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New Clause—(Industrial And Provident Societies)

Volume 440: debated on Wednesday 16 July 1947

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(1) Where the person carrying on a trade or business is a registered society, the profits tax payable by the society shall be computed as if no net relevant distributions to proprietors had been made in the case of that trade or business for any chargeable accounting period.

(2) For the purposes of this section, the expression "registered society" means a society registered under the Industrial and Provident Societies Acts, 1893 to 1928, or under the enactments in force in Northern Ireland, known as the Industrial and Provident Societies Acts (Northern Ireland), 1893 to 1929. —[ Mr. Glenvil Hall.]

Brought up, and read the First time.

3.20 p.m.

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

This new Clause deals with industrial and provident societies. It provides that these societies should be charged the Profits Tax at the rate of 5 per cent., that is the lower rate, instead of the higher rate, namely 12½ per cent. The treatment of these societies was raised during the Committee stage of this Bill in the Debate on Clause 35, which deals with building societies, and a request was then made by certain hon. Members that industrial and provident societies should receive equal treatment with building societies.

The House will have noticed that building societies previously paid 1½ per cent., and that now, under the terms of this Bill, they will pay 3 per cent.; but that 3 per cent. has to be paid on profits before and not after deducting interest on loans or deposits. The 5 per cent. for industrial and provident societies, which it is proposed to incorporate in the Bill, will be computed on the ordinary basis, that is, after deducting loan but1not share interest. It may be asked by hon. Members opposite why the Co-operative societies, who are the chief organisations to benefit by this change, should be permitted to pay at the lower rate rather than the higher, and the answer is that the share capital of these societies is not analogous to the ordinary share capital of commercial trading concerns. The lower rate will benefit largely small holdings of shares, and these shares are a sign of membership in the particular Co-operative society concerned.

I think that only about 20 per cent. of the share capital invested in this way is actually used to finance trading activities. The great bulk of it—I am told it amounts to something like 80 per cent. —is passed on to the Wholesale Society and invested by them, mostly in Government securities. Therefore it can be said that investments of this kind, that is, shares in Co-operative societies of this nature, are more investments accepted to encourage thrift than for use in the society's business. Investments of this kind take their place with those in many other corporations like those in a savings bank, and there is a limit, namely £200, placed on the amount which any individual can invest. Many of the members leave the interest which accrues to them to accumulate and be added to their holding, and do not normally withdraw it as and when it becomes due.

If the House assents that these features are there and that they do mark off industrial and provident societies from ordinary trading concerns, it does, I think, put them in a special category of their own, so that the dividends on their share capital is more akin to fixed interest on loan capital than to dividends on share capital in an ordinary company. Interest on loan capital is allowable as a deduction in computing profits for Profits Tax purposes, and does not rank as a distribution attracting the 12½ per cent. tax. A similar problem arose in 1937, and those hon. Members who were in the House then will recall the discussions that took place. The problem arose over building societies, and it was pointed out that there was little distinction between the share and loan capital of these societies, and, in that instance, by general agreement in all parts of the House, the situation was met by a special provision which limited the Profits Tax for such societies. As I have reminded the House, the Profits Tax has been 1½ per cent, up to now for building societies, and it is now proposed that it should be raised to 3 per cent.

When we had the discussion on the Committee stage, the Chancellor the Exchequer, after listening to the Debate, agreed that there was a case which should be considered. He has, in the interval, looked at it again, and has come to the conclusion that it will be fair and just to place these provident and industrial societies in this category of their own and to allow them to pay at the rate of 5 per cent. rather than the full.rate of 12½ per cent. The House will see that this is a compromise. My right hon. Friend has not accepted the suggestion that they should be placed exactly on all fours with the building societies and pay 3 per cent., but he has fixed a rate of 5 per cent. which he thinks is reasonable in the circumstances. I would add that, at the moment, they pay 5 per cent., and, therefore, so far as that is concerned, the position will really he unchanged, although I have to say that, in spite of the fact that the rates will remain the same, industrial and provident societies will, in fact, pay more under the legislation now going through the House.

If it is asked why Co-operative societies are placed in a different category from building societies, I think the short answer is that it is quite obvious from the facts and figures that they do not use this share capital to the full for trading activities, and that the greater proportion is invested mainly in Government stocks. Nevertheless, unlike building societies, some of it is used in trading activities, and, therefore, it is right, in the view of my right hon. Friend, to fix the rate at 5 per cent. This does indicate the difference between a Co-operative and a building society and also makes clear the difference between a Co-operative society and an ordinary trading concern. The financial effect, if the new Clause is accepted, will be that the cost will be about £250,000 per year, taking into account the fact that Profits Tax will be allowed as a deduction for Income Tax. The position of Co-operative societies as a whole will be that, whereas they formerly paid 5 per cent. on trading profits only, they will now pay 5 per cent. on trading profits plus investment income. The additional charge, I am informed, will be about £325,000 a year. I hope that, with that brief explanation, the House will agree with what my right hon. Friend desires to do and will accept the incorporation of the new Clause in the Bill.

This is one of the most barefaced proposals which I have ever heard made by a Government to benefit their own political friends. I listened with great interest to what the Financial Secretary said, and there was not a word in it which could justify this proposal. He started by drawing an analogy with building societies, which, as all hon. Members know, are in a wholly different position with regard to taxation, and always have been. The arrangements for taxation of building societies are on a wholly different basis, and their circumstances are totally different. The Financial Secretary, in fact, admitted that just now. He differentiated between the Co-operative societies and the building societies, saying that the position of their share and loan capital was different. He sought to justify it by saying that we are not going to give the Co-operative societies quite as good terms as we are giving to the building societies. I do not know whether hon. Members fully understand what this proposal means. It is not a proposal related to the dividend, which is the discount allowed to those who trade with the Cooperative societies; this is related to the interest received on the share capital of those who invest in Co-operative societies, and is, therefore, wholly analogous to the money invested in a company, or any other concern belonging to a private trader.

3.30 p.m.

I find it difficult to understand how the Financial Secretary has the effrontery to bring this proposal before the House. Of course, I have no doubt that he is very much encouraged by the fact that he has a very large majority. If a proposal of this sort, which is so obviously unjust, is pushed through the House. I cannot help feeling that there will be pretty serious reactions against a Government who are ready to indulge in this sort of financial trickery. I do not know whether the right hon. Gentleman thinks that because share capital in some concerns is limited to £200, they should be treated differently from concerns in which more can be invested. That is an argument which does not seem to have much justice or sense about it. I hope that the Chancellor of the Exchequer will withdraw this monstrous Clause.

I am sorry to note the unfriendly way in which this Clause is received by hon. Members opposite. The right hon. Gentleman was careful to say that there was a separate case to be made out for building societies. Perhaps, had he told the House what that separate case was, he would have given away his opposition to another separate case to be made for the Co-operative movement. The Cooperative movement consists of people who are persuaded, as a matter of policy, to lay aside for capital purposes, in the price they pay for their commodities—in the form of an automatic sale—money that shall ultimately be used for general capital or social purposes. Preferably, it would be well to use it within the Co-operative movement, and those of us who are co-operators have advocated that it should be used in that way. Instead, in large measure, it is used, as the Financial Secretary explained, in the form of investments in Government stocks. It is a very good thing for the country, as well as for the individual co-operator, that there is this method of persuading literally millions of people—nine million people are members of the Co-operative movement—that this process of raising capital should be adopted.

That is the special case for the Co-operative movement, and it is as good a case—and can, in my judgment, be better defended—as any that could be made for the building societies. I am very glad that my right hon. Friend the Chancellor has made this concession, although I am not altogether sure whether he ought not to have made the full concession for which we asked. However, he has at least made this concession. I am perfectly certain that if the Conservatives wish to make this a debating point for electoral or general political purposes, they will have the greatest difficulty in explaining why this concession, which is readily allowed in other respects with reference to the building societies, should not be allowed to this highly beneficent social process that exists in the Co-operative movement, of persuading people to buy their goods at a price that will enable, at the end of a quarterly or yearly period, a sum to be put aside, to be used as personal savings, and, ultimately, as social capital. I am certainly in favour of this proposal.

The Financial Secretary, in commending this new Clause to us, was at some pains to anticipate that some argument might devolve upon the Cooperative societies from, I think he said, this side of the House. I think his wisdom is revealed to us in anticipating the thunder from the hon. Member for West Ealing (Mr. J. Hudson), who has put before us what, of course, are the real reasons behind this proposal. First of all, nine million potential electors now demand their pound of flesh before the sands finally run out for the Socialist Government. Then there was some reference to beneficent social consequences. The hon. Gentleman did not make it clear to me, at least, just what those social consequences were going to be, unless it was that the Co-operative societies propose to lose a considerable amount of their depositors' money by investing it in the gilt-edged market in its present state of decline. I do not know whether that is what the hon. Gentleman who was thundering from the Left a minute or two ago had in mind.

There are one or two curious features about this proposal. If it is to be advanced on the ground which the Financial Secretary gave, one cannot really understand why it was not contained in the original Budget proposals. There has been a lapse of time since the introduction of the Budget which has made possible the perfect crime which is now placed before us. First of all, it allows time for the hon. Gentleman and his nine million friends to bring forward this ultimatum, because, quite obviously, that is what it is. The cheers from hon. Members opposite made it clear that the Government: had been told to stand and deliver on this matter; that there was to be no nonsense about it. Of course, the second thing that makes the crime perfect and only possible this week—and that is why it has been postponed until now—is the Government's attack on the reporting of Parliamentary Debates by the cutting down of newsprint, and it is now hoped that this matter will escape notice and will be able to be slipped through.

I submit that those are two obvious reasons for the delay in bringing this matter forward. The Financial Secretary made an endeavour to probe into the past. He told us about some discussions which took place in 1937, when, as it happens, both he and I were temporarily absent from this assembly owing to the displeasure of certain electors, but, at least, he knows that there was no Profits Tax in 1937. I think we all know that. Why did he delve into the past and bring up a Debate in 1937, unless, of course, there was something connected with the National Defence Contribution which figured in the Finance Bill of that year? At any rate, the reference seemed a little obscure.

As regards building societies, I am not going to repeat some remarks which I made during the Committee stage, when I put forward—and I was one of those who stressed it particularly—the need for building societies to have some preferential treatment in this matter. The reason l gave was the one I repeat now, that there we have an instrument which is playing a useful part, and which can play a more useful part, and will do so when there is a change of Government on the rising of the people. The Co-operative societies have made no contribution whatever to the well-being of the people.

Is the hon. and gallant Gentleman not aware that the Co-operative societies have built very many comfortable and commodious houses at a nominal rent for members of the working classes?

I hope the hon. Member, whose frequent championship of the Methil Co-operative Society in connection with the naval base at Rosyth, we know, is comfortably housed under their auspices. Nothing is more likely to soothe his temper in this House than if he can be comfortably accommodated somewhere else.

Is the hon. and gallant Gentleman not aware that after the last war, the Royal Arsenal Cooperative Society bought a whole housing estate which would have become derelict but for their support and financial aid in helping to house homeless people? Is he also not aware that within 12 miles of this House there are scores of houses which have been constructed by the Cooperative movement, and there are also hundreds of houses more which have been built because the Co-operativemovement lent money to help working people to get their own homesteads?

I have no objection to the hon. Member for Doncaster (Mr. Walkden) attempting to put himself on side, after his rough treatment by the Parliamentary Secretary to the Ministry of Food. Of course, a limited number of houses of inferior quality have been put up under those auspices, and a certain number of working class people have been enabled by the Co-operative Society to buy their own houses Where the societies do that, of course, they are performing the function of building societies, which I am now advocating, in helping people to buy their own homes. But I repeat that, by and large, the Cooperative societies have made no contribution of any real value to the social wellbeing of the people in this country. They are and have been for a great many years a convenient method of evading taxation of one kind and another. I repeat here and now that the case for the building societies rests upon a social contribution of that kind. However, as I said earlier, the moment has arrived for the perfect crime. The Press are in course of being muzzled. The nine million co-operators have now presented the pistol at the Government's head. The hon. Member for West Ealing, having refreshed himself on non-alcoholic lines has come down here in an extremely ferocious frame of mind, and it will only remain for the Opposition to stand as the champions of social improvement by resisting this discriminatory tax.

I trust hon. Members will view this matter quite impartially, I quite appreciate the incapacity of the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) to draw a distinction between the Co-operative movement and a private company, but I wish to make that distinction clear. Before I do so, in order to disabuse the minds of hon. Members of the idea that the Co-operative movement is treated differently from any private company, I shall refer to the words of the right hon. Member for the Scottish Universities (Sir J. Anderson), who speaking in this House on 17th October, 1944, pointed out clearly:

"Since 1933 the Co-operative Societies have been taxed on the whole of their profits in the same way as limited companies. The "divi" paid by such societies, which is the sum paid as discount, rebate, dividend or bonus referred to in Subsection (3) of Section 31 of the Finance Act, 1933, is allowed as a deduction in arriving at the assessable profits in the same way as a discount or rebate allowed by a company would be deducted, and I am not prepared to propose legislation to alter this position, which is in accordance with the recommendations both of the Royal Commission on the Income Tax and the later Raeburn Comniittee."—[OFFICIAL REPORT, 17th October, 1944: Vol. 403, C. 2210.]

3.45 p.m.

Will the hon. Gentleman agree that it will not be possible for any Chancellor of the Exchequer in future to say that, if this Clause becomes law?

Not at all. I want to indicate how the Co-operative movement functions, and to give some idea of the social benefits to which the hon. and gallant Member for Holderness referred. I understand from proclamations made by the Opposition that they believe in a property-owning democracy. They may believe in it as a theory, but I suggest that in the Co-operative movement we have that idea in practice. We have 91½ million members, with a capital of approximately £310 million. That means, approximately, that 9½ million people have an average shareholding of about £40 each. If that is not approximating towards the ideal suggested by hon. Members opposite, I should like to know what is.

We should realise that right from the beginning, the Co-operative movement, apart from being a trading organisation, has been an organisation with a social mission, and consequently it has inculcated the virtues of thrift and temperance—although that may not be acceptable by a large number of Members in this House—and self-reliance. It was for that reason that, as hon. Members opposite will learn if they care to look up their own history, many of their illustrious forbears condescended to go on platforms of the Co-operative movement and lavish praise upon the social improvements which that movement was effecting. In consequence of that, the great majority of the people in this country treat the local retail society not merely as a trading organisation, but as their banking institution, with the result that we find that in 1945, millions of people have not only placed deposits in the society but they have allowed their dividends and interest to accumulate within the society to such an extent that it became literally impossible for the retail societies to employ the capital placed at their disposal in trade. That is why the Financial Secretary has indicated that out of a total capital of £310 million, approximately 86 per cent. has to take on the form of investment, and slightly less than 14 per cent. is involved in the trade.

That is where we differ from the private limited liability company. The whole of the capital is involved in the trade, and the profit is assessed on the basis of their capital, but the Co-operative movement, of course, employs only about 14 per cent. in trade. The rest of it is passed on, for the most part, by the local retail society to the Co-operative wholesaler, but by law we are denied the opportunity of acquiring more than a certain number of shares in the Co-operative Wholesale Society. As a matter of fact, our shareholding in the Wholesale Society is limited by the C.W.S. itself. For every two members of the retail society, we are allowed to take up one £5 share, so that the whole of the capital in a retail society cannot be invested in the trade so far as the wholesaler is concerned. That now means that we must, therefore, invest it in the banking accounts of the Co-operative Wholesale Society. But just as a retail society cannot engage the whole of its capital for trade, neither can the C.W.S. There are enough complaints on the part of the Opposition about the gigantic development of the Co-operative movement at the present moment, but if we should engage the whole of these capital resources in trade, I think they would begin to complain more bitterly.

The hon. Member talks with such authority, and uses the word "we." Would he tell the House whether he has any interest in this Clause, and whether he has any shares in the Co-operative Society?

My shares are so infinitesimal that they would not influence any judgment or decision of mine on a matter of this kind. The investment of a member is limited to £200, and the hon. Member can imagine what interest I should receive on £200 at 2½ per cent. I think he will see it is not likely to colour my judgment in any way whatsoever. The C.W.S., or great Co-operative Wholesale Society, is unable to employ the whole of the capital placed at its disposal in trade, and the result is that, of course, it is obliged to find investments and it places great sums at the disposal of the Government—even a Tory Government, not merely a Labour Government. It likewise takes up loan stock in local corporations, and so on. Vast sums of money that we placed in investments because we could not engage it in trade, earn interest, which we pay out in interest upon the share capital; but as a local society, we make no profits on the transactions at all, because, as the local member hands it in to the retail society, so the retail society lends it to the Wholesale Society, and passes it on. Is any hon. Member opposite going to argue that because money is placed in a branch of some great banking institution that branch should be taxed? Of course, it should not. The retail society is merely being placed in the position of the branch of a bank.

Without making a long speech I want to indicate that the Bill has two intentions. The first is to prevent inflation, and the second to plough back capital into business. As we know, at the present moment, if the Bill stands as it is, without the introduction of the new Clause, instead of being anti-inflationary, it would be inflationary; because what we should be constrained to do is to prevent members of the community, those millions of people, putting money into the Co-operative societies. We should be obliged to convert the share capital into loan capital. Therefore, we should he handing out the money to the members, which, once in their hands, would become purchasing power. That would have tended toward an inflationary situation which we are endeavouring to avoid. Secondly, for the information of hon. Members who do not seem to know, I would indicate that the great majority of members of Co-operative societies permit their interest and their dividends to accumulate within the retail societies to the extent of about 65 per cent. of the amount to which they are entitled. The whole of that is used by the Co-operative movement for purposes such as I have indicated. But if this Measure were adopted without this Clause, I am afraid we should have to restrict all those prac- tices, and consequently prevent people from saving as they are at the present moment.

There are many other things I should like to say in connection with this, but conclude by reminding the House that the Co-operative movement from its inception has endeavoured to keep prices within the means of the great majority of people, and has expended and is expending substantial sums of money on education, housing, and the institution of social services to relieve the distress of its members. When private companies are ready to act on that principle, I shall be prepared to back them if they wish to receive precisely the same terms.

The very interesting picture of the activities of the Co-operative movement given by the hon. Member for North Bristol (Mr. Coldrick) is not quite complete in certain directions. I saw the very great merits of the Cooperative movement when it was being run entirely for the purposes and aims for which is was originally created. I happen to have, in the area I represent, a Co-operative with a Conservative majority, and so I speak with certain backing. But the picture that the hon. Member has painted is far from complete. Near where I live in the country, one of the local Co-operatives has recently purchased a very large and handsome estate, and I have during the shooting seasons seen the managers and directors having a pleasant afternoon's shooting. That, in its way, is an admirable thing; but whether the people who have put money into that "Co-op" know it is rather different.

There seems to be a point here. A public company has to have articles and a memorandum showing the shareholders exactly for what purposes their money is to be used. I believe that one of the dangers of the "Co-op" movement—as one of its backers I put this forward seriously—is that it is has departed widely from its original aims. It has been buying cinemas, and going into every form of industry. That is probably, in its way, a good thing. But let us be quite clear about it. H it is going in for this form of competition, it should not be unduly favoured by comparison with other organisations—in undertaking things which were not its primary functions I think there is a very considerable danger that the Co-operative movement, which has, in my view, performed great and useful functions for this country, is going to lose a great deal by going on as it is, partly for the reasons I have given, and partly for the political use to which it may put its funds.

If an organisation asks people to invest in it, so that they will be able through it, to purchase their goods or any services which may be provided in the best way, and because thus they will get the best deal, then surely it should limit the uses of the enormous funds accumulated as described by the hon. Member for North Bristol. But if it is going forward into the political arena, and using that money for that purpose, it should be made known in the same way as the activities of private enterprises are known through the articles and memoranda of association.

Is not the hon. Member aware that all Co-operative members read a quarterly—sometimes, a monthly—statement made by the board of directors in great detail, and issued to the whole of the membership so that there cannot possibly be any doubt or ignorance amongst the members as to what is being done with their funds?

We are discussing a new Clause, and we are not discussing the whole history of the Co-operative movement. I think the Debate is going rather wide.

I was only replying to things which the hon. Member for North Bristol has said. I do believe that the "Co-op." is being harmed in a way by the undue favour that is being shown to it as against private enterprise.

I am a little puzzled by this. I did not have the advantage of hearing my hon. Friend move the new Clause. I have heard the last two or three speeches, which seem to be about Co-operative societies. But when I look at the marginal note of the new Clause I cannot find that there is anything about Co-operative societies in it. The marginal note is about industrial and provident societies. I should like to know from whoever is to reply to this discussion whether the bene- fits, if there are benefits, of this new Clause, are limited to Co-operative societies, or in what way the Co-operative societies become a proper object of Debate under it. I can quite see that the benefit of the Clause would go to the Co-operative societies as well. There are a lot of Cooperative societies which gives me joy. I understand that hon. Members opposite do not share my joy. But I suppose that many other organisations will benefit by this Clause that are not Co-operative societies. I understand that there are a great many organisations and associations which will be covered by such benefits as the Clause gives—associations of allotment holders, for instance, and any kind of agricultural association, and a great many clubs. I understand that hon. Members opposite are interested in clubs, and that the interest in clubs on the other side of the House is as great as the interest in Co-operative societies is on this side. It is rather a pity that something which would confer a benefit on a particular type of society is criticised and cavilled at by hon. Members opposite, because other associations they happen not to like, and whose political affiliations are obnoxious to them, may happen to benefit as well.

4.0 p.m.

I think that the hon. Member for Nelson and Colne (Mr. S. Silverman) would not have made that speech had he had the privilege, as we had, of hearing the Financial Secretary introducing the new Clause, because he would have realised that the Financial Secretary devoted the whole of his arguments, so far as I could follow them, to the justification of the position of the Co-operative societies. The right hon. Gentleman made it quite plain that it was the Co-operative societies who were the main object of this Clause and who, as I think he said, were the main beneficiaries. Very often, in these financial Debates, I have a great deal of sympathy with the Financial Secretary of the Treasury, because I am pretty certain when I see him put up to move an Amendment or a new Clause that there is not very much to be said in favour of it. I was not this time wrong.

The hon. Member for North Bristol (Mr. Coldrick) spoke from a great deal of knowledge, because he is intimately connected with the Co-operative societies of whose internal working he spoke with such authority. I have a considerable amount of sympathy with what he said. The trouble is that, as he must realise, what we are dealing with here is a tax which applies to all forms of companies. It happens to be an extremely bad tax. The trouble of which he complained when this tax is applied to the particular organisations in which he is interested, comes from the inherent badness of the tax itself. Equally hard results can be shown by those interested in other forms of industrial organisations who suffer unfairly from the incidence of a tax which 10 years ago, when the Chancellor of the Exchequer was both younger and wiser, he was himself the first to condemn.

No one on this side of the House, I am sure, would display—certainly I would not—hostility either to the object or the methods of the Co-operative societies as such. Whether they always spend their surplus money which they acquire with the utmost wisdom is not for me to say. Whether the visible results of their successful trading which we see in this House are on the same level as the admirable goods which we see displayed in their shop windows is not for me to judge; but so long as they compete with private enterprise on equal terms and without discrimination in favour of the Co-operative societies, no one on this side of the

Division No. 310.]


[4.6 p.m.

Adams, Richard (Balham)Chater, D.Fernyhough, E
Adams, W. T. (Hammersmith. South)Chetwynd, G. RFletcher, E G M (Islington, E.)
Allen, A. C. (Bosworth)Cluse, W SFollick, M.
Allen, Scholefield (Crewe)Cocks, F. SForman, J C
Anderson, A. (Motherwell)Coldrick, WFoster, W (Wigan)
Attewell, H. C.Collick, PFraser, T. (Hamilton)
Austin, H. LewisCollins, V. JGallacher, W.
Awbery, S. SColman, Miss G MGanley, Mrs C S
Ayles, W. H.Comyns, Dr. LGibbins, J
Ayrton Gould, Mrs BCove, W. GGlanville, J E. (Consett)
Balfour A.Crossman, R. H SGreenwood, Rt Hon A (Wakefield)
Barstow, P GDaggar, G.Greenwood, A W J (Heywood)
Barton, C.Dalton, Rt. Hon. H.Grenfell, D R
Battley, J. R.Davies, Edward (Burslem)Grey, C. F.
Bechervaise, A. EDavies, Ernest (Enfield)Grierson, E
Belcher, J. WDavies, Harold (Leek)Griffiths, D (Rother Valley)
Benson, G.Davies, Hadyn (St. Pancras, S W)Griffiths, Rt Hon J. (Llanelly)
Bing, G. H CDavies, R J (Westhoughton)Griffiths, W D (Moss Side)
Binns, JDeer, G.Guest, Dr. L Haden
Blackburn, A. RDelargy, H. JGunter, R. J
Blyton, W. R.Diamond, J.Guy. W. H.
Bowles, F. G. (Nuneaton)Dobbie, WHaire, John E (Wycombe)
Braddock, Mrs. E. M. ( Exch'ge)Dodds, N NHale, Leslie
Brook, D. (Halifax)Driberg, T E. N.Hall, W. G.
Brooks, T. J. (Rothwell)Dumpleton, C. WHamilton, Lieut.-Col. R
Brown, George (Belper)Edelman, M.Hannan, W (Maryhill)
Brown, T. J. (Ince)Edwards, A. (Middlesbrough, E.)Hardy, E. A.
Bruce, Maj. D. W. TEdwards, Rt. Hon. Sir C (Bedwellty)Harrison, J.
Buchanan, G.Evans, E. (Lowestoft)Hastings, Dr. Somerville
Callaghan, JamesEvans, S. N (Wednesbury)Henderson, Joseph (Ardwlck)
Carmichael, JamesEwart, R.Herbison, Miss M
Castle, Mrs. B. AFairhurst, FHicks, G.
Champion, A. J.Farthing, W JHolman, P

House is, I am sure, entitled to protest. What we see here is a remarkable example of discrimination in favour of the Cooperative societies. What the hon. Member for North Bristol has to remember—because in his speech he certainly omitted altogether to mention it—is that the whole of this tax when applied to ordinary industry is based not on how the capital is acquired or used, but entirely on the distribution that is made to the shareholders.

Once we say that the Co-operative societies or any other trading concern have not to pay the same tax on distribution to their shareholders that a grocery store next door has to pay, then we are discriminating unfairly between the two. It is because of that, that we should like to see this relief applied to all industrial concerns; in other words, we should like to have seen a bad tax never put on. We shall vote against this Clause, not because it removes from the Co-operative some of the disadvantages of a bad tax, but because it discriminates in favour of the Co-operative society by leaving the whole of the rest of private industry still to bear the results of the Chancellor's very bad second thoughts.

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

The House divided: Ayes, 232: Noes, 109.

Helmes, H. E (Hemsworth)Neal, H. (Claycross)Strauss, G. R (Lambeth, N.)
House, GNichol, Mrs M E (Bradford, N.)Stross, Dr. B
Hoy, J.Nicholls, H R (Stratford)Stubbs, A. E.
Hudson, J H. (Ealing, W.)Noel-Baker, Capt. F E (Brentford)Summerskill, Dr. Edith
Hughes, H D (Wolverhampton, W.)Oldfield, W H.Swingler, S
Janner, BOrbach, M.Sylvester, G. 0
Jay, D. P T.Palmer, A. M. F.Symonds, A. L.
Jeger, Dr S. W. (St. Pancras, S. E)Pargiter, G. A.Taylor, H. B. (Mansfield)
John, W.Parker, J.Taylor, R. J. (Morpeth)
Jones, D. T. (Hartlepools)Parkin, B. T.Taylor, Dr. S. (Barnet)
Keenan, W.Paton, J. (Norwich)Thomas, D. E. (Aberdare)
Kirby, B. V.Peart, T. F.Thorneycroft, Harry (Clayton)
Kirkwood, DPoole, Major Cecil (Lichfield)Thurtle, Ernest
Lavers, S.Popplewell, E.Tiffany, S.
Lawson, Rt Hon. J. J.Porter E. (Warrington)Timmons, J.
Lee, F (Hulme)Porter, G. (Leeds)Tilterington, M. F.
Leslie, J. R.Pryde, D. J.Tolley, L.
Lipson, D L.Randall, H. E.Turner-Samuels, M.
Lipton, Lt.-Col MRanger, J.Ungoed-Thomas, L.
Logan, D GRankin, JVernon, Maj. W F.
Longden, F.Reeves, J.Viant, S. P
Lyne, A. W.Richards, R.Walkden, E.
McAdam, W.Ridealgh, Mrs. M.Walker, G. H.
McAllister G.Robertson, J. J. (Berwick)Wallace, G. D. (Chislehurst)
McEntee, V. Lt.Rogers, G. H. R.Watkins, T. E.
McGhee, H. G.Ross, William (Kilmarnock)Watson, W. M.
Mack, J. O.Royle, C.Webb, M. (Bradford, C.)
McKay, J. (Wallsend)Scollan, T.Wells, P. L. (Faversham)
McKinlay, A SScott-Elliot, WWest, D. G.
Maclean, N (Govan)Segal, Dr. S.Whiteley, Rt. Hon. W.
McLeavy, FSharp, GranvilleWilkes, L
Mainwaring, W H.Shurmer, P.Wilkins, W. A.
Mann, Mrs. J.Silverman, J. (Erdington)Willey, O G. (Cleveland)
Manning, C. (Camberwell, N.)Silverman, S S. (Nelson)Williams,?. J. (Neath)
Manning, Mrs. L. (Epping)Simmons, C. J.Williams, J. L. (Kelvingrove)
Medland, H M.Skeffington, A. M Williams,. Rt. Hon. T. (Don Valley)
Middleton, Mrs LSkinnard, F. W.Williams, W. R. (Heston)
Mikardo, IanSmith, H. N (Nottingham, S.)Willis, E.
Mitchison, G. R.Smith, S. H. (Hull, S.W.)Wills, Mrs. E A
Monslow, W.Snow, Capt. J W.Woods, G. S.
Morris, P (Swansea, W.)Sorensen, R. W.Wyatt, W.
Mort, D. L.Soskice, Maj. Sir FYates, V. F.
Moyle, A.Sparks, J. A.Zilliacus, K.
Nally, W.Stamford, W.
Naylor, T. E.Stewart, Michael (Fulham, E.)TELLERS FOR THE AYES.
Mr. Pearson, and Mr. Dalnes:


Amory, D. HeathcoatHannon, Sir P (Moseley)Osborne, C.
Anderson, Rt. Hon. Sir J. (Scot Univ)Headlam, Lieut-Col. Rt. Hon. Sir CPeake. Rt Hon. O
Assheton, Rt. Hon. R.Hollis, M. C.Peto, Brig C. H. M
Astor, Hon. MHolmes, Sir J. Stanley (Harwich)Pickthorn, K.
Baldwin, A. EHope, Lord JPonsonby, Col. C. E.
Beamish, Maj T V. HHudson, Rt Hon R. S. (Southport)Prescott, Stanley
Birch, NigelHulbert, Wing-Cdr N. J.Price-White, Lt.-Col. D.
Boothby, RHutchison, Col. J. R (Glasgow, C)Reed, Sir S. (Aylesbury)
Bossom, A. C.Jarvis, Sir J.Reid, Rt. Hon. J. S. C. (Hillhead)
Braithwaite, Lt.-Comdr J GKeeling, E H.Roberts, Emrys (Merioneth)
Bromley-Davenport, Lt.-Col. WKerr, Sir J GrahamRoberts, H. (Handsworth)
Buchan-Hepburn, P G. T.Lambert, Hon. G.Roberts, Maj. P. G (Ecclesall)
Byers, FrankLancaster, Col. C. G.Roberts, W (Cumberland, N.)
Channon, H.Law, Rt. Hon. R. K.Robinson, Wing-Comdr. Roland
Clarke, Col R SLinstead, H NRopner, Col L
Clifton-Browne, Lt.-Col GLloyd, Selwyn (Wirral)Sanderson, Sir F
Conant, Maj. R. J. ELucas, Major Sir JSavory, Prof. D L
Cooper-Key, E. M.Lucas-Tooth, Sir HShepherd, W S. (Bucklow)
Crookshank, Capt. Rt. Hon. H. F. C.Lyttelton, Rt. Hon. OSmithers, Sir W.
Crosthwaite-Eyre, Col. O. E.Macdonald, Sir P. (I of Wight)Spearman, A. C. M
Crowder, Capt. John EMcKie, J. H (Galloway)Stanley, Rt. Hon. O
Cuthbert, W. N.Maclay, Hon. J. SStoddart-Scott, Col. M
Davidson, ViscountessMacLeod, JStrauss, H. G. (English Universities)
Davies, Clement (Montgomery)Macmillan, Rt. Hon. Harold (Bromley)Studholme, H G
Dodds-Parker, A. DMacpherson, N (Dumfries)Thorneycroft, G. E. P. (Monmouth)
Donner, Sqn.-Ldr P WMaitland, Comdr. J. W.Touche, G. C.
Dower, Lt -Col A V G. (Penrith)Manningham-Buller, R ETurton, R. H.
Drayson, G BMarples, A. EVane, W. M F.
Drewe, C.Marsden, Capt. AWadsworth, G.
Dugdale, Maj. Sir T. (Richmond)Marshall. D (Bodmin)Walker-Smith, D
Eden, Rt. Hon AMollor, Sir J.Wheatley, Colonel M. J.
Fleming, Sqn.-Ldr. E. L.Morris, Hopkin (Carmarthen)Williams, Gerald (Tonbridge)
Fletcher, W (Bury)Morrison, Rt. Hon. W. S. (Cirencester)Willoughby de Eresby, Lord
Gammans, L. D.Mott-Radclyffe, Maj. C. E.
Glyn, Sir RNeven-Spence, Sir BTELLERS FOR THE NOES:
Grant, LadyNicholson, GMajor Ramsay and
Gridley, Sir ANoble, Comdr. A, H. PLieut -Colonel Thorp.
Grimston, R VOrr-Ewing, I. L

Clause read a Second time, and added to the Bill.