limiting it to the kind of case to which he limited his arguments. There are no old age pensioners of the age of 60. There may be some people in the enjoyment of superannuation benefit, and really hon. Members can hardly be unaware that it would be utterly impossible for my right hon. Friend to have accepted this Clause in itspresent form. I cannot suppose that the hon. and gallant Member was not aware of the meaning of this Clause and therefore what has he done? He has put down a Clause which he knew the Government could not accept, in order to make a speech of this kind which would secure him some credit in the country.

:: On a point of Order, Mr. Temporary Chairman, may I draw your attention to the fact that the hon. Member is imputing a motive to me which is untrue?

I would suggest to the hon. Member that he should keep strictly to the merits of the Clause under discussion.

I was not aware that it was unparliamentry to impute a motive. I am sure the hon. and gallant Member would not have complained if I had imputed a worthy motive, but in fact I was not imputing any motive at all. I was explaining the difference between the claim he made in his speech, and the claim which is covered by his Clause. That I am entitled to do and of that he cannot complain, It is true that I asserted a motive, and I will withdraw if he assures me that my assertion is incorrect which was that he knew what the Clause meant. Of course, if he did not know what it meant, then there is no ground for any charge against me. But if he did know, and I 'assume he did, that this Clause went far beyond the case he made out, then I assert that he must have known that he was moving a Clause which my right hon. Friend could not accept, and was doing so in order to make an emotional appeal which he knew would cost nobody nothing.

The Clause simply wants the repayment of these postwar credits.

I think there is a very, very strong case in favour not of the hon. Gentleman's Clause, but in favour of the argument in his speech, in other words in favour of the Clause as it would have been if it had been redrafted with the Amendment which was put on the Order Paper by other hon. Members and myself. I do suggest to my right hon. Friend that, although he cannot accept this Clause because of the way in which it is drafted, he ought between now and the Report stage to consider whether he cannot make a concession of this kind to one limited class of persons who are in need and whose need can be justifiably distinguished from the rest of the community, and from other people in the same age groups.

Does the hon. Member suggest that the means test should be applied strictly in these cases?

I have been in the Mouse with the hon. and- gallant Member long enough to know that when he makes the effort he is perfectly capable of following a connected argument and if he will kindly wait for me to finish mine, he will know exactly what I mean. I should think that I was entitled to his support on this and not to unintelligent interruptions. I feel that if there is a Division on this Clause the hon. and gallant Gentleman will vote for it. I am putting the case for at any rate some of the people who would be covered by the Clause if it were properly drafted and I hope to have his support in the Debate. I am putting a limited case, that of old age pensioners, people already in receipt of or entitled to old age pensions, not to receive something new from the Government, not to any increase of their pensions, not to any payment to them out of public funds, but of a repayment to them of their own loans to the State while they can still enjoy it. During the war, a very great number of old age pensioners, in response to the call of the State, came out of their well-earned retirement and engaged in very heavy labour all over the country, sometimes in dangerous as well as difficult circumstances. It is true they were paid wages for so doing, but they paid Income Tax upon those wages, and in a great many cases there was the result that they were paying, because they had come back to aid the community in its hour of need, Income Tax not merely upon the wages they earned, but upon their pensions as well. They did not complain of that, and I am not complaining of it on their behalf, but the State did promise that after the war part of what they paid would be treated as a compulsory loan to the State and would be repaid to them. It has been said time after time in the Debates in this Committee that we all accept that as an obligation of honour as well as an obligation of law.

6.45 p.m.

How long are these people to wait? Everyone else can afford to wait. In the case of nearly all other people, if they wait a little while longer, ultimately they will get their money back, but there is one thing which distinguishes this class from all other classes, and that is their age. As an old lady wrote to me recently, "When you are 75 you cannot hope for anything beyond the present." Surely, that is something which does entitle these people to a special, exceptional consideration in this matter from a Labour Government. They cannot wait; they may never get it if they do. It is true that the money will be repaid some day. To whom will it be repaid? To their relatives, to their executors, to their personal representatives, to their estates? That may be all very well for people whose means are high; it does not much matter to them whether the money is paid back to them now or not if their income is high. If a person has nothing but the old age pension and his claim on the State for the return of money be lent to it, he is entitled to say; "Give it back to me now to relieve my present anxieties and necessities; do not make me wait, because I have not long to wait."

The general argument that has been used against repaying these credits now is an argument which we all understand and which is, I think, generally accepted—the argument against increasing purchasing power faster than goods become available. We must avoid an inflationary tendency. In the case of people whose means are not sufficient to give them a fair share of such goods as are being produced, it is not an argument that can be used fairly against them. I do not know what may be the amount involved. I cannot believe it can be very much, but I think no one would say that the sum involved in this special, limited class, as against the unlimited, unqualified class covered by the new Clause, can be such as to make any appreciable difference to the balance of money in circulation and goods in production. I think this is something which the right hon. Gentleman ought to consider sympathetically. I shall not vote for this new Clause. I do not see how anyone can vote for it.

If there were an opportunity I would move it and vote for it without hesitation, and invite my hon. Friends to support me, but as I understand the situation, an hon. Member cannot move an Amendment to a new Clause until the Committee has given the new Clause a Second Reading.

The hon. Member might have the chance if he voted for the new Clause.

I have been in the House too long to fall for that. The right hon. Gentleman and many of those supporting him would be very ready to welcome my assistance in passing this wider Clause, but where would they be when I wanted to amend it afterwards? I have no guarantee. I am taking no chances. I say, therefore, that I cannot vote for this new Clause, but I would have voted for it if the hon. Member had done that which he could have done-last night. He could have accepted this Amendment, he could have withdrawn the new Clause as he had it on the Order Paper, and he could have put it down in an amended form incorporating my Amendment. I would have voted for it then, but I cannot vote for the new Clause as it is.

:Will the hon. Member tell us how he thinks he can get what he wants and what the Committee wants—if the Chancellor refuses his request—if he does not support this new Clause?

I cannot support the new Clause now, whatever my right hon. Friend does.

Was it net possible for the hon. Member last night to put on the Order Paper a new Clause in the form in which he wanted it to be passed?

:Probably it was, and it is still possible for me to do so on the Report stage. The only reason I did not put down another new Clause dealing with the same point as is covered by the new Clause is that I doubted whether such a thing would be called. Besides,I was somewhat curious to see what. would be the attitude of hon. and right hon. Gentlemen opposite to the Amendment which I put down to this new Clause.

An experienced Member like the hon. Member would surely know how to put this on the Order Paper. There is no reason why lie should not do it on the Report stage. The hon. Member is getting worse and worse as he goes on.

:All I can say in my own defence is that I did get a leading article in the "Evening News" commending me for opposition to the Government, which is more than any hon. Members opposite did. Will not my right hon. Friend consider again the case of the limited, small number of people who have a special claim to consideration? I hope he will.

:I am sure the Committee wish to make progress. It is nearly seven o'clock, and we have not got very far with the new Clauses. It looks as though, unless we get on a little faster, we shall be here most of the night. The matter with which I have to deal is the new Clause which was moved by the hon. and gallant Member for West Edinburgh (Lieut.-Commander Clark Hutchison), and not the Amendment on the Paper in the name of my hon. Friend the Member for Nelson and Colne (Mr. Silverman). What the hon. and gallant Member for West Edinburgh wants is quite plainly set forth in the new Clause. It is that everybody who is entitled to a post-war credit, if he happens to be 60 years of age or over, should get it at the end of this year.

We are, very properly, sympathetic towards people who are old and who have postwar credits due to them. Unfortunately, it is quite impossible to accept this new Clause, for three reasons. The first is that the date proposed is the end of this year, and mechanically and physically it would be impossible to pay these postwar credits to any section of the community within that time. As my right hon. Friend the Chancellor indicated yesterday, these postwar credits will probably be paid in instalments. They will have to be spread, and not only will they have to be spread but some preparation will have to take place even for paying them when they are spread gradually over the number of people to whom postwar credits are due. It would be physically impossible to do that by the end of this year.

Secondly, one hon. Member said that the amount would not be great. It is difficult to estimate accurately how many people over 60have postwar credits due to them, but the estimate is that there are roughly about 1,500,000 taxpayers to whom postwar credits are due who are 60 years old and over, and as at the end of this financial year the round total of postwar credits will amount to about £800,000,000, it is estimated that £80,000 000 would be due to the class dealt with by the new Clause. That, quite frankly, is a large sum to find, and the Chancellor cannot possibly find it or pay by the end of December.

I am sorry I have not the figures. It would be an appreciable sum, although, of course, it would not be anything like £80,000,000. The point is that, if we put the age at 60 or 65, although it is true that some of the people included would be deserving people who want the money, it would also include a very large number of rich people who do not want it at this juncture. We have every sympathy with the aged and deserving people, and next April my right hon. Friend will look at the matter again. It may well be that when the amounts come to be paid out, my right hon. Friend will give consideration to that point. I do not know, and I cannot make any promises. Nevertheless, what is certain is that although there may be some hardship among aged people in the lower ranges of income, hardship unfortunately does not stop there, and if we were to pay out postwar credits to people who are going to die, all of us would have a claim, because none of us knows from day to day how much longer we have to live.

Within the last week a Member of the House, whom we saw in his place on Friday, was not there on Monday. Death had taken him. I realise that is not a strong argument, but for what it is worth it is there. It is the same with hardship of another kind. There is hardship caused not only by age, but by ill-health. Ill-health is suffered by young people as well as by old people, and there is need for money among people of 20, 25 and 30 years of age as much as among people who are 60, 65 and 70.

When the repayment of these sums begins, will the Chancellor undertake that the old age pensioners will get priority?

7.0 p.m.

I said that I could not give any undertaking. As my hon. Friend knows, the Chancellor never gives a hard-and-fast promise of what he is going to do in any Budget that he may be called upon to open, and I think the Committee must leave it in this way: That my right hon. Friend is sympathetic to the feeling there is in every quarter of the Committee that these postwar credits which may be due to the old and infirm might be paid among the earlier categories when we get to paying postwar credits. But he has said, and I must remind the Committee of it, that he cannot see, within the financial situation facing him, any chance of his paying any part of the postwar credits to any section of the community during the next financial year. Subject to that, I can make this promise. The Chancellor has listened to the Debate, he realises the feeling on this matter in the Committee, and he will look at it again next April. I hope that the Mover of the Clause will be willing to drop it now on the assumption that my right hon. Friend will look at the whole question next April.

I do not feel that the Committee will be in any way satisfied with the reply which we have just had. I was interested in and tried to follow with great care the arguments of the hon. Member for Nelson and Colne (Mr. S. Silverman), but I think that if the Clause had been put down to incorporate the second Amendment in his name, the Chancellor would have been perfectly entitled to say, "This is not workable and I cannot do it." Let us look at the Clause in the name of the hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison) in which two simple requirements are necessary in order to secure repayment. The first is, obviously, that there is money to be repaid and the second is that a certain age—which the hon. Member suggests should be 60—has been attained. All that would be capable of determination inside the one department concerned, the Inland Revenue Department of the Treasury; but the moment the bon. Member for Nelson and Colne had provided that the applicant must prove that

"he is in receipt of or entitled to an old-age pension,"
and so on, he imports into the question the new Ministry of National Insurance.

Surely not. All you have to do in order to prove that you are in receipt of an old-age pension is to produce your book. The officials of the Inland Revenue Department will be able look at it.

I doubt very much whether in practice it would be possible to accept the production of a book as evidence in these cases.

:Surely that is a false point. Even as the Clause stands the man would have to prove his age and prove that something was owing to him, and he would prove both those points by the production of the appropriate documents, his postwar credit and his birth certificate; and it would be no more difficult for him to prove by the production of his old age pension book that he is in receipt of an old age pension.

The hon. Member has overlooked these words:

"In receipt of or entitled to an old age pension."
The applicant may be entitled to it but not in possession of the necessary documents. It seems to me that what is desired here is that we should make a start in the payment of these postwar credits. After all, these old people are entitled to something from this Government. They were promised enough by it. The Financial Secretary said they had the sympathy of the Government. The old people want, in their declining years, more than the sympathy of any Government, even if it is a Socialist Government. What is the message of the Socialist Government to these old people who want a little bit of money to buy extra comforts for themselves in their old age, want to spend a certain amount of their own money—and it is their own money—perhaps to pay a visit to their children or their grandchildren? The message of the Socialist Government is, "Stop at home and enjoy our sympathy."

May I ask the hon. Member what his party did about old age pensions when they were in office?

If the hon. Member had been here longer he would have realised that my party was very small in numbers.

On a point of Order. I wish to beg the hon. Member's pardon. I thought he was a Member of the party sitting opposite.

:I feel that we might have expected a much more sympathetic response from the Chancellor. If tie had said, "I will undertake to start repaying these postwar credits to people over 65 and on demand" I think the Committee would have been satisfied, and I hope that between now and Report stage he will carefully consider whether it is not possible to do that. I put specially the age of 65 because it excludes at once a substantial number of age-groups, and therefore limits the administrative difficulties on the one hand and on the other limits the amount of money which the Chancellor would have to find.

I include the words "on demand" for this reason. There are a lot of people, the rich—if there are any rich left nowadays—at any rate the wealthy, the middle class, the comfortably off, those not in desperate need, who would not be particularly desirous of repayment, who would not be prepared to spend the money if they were to get it from the Chancellor but would only transfer it to their bank account or to the Savings Bank. But there are also the poor, including old age pensioners, who have turned out to work again after they had retired. It would be right and proper that they should be able on demand to receive this money. Then the question is whether we should include others who are "in receipt of or entitled to an old age pension". We cannot do that for two reasons. The first is that this would be a means test, and that would be repugnant, particularly to hon. Members opposite. My argument that we must confine it to people of a certain age rests on exactly the same grounds as the argument the Chancellor used in relation to the doctor's motor car, that when dealing with large groups it is not possible to split them up into various sections. The number of people would be very small if we took the age of 65, and the number who would demand repayment, knowing the needs of the country at the present time would be still smaller, and I believe that if the Chancellor had the will he would find a way to do this thing.

I am very glad to, have the opportunity of saying a few words on this subject. I associated myself with my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) in the Amendment, and although there have been differences in the Committee about details nevertheless we have had a discussion which has interested the whole Committee. In almost the first fortnight of this new Parliament I put a Question on that subject to the Chancellor of the Exchequer, because I had come across a large number of people who had retired and had old age pensions who, when the war came, went back to the factories and did a magnificent job of work in those factories. When the war was over they were the first to retire again. They had paid Income Tax and had received Income Tax postwar credits, and they put it to me that it would be fair that they should have back the odd amounts of money that they had paid, and that were theirs, as soon as possible, because, after all, their expectation of life was a good deal less than that of the Financial Secretary to the Treasury. The expectation of life at 65 is a good deal less than at 55 or 45. They have a very strong case. The Chancellor, in a written answer, said he could not consider it at the present time. The Financial Secretary gave three reasons why the Chancellor could not grant these concessions. He was really replying precisely on the new Clause and he mentioned the figure of £80,000,000. My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) and I realise that the width of that Clause is quite fantastic and would include every taxpayer now reaching the age of 60, and the figure of £80,000,000 included the large Income Tax and Surtax payers and so on.

I would like to know from the Chancellor what particular age would be involved, if the Amendments on the Paper were embodied in the Clause and carried. Obviously, 65 is the figure mentioned, and a person must also be in receipt of the old age pension. The total amount of postwar credits on all Income and Surtax payers is £80,000,000, and the figure that we are asking for repayment might be. £1,000,000 or £2,000,000. The Committee would be grateful if the right hon. Gentleman would give the answer. Curiously enough, I received a letter from one of my constituents who had seen that this matter was to be raised, and he said that, being 66 and an old age pensioner, he was badly in need of his postwar credit, which amounted to £40. He is a man who worked all through the war and he has a £40 postwar credit. He is 66, and I cannot see why he should not be able to receive payment, even by the 31st December. The Government are capable of doing things quickly if they want to, and, as my hon. Friend pointed out, the Financial Secretary seemed to think that there would be the tremendous difficulty of proving entitlement to postwar credits. There was the piece of paper which he mentioned to the hon. Gentleman the Member for Bath (Mr. Pitman)—the encouragement they get when they receive the postwar credit from the Department. Surely, that could be produced to the appropriate authority. What is the objection—I wonder Whether it is an important one—when it comes to the limited class of people for whom we are appealing? In the Debate on the Second Reading of the Finance Bill the Chancellor said:
"What I was trying to indicate was that these postwar credits will give rights to those enjoyments—by those entitled to receive them—when negotiable, and if that is not so, why am I asked by hon. Members on this side of the House to hand them out now to people over 70 years of age? I am afraid I cannot accede to that, but we will think about it again next April. The reason why I cannot accede to that at the moment is because the releasing of the postwar credits now would be inflationary."—OFFICIAl. REPORT, 19th November,1945; Vol..416, c. 140.]

7.15 p.m.

This argument can be pushed a good deal too far. The suggestion is, that if a man gets another £40 in his pocket, or if a million people get another £40 in their pockets, there will be an inflationary situation. There are a large number of people who have never cut down their expenditure during the war. They may have contributed to war loans and so on, but I am certain that there arc a large number of hem. Gentlemen in this House, many, no doubt sitting on the Government Front Bench, who, if they wanted a book or to spend another £50tomorrow would do so without the slightest hesitation. I imagine that the hon. Member for Devonport (Mr. M. Foot) might write two articles in the paper next week for which he might get £20 each. [HON. MEMBERS: "Oh."1 If they were descriptive of the House of Commons I am sure he would get a good deal more. It would give the hon. Member another £40 in his pocket. Is the Chancellor really suggesting that, if the hon. Member for Devon-port earns another £40, or the learned Solicitor-General 500 guineas in the course of tomorrow, and his brother lawyer 500 guineas at Nuremburg the day after to- morrow, the fact of these hon. Gentlemen having more cash in their pockets would really lead to a serious inflationary situation? Inflation is not only a question of money. I remember the right hon. Gentleman the Chancellor teaching me this theory about 25 years ago. I suggest that what he said was that the position about inflation is not very simple. You not only have at any given moment a certain quantity of goods, but a certain amount of money and credit, and if you vary the quantity of either, you can get an inflationary or deflationary situation. What is important—I am sure the right hon. Gentleman will agree—is the speed of the circulation.

Here is a suggestion that, if these old age pensioners get £40 postwar credit—it may be a good deal less in individual cases—it is going to create an inflationary situation. The right hon. Gentleman, as did his predecessor, is preventing an inflationary situation arising in this country by providing for the coupon, rationing and points system, a method which I am sure, when he was at the Board of Trade, he found invaluable in preventing this country from going a good deal further towards an inflationary situation. If I wanted to buy secondhand furniture, or the very expensive curtain material on which I asked the President of the Board of Trade a question, there would be no difficulty, I could do it. It might send the price of secondhand furniture up, and it may be that the price of furniture is sufficiently high that only a few people can buy it. But there is plenty of spending ability in the pockets and banking accounts of a great number of people in the country at the present time. They do not spend the money in wasteful expenditure but, nevertheless, it is there. It seems to be very much better that some of this money might be spent by these old people due to receive £10 or £15,or, as in the case I have quoted, £40, which they have had taken from them, not wrongfully, but as a tax. It was taken off this man while he working during the blitz in Coventry and now, when he is nearly 70 and goes back to his lower standard of life, there is a case for paying him his postwar credit.

Although we cannot accept the new Clause which has been submitted by the hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison) I hope that even now, before the Report stage, the Chancellor, who, fortunately, has been in the Chamber for the whole of this Debate and realises the unanimous feeling in favour of this, will be good enough to tell us, tonight, if he can, in how much it would really involve the Exchequer. I hope that he will not emphasise the dangers of an inflationary situation arising from such a concession. I feel that I am speaking for the whole Committee when I beg the Chancellor of the Exchequer to make some statement on the Report stage of the Finance Bill and to say that if he did that it would fall in with the general wish of the House.

I want to make a very brief intervention on this matter for two reasons: first, to fill the aching void left by the non-intervention of the hon. Gentleman the Member for Thornbury (Mr. Alpass) who was weighed down in his seat by the Chief Whip—I am always sorry to see that happen to an hon. Member—and to try to put the point of view which the hon. Gentleman would have put had he been called, and, secondly, to respond to the invitation of the hon. Gentleman the Member for Nelson and Colne (Mr. Silverman) who asked for my support in the Debate. I am not certain whether to support him in resisting the Clause, or in the arguments which he adduced—

I would like the hon. and gallant Gentleman to support me in the appeal that we have made on this side of the Committee, not for the wide class covered by the Clause, but for the narrow class covered by the Clause as we would like to amend it.

I am going to support the general principle contained in this new Clause, and I will give the Committee my reasons for so doing. I feel that the Chancellor of the Exchequer must have been almost irresistibly convinced by the expurgated edition of a London School of Economics lecture delivered by the hon. Gentleman the Member for Nuneaton (Mr. Bowles) on the subject of inflation. I followed his argument and thought it was a good one. It appeals to me more than that of the hon. Gentleman the Member for Nelson and Colne who sought to introduce the means test principle and some form of class distinction into his argument.

This is an income point. How can you have Income Tax without a means test?

That is an argument which I have tried to put forward on many occasions, only to be greeted with jeers and catcalls. However, it is not a large point. We are moving now into an era when an all-in contributory scheme is going to remove that element from the field of old age pensions. They are to be payable at a certain age to all who contributed, from Lord Nuffield down to the latest victim of the Socialist Government who has joined the ranks of the unemployed. I would rest myself very largely on something which the hon. Gentleman the Member for Nelson and Colne said just now. He said that for the aged there is no future, or words to that effect. Surely, that is the whole gravamen of the issue behind this Clause. Old -age descends upon the just and the unjust, upon the rich and upon the poor, and it is for that reason that we feel these postwar credits should be released on grounds of age rather than upon those of income. When all is said and done, the right hon. Gentleman can offer many inducements for the use of postwar credits when released. Many Government stocks will be available, and perhaps some public corporation investments dealing with industries. There are many methods of doing it.

I am just as anxious as anybody else that we should not sit here all night, but I think this must be said. The hon. Member for Nelson and Colne was good enough to refer to the fact that he and I had been in this House for some time together, and to say I knew something about Parliamentary procedure. May I return the compliment and say to him that he knows very well how to get a concession on the Report stage when it comes. The method is to get a good fat Lobby on your proposal at this stage; the better the Lobby now, the more likelihood of some form of concession on the Report stage.

I thought we were debating a principle. The hon. Gentleman says my right hon. and gallant Friend's Clause is a bad one. I do not think his Amendment is all it might be, but both embrace a certain principle.

I hope the hon. and gallant Gentleman will forgive me for interrupting him again, but there is a great difference between the principle of the Clause unamended, and the principle of the Clause amended. The principle of the Clause unamended would give a chance to everybody in the community to get relief which they do not need, whereas the principle of the amended Clause, if it were amended, would be to give relief to people in dire need. Surely there is all the difference in the world between the two principles.

It is to the means test that we object on this side of the House. However, my hon. Friends and myself propose to take this matter to the Division Lobby, and we hope we shall have the support of all hon. Members who think with us on the general principle. The hon. Gentleman referred to the hon. Gentleman the Member for Devonport (Mr. M. Foot) as an illustration of how income can be earned by the pen. Many are the effusions which have come from the pen of the hon. Gentleman the Member for Devon-port. In a few minutes he will be able to get to work again with his pen; the second edition of "Your M.P." will have to appear. Here is a situation almost exactly similar to that for which we were pilloried in 1939, and it is only right that the hon. Gentleman the Member for Devonport and his friends should be hoist with their own petard.

Perhaps I may ask, since we are told that there is going to be a Division, that we may have it now after I have made a few brief observations. It is now 7.25 p.m. and I thought it was agreed—I am not making any suggestion that the bargain will not be kept—that we might have a moderately late Sitting last night and clear up this matter tonight. There are other Orders on the Paper, and we have made very slight progress. A number of speeches have been made which have not been very short, and unless we can shorten our proceedings this also is going to be a very late Sitting, because we are going to get the Finance Bill finished tonight. We have not been asked to postpone it, and unless we can quicken matters, it is bound to be a very late Sitting.

I understand that a good deal of the time has been occupied by the right hon. Gentleman's own supporters.

That may be so, but they are just as entitled to take part in the proceedings as other people.

No, I will not give way any more to the hon. Gentleman, and that is the general wish of the Committee, I think. We are going to have a Division and, therefore, I will give the reasons why the Government will not accept this Clause, and I will make certain further observations of a general character very briefly. This Clause has been very properly criticised by my right hon. Friend as an indiscriminate proposal regarding all persons over 60, whatever their need, who have a postwar credit. This is going to put into the first line of priority, among others, the millionaire over 60. It is therefore quite indefensible on the grounds of need, and we shall have no difficulty in explaining why it was that we rejected a Conservative proposal to give repayment of the postwar credit to the millionaire over 60, in preference to the needy and poor, who, however great their need, because they were under 60, would get nothing. I ask, therefore, for a solid vote against this new Clause.

7.30 p.m.

On the other hand, I have already said, and I repeat, that I am deeply concerned about the whole question of how these postwar credits can be repaid at the earliest possible moment in a way that will not do severe economic damage but according to some ordered plan; on the assumption, which we must make, that a total of £800,000,000 cannot be laid out in one operation, but must be spaced out. How are we to space it out? I undertake to the Committee that I will give the most careful thought to the best way of spacing it out in the interests of those who are entitled to it, and I will do that between now and next April. But I venture to suggest to the Committee now that we cannot get justice, or distribution according to need, which is what we believed in, merely by taking an automatic age criterion. It is, of course, true that the older people grow, the less their future expectation of life becomes. That is obvious but it is only one of many factors, and, if I were to insist on a strict age criterion in this matter, I should be excluding a number of people whose needs are very great by reason of physical health, family circumstances, and so on.

It would be very difficult to justify that, and not all the old age pensioners whom we seek to assist here are entitled to postwar credit, and those who are entitled to it are, relatively, within the class of old age pensioners, better off. Many a pensioner has no postwar credit because he was below the Income Tax level, and those whose need is greatest are outside the discussion altogether. They have no postwar credit to repay, and we must help them by other and more comprehensive means. If people within this class are sick, their need may be greater, even though they are only 30 or 40 years old, than the needs of people much older.

I ask the Committee not to press for the basing, of this relief simply on a crude criterion of age. Age enters into it, of course. I will undertake to look at the matter again to see how far we can arrive at a satisfactory and just arrangement. A great many old age pensioners will come high in the list, but not all of them, and there are others who must come as high as any old age pensioner. This cannot be dealt with in a day, and I should be deceiving the Committee if I promised to get a particular scheme ready by the Report stage. It cannot be done. In any case, the inflationary effect will, of course, depend upon the volume released—how much and how far. If we release very little, the inflationary effect would be negligible, but very little would do little good, and if we are to do good in a substantial way, we must release a great deal. I will go into the matter again with every sympathy towards those whose needs are greatest, and who include not only old age pensioners but others as well.

The Chancellor has certainly brought the Debate nearer to the general merits of the case, and I am sorry that the hon. Member for Nelson and Colne (Mr. S. Silverman) thought it right to attack my hon. and gallant Friend so vigorously for, among other things, not having thought of incorporating his Amendment with the Clause before the Committee. But my hon. and gallant Friend could not have done so, because the Amendment appeared on the Order Paper only today.

The fact may have been there, but the hon. Member talked of incorporating the Amendment, and there is a broad difference between the two. The hon. Gentleman's proposals, which are not to be moved, but to which the Chancellor addressed himself, were concerned with the person in need. The other proposals would deal with people in need on the basis, rather, of an age group, rather than tying it clown, as this Amendment does, to people who come within the ambit of a particular Act of Parliament. By and large, it covered very much the same field. This did include one particular group of persons widows. The widows pension class is the 60group, and I think that was another case which my hon. and gallant Friend had in mind. I think the Chancellor went no further than to say that he would look at it again. Well, the right hon. Gentleman is going to have an awful lot to look at between now and April next, as he has promised to do that with almost every proposal, and I wish him joy in his post-Christmas cogitations. I understand the Financial Secretary to say that he could hold out no hope that anything would be done in the next financial year. Is that right, or was the Financial Secretary saying something which he should not have said? I do not want to get the hon. Gentleman into trouble, but I think the Committee are entitled to know whether we are talking about what is possible between April, 1946, and April, 1947, or whether—

:The Financial Secretary was accurately quoting what I said. I have not got the exact words here now, but I can give it in my own words and I hope that it will prevent misunderstanding. The Financial Secretary was quoting from what I said in one of these very numerous discussions. He was quoting me as having said that I could hold out no assurance that, in the next financial year, we could begin this repayment, this being a matter which must be reviewed in regard to the inflationary danger and other considerations. I have listened to the Debate and heard many arguments adduced, some strong, some weak. I am prepared to look at the whole thing before we come to April next, and, although I think that- the inflationary danger is such that no large disburse merit will be safe in the next financial year, I do not finally say that I will not do it. I will, I repeat, go into it and see what I can do, and, although I think on balance of considerations the chances are against its being possible, I do not bar it out, and the House will have another opportunity of judging it next April.

That is quite clear. There is no assurance about next year and we forget about any hope. The other thing I wanted to ask the Chancellor was this. The reason why a date was put in was the obvious one that, if these things are to be put off for a long time, the older people have less chance of having this enjoyment, to which the right hon. Gentleman referred in one of his other speeches, than younger people. It was for that reason, I think, that most of us On this side would have said that the older people should be put at the top of the queue, rather than the Younger.

That is really the idea at the back of this proposal, but what the Committee should take note of is this extension. Following up the Amendment to the Clause, which was not moved, but which was intended to limit the class of those who come within certain Acts of Parliament and therefore may be more needy than those who do not, the Chancellor has given me the impression that in his cogitations after Christmas he will look to see how he is best able to release this purchasing power when the time comes—about which there is no assurance—largely on the grounds of need. That is an entirely new conception of the postwar credits. It may or may not be right: I am not saying either; I am merely noting the fact, for the Committee's attention, that it is entirely new because, when this was planned originally—and I do know about that period of its short life—

:No, I did not; the late Sir Kingsley Wood did it. The Chancellor would not say the Financial Secretary was responsible for his Budget. Sir Kingsley Wood did it, but I know some of the considerations which were in mind, and if the Chancellor looks back at the speeches made not only by Sir Kingsley Wood but by other Members of the then Government—the Prime Minister of the day and other leading Ministers, because we were all in it together—he will see that the idea then was that these compulsory savings were being put aside so that there would be some lump sum out of which perhaps people could furnish the new home, and so on. It was never put upon the basis of those who were hard up and really needed it badly 'because they were ill, or something like that. It was never envisaged to deal with that sort of thing, and I hope that the right hon. Gentleman will not go too far in wanting to make it on some form of eleemosynary basis, rather than on the right of every person who has had this saving taken from him, to receive it back in due course. I hope lie will not go too far in looking round to see who is the most hard up, because probably there are other ways in which those cases can be dealt with better.

For all that, my hon. Friends have raised this issue, and I am sure the Committee must be very grateful to them for doing so. I would remind the Committee at large, if there is still anybody who shares the view of the hon. Member for Nelson and Colne (Mr. S. Silverman), that it was not terribly shortsighted to mention the age of 60 in this. It was done for the reasons which the hon. Gentleman who moved it put forward, but there was an alternative proposal at an earlier stage and the Chair decided this was the Clause on which to debate it. The alternative had the age of 65, but that is neither here nor there. It is as well that priority should be given to the old. The right hon. Gentleman may or may not do that. We do not know, because he has been very careful—he is not Chancellor of the Exchequer for nothing—not to pin himself down at this stage. We are prepared to say that we think it is right that the priority should come to the aged ahead of the others, and if the right hon. Gentleman wants to test the opinion of the Committee, we are quite prepared to do it.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 117; Noes, 265.

Division No. 36.]

AYES.

[7.45 p.m.

Agnew, Cmdr. P. G.Gomme-Duncan, Col. A. G.Nutting, Anthony
Amory, Lt.-Col. D. H.Gridley, Sir A.Osborne, C.
Baldwin, A. E.Grimston, R. V.Peake, Rt. Hon. O.
Beamish, Maj. T. V. H.Hare, Lt.-Col. Hon. J. H. (Woodbridge)Peto, Brig. C. H. M.
Bennett, Sir P.Harris, H. WilsonPitman, I. J.
Birch, Lt.-Col. NigelHarvey, Air-Commodore A. V.Ponsonby, Col. C. E.
Boles, Lt.-Col. D. C. (Wells)Haughton, Maj. S. G.Poole, Col. O. B. S. (Oswestry)
Boothby, R.Headlam, Lt.-Col. Rt. Hon. Sir C.Price-White, Lt.-Col. D.
Bowen, R.Hollis, Sqn.-Ldr. M. C.Raikes, H. V.
Bower, N.Holmes, Sir J. StanleyRobinson, Wing-Comdr. Roland
Boyd-Carpenter, Maj. J. A.Howard, Hon. A.Ropner, Col. L.
Braithwaite, Lt. Comdr. J. G.Hutchison, Lt.-Cdr. Clark (Edin'gh, W.)Ross, Sir R.
Bromley-Davenport, Lt.-Col. W.Jeffreys, General Sir G.Scott, Lord W.
Buchan-Hepburn, P. G. T.Keeling, E. H.Smiles, Lt.-Col. Sir W.
Butcher, H. W.Kerr, Sir J. GrahamSmith, E. P. (Ashford)
Carson, E.Legge-Bourke, Maj. E. A. H.Snadden, W. M.
Channon, H.Lindsay, Lt.-Col. M. (Solihull)Spearman, A. C. M.
Clarke, Col. R. S.Linstead, H. N.Stanley, Col. Rt. Hon. O.
Cooper-Key, Maj. E. M.Lloyd, Maj. Guy (Renfrew, E.).Stephen, C.
Crookshank, Capt. Rt. Hon. H. F. C.Lloyd, Brig. J. S. B. (Wirral)Stoddart-Scott, Lt.-Col. M.
Crosthwaite-Eyre, Col. O. E.Lucas, Major Sir J.Stuart, Rt. Hon. J
Crowder, Capt. J. F. E.Lucas-Tooth, Sir H.Sutcliffe, H.
Cuthbert, W. N.Lyttelton, Rt. Hon. O.Taylor, C. S. (Eastbourne)
Darling, Sir W. Y.MacAndrew, Col. Sir C.Teeling, Flt.-Lieut. W.
De la Bere, R.McGovern, J.Thomas, J. P. L. (Hereford)
Digby, Maj. S. WingfieldMackeson, Lt.-Col. H. R.Thornton-Kemsley, Col. C. N,
Dodds-Parker, Col. A. D.McKie, J. H. (Galloway)Thorp, Lt.-Col. R. A. F.
Dower, Lt.-Col. A. V. G. (Penrith)Macpherson, Maj. N. (Dumfries)Turton, R. H.
Drayson, Capt. G. B.Manningham-Buller, R. E.Vane, Lt.-Col. W. M. T.
Drewe, C.Marlowe, A. A. H.Wakfield, Sir W. W.
Duncan, Rt. Hon. Sir A. (C. of Lond.)Marples, Capt. A. E.Walker-Smith, Lt.-Col. D.
Eccles, D. M.Marshall, Comdr. D. (Bodmin)Watt, Sir G. S. Harvie
Erroll, Col. F. J.Maude, J. C.Wheatley, Lt.-Col. M. J.
Fletcher, W. (Bury)Mellor, Sir JrWilliams, C. (Torquay)
Fox, Sqn.-Ldr. Sir G.Moore, Lt.-Col. Sir T.Williams, Lt.-Cdr. G. W. (T'nbr'ge)
Fraser, Maj. H. C. P. (Stone)Morrison, Maj. J. G. (Salisbury)Will ink, Rt. Hon. H. U.
Cage, Lt.-Col. C.Morrison, Rt. Hn. W. S. (Cirencester)Winterton, Rt. Hon. Earl
Gammans, Capt. L. D.Mott-Radclyffe, Maj. C. E.
Gates, Maj. E. E. Neven-Spence, Major Sir B.

TELLERS FOR THE AYES:

George, Maj. Rt. Hn. G. Lloyd (P'br'ke)Noble, Comdr. A. H. P.Major Sir A. S. L. Young and
Mr. Stndholme.

NOES.

Adamson, Mrs. J. L.Chetwynd, Capt. G. R.Fairhurst, F.
Allen, A. C. (Bosworth)Cluse, W. S.Farthing, W. J.
Allen, Scholefield (Crewe)Cobb, F. A.Fletcher, E. G. M. (Islington, E.)
Allighan, GarryCocks, F. S.Follick, M.
Alpass, J. H.Collick, P.Foot, M. M.
Anderson, A. (Motherwell)Colman, Miss G. M.Foster, W. (Wigan)
Attewell, H. C.Cook, T. F.Fraser, T. (Hamilton)
Awbery, S. S.Cooper, Wing-Comdr. G.Freeman, Maj. J. (Watford)
Ayles, W. H.Corlett, Dr. J.Gaitskell, H. T. N.
Ayrton Gould, Mrs. B.Corvedale, ViscountGanley, Mrs. C. S.
Bacon, Miss A.Cove, W. G.George, Lady M. Lloyd (Anglesey)
Baird, Capt. J.Crawley, Fit.-Lieut. A.Gibson, C. W.
Balfour, A.Crossman, R. H. S.Gilzean, A.
Games, Rt. Hon. A. J.Daines, P.Glanville, J. E. (Consett)
Barstow, P. GDalton, Rt. Hon. H.Gooch, E. G.
Barton, C.Davies, Edward (Burslem)Goodrich, H. E.
Battley, J. R.Davies, Clement (Montgomery)Granville, E. (Eye)
Bechervaise, A. E.Davies, Ernest (Enfield)Grenfell, D. R.
Belcher, J. W.Davies, Harold (Leek)Grey, C. F.
Berry, H.Davies, Haydn (St. Pancras, S.W.)Grierson, E.
Bevan, Rt. Hon. A. (Ebbw Vale)Davies, S. O. (Merthyr)Griffiths, D. (Rother Valley)
Bevin, Rt. Hon. E. (Wandsworth, C.)Deer, G.Griffiths, Rt. Hon. J. (Llanelly)
Binns, J.Delargy, Captain H. J.Gunter, Capt. R. J.
Blackburn, A. R.Diamond, J.Guy, W. H.
Blenkinsop, Capt. ADobbie, WHaire, Flt.-Lieut. J. (Wycombe)
Bottomley, A. G.Douglas, F. C. R.Hall, W. G. (Colne Valley)
Bowden, Flg.-Offr. H. W.Driberg, T. E. N.Hannan, W. (Maryhill)
Bowles, F. G. (Nuneaton)Dugdale, J. (W. Bromwich)Hardy, E. A.
Braddock, Mrs. E. M. (L'p'l, Exch'ge)Dumpleton, C. W.Hastings, Dr. Somerville
Braddock, T. (Mitcham)Durbin, E. F. M.Haworth, J.
Brook, D. (Halifax)Dye, S.Henderson, A. (Kingswinford)
Brooks, T. J. (Rothwell)Ede, Rt. Hon. J. C.Henderson, J. (Ardwick)
Buchanan, G.Edelman, M.Hewitson, Captain M.
Burden, T. W.Edwards, A. (Middlesbrough, E.)Hobson, C. R.
Burke, W. A.Edwards, John (Blackburn)Holman, P.
Butler, H. W. (Hackney, S.)Edwards, N. (Caerphilly)Hoy, J.
Byer, Lt.-Col. F.Edwards, W. J. (Whitechapel)Hudson, J. H. (Ealing, W.)
Castle, Mrs. B. A.Evans, S. N. (Wednesbury)Hughes, Hector (Aberdeen, N.)
Champion, A. J.Ewart, R.Hughes, Lt. H. D. (W'lhampton, W.)

Janner, B.Neal, H. (Claycross)Sparks, J. A.
Jeger, Dr. S. W. (St. Pancras, S.E.)Nichol, Mrs. M. E. (Bradford, N.)Stamford, W.
Jones, D. T. (Hartlepools)Noel-Baker, Capt. F. E. (Brentford)Stewart, Capt. M. (Fulham)
Jones, J. H. (Bolton)Noel-Buxton, LadyStrachey, J.
Jones, Maj. P. Asterley (Hitchin)Oldfield, W. H.Strauss, G. R.
Keenan, W.Oliver, G. H.Summerskill, Dr. Edith
Kenyon, C.Orbach, M.Swingler, Capt. S.
Key, C. W.Paling, Rt. Hon. Wilfred (Wentworth)Symonds, Maj. A. L.
Kinghorn, Sqn.-Ldr. E.Paling, Will T. (Dewsbury)Taylor, H. B. (Mansfield)
Lang, GPalmer, A. M. F.Taylor, R. J. (Morpeth)
Layers, S.Pargiter, G. A.Thomas, I. O. (Wrekin)
Lawson, Rl.-Hon. J. J.Parkin, Flt.-Lieut. B. T.Thomas, John R. (Dover)
Lee, Miss J. (Cannock)Paton, Mrs. F. (Rushclifle)Thomson, Rt. Hon. G. R. (E'b'gh, E.)
Leslie, J. R.Paton, J. (Norwich)Thorneycroft, H.
Levy, B. W.Pearson, A.Tolley, L.
Lewis, A. W. J. (Upton)Peart, Capt. T. F.Tomlinson, Rt. Hon. G.
Lewis, T. (Southampton)Perrins, W.Turner-Samuels, M.
Lindgren, G. S.Piratin, P.Ungoed-Thomas, Maj. L.
Lipson, D. L.Porter, G. (Leeds)Vernon, Maj. W. F.
Lyne, A. W.Pritt, D. N.Viant, S. P.
McAdam, W.Proctor, W. T.Walkden, E.
McEntee, V. La T.Pursey, Cmdr. H.Walker, G. H.
Mack, J. D.Ranger, J.Wallace, G. D. (Chislehurst)
McKay, J. (Wallsend)Rankin, J.Watson, W. M.
Maclean, N. (Govan)Rees-Williams, Lt.-Col. D. R.Webb, M. (Bradford, C.)
MoLeavy, F.Reeves, J.Weitzman, D.
McNeil, H.Reid, T. (Swindon)Wells, Maj. W. T. (Walsall)
Macpherson, T. (Romford)Rhodes, H.White, H. (Derbyshire, N.E.)
Mainwaring, W. H.Richards, R.Whiteley, Rt. Hon. W.
Mann, Mrs. J.Ridealgh, Mrs. M.Whittaker, J. E.
Manning, C. (Camberwell, N.)Robens, A.Wigg, G. E. C.
Mathers, G.Roberts, G. O. (Caernarvonshire)Wilkes, Maj. L.
Mayhew, Maj. C. P.Robertson, J, J. (Berwick)Wilkins, W. A.
Medland, H. M.Rogers, G. H. R.Willey, F. T. (Sunderland)
Messer, F.Royle, C.Willey, D. G. (Cleveland)
Middleton, Mrs. L.Sargood, R.Williams, Rt. Hon. E. J. (Ogmore)
Millington, Wing-Comdr. E. R.Scott-Elliot, W.Williams, J. L. (Kelvingrove)
Mitchison, Maj. G. R.Segal, Sq. Ldr. S.Williams, Rt. Hon. T. (Don Valley)
Monslow, W.Sharp, Lt.-Col. G. M.Willis, E.
Montague, F.Shinwell, Rt. Hon. E.Wise, Major F. J.
Moody, A. S.Shurmer, P.Woodburn, A.
Morgan, Dr. H. B.Silverman, S. S. (Nelson)Wyatt, Maj. W.
Morley, R.Skeffington, A. M.Yates, V. F.
Morris, LI.-Col. H. (Sheffield, C.)Smith, Capt. C. (Colchester)Young, Sir R. (Newton)
Morris, P. (Swansea, W.)Smith, Ellis (Stoke)Younger, Maj. Hon. K. G.
Morris, Hopkin (Carmarthen)Smith, Norman (Nottingham, S.)Zilliacus, K.
Morrison, R(. Hon. H. (Lewisham, E.)Smith, S. H. (Hull, S.W.)
Moyle, A.Snow, Capt. J. W.

TELLERS FOR THE NOES:

Murray, J. D.Solley, L. J.Mr. Collindridge and Mr.Simmons.
Nally, W.Sorensen, R. W.
Naylor, T. E.Soskice, Maj. Sir F.

New Clause—(Rule 9 And 10 Of Schedule E Of Income Tax Act, 1918)

Rules 9 and 10 relating to Schedule E of the Income Tax Act, 1918, shall be construed as providing that any amount (not exceeding fifteen pounds in the aggregate in any year) paid by any member by way of subscription to any institution or other body which is, in the opinion of the Treasury, conducted wholly or mainly for the advancement of any branch of learning, science or technology and not operating for profit, may be deducted from the salary, fees or emoluments to be assessed in respect of such person.— [ Colonel Erroll.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

Membership of a learned or professional society is essential to the professional man, particularly to the technical man, just as tools are to a carpenter. First, such membership adds to and refreshes the individual's technical professional knowledge, on which his earnings may depend. Secondly, by participating in the activities of the institution of which he is member he is able to add to the sum of knowledge which is stored up in that institution. Thirdly, membership of an institution confers upon a member a very important status. I hope that hon. Members opposite will not disagree with me when I say how important that status is, because it does enable prospective employers, and not only individual employers but Government employers, to assess the status and ability of the individual concerned. The letters M. Inst. C.E. or M.I.M.E. denote a status in much the same way as the degree of B.A. or B.Sc. denotes a status and a standard of teaching. There is however, one very important difference, in this matter, and that is that a degree once won, does not have to be paid for again. One has a label round one's neck for the rest of one's life, as having achieved an intellectual, technical standard; and there it is—paid for and truly earned!

Membership of a learned institution, however, involves payments year by year of subscriptions in order that one may continue to be a member and be known as a member of the institution. It may be thought that these are rather small matters, and that good men will always rise, as indeed they do, despite all lack of such qualifications. That is certainly not the case in many Government Departments, which insist upon membership of certain technical institutions as a necessary condition of Government appointment. It is no good saying that you were a member of a technical institution; you have to be able to prove current membership, and therein lies the difficulty, because the subscriptions which have to be paid are very often a not inconsiderable portion of a man's total income. I think that the income of technical men should be higher than it is, but the fact remains that for many technical men, subscriptions of six guineas a year for membership of the Institution of Civil Engineers or £4 a year for membership of the Institution of Mechanical Engineers represent a big slice out of a man's total income.

During the war. I was on the Select Committee for one of the Government Departments appointing technical assistants, and these men, even in wartime, were only to be paid £400 a year by the State. Yet the State was insisting rigidly upon membership of a particular engineering institute. Out of a total salary of £400 a year, it is very hard to have to give up six guineas a year or a year. I am, therefore, suggesting in this Clause that membership should be paid out of income before it is subjected to tax. In that way a real concession would be given to needy professional men, and it would advance the cause of learning and science in this country.

The justice of this proposition is to a very large extent already admitted by the Treasury, since a certain small concession does exist at present. The concession is that where membership is made a condition of employment, the tax shall be remitted, but where it is not made a condition of employment, or where a man is independent, such as a consulting engineer or a consulting specialist, he must pay. the subscription out of his taxed income. As the Treasury have already conceded this much to the general principle, they should go the whole way, and concede the remission of taxation to all members of professional societies in the form laid down in this Amendment.

8.0 p.m.

I would point out how much of a burden these subscriptions are to young men, particularly those who are struggling to make their way in a profession. They are now, in many cases, men who have had their careers, interrupted, and who will be returning from the Services, and who will find it difficult to dip into their pockets to pay the large but necessary subscriptions to their professional societies and institutions. It may be pointed out in reply that in a year or two's time it will be all right for them, as they will be earning more money, and it will not be so important. That is not the case, because many professional men in industry have been barred from increases in salary during the war years by the operation of the Essential Work Order, which freezes them to a particular job at a particular salary. I see very little likelihood at present of professional men being able to move about from one employer to another with the freedom which we used to know under Tory Government before the war.

There is the difficulty of the relatively wealthy professional man, in respect of whom it may be said that there is no need of a concession. That is a point which must be admitted to be a strong and important one. I therefore suggest as an alternative, if the whole Clause cannot be agreed to, that the concession might stop with the Surtax payer. A few evenings ago I was bold enough to speak in favour of the Surtax payer; I now make a suggestion against him. The real purpose of this new Clause is to help the needy young professional man, or the needy old professional man, not the more wealthy professional man. I make that suggestion as a possibility if the whole of the Clause cannot be accepted in its present form. It will prevent the concession going to men who do not so obviously require it.

There is another category of individuals who it has been suggested to me should not get it, the man who is sometimes called "the old fool." There may be a few but there cannot be very many, because in the case of membership of these societies all members must either pass the examinations of the institutions or societies, or give proof of their qualifications in some other way. They may appear to be old fools, but the fact remains that they have reached the requisite standard, and are surely entitled to the same remission as other individuals would get, if this Clause were accepted. I could sympathise with any Treasury objection on the lines that this is one more concession and that what we want is a simple scheme of taxation with as few exceptions or concessions as possible. I am told that it is already considered that there are too many concessions, that the relatively simple Income Tax form is becoming cluttered up with provisos and that this will add to the number already there.

There is a certain attractiveness in an alternative proposal, such as the granting of State subsidies to these institutions, instead of making it easier for men to be members, and by means of these subsidies to enable the subscriptions to be reduced. When this proposal was first put to me it struck me as being attractive, but after further examination, I submit that it is a most undesirable proposal, for two very good reasons. First there would be bound to be arguments and interminable discussions as to which institutions should get subsidies and which should not. Secondly, there would be arguments as to the amount of the subsidy—whether it should be increased or decreased. Thirdly, there is always the danger, and one must be frank and admit it, of Government influence where the Government subsidise. At the present time that may be thought by some Members to be a desirable thing, but, of course, the present Government might not think so after the next General Election, should they find themselves—

The hon. and gallant Member is wandering very far. Will he return to his Clause?

I hope therefore that a subsidy will not be put forward as an alternative to the Clause which I have suggested. Finally, if the Clause cannot he accepted now, I hope that the Chancellor of the Exchequer will consider the matter further. I know that there are a lot of things which he is hoping to consider further. I hope this will be one more, so that if he cannot accept it now, we may see this Clause in the next Finance Bill.

I wish to support the Clause. My hon. and gallant Friend has given many reasons in favour of it, and he also very fairly stated certain objections which might be held against this Clause. I hope that the Government will not just consider it, but will take action and implement it. The object of this new Clause is to encourage a larger membership of the scientific and technological societies which arc so important for the development of industry in this country, and for the further advancement of science, without which this country cannot make proper progress. Generally speaking, the independent professional man can claim the subscriptions he makes to these societies as a deduction from his profits for the purpose of Income Tax. The Income Tax authorities are very reasonable in this way, but there are certain cases in which professional men cannot claim. They can claim it, if it is a condition of their appointment, but in the case of many Government Departments and local authorities and certain other cases, it is not possible for relief to be so claimed. The purpose of this Clause is to enable this relief to be claimed by young men who are starting on their scientific careers and to whom a subscription amounting to £10, £12 or £15 does mean a real burden. There is every possible reason why all encouragement should be given to our young scientists and technologists to take degrees, and to maintain their membership of scientific and technological societies.

It seems to me that here is an excellent opportunity for the Government to implement what has been mentioned on many occasions, namely, their earnest desire to give all possible encouragement and help to our young people to develop their scientific knowledge and experience. This matter has been raised previously. In 1943, the then Attorney-General opposed it on behalf of the Government, and the reasons he gave were that the Clause as drawn at that time was too unrestricted and that it would enable people to deduct subscriptions to societies which did not really concern their work. This may be true in a few cases. There was some substance in that argument, and that is the reason why, in the Clause which has been moved by my hon. and gallant Friend the Member for Altrincham (Colonel Erroll), the subscription allowance has been limited to £15. It is felt that with a maximum of £15, that is a reasonable deduction and that the objection which hitherto existed should not remain. It should not be difficult to have an approved list of scientific bodies and societies members of which would be allowed to make this deduction as an expense from their income. I hope the Solicitor-General in making his reply will see his way to grant this modest and very reasonable request. We want now to see that the Government are really in earnest in encouragement of those young people on whom the membership of learned societies at present casts a burden and we hope the Government will consider sympathetically and favourably, this New Clause.

I have a paternal interest in this proposal, having moved similar Motions twice when we were blessed with a Coalition Government. On those occasions the idea was rejected by the Government but I am, therefore, much more hopeful in my approach to the present Front Bench.

My hon. Friend the Member for St. Marylebone (Sir W. Wakefield) gave the reason and it will appear in HANSARD tomorrow, if the hon. Member cares to look at it. The two points I wish to make tonight supplement points which have already been made. I emphasise that we, on these benches, are speaking on behalf of a large number of employees who are suffering an injustice in comparison with employers and independent practitioners. The independent practitioner of engineering, chemistry, or what you will, is entitled to deduct subscriptions which he pays to scientific societies, in so far as they are necessary in the practice of his profession. But a man with identically similar qualifications who happens to be an employee is prejudiced. He is not allowed to deduct the same subscriptions as his employer, but the employer requires him, as a condition of his employment, to belong to those societies.

That is an inequality we desire to see removed. We desire to plead the case of the employee-scientist and ask that he should be put in the same position as the employer-scientist.

8.15 p.m.

I believe the practical answer of the Solicitor-General will probably be that it is opening a wide door and that the Treasury cannot see where the line is to be drawn. There is no practical force in that objection because there exists in the Inland Revenue Department, a list of the societies, which is used for the purpose of dealing with the employers, when deciding which subscriptions, when paid by independent men or employers, are to count for Income Tax relief purposes. We are asking that exactly the same list shall be applied in the case of employees, on the practical ground that there is an inequality between two types of scientist with the same qualifications. The thing can be done and indeed is already being done, and we desire to urge this new Clause on the favourable consideration of the Government.

Since most of the employees will be members of the very eminent trade union, the Association of Scientific Workers, can the hon. Member say what is the attitude of that union to this proposal?

Although this is not the most important part of the Budget, it is none the less important. I have been struck by the way in which the Budget has been unfolded and I recognise it not only as a way of raising large sums of money, but as a social instrument. It impressed me that if this Clause were adopted—and His Majesty's Government might well adopt it—it would have a far-reaching effect on the standards of education, culture and science in our country. It was said, before the war, that our country was handicapped by the lack of men and women with high scientific attainments and that in Germany higher sums were paid to men with high scientific attainments.

This Clause would be a valuable contribution to raising the educational standard of our community. I do not think it would be very costly. If I understand the Government's proposals they propose to build up a series of intricate and inter-linked communities and societies with specialist knowledge and capacity. This Clause would give a valuable stimulus to such societies. During the war the Government frequently had to rely on these organisations to deal with special problems and, had these societies not existed in considerable measure, that resort would have been impossible. I would be opposed to a direct grant to a selected society, but I see force in the proposal that it should be allowed as a charge against the gross income. That is only giving the employee equal justice with his employer. I feel, with all respect to the hon. and learned Gentleman the Solicitor-General, sorry the Chancellor is not here because, knowing his background and origins, I would like to have said to him that the Chancellor, in these matters, "suffereth long and is kind" and "seeketh not his own." In accepting this, he would beseeking the public good.

:The arguments that have been addressed to the Committee on this matter can really be classified into three. One classification is that of the hon. and gallant Gentleman the Member for Altrincham and Sale (Colonel Erroll), and his argument was pitched on the note of general desirability. With regard to that, equally cogent cases can be put forward for any number of reductions in Income Tax. I agree it can be said that one is driving a hole through it, and once one has driven a hole through the Act, one sees it is wrong. That is the argument, and that is the objection. Once you accept the principle that you can amend the rules of Schedule E by allowing deductions for this sort of expenditure, you must with equal cogency accept the principle that you should allow deductions for other sorts of similar expenditure and then for other sorts of different expenditure. Once you start doing that, you do not know where it is going to lead you, and ultimately you find yourself with an unrecognisable Schedule E. Admittedly it is desirable to allow every possible allowance to taxpayers, but the line has to be drawn somewhere, and unfortunately it has to be drawn, I put it to the Committee. on the wrong side of this particular Motion. It was said by the hon. Member for Putney (Mr. Linstead) that there was a contradistinction between the position of the scientist who is an employer and the scientist who is an employee. That is perfectly true, and the reason is that the scientist who is an employer is taxed under Schedule D and the employee is taxed under Schedule E. Ever since 1918 and before, the principle on which these two Schedules are based has been completely different. Schedule D is drawn on far more generous terms than Schedule E—that has always been the case—and that is why under Schedule D a more generous allowance is given. It has been said that this would be of assistance to scientific institutions—

I hope the hon. and learned Gentleman will realise that it is small consolation to any employee to be told that a reason for this not being granted is because he happens, by accident, to be taxed under one Schedule and not under another.

I was going to apply a little comfort to the wound later on, but I shall just outline the position before I come to that. The hon. Gentleman the Member for South Edinburgh (Sir W. Darling) referred to the fact that it would be an encouragement to scientific societies if this Motion were accepted. My answer is that the encouragement has already been given by the Finance Act of 1944, because again under Schedule D deductions are permitted under Section 27 of the Act in respect of contributions to scientific research associations. That has already been done. Therefore, where do we get?' We get to the position that there is—

If I might interrupt my hon. and learned Friend, I would like to put this point. A scientific society is made up of individuals. That is what gives it life. The point is, surely, that some encouragement should be given to the individuals.

:I can only ask my hon. Friend to look at the Section to which I was referring. If he will take the Finance Act, 1944, and look at Section 27, he will see that the necessary encouragement has already been given by the Government which preceded this Government by one, so that point goes by the board, if I may say so. The two points which remain are these: First, is there a sufficiently strong case for making an exception in the principles embodied in Schedule E Rules? The second point is: Should the position remain so that there is a distinction between Schedule E and Schedule D? As regards the second point, if I may take that first, I would like to draw the attention of the Committee to the answer which was given on 6th November of this year by my right hon. Friend the Chancellor of the Exchequer, in reply to a Question which was asked by the hon. and gallant Member for North Portsmouth (Major Bruce), who in his Question did specifically refer to that difference and ask whether the contrast was justifiable. The answer of the Chancellor was:

"Under Rule 9 of Schedule E an employee is already entitled to claim an income tax deduction for expenses incurred by him wholly, exclusively, and necessarily in the performance of the duties of his employment. It is true that the Schedule D rule governing expenses is somewhat wider arid I am now considering whether this can be justified."— [OFFICIAL REPORT, 6th November, 1945; Vol. 415, c. 1086.]
So that as far as that discrepancy is concerned, it is now being considered by the Chancellor of the Exchequer. I do not say whether one will be made more generous or the other less generous, but the question of discrepancy is one which is having consideration.

It remains to ask whether a case can be made out for these allowances. A case certainly can be made out, and has been made out, but the difficulty is this. Having made that case out, why are you not to accept the same principle in relation to a number of other things which could afford the basis of a proper, convenient, helpful and fruitful deduction from salaries or emoluments of employment for the purposesof Schedule E? The difficulty which the Government are in is that, much as they would like to accept the sort of suggestion which is embodied in this Motion, they cannot do so because once they start doing that they must, as a matter of consistency and logic, go far beyond that and consider the whole range of normal and necessary needs of men who want to restock themselves or qualify themselves for their employment, or men who wish to improve themselves in their employment, and they must as a matter of consistency accept that as well.

The hon. Gentleman who proposed the Motion adverted to the fact that, if you have to pay the scientific subscription in question as a condition of keeping your employment, you are already allowed that, as the law stands at present, as a deduction under Schedule E. That is the case, and it has always been so. It is not in any sense a concession. It is in consonance with the law as it has always stood. That has always been stated as the answer to any question which arose on similar lines. I ask the Committee to say that, much as a concession like this would be desired, it is impracticable to accede to it because, as a matter of necessary logic, it would bring in a whole number of other concessions in respect to which equally cogent cases could be put forward, but which could not be accepted. The question of assimilating the rules of Schedule E in this respect to the rules of Schedule D is, as I have said, being considered by the Chancellor of the Exchequer.

:I must confess that if I have understood the hon. and learned Gentleman's answer aright, it is one of the most curious replies to which I ever had the privilege of listening. The case has been made that it is desirable, both in the case of the employer and of the employee, that they should be encouraged to join societies of this kind and that some help should be given them in doing so. It is further pointed out that that is already done in the case of the employer who is taxed under Schedule D. My hon. Friends are asking whether it. is not possible now to do the same for the employee who is taxed under Schedule E. The hon. and learned Gentleman says in reply, "I quite agree, we are in thorough sympathy. We think it is quite right that every help should be given to assist these classes, but we have talked it over and we cannot see why we should help the employees under Schedule E. But do not worry, we have got this little bit of consolation. As we cannot find a way of doing what we want for the people under Schedule E, we will "—as he calls it—" assimilate them and take away from the people under Schedule D what they have enjoyed for some years, and which all of us say is the right thing. "That seems to me to be one of the most extraordinary answers that I have heard. Surely the hon. and learned Gentleman is is not going to put up such a case as that, and simply say "I cannot do it," and then go on to say "Anyhow, for the sake of the monotonous inequality," for which he stands, "we will take away from the people in respect of whom we have been able to find a way to help, that which they already enjoy."

Question, "That the Clause be read a Second time," put, and negatived.

New Clause—(Outlay By Rural Craftsmen)

Subject to the provisions set out in Section thirty-three of the Income Tax Act, 1945, rural craftsmen engaged in the production or repair of agricultural machinery shall, in respect of new construction of shops, be entitled to the allowance set out in the said section where specified.— [ Sir G. Fox.]

Brought up, and read the First time.

8.30 p.m.

I beg to move, "That the Clause be read a Second time."

I move this new Clause in the hope that steps can be taken to include agricultural repair trades such as the village blacksmith in the Income Tax concessions given in Section 33 of the Income Tax Act, 1945. Under that Act concessions are made to farmers for the erection of up-to-date buildings. The large farmer, farming 2,000 or 3,000 acres, obviously erects new repair shops to repair and keep going his machinery on the mechanised farm, but the small farmer will not have those facilities. He will want to go to the village blacksmith, the village repairer, or the small agricultural engineer, to repair his machinery. Those small blacksmiths and agricultural repairers will not be entitled to these concessions if they put up buildings for the repair of machinery. They arc entitled to the concessions only when they erect new buildings for the production of new machinery.

I ask the Chancellor to give sympathetic consideration to this anomaly and to help the small blacksmith and the agricultural engineer to have modern workshops and to keep up to date in the change-over from old-fashioned farming to the mechanised farming of today. These small people are finding it very difficult to change from putting shoes on horses and the other trades they carried on, to the scientific repair of machinery, which is more important than ever, now that we have not got dollars to spare and are not able to buy all the spare parts that we would like for the agricultural machinery. The cogs have to be repaired. We cannot get new ones. This is a good way of helping the foreign exchange situation. It is quite easy for a man to be taught welding and other forms of repairing machinery by attending short courses and being brought up to date. I appeal to the Chancellor to try to help these small agricultural repairers.

:I can only speak to the Clause as it appears upon the Paper. It is that the allowance should be available in respect of the construction of shops. "Shops," I take it, is not only limited to the blacksmith type of shop, but includes shops in which things are sold. If that is so, no doubt the hon. and gallant Gentleman who moved the Clause realises that it does not come within Section 33 of the Income Tax Act of 1945. He is perfectly right about that.

Before I deal with the new Clause, which I must ask the Committee to reject, I want to say that a shop, if it was opened for the purpose of constructive creation, that is to say the making of machines and so on, would come within the purview of Section I of the Act and would be entitled to the initial allowance and the annual allowance which are applicable to an industrial building under the terms of Sections I and 2 of the Income Tax Act, 1945. Therefore, some of the shops which the mover has in mind, namely, those which can fairly be said to be engaged in productive creation would, in any event, qualify for what is admittedly the lesser allowance envisaged under those Sections. They would not, as the hon. and gallant Member says, qualify for the larger allowance which is provided by Section 33, because that is limited to shops or buildings for the purpose of agriculture and husbandry.

What is really the substantial reason for rejecting the proposed new Clause, in so far as it relates to shops for the purpose of selling things? After all, the wording of the Clause is wide, and covers all shops.

:I am quite sure that the Solicitor-General understands that "shops," in the sense of retail distribution, was not what my hon. and gallant Friend had in mind, to judge from the context of his speech. He meant what are called repair shops. The hon. and learned Member need not, therefore, trouble himself to argue that case. We can accept it that "shops" in the retail sense is not intended.

I am much obliged to the right hon. and gallant Gentleman for his intervention, but I can only speak, as I said at the outset, to the Clause as it stands on the Paper. If it were accepted and eventually became part of the Act, it would have to be construed in the ordinary acceptation of "shops."

:I think this is the first time that the Solicitor-General has taken any part in Debates on a Finance Bill. It is very often that an Amendment is put down by an hon. Member who knows perfectly well that it may not be drafted in proper legal form. It is only if the intention behind an Amendment is accepted that the Government's draftsmen can be asked to put it into the right form.

I entirely accept what the right hon. and gallant Gentleman says. I will therefore deal with the proposal on the footing that what the mover had in mind was the sort of repair shop which he mentioned in his opening speech. Those shops do, by the wording of Section 8 of the Act, also fall within the exclusion. Admittedly, if repair shops are to be brought into the terms of the Act, an Amendment, not in the form proposed, but in some other form and with the appropriate wording, would be necessary.

What is the substantial reason for rejecting the proposed new Clause? It is that the Act of 1945, which came into force in June this year, was carefully drafted to promote and to deal with what could fairly be said to be productive industry, and it was specifically drawn to exclude what the hon. and gallant Member who proposed the Clause had in mind. It was framed as it was in pursuance of the policy announced by the then Chancellor of the Exchequer on the Second Reading of the Bill, and I will quote from what he said on that occasion. He said:
"Let me, at this stage, say quite frankly that I know there will be some disappointment that the new allowances for buildings are to be confined in general to buildings used in productive industry and that, for example, offices and hotels are excluded; but I made it quite clear in my Budget speech of last year that my proposals would be deliberately framed in this way, in order to benefit productive and creative industry. The reasons that have led me to make this dinstinction will, I think, commend themselves to the House. I propose to the House that we should, as an Act of conscious policy, deliberately weight the scales in favour of those forms of capital investment which are most necessary to the industrial strength of the community. It is productive or creative industry that provides in the main industrial employment and is the foundation of our national prosperity."—[OFFICIAL REPORT, 14th March, 1945; Vol. 409, c.258.]
That was a deliberate and conscious expression of policy, and on that policy the Act was framed to cover productive industry and nothing else. That appears from the conditions as they are set out under Section 8 of the Act. I submit, that since June, 1945, to the present there has been no sufficiently marked change to make it desirable to depart from the policy of the Act, based as it was on the opinion expressed by the then Chancellor. What the hon. and gallant Gentleman proposes is that there should be a departure from the principles embodied in that Act in the way of including retail shops when they were specifically excluded, and I submit that no case has been made out for now departing so soon after the Bill became law from the principle upon which it was framed.

:We will not take this to a Division. My hon. and gallant Friend wished to make the point, which is an important one for agricultural constituencies. The word "shop" is perhaps, unfortunate, because he did not, and I did not, intend it to have the meaning implied to it. There are up and down this country a number of small people who do repairs of the nature referred to, and the blacksmith is a very good instance. With the coming of machinery on the vastly increased scale on the land it naturally follows that a great deal of the work hitherto done out of the country necessarily falls to be done here. The various county councils and rural community councils have done great work in recent years training men for that purpose. In my opinion, because of this new equipment which has come on to the land, there has been some slight change since June, 1945. It is true that the Act of this year directed attention to what it called creative and productive industries, but it is also quite true that there has been a considerable change in our external asset position during the last few months.

A good deal of the agricultural machinery is American in origin, and it is probable that it will not be possible owing to the dollar position to get all the spare parts readily. Therefore, the corresponding spare parts could be and should be made in this country. If the small rural industries could be developed—and it will be necessary to do this—it will be advantageous to have them equipped to make the necessary spare parts. It was in order to call the Government's attention to that new phase of the question that the Clause was put down. I am certain, having called the attention of those who are mostly responsible, the agricultural Ministers, rather than the Solicior-General, will take the hint which we have put before them, and no doubt, during the period in which the Chancellor is going to do his thinking, some thought maybe given to this question. I hope my hon. and gallant Friend will not trouble the House with a Division.

Motion and Clause, by leave, withdrawn.

New Clause—(Sales Of Plant Between Controlled Bodies Of Persons)

Subsection (3) of Section fifty-nine of the Income Tax Act, 1945, which prohibits the making of an initial allowance to the buyer of machinery or plant in the circumstances referred to in paragraph ( a) of Subsection (1) of that Section shall be amended by the addition to the second proviso of the words:

" and where the sale takes place after the appointed day at a price which is more than four-fifths of the limit of recharge, an allowance shall be made equal to the excess with a maximum allowance of one-fifth of the limit of recharge."—[ Sir P. Bennett.]

Brought up, and read the First time.

8.45 p.m.

I beg to move, "That the Clause be read a Second time."

The point which I am putting is a small one, but for reasons which I will mention later, it is of considerable importance at the present moment. It deals with the 20 per cent. allowance which is made when machinery is bought in the ordinary way. This is only an advance, because in the normal way the depreciation will be allowed over the year, but the initial allowance of 20 per cent. is of considerable value in arranging capital in times of reorganisation and reconversion. When the sale is a plant purchase by an ordinary company no question arises, but there are sales between controlled companies, that is, between one controlled company and another. Then it is right that conditions should be made so that the controller company does not arrange matters so as to be able to write the plant down and pass it from one to another, and so get this 20 per cent. to cover the whole value by passing the plant on from one to the other. It is possible for a buyer inside a group to obtain from a seller inside the same group certain plant, and he ignores the fact that there is a balancing charge on the seller, which the Revenue can put into effect, which gives back the initial amount which had already been given to the other member of the group on the first purchase of the plant from outside.

This new Clause simply seeks to put this point right. It gives back to the seller who has already suffered a balancing charge from the Revenue and gives back to the buyer who has taken the plant over, an initial amount equal to that with which the seller has already been charged. So it arranges that within the group there is only one initial payment. It is of some importance because at the present time there are a number of contemplated amalgamations, and it is desirable tint the plant should be modernised. I hope that I have made it clear that the group will always be certain of one 20 per cent. and nothing more, which is the Revenue's point of view; and nothing less, which is the industry's point of view. I am quite certain that the Solicitor-General, who knows this question, will understand the point that I have been trying to make. It is a simple one and I hope that he will be able to meet us.

:My right hon. Friend feels that a case has been made out, subject to certain qualifications, for this new Clause. I want to make clear what the qualification is. Section 59 of the Income Tax Act and Subsection (3) to which the hon. Member refers is drawn with a view to preventing undue allowances being obtained by fictitious sales between groups of companies, as he indicates; but where there is a perfectly bona fide sale at a proper market price, and the result of that sale is that the selling company loses the whole of its.initial allowance, there is an injustice, in the view of my right hon. Friend, which calls for some consideration. Actually, of course, the initial allowance is never completely lost. It is postponed, although postponed for a substantial number of years, because it may be used up in the annual allowance, which will take some years to materialise. Meanwhile, taxes may, and probably will, diminish considerably, and, therefore, there is a case for an initial allowance being retained for the advantage of the group where there is a bona fide sale as between companies.

The Income Tax Act, 1945, comes into operation only on the appointed day, which is 6th April, 1946, so that there is no immediate urgency about the matter; but I can give the Committee an assurance, on behalf of my right hon. Friend, that, without binding himself finally to any form of words or to any particular undertaking, he will consider the matter sympathetically between now and next April. With that assurance, I hope the hon. Gentleman will withdraw the new Clause.

I wish to thank the Solicitor-General for the way in which he has dealt with this new Clause. He and the Government know that the amalgamations I have in mind are in the national interest, and as those concerned felt that it would be a considerable advantage to them to have this point cleared up, I am grateful for the Solicitor-General's promise, and I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause—(Double Taxation)

Whether or not arrangements having effect by virtue of Section fifty of this Act have been made and whether or not relief may be claimed under Section twenty-seven of the Finance Act, 1920, by virtue of income tax paid in a Dominion, if it is proved to the satisfaction of the Commissioners of Inland Revenue that income arising or accruing in or received from a foreign country and chargeable under the Income Tax Ants consists in whole or in part of income which has previously been subject to United Kingdom income tax by deduction or otherwise such relief shall be granted in calculating the amount of the income which is chargeable to United Kingdom income tax as may be just to the intent that United Kingdom income tax

shall not be charged more than once on the same income by reason only of changes in the persons beneficially entitled to the income.— [ Sir P. Bennett.]

Brought up, and read the First time.

:I beg to move, "That the Clause be read a Second time."

This new Clause relates to another small point that I would like to have cleared up. It deals with a small question of double taxation. We are all very grateful to the Chancellor, and those who have worked with him, for the progress that has been made in dealing with the question of double taxation relief between this country and America and the Empire, but there remains a strange little injustice which I feel can be dealt with at home without any international or inter-imperial negotiations. There was the old case of Gilbertson v. Ferguson in the House of Lords—

I am sorry; it wasin the Court of Appeal. In that case it was settled by the court that taxation which had been paid once should not be charged again. The case arises when a foreign company owns shares in an English business and the dividend is paid overseas. In due course the holders of shares in the overseas company receive their dividend back.

It has already suffered Income Tax before the dividend went overseas and on its coming back the Income Tax on it is charged again. It was thought that that had been dealt with, but recently the House of Lords, in the case of the Selection Trust v. Dent, could not uphold the earlier decision, and reversed it. I feel that this is a point to which attention has only to be called and the authorities will deal with it. I do not ask that the matter should be dealt with in exactly the form of words in the new Clause, but I would like to know that the Government appreciate the point and will deal with it.

I ventured to interrupt the hon. Member for Edgbaston (Sir P. Bennett) to point out that the case was not in the House of Lords, because if it had been it could not have been overruled subsequently, and the fact that it was overruled, of course, is the whole difficulty. The House of Lords decision did, in fact, in terms overrule the earlier decision. The hon. Gentleman asked for an undertaking. Frankly, the matter is one of very great difficulty. Ever since the case to which he referred was decided in 1881, some allowance has been made, but it has been found necessary progressively to encroach upon that allowance. As the hon. Gentleman knows, the allowance was not given in respect of preference shares, or in respect of interest on mortgages and debentures; nor was it given, in recent years, when the foreign company drew its income from the United Kingdom in the form of dividends. It was given only when the income of the foreign company was income taxed under Schedule D. The whole position was felt to be one of some considerable difficulty.

Nevertheless, the fact does remain that the effect of the House of Lords decision is that an allowance which was previously made is no longer made, because it has been held by the House of Lords that the allowance never should have been made. It is difficult to make the allowance, because whereas it is very easy to know exactly what the method of keeping accounts is in an English company, and the Revenue authorities know very well what the company's profits are, and knows what its trading is, the same thing does not apply to a foreign company in a great many foreign countries. In some foreign countries the position is much easier. The British Revenue authorities are at a disadvantage when they ask themselves, in relation to foreign companies in many foreign countries, whether it can be fairly said the income which they draw from the United Kingdom is the very same income out of which they are paying their dividends to the British taxholder resident in the United Kingdom. The question bristles with a number of complications.

I cannot at this moment give an undertaking such as the hon. Member asks for, but I can assert that the matter is very prominently in the minds of those responsible for dealing with that kind of problem, and they are in fact investigating it to see whether it is feasible, notwithstanding the House of Lords decision, for some sort of allowance to be granted in the kind of circumstances depicted by the hon. Member. That is the only statement I can make, and I cannot give an undertaking in the terms in which the hon. Member asked. I agree that it is a small matter, and it is at present the subject of investigation.

I quite appreciate that this is a difficult little point and that the Inland Revenue authorities must give it consideration and investigation. It is not a thing that we would ask them to run into straight away. I appreciate that they are at a disadvantage in not knowing exactly how the foreign taxing authority deals with any particular packet of income. In spite of that, however difficult it may have been, it has been the position since 1881, and some sort of modus vivendi has been discovered. There has been since then a House of Lords decision which has reversed the position. I hope the fact that the House of Lords decision reversed the previous decision, and therefore upset such arrangements as had existed, will not be taken, as the Solicitor-General's remarks caused me rather to fear it might be taken, as implying that, because the House of Lords has decided that way, Parliament will therefore not do anything about it.

After all, Parliament is able to change the law. The House of Lords interprets what the law is, but this House and the House of Lords can certainly change the law, and as this particular arrangement, even if it was not particularly satisfactory, has existed for so long, and has now by a judicial decision been reversed, there surely is a case why every effort should be made to try and put the position back to as nearly as possible what it should be. If it can be improved, if there are difficulties which can be smoothed out, so much the better; but it is incumbent on the Revenue Department and the Treasury to go into the matter closely. The hon. and learned Gentleman has, to use his own word, "asserted" that it is being investigated. Of course, we accept the assertion, but it does not take things very far. I hoped he would be able to say that this would be one of the things on the list for April. The list is already long and one more item would not do very much harm, but after the assertion he has made perhaps my hon. Friend will realise that the spirit is willing. Of course, if the assertion leads to nothing and we hear nothing more about this matter there will be other opportunities, on the next Finance Bill, to move some such Clause as this, and then, I hope, the hon. and learned Gentleman will give us more satisfaction.

9.0 p.m.

:I should like once more to thank the learned Solicitor-General for the kind way in which he has accepted the suggestion we put forward. I do not quite follow his argument that they would have to trace the dividend and the earning capacity—where the money came from—on the other side, because they have a rough idea of how much money went out from this side to the other, and to that extent they would know that whatever came back would be less by the amount we had sent over there. It is like putting another gallon of petrol into the tank of a car. You cannot trace which particular gallon you are using for any particular journey, but you know that if you have not got the gallon you cannot proceed. I feel the Revenue authorities would not need to worry very much about that point. They would know the amount that went out and the amount that came home. After the offer of the hon. and learned Gentleman to go carefully into the question, I ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

Before calling upon the hon. Member for Holland with Boston (Mr. Butcher) to move his new Clause (Reduced customs duties on tea) I ought to inform the Committee that I am not proposing to call the new Clause following which stands in the name of himself and the hon. Member for Harwich (Sir J. Stanley Holmes)— (Repeal of Customs duties on foodstuffs and Import Duties Act not to apply to foodstuffs.)

New Clause—(Reduced Customs Duties On Tea)

(1) The duties of customs chargeable on tea under section one of the Finance Act, 1936, shall be at the following reduced rates that is to say:—

Tea not being an Empire product the lb. 8d.

Tea being an Empire product … the lb. 2d.

(2) This section shall be deemed to have had effect as from the twenty-fourth day of October, nineteen hundred and forty-five.— [Mr. Butcher.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I now ask the Committee to turn their attention from the intricacies of the law as it affects large company taxpayers to the claims of the vast majority of the citizens, indeed, the claims of almost every citizen except the holders of babies' ration books, and even they, I think, have some share in the tea rations. It has been almost an axiom of our taxation that when benefits were given to the direct taxpayers by means of the amelioration of taxation upon them that some benefit should be conferred also upon indirect taxpayers, and the purpose of this new Clause, which stands in my name and that of the hon. Member for Harwich (Sir J. Stanley Holmes) is to give the Chancellor some opportunity of keeping the customary balance between these two classes of taxpayer. I appreciate the Government's difficulty in these matters. It is not an easy thing to remit large slices of taxation at any time, and particularly now. That, indeed, has been an argument which has been coming from the Treasury bench throughout the Committee stage, but I hope that this is one particular claim to which the Government will be really eager to accede.

This new Clause proposes to reduce the duties payable on tea. I know that in ampler days, in 1929, the right hon. Member for Woodford (Mr. Churchill) entirely abolished the tea duties in his Budget. They were re-imposed later. This was not regarded with favour by the benches opposite, and I do not blame them. I do not think there is any great party feeling over this question of the tea duties. I have merely amended suitably the wording of an Amendment which was moved in June, 1939, by the present Minister of War Transport, and now that Members opposite have the opportunity of controlling the financial affairs of the nation, and in view of the fact that in 1929 the Conservative Party entirely abolished that duty, and that in 1939 hon. Members opposite moved a reduction, I suggest we could choose this psychological moment to act together and bring the tax down. This is the reason why this is the psychological moment. The tea ration is at its very lowest and, therefore, it is at this precise time that the cost of remission will be smallest to the Chancellor. If he allows the tea ration to be increased without making any remission of taxation the burden to be faced will be far greater.

I hope that the Financial Secretary is not going to give another of those sympathetic promises to consider this next April. The people of this country are going to expect a lot more tea between now and April, and if he takes advantage of the opportunity that I am giving him, it will cost far less to do it now, in November, than it would cost him to do it in April. In view of the distinguished parentage of this new Clause, I would remind the Committee that the right hon. Gentleman the Minister of War Transport based his claim on three classes of people who had not received any benefit under the 1939 Budget. There are the old age pensioners. What have they received from the Socialist Government in their first Budget? The answer is, "Nothing." There is unemployment, and the figures for unemployment are already rising. The hon. Lady the Member for Coatbridge (Mrs. Jean Mann), in showing concern for her own constituency, has drawn from the Minister of Labour the information that unemployment in her area is 11 per cent. And then there is the widow. The right hon. Gentleman the present Minister of Transport, in 1939, said:
"The imposition of the Tea Duty does represent actual distress if not to the majority of the citizens of this country, at any rate to a fairly considerable proportion.— [OFFICIAL REPORT, 29th June, 1939; Vol. 349, c. 766.]
That was his position in those days and he was supported—I am sure that the Financial Secretary to the Treasury will be interested in this—by two hon. Gentlemen who have since been closely associated with the Treasury. I refer to the hon. Gentleman the Member for Barnsley (Mr. Collindridge), now a Junior Lord of the Treasury, and to an hon. Gentleman equally prominent on the Socialist benches, the hon. Member for Morpeth (Mr. R.J. Taylor). The case which these hon. Gentlemen put in 1939 convinced many of their colleagues, and indeed, my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank), who was the Financial Secretary at that time, was hard put to it to resist the argument, and nothing but the fact that we were engaged in a heavy rearmament programme prevented him from accepting the Amendment. I hope that the Financial Secretary is in no way embarrassed in feeling that he might accept this Clause during the absence of his Chief. I can assure him that he will not get into trouble at all. In the Division on that occasion no fewer than 31 Members of the Government voted for the kind of Clause I am now commending to the Committee, and they included the present Chancellor. They are not only my views. Thirteen of them were what are called Cabinet Ministers or Ministers of Cabinet rank, so that the Financial Secretary need not worry about sending for the Chancellor of the Exchequer. He will be quite safe in accepting this Amendment off his own bat, and he will please his hon. Friends who sit behind him and hon. Member on these Benches.

May I ask the hon. Gentleman how he voted on that occasion?

I felt it my duty on that occasion—perhaps because the arguments were not put forwardso well as on this occasion—to vote against it, because I thought,.on balance, that the most convincing argument on that occasion was that of the right hon. and gallant Gentleman the Member for Gainsborough (Captain Crookshank). Perhaps it was not altogether the way in which the arguments were presented at that time, but I have had the opportunity of pondering them in recent days, and I have been convinced of their worth. I believe that this is the psychological moment to do it at the cheapest cost to the National Exchequer. It will bring a benefit to the old age pensioner, the unemployed and the widow, and I fail to see why the Government, having advocated it in 1939 when they were in a minority, should not now, when tea consumption is at its lowest, be consistent and accept the Clause.

:I would say a word or two in support of the convincing case put by my hon. Friend. If we think for a moment of the six years through which the nation has just passed I am sure everyone will agree that the greatest consolation the people of the country had during that period was the cup of tea. One heard that said in blitzed areas, by men coming home after a hard day's work in factories, and so on. We are often told by the Chancellor, and also by the Financial Secretary, that certain things must not be allowed to become cheaper because it would mean an increased demand in a market which was not capable of meeting it, but that does not apply to tea. Tea is rationed and, therefore, if the tax is reduced it will not make the price go up, and the whole benefit will go to those who want a cup of tea, particularly the poorest people who are often spoken about by hon. Members opposite—the people in the lowest strata of society, as it were. Now comes the new Clause, and I call on my right hon. Friends and hon. Friends opposite to implement by their vote today what they believed to be desirable in 1939, and what is even more pressing now than it was in those days.

My hon. Friend referred to the fact that the right hon. Gentleman the Member for Woodford (Mr. Churchill), when he was Chancellor of the Exchequer in 1929, abolished the Tea Duty and in his speech at that time reminded the House that the Tea Duty had remained in being since the time of Queen Elizabeth and that he was glad to be the instrument to abolish the tax in the reign of King George V. The Chancellor of the Exchequer has now a great opportunity, the opportunity of voting for the very Motion he voted for in 1939. He has a similar opportunity to that which my right hon. Friend the Member for Woodford had in 1929, of abolishing once again the Tea Duty in the reign of King George VI.

9.15 p.m.

:This new Clause of the two hon. Gentlemen who make up a fair proportion of the Liberal-National Party, is rather an interesting, one. The interjection by my hon. Friend the Member for West Woolwich (Mr. Berry) put the Clause in its true perspective. I do not think that either hon. Gentleman expects that the Chancellor will accept it. If the Government accepted it, the effect would be to reduce the duty on Empire tea by 4d. per lb. At the present moment the existing duties are 8d. a lb. on foreign teas and 6d. a lb. on Empire teas, the

Division No. 37.

AYES.

[9.20 p.m.

Agnew, Cmdr.P.G.Byers,Lt. Col.F.Fletcher, W. (Bury)
Allen, Lt.-Col. Sir W. (Armagh)Carson, E.Fraser, Maj. H. C. P. (Stone)
Amory, Lt.-Col. D. H. Clarke, Col. R. S. Gage, Lt.-Col. C.
Baldwin, A. E.Cooper-Key, Maj. E. M. Galbraith, Cmdr. T. D.
Beamish, Maj. T. V. H. Crookshank, Capt. Rt. Hon. H. F. C.Gates, Maj. E. E.
Bennett, Sir P.Crosthwaite-Eyre, Col. 0. E. Gomme-Duncan, Col. A. G.
Birch, Lt.-Col. NigelCuthbert, W. N.Granville, E. (Eye)
Boles, Lt.-Col. D. C.(Wells)Digby, Maj. S. WingfieldGridley, Sir A.
Boothby, R.Dodds-Parker, Col. A. D.Grimston, R. V.
Bowen, R.Dower, Lt.-Col. A. V. G. (Penrith) Hare, Lt.-Col. Hon. J. H. (Woodbridge)
Bower, N.Grayson, Capt. G. B.Harvey, Air-Cmdre A. V.
Boyd-Carpenter, Maj. J. A. Drewe, C.Haughton, Maj. S. G.
Braithwaite, Lt. Comdr. J. G. Duncan, Rt. Hon. Sir A. (C. of Lond.) Headlam, Lt.-Col. Rt. Hon. Sir C.
Bromley-Davenport, Lt.-Col. W.Eccles, D. M.Hollis, Sqn.-Ldr. M. C.
Buchan-Hepburn, P. G. T. Erroll, Col. F. J.Howard, Hon. A.

difference of 2d. being due to the preference under the 1939 Agreement with India, when that preference was guaranteed. At the present time, and for a very large part of the war, we have had little or no foreign tea coming into this country. It has all been Empire tea, and the effective duty on Empire tea has been about 6d. a lb.

As tea is rationed, none of us gets a great deal—I think it is 2½ ozs. per week—and, therefore, the burden of the Duty is not great. How long rationing will continue it is difficult to say, but I think I can say that it must continue for some little time, and certainly beyond April next, when, if hon. Members opposite desire to press their case, they will have all the opportunities they want.

The duty now works out at about 1d. per head per week, and the incidence of that on the cost of living is very small. About one-third of the duty is offset by the subsidy. There is a subsidy of about £3,500,000 on tea, so that it offsets the Duty, and the result is that the actual effect on the old-age pensioner's or anybody else's cup of tea or even that of Ministers who have occasionally to go out and refresh themselves, is infinitesimal. If we had to accept the new Clause the cost to the Exchequer in a full year, dating back to 24th October, which is the suggestion contained in the Clause, would be £7,000,000 a year. We suggest to the Committee that the Chancellor, whoever he may be, can do with that amount of money, whereas the reduction of the duty would make little or no difference to anyone. I, therefore, ask the Committee to reject the new Clause.

Question put, "That the Clause be read a Second Time '

The Committee divided: Ayes, 107; Noes, 247.

Jeffreys, General Sir G.Morris, Hopkin (Carmarthen)Sluart, Rt. Hon. J.
Joynson-Hicks, Lt.-Cdr. Hon. L. W.Morrison, Maj. J. G. (Salisbury)Studholme, H. G.
Keeling, E. HMorrison, Rt. Hn. W. S. (Cirencester)Sutcliffe, H.
Kerr, Sir J. GrahamMott-Radclyffe, Maj. C. E.Taylor, C. S. (Eastbourne)
Lambert, G.Neven-Spence, Major Sir B.Teeling, Flt.-Lieut. W.
Legge-Bourke, Maj. E. A. H.Noble, Comdr. A. H. P.Thomas, J. P. L. (Hereford)
Lindsay, Lt.Col. M. (Solihull)Osborne, C.Thornton-Kemsley, Col. C. N.
Linstead, H. N.Peake, Rt. Hon. 0.Thorp, Lt.-Col. R. A. F.
Lipson, D. L.Peto, Brig. C. H. M.Turton, R. H.
Lloyd, Maj. Guy (Renfrew, E.)Pitman, l. J.Vane, Lt.-Col. W. M. T.
Lucas-Tooth, Sir H.Ponsonby, Col. C. E.Wakefield, Sir W. W.
Lyttelton, Rt. Hon, 0.Poole, Col. 0. B. S. (Oswestry)Walker-Smith, Lt.-Col. D.
MacAndrew, Col. Sir C.Price-White, Lt.-Col. D.Ward, Hon. G. R.
Mackeson, Lt. Col. H. R.Raikes, H. V.Watt, Sir G. S. Harvie
Manningham Buller, R. E.Roberts, Sqn.-Ldr. E. 0. (Merioneth)Wheatley, Lt.-Col. M. J.
Marlowe, A. A. H.Robinson, Wing-Comdr. RolandWillink, Rt. Hon. H. U.
Marples, Capt. A. E.Ropner, Col. L.Winterton, Rt. Hon. Earl
Marsden, Comdr. A.Ross, Sir R.Young, Maj. Sir A. S. L. (Partick)
Marshall, Comdr. D. (Bodmin)Smiles, Lt.-Col. Sir W.
Maude, J. C.Smith, E. P. (Ashford)

TELLERS FOR THE AYES:

Mellor, Sir J.Stanley, Col. Rt. Hon. 0.Sir Stanley Holmes and Mr.Butcher.
Moore, Lt.-Col. Sir T.Stoddart-Scott, Lt.-Col. M.

NOES.

Adams, W. T. (Hammersmith, South)Dodds, N. NKirby, B. V.
Adamson, Mrs. J. L.Douglas, F. C. R.Lang, G.
Allen, A. C. (Bosworth)Driberg, T. E. N.Lavers, S.
Allen, Scholefield (Crewe)Dugdale, J. (W. Bromwich)Lawson, Rt, Hon. J. J.
Alpass, J. H.Dumpleton, C. W.Lee, Miss J. (Cannock)
Attewell, H. C.Durbin, E. F. M.Levy, B. W.
Awbery, S. SDye, S.Lewis, T. (Southampton)
Ayles, W. HEde, Rt. Hon. J. C.Lindgren, G. S.
Ayrton-Gould, Mrs. B.Edelman, M.Lyne, A. W.
Bacon, Miss A.Edwards, A. (Middlesbrough, E.)McEntee, V. La T.
Baird, Capt. J.Edwards, John (Blackburn)Mack, J. D.
Balfour, A.Edwards, N. (Caerphilly)McKay, J. (Wallsend)
Barnes, Rt. Hon. A. J.Edwards, W. J. (Whitechapel)McLeavy, F.
Barstow, P. G.Evans, S. N. (Wednesbury)Macpherson, T. (Romford)
Barton, C.Ewart, R.Manning, C. (Camberwell, N.)
Battley, J. R.Fairhurst, F.Manning, Mrs L. (Epping)
Bechervaise, A. E.Farthing, W. J.Marquand, H. A.
Belcher, J. W.Fletcher, E. G. M. (Islington, E.)Mayhew, Maj. C. P.
Berry, H.Follick, M.Messer, F.
Beswick, Flt.-Lieut. F.Foot, M. M.Middleton, Mrs. L.
Bevan, Rt. Hon. A. (Ebbw Vale)Foster, W. (Wigan)Mikardo, Ian
Bevin, Rt. Hon. E. (Wandsworth, C.)Freeman, Maj. J. (Watford)Millington, Wing-Comdr. E, R.
Binns, J.Gaitskell, H. T. N.Mitchison, Maj. G. R.
Blackburn, A. R.Ganley, Mrs. C. S.Monstow, W.
Blenkinsop, Capt- A.Gibson, C. W.Montague, F
Bottomley, A. G.Gilzean, A.Moody, A. S.
Bowdcn, Flg.-Offr. H. W.Gooch, E. G.Morgan, Dr. H. B.
Bowles, F. G. (Nuneaton)Goodrich, H. E.Morley, R.
Braddock, Mrs E. M. (L'p'l, Exch'ge)Grenfell, D. R.Morris, P. (Swansea, W.)
Braddock, T. (Mitcham)Grey, C. F.Morrison, Rt. Hon. H. (Lewisham, E.)
Brook, D. (Halifax)Grierson, E.Murray, J. D.
Brooks, T. J. (Rothwell)Griffiths, D. (Rother Valley)Nally, W.
Burden, T. W.Griffiths, Rt. Hon. J. (Llanelly)Neal, H. (Claycross)
Burke, W. A.Gunter, Capt. R. J.Nichol, Mrs. M. E. (Bradford, N.)
Butler, H. W. (Hackney, S.)Haire, Flt.-Lieut. J. (Wycombe)Nicholls, H. R. (Stratford)
Castle, Mrs. B. A.Hall, W. G. (Colne Valley)Noel-Buxton, Lady
Champion, A. J.Hamilton, Lieut.-Col. R.Oldfreld, W. H.
Chetwynd, Capt. G. R.Hannan, W. (Maryhill)Oliver, G. H.
Clitherow, R.Hardy, E. A.Orbach, M.
Cluse, W. S.Hastings, Dr. SomervillePaling, Rt. Hon. Wilfred (Wentworth)
Cobb, F. A.Haworth, J.Paling, Will T. (Dewsbury)
Cocks, F. S.Henderson, A. (Kingswinford)Palmer, A. M. F.
Collick, P.Henderson, J. (Ardwick)Pargiter, G. A.
Colman, Miss G. M.Holman, P.Parkin, Flt.-Lieut. B. T.
Cooper, Wing-Comdr. G.Hoy, J.Paton, J. (Norwich)
Corbet, Mrs. F. K. (Camb'well, N.W.)Hudson, J. H. (Ealing, W.)Peart, Capt. T. F.
Corlett, Dr. J.Hughes, Hector (Aberdeen, N.)Perrins, W.
Corvedale. ViscountHughes, Lt. H. D. (W'lhampton, W.)Piralin, P.
Crawley. F't.-Lieut. A.Hynd, H. (Hackney, C.)Platts-Mills, J. F. F.
Crossman, R. H. S.Hynd, J. B. (Attercliffe)Popplewell, E.
Daines, P.Janner, B.Porter, G. (Leeds)
Dalton, Rt. Hon. H.Jeger, Dr. S. W. (St. Pancras, S.E.)Pritt, D. N.
Davies, A. E. (Burslem)Jones, A. C. (Shipley)Proctor, W. T.
Davies, Ernest (Enfield)Jones, D. T. (Hartlepools)Pursey, Cmdr. H.
Davies, Harold (Leek)Jones, J. H. (Bolton)Ranger, J.
Davies, Haydn (St. Pancras, S.W.)Jones, Maj. P. Asterley (Hitchin)Rees-Williams, Lt.-Col. D. R
Davies. S. 0. (Merthyr)Keenan, W.Reid, T. (Swindon)
Deer, G.Kenyon, C.Rhodes, H.
Delargy, Captain H. J.Key, C. W.Richards, R.
Dobbie, W.Kinghorn, Sqn.-Ldr. E.Ridealgh, Mrs M.

Robens, A.Soskice, Maj. Sir F.Weitzman, D.
Roberts, G. 0. (Caernarvonshire)Sparks, J. A.Wells, Maj. W. T. (Walsall)
Robertson, J. J. (Berwick)Stamford, W.White, H. (Derbyshire, N.E.)
Rogers, G. H. R.Stewart, Capt. M. (Fulham, E.)Whiteley, Rt. Hon. W.
Royle, C.Strachey, J.Wigg, G. E. C.
Sargood, R.Strauss, G. R.Wilcock, Group-Capt. C. A. B.
Scott-Elliot, W.Swingler, Capt. S.Wilkes, Maj. L.
Segal, Sq. Ldr. S.Symonds, Maj. A. L.Wilkins, W. A.
Sharp, Lt.-Col. G. M.Taylor, H. B. (Mansfield)Willey, F. T. (Sunderland)
Shawcross, Cmdr. C. N. (Widnes)Taylor, R. J. (Morpeth)Willey, 0. G. (Cleveland)
Shinwell, Rt. Hon. E.Taylor, Dr. S. (Barnet)Williams, J. L. (Kelvingrove)
Shurmer, P.Thomas, I.0. (Wrekin).Williams, Rt. Hon. T. (Don Valley)
Silverman, J. (Erdington)Thomas, John R. (Dover)Willis, E.
Silverman, S. S. (Nelson)Thorneycroft H.Wise, Major F. J,
Simmons, C. J.Tiffany, S.Woodburn, A.
Smith, Capt. C. (Colchester)Tolley, L.Wyatt, Maj. W.
Smith, Ellis (Stoke)Tomlinson, Rt. Hon. G.Yates, V. F.
Smith, Norman (Nottingham, S.)Turner-Samuels, M. 'Young, Sir R. (Newton)
Smith, S. H. (Hull, S. W)Ungoed-Thomas, Maj. L.Younger, Maj. Hon. K. G.
Smith, T. (Normanton)Walkden, E.Zilliacus, K.
Snow, Capt. J. W.Walker, G. H.
Solley, L. J.Wallace, G. D. (Chislehurst)

TELLERS FOR THE NOES:

Sorensen, R. W.Webb, M. (Bradford, C.)Mr. Pearson and
Mr. Collindridge.

New Clause—(Expenditure Of Tax Allowances For Repairs On Motor Vehicles)

Where for the purposes of excess profits tax or income tax allowance has been made for repairs to motor vehicles and by the reason of the emergency created by the war such repairs have not been executed the said allowance or part thereof may be applied to meet expenditure on new vehicles to replace the old vehicles in respect of which the allowance was made. [ Sir W. Wakefield.]

Brought up, and read the First time.

9.30 p.m.

I beg to move, "That the Clause be read a Second time."

The purpose of this Clause is to encourage the purchase of new vehicles rather than the repair of old ones, by allowing the money which has been admitted for deferred repairs to be utilised for the purchase of new vehicles. Very briefly, the reasons are as follow: It is of the utmost importance for the trade of the country as a whole for the road haulage industry to be efficient and run economically. This can best be done with new vehicles rather than by repairing old vehicles. Furthermore, in view of the shortage of labour, if people are used in factories to manufacture new vehicles rather than to repair old ones, this will be of advantage to the export trade. From the road safety point of view also, it is better to have new vehicles on the road rather than old, obsolete and worn-out vehicles. These are the reasons why the Government are asked to give sympathetic consideration to this Clause. During the war the remuneration of the road haulage industry has been limited by arrangements with the Ministry of War Transport, both for con- trolled undertakings and for hired vehicle operators, It has not been possible for them to put aside as much as would normally have been put aside for the purchase of new vehicles. The depreciation or wear and tear allowances provide money for replacements at the original prices, but— and this is the point for which Government sympathy is asked—new vehicles will be some 6o per cent. or more in price than the old ones, and for small operators, who compose the great bulk of the road haulage industry, this will be a severe handicap. If money which has been set aside for deferred repairs could be permitted to go towards the increased cost of the purchase of new vehicles, it would be extremely helpful to this industry. We ask for this as a special case, due to the circumstances arising out of the war, and not as a permanent feature. I hope that with that statement, which is brief in order not to detain the Committee, we may have the sympathetic consideration of the Chancellor of the Exchequer towards the proposal contained in this Clause.

As the Committee will remember, this matter was dealt with in the Second Reading Debate. The short answer to the hon. Member is that the point he makes is actually covered under the legislation now in being. It is quite obvious that if repairs do not take place there could not, either under E.P.T. or Income Tax, be an allowance given for something which never happens. That being so, it is impossible for us to accept this Clause, even if it were necessary, which, actually, it is not, because the trader who replaces his vehicle after the war without repairing it will not be penalised in any way. He will get his full allowance in respect of the replaced vehicle and a special allowance for the new one. He will have had his wear and tear and obsolescence allowances in respect of the old one under Income Tax and E.P.T. If the hon. Member would agree to see me at some time I think I could make it perfectly clear to him that the point he raises is actually covered, and that the traders he has in mind will not be penalised in any way under the present Finance Bill. That being so, I hope that he will agree to withdraw his Clause.

In View of the statement made by the Financial Secretary, I beg to ask leave to withdraw the Clause.

Motion and Clause, by leave, withdrawn.

New Clause— (Expenses In Connection With A Successful Appeal To Be A De Duction For Income Tax Purposes)

In computing the amount of the profits or gains of any person for the purpose of assessment to income tax under Case r of Schedule D of the Income Tax Act,1918, there shall, notwithstanding anything contained in Rule 3 of the Rules applicable thereto, he allowed as a deduction from those profits any legal or other professional costs and other expenses incurred in any year in connection with any successful appeal affecting the computation of profits chargeable to excess profits tax or the national defence contribution of any trade or business carried on by that person.

The provisions of this section shall with any necessary modifications apply equally to the computation of expenses of management in respect of which repayment of income tax is or may be made under section thirty-three of the Income Tax Act, 1918.— [ Mr. C. S. Taylor.]

Brought up, and read the First time.

I beg to move, "That the Clause be read a Second time."

I apologise for the technical character of this Clause but the structure of taxation has become so complicated that even learned judges have found it difficult to determine some of the points of law brought before them on taxation matters. In fact, I feel that I should add my humble protest to the difficulty of understanding tax law. One learned judge observed in court that the Income Tax law was "quite enough to puzzle one's head off," while another said it was a crying scandal that legislation by which a subject is taxed should appear on the Statute Book in such an unintelligible form. That was Mr. Justice Rowlatt in the case of Lionel Sutcliffe Ltd. v. Commissioners of Inland Revenue. These taxation difficulties are not confined to the rich and prosperous companies, they equally concern the little man who carries on a business just round the corner, in fact they concern both the millionaire and the small man. Therefore I claim that though the wording of this Clause is technical, it concerns in many ways the smallest taxpayer.

This Clause which is the first of two on the Paper dealing with this matter, is designed to give an allowance in computing Income Tax under Schedule D. Case I liabilities, claims for legal or professional costs and other expenses incurred by the taxpayer in prosecuting successful cases—and I ask the Committee to remember the word "successful" because it is a very material word in the new Clause—before Special Commissioners or the Board of Referees and if necessary the courts in respect of taxpayers' liability to assessment for Excess Profits Tax, and national defence contributions. The second Clause, which I understand is not to he called, but on which I understand discussion is allowable, is designed to give a similar allowance in computing the actual liability of the taxpayer to these taxes. Until now, it has been the practice of the Inland Revenue to disallow as deductions from profits for Income Tax purposes the costs and other expenses of appeals on the ground that such expenses are not expenses of earning profits, and thus they fall within—I am sorry to bore the Committee with lots of Schedules and Rules and this, that and the other—the prohibitions in the rules applicable to cases 1 and 2 of Schedule D. Income Tax Act 1918, and in particular Rule 3 which reads as.follows:
"In computing the amount of profits or gains to be charged, no sum shall be deducted in respect of—
(a) any disbursements or expenses not being money wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation."
I apologise as I say for the technical nature of this Clause but not for the necessarily technical wording and I look forward to the day when that wording can be simplified so that hon. Members can understand it. I must mention, however, that the Inland Revenue do allow deductions from profits for normal recurring professional costs, charges and expenses incurred by the taxpayer in settling his taxation liability with the Inland Revenue officials. It is also Revenue practice to allow costs on appeal to the Board of Referees where the taxpayer is successful in those cases which deal with the non-distribution of income by companies for Surtax purposes, and that is dealt with under Section 21 of the Finance Act, 1922. I feel that it is at least justice to allow, as a deduction in computing liability to income tax, any legal and professional charges, costs and other expenses in ascertaining the liability to Excess Profits Tax or National Defence Contribution, in the same way as such deductions are allowed in claims or actions relating to the settlement of war damage claims, deferred repairs claims or disputes about goods or services rendered,

If a dispute occurs between a manufacturer and a customer about the type or quality of goods supplied, and the matter is not settled amicably outside the courts but is referred to the courts, the legal and professional costs of both the manufacturer and the purchaser of those goods are allowed for tax purposes. In the same way, if an engineer carries out a contract and the contract is not satisfactory, the customer can bring an action against the engineer, and again the costs of both the customer and the manufacturer are allowed as far as tax is concerned. Hon. Members will realise that this Clause is confined to successful appeals only, and the reason for confining it to successful appeals is to prevent a spate of frivolous appeals being made to the courts, which would take up a great deal of time and be a great expense. This is purely confined to the person who claims successfully and wins his action, and the costs of the action are allowed in regard to Excess Profits Tax or Defence Contribution assessment. The fact that appeals are often disallowed deters especially the smaller taxpayer, even though he and his legal advisers know that he has a good case, from making an appeal further, because he knows that the Inland Revenue, with their unlimited resources, can take him to the House of Lords and he may, in the costs incurred, lose all the benefit that his successful action may bring him.

9.45 p.m.

It often happens that the taxpayer is compelled, willy-nilly, to agree to the decision of some official of the Treasury or of the Inland Revenue. He may be compelled to agree to a ruling which may at a later date be reversed or revised completely. I can assure the Committee that if hon. Members study the cases that have been successful before the Appeal Tribunal or before the courts, they will find that a great many taxpayers have been successful in prosecuting their claims against the Inland Revenue. For instance, there is a case I must mention of someone called Terence Byron which was before the courts. The plaintiff complained that he was not allowed to consider as working capital a cinema which had been bombed. He was successful all through the courts, and eventually, for E.P.T. purposes, he was allowed to consider the value of the cinema as capital employed in his own business, even though the cinema had been bombed at some previous date. He was still permitted to say that that cinema, or the original value of the cinema, was capital employed in his business, as far as E.P.T. purposes were concerned.

Turning to the second of the proposed new Clauses, which I understand it will be in Order to discuss with the first, it seems not only reasonable but quite equitable that with short-term taxes—we all hope that E.P.T. and N.D.C. will be short-term taxes—relief or allowance should be granted in respect of the ascertainment of taxpayers' liability, especially as it is governed by such complicated and, to the layman, quite unintelligible provisions. I believe the Chancellor of the Exchequer should welcome a certain number of appeals on these matters, as they might help to clarify the present unclear position about matters of taxation, and even if they relieved some of his officials from the voluminous work to which they are subjected at the present time.

I apologised at the beginning by saying this was a difficult matter. I will put it, if I may, very simply in this way: If a company makes £ 100 or £1,000 in E.P.T., or if a company is assessed at the rate of £100 or £1,000 for E.P.T. purposes, and if that company disagrees with the Assessors, that company has the right to appeal. The Inland Revenue with its great resources may take that company, sup- posing the preliminary appeals are.successful, up to the House of Lords. Surely, it is right that if that company is successful in the courts it should have the right to charge the legal and professional expenses against the E.P.T. assessment.

I support the hon. Gentleman who moved the Second Reading of the Clause. I have sat here today and yesterday watching the faces of the hon. Members on the Government side. I am very glad, indeed delighted, to see some representatives from Manchester, the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock), and many other people who represent business interests—

Oh, no, I do not; I represent the working classes.

Unfortunately, a number of Members have gone nut, as they have done in the past undoubtedly, to tea, and this time I believe the tea party is in Downing Street. However, they come back at the call of the bell. They come back to the Division, and several of them at any rate are passing into the Lobbies on the instruction of the Government, who are quite determined that in no circumstances are they going to give way on any point in this Finance Bill. I hope, however, that they may do so in this case, largely because of the looks of sheer boredom that I see on the faces of so many Members opposite—sheer boredom with such difficult Clauses as the one which has been discussed during the last few minutes. Unfortunately, the hon. and right hon. Gentlemen on the Front Bench have not been able to see the looks on the faces of their back benchers.

On a point of Order. Has the speech to which we are listening any reference to the Clause under discussion?

I was hoping the hon. Gentleman would very shortly come to the point.

:I am delighted that the hon. and learned Gentleman has asked me to Come as quickly as possible to this particular point, which if it is difficult to the hon. Gentlemen on the Govern-Benches is obviously just as difficult to the ordinary back bencher and the ordinary citizen. They are themselves more confused today over Income Tax questions, than over anything else. The position is that any one who wishes to take up a case against the Government is concerned with the chances and the possibilities of winning the case, and is just as worried, trying to understand the vast number of Clauses and regulations connected with Income Tax. Is it not understandable that most persons, including big business and small business people, realise that even though they may be in the right, they may not be able to afford to take the risk of the Treasury suddenly raising a point which they would have to fight right up to the House of Lords.

My hon. Friend who moved this Clause has shown us the complications of the situation and given details of the difficult problems which have to be dealt with. Surely the Government will feel that it is possible that something should be done in order to allow people to take up these cases, especially in regard to Excess Profits Tax. In regard to new Taxes judges themselves have said how difficult is the situation. Some one has to start a case and some one has to make a ruling. Why should not businesses be encouraged to bring up points on which a ruling would make things clearer. Another point is that these Clauses are not going to last for very much longer. I hope the Financial Secretary will answer me on the point whether the Excess Profits Tax provisions are going to last very long. If they are not going to last very long, we should get these things decided quickly, and the Government ought to encourage cases to be brought so that decisions can be made. All we ask is that the Government shall give the possibility that if a person succeeds in his appeal he will be left in a position in which he can claim the expenses against his liability for tax. That is what we are worrying about.

I want to warn the Committee of the position into which we are being led. Finance is at the present time the most important thing in the country, and in a sense the Treasury governs the whole country. In the years before the war, I had an opportunity of studying very closely, for different bodies in this country, developments abroad, especially in Germany. I remember a well-known Social Democrat, who happened to be in Nazi pay, saying to me: "My position is this: I dare not do anything because I am not allowed enough money for myself, and if I try to be in any way independent, I shall be dismissed." We are slowly and surely being led into that situation. We are being caught financially so that nobody feels that he can afford to appeal against the Government. Soon nobody will be in a position in which he can actually take an independent line. If the Government are really serious in wanting this country to be free, independent and democratic, they should leave us the chance and opportunity of trying, if possible. to win cases and make things clear for the future.

:I earnestly appeal to the Solicitor-General to give consideration to a point which I think can be shorn of all technicality and put simply and shortly as a point of human justice. Here is a case in which a man is forced into extra expenditure, not by his own will, but by something which is proved afterwards to have been a mistake of the Government, and to an ordinary human being it would certainly seem that in that case a man should be allowed to charge that extra expense which has been forced upon him against the taxation which would otherwise be due. I think the strongest case lies in the second New Clause upon which, although we are allowed to discuss it, we are not going to Divide. Let us take a simple case. A man claims that his profit during the year has been £1,000, but the Treasury say it has been £2,000. The matter has to go through the process of law. In the course of that, out of that profit of £1,000 the man spends £500, or if he is particularly frightened about the case and employs the hon. and learned Member for North Hammersmith (Mr. Pritt), he probably spends the whole £1,000. What happens in the end? Thanks to the professional skill of the hon. and learned Gentleman, he wins his case. It is established that £1,000 was the right profit. The Treasury then say, "We will let bygones be bygones, and still pretend you have got the £1,000 profit with which you started." In fact, the whole of that profit, or part of it, has been dissipated in proving against the Treasury that that was the profit. I am sure the Solicitor-General will have a magnificent legal defence. I am sure the right hon. Gentleman would be full of Treasury principles but I do not think the ordinary man would understand the reason for this action on the part of the Government which, if it were action taken by one section of the community against some other section, would be regarded as the very height of meanness.

10.0 p.m.

This position has existed over a numberof years, and I would like to ask the right hon. Gentleman why previous Administrations, extending over some 40 or 5o years, have not seen fit to introduce such a just rectification in their Budgets.

Is this the new Socialist spirit? Are these the people who are going to put everything right? [HoN. MEMBERS: "Answer."] If it has not been put right, make a start now.

If I may point what has been said, I would remind the Committee that the Act we are discussing is the Income Tax Act, 1918, and that that Act has remained unchallenged until today since 1918 so far as this particular feature is concerned. Now this matter is put forward as one of great injustice, and it is said that it is the urgent duty of a Socialist Government to reverse the position.