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Clause 27—(Other Amendments Of, Or Affecting Finance Act, 1940, S 55)

Volume 529: debated on Monday 28 June 1954

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I think it would be for the convenience of the Committee if we discussed the next Amendment on the Order Paper in the name of the hon. and gallant Member for Cheltenham (Major Hicks Beach) together with the one following in page 31, line 13, in the name of the hon. Member for Beverley (Mr. Odey).

I beg to move, in page 30, line 46, to leave out paragraph (a).

Clause 27, in principle, is a good Clause. It gives a concession to estates or shares which have been valued under Section 55 of the Finance Act, 1940, and allows the substitution of a sale price if a sale takes place within three years; but that concession, if I may so describe it, is subject to three provisos set out in the Clause.

The first, with which we are concerned in this Amendment, provides that the Commissioners of Inland Revenue have to be satisfied, before giving a price valuation concession, that no person concerned, either as a vendor or as having an interest in the proceeds of sale, was a relative of any person concerned either as purchaser or as having an interest in the purchase.

Those of us who have practical experience in these matters will agree that the proviso to paragraph (a) will negative the concession which it is intended to give in a great many cases, because in all assessments under Section 55 of the 1940 Act it is generally the case that they are small family businesses and the only probable purchasers—in fact, very often the only possible ones—are members of the family.

The Solicitor-General may say that this is a safeguard which is essential for the Treasury, but paragraph (b) says that the sale must be made at arm's length at a price freely negotiated at the time of sale. I should have thought that gave the Treasury an ample safeguard. If this Amendment is accepted, it will mean that they have a full discretion under paragraph (b) apart from the discretion under paragraph (c). It will also mean that where the Commissioners of Inland Revenue are satisfied that there has been a genuine sale within the three-year period to a member of the family, the price concession shall stand.

I understand, Sir Charles, that it is the desire of the Committee to consider, with the Amendment moved by my hon. and gallant Friend, the one in my name in page 31, line 13, which seeks to insert at the end:

Provided that, where the purchaser is a relative, and the Commissioners of Inland Revenue are not satisfied that the price obtained represented one freely negotiated at arm's length, the price which shall be substituted as the value of the shares and debentures sold shall be the price which in the opinion of the Commissioners would represent a price freely negotiated at arm's length subject to the right of appeal to the courts by the executors, administrators or trustees.

That Amendment has not been selected but the point can be made on the present Amendment.

I beg your pardon, Sir Charles. If I had been in a position to move my Amendment, the object would have been to provide relatives desiring to acquire an interest in a family business with a safeguard which they might well need if they found themselves in the position of not being able to agree with the value placed upon the shares by the Commissioners of Inland Revenue.

The Amendment would have achieved the effect of the omission of paragraph (a) and would have given an additional safeguard of appeal to the courts. I see, however, that you are becoming slightly restive, so I will only say that I realise that the general object of my Amendment will be achieved by the removal of paragraph (a).

4.0 p.m.

I support the Amendment. While we welcome the provisions in the Bill for mitigation of hardships created under Section 45 of the Finance Act, 1940, we regret that it falls short of completely removing discrimination against owners of shares in controlled companies. In view of the safeguards provided in Clause 27 (1, b), we protest against the inclusion of subsection (1, a) of the same Clause, which we think is a typical example of such discrimination.

Our objection is on the ground that subsection (1, b) adequately protects the Exchequer from the risk of loss of revenue. If it does not, then why include it? It may be contended that on occasion it may be difficult to determine whether any specific transaction is at market value, but surely the answer to that is that the onus of proof is on the party claiming benefit under the Clause. If he fails, then he cannot get the benefit of the Clause as originally drafted, but if he succeeds then he should not be debarred from his benefit simply because the vendor or the person for whose benefit he is acting is a relative of the purchaser or the person for whose benefit he is acting.

We feel that the paragraph is unjust. We protest against it. We hope that it will be removed. I do not know whether my right hon. and learned Friend the Solicitor-General is sympathetic in this case. One can usually tell from the back of his neck, for instance when he is playing chess. I shall not pursue that line of thought today, but will conclude by expressing the hope that the Amendment will be accepted.

On behalf of the whole Committee, I should like to welcome the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport) back to our debates. We have invited him on more than one occasion to participate and he has shown himself unusually coy. It may be difficult to judge the Solicitor-General's feeling from the back of his neck, but we are never in any doubt as to the hon. and gallant Member's feelings on any subject at all.

The Amendment goes extremely wide. The Chancellor told us on Clause 25 that, after very long consideration—he referred to a year-long examination at the Treasury—he had decided not to give up the assets basis of valuation in favour of valuation by Stock Exchange values. In effect, the subsection says that the assets basis of valuation can be given up in favour of a different basis of valuation, in this case, the basis of puchase price, in what, I imagine, would be a rather small number of cases where, within three years of death, shares or debentures are sold to a relative.

This is clearly a concession to cover a relatively small number of cases, but if it is extended, as it would be by the Amendment, I cannot help feeling that the assets basis of valuation would disappear by the back-door and a completely different basis would come in by the same door despite the fact that the Chancellor, after a year's consideration, has decided to retain that basis. If the Amendment were accepted, it would become common practice for sales of shares and debentures to be made to relatives within three years of death.

The hon. and gallant Member for Knutsford said that the Inland Revenue were protected by subsection (1, b). I can see that there is a protection, but it would be very much harder to interpret that subsection in the case of sales made within a family than it would be in other cases. It would be much more difficult to decide whether a sale was a genuine arm's length sale if it was within a family than if it was taking place in an ordinary commercial way between two strangers.

While one's instincts are naturally in favour of the Amendment and the arguments employed by the hon. and gallant Member for Cheltenham (Major Hicks Beach), it would widen the Clause so that the assets basis of valuation would almost disappear. We really ought to make up our mind whether we believe in this basis of valuation or net. The Chancellor, despite very heavy pressure from his own benches, decided to stick to it. If we are to stick to it, we ought to make it perfectly clear. If we are to give it up we ought to do so openly in all cases and we ought not pass an Amendment of this sort which would so widen the avenue of concessions that the assets basis of valuation would completely disappear without any of us noticing it.

For these reasons, for the moment I remain unconvinced by the arguments in favour of the Amendment.

I am sorry to have to disappoint my hon. Friend by saying that we are not prepared to accept the Amendment. The object of the Clause is, as far as possible, to avoid injustice, and it was an injustice where some one had to sell a parcel of shares to a stranger in order to secure enough money to pay Estate Duty—sometimes at a price which probably bore no relation to the assets value—that the shares so sold should be valued at an assets value basis. The Clause remedies that. To go further, as the Amendment suggests, would be to open a very wide door indeed to avoidance of the intention of the Clause.

It may well be that the transfer of shares from one member of a family to another still leaves the recipient of those shares in a position to realise the assets value of the shares if he wishes. In such a case we do not think that it would be right that the shares should be valued at the price at which they were sold between the members of the family. My hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach) suggests that it is sufficient to rely on subsection (1, b). In our view, it is not sufficient. It is a matter of great difficulty in the case of sales between close relatives. I would emphasise that this is not just a sale between any relative but between relatives as defined in Clause 28 (1, d) as meaning:
"husband, wife, ancestor, lineal descendant, brother, or sister."
It is a pretty close relation. It is a very hard matter to determine, on sales between those relatives, that the sale was not
… made at arm's length for a price freely negotiated at the time of sale."
We have considered the matter very carefully in view of the feelings of my hon. Friends. We feel that we could not accept the Amendment without opening a very wide door for avoiding the operation of the assets value basis in cases where the family can still realise the assets value for the shares that have been transferred from one member to another. I have put the case shortly because I know that the Committee want to get on to the new Clauses at a fairly early stage. It is because we feel that there are so many dangers which would accompany the deletion of the subsection that we have reached the conclusion that we must adhere to it and keep it in the Bill.

Would I be right to interpret the words of my right hon. and learned Friend as meaning that the Government think that this proposal is not unjust, that in fact it is reasonable, but that they find it administratively difficult to carry out?

I do not think that that is the interpretation which I would ask my right hon. Friend to put on my words. If we left out subsection (1,a) it would mean that the way was open for the avoidance of the proper scale of duty on the assumption that we are retaining the assets value basis for cases where the family retain control and are so able to realise the assets value of the shares if they wish.

In view of the very full explanation given by the Solicitor-General, I beg to ask leave to withdraw the Amendment—[HON. MEMBERS: "No".]

On a point of order, Sir Charles, I did not understand that the Committee gave leave to the hon. and gallant Member to withdraw the Amendment.

We understood we were still on the Amendment. At least one hon. Member opposite rose in his place in order to carry on the debate, Sir Charles. I am afraid you did not see him. When my hon. Friend the Member for Islington, East (Mr. E. Fletcher) rose, we understood that you were not closing the debate but that you were proposing the Question and that the Amendment was still open to debate.

I was putting the Question. I did not see anyone rising. No one hailed me indicating that he wished to speak.

Would it have been in order, Sir Charles, for an hon. Member to hail you?

Amendment negatived.

I beg to move, in page 31, line 13, at the end, to insert:

"and in so far as may be just in the circumstances for the value of any remaining shares of the same class not sold."
The provisions of subsection (1) are designed to remove an anomaly and their purpose is to ensure that where shares have been valued on an assets basis and any such shares are subsequently sold and realised at a price lower than the assets basis of valuation, that lower price shall be used for the purpose of working out the amount of Estate Duty they should attract. It means that one is actually paying out in relation to what one has actually received for the shares, which is good as far as it goes, but it does not apply to those shares not actually sold. This may be fair in some circumstances, but, equally, it may be unfair in others.

To give an example, if a deceased person had 75 per cent. of the shares in a company and 10 per cent. only were sold, that is plainly a minority interest. They would be sold at a price probably well below the true value because one would not be surrendering control, which would remain with the majority shareholding, and the small parcel would be expected only to command a lowish price. Therefore, the benefit of the relief of the subsection would be confined to those actually sold, which is quite fair.

If one takes the proposition the other way round and one is dealing with 75 per cent. of the shares of a company of which 60 per cent. are sold and 15 per cent. only are left unsold. Suppose the 60 per cent. are sold at lower than their assets valuation, it is plainly unfair that the remaining 15 per cent. should be valued on the assets basis to attract duty on that basis and could not have the benefit of being valued on the basis of what the 60 per cent. holding actually fetched in the open market. One should remember, particularly, that in the second case control would be sold with the 60 per cent. and, even then, could not produce a figure equal to the assets basis. It is obvious that the remaining shares could not reach figures in the market as high as those actually sold. It is plainly unfair that the small minority holding should continue to the valued on the assets basis; it ought to be accorded the benefit of this subsection.

The two examples I have given are clear-cut. In one case the benefit should not apply and in the other case it should apply. But there will be some marginal cases, and those we must leave to the Inland Revenue authorities to judge fairly where the true balance should lie. That explains the wording of my Amendment, which says:
"in so far as may be just in the circumstances"—
obviously there may be many and varied circumstances—
"for the value of any remaining shares"
—and so on. Therefore, on behalf of the holders of shares which are not sold, I seek the kindness and indulgence of the Solicitor-General to see that they are accorded full justice.

4.15 p.m.

I regret that I must disappoint my hon. Friend. As he indicated when moving the Amendment, it would not work properly in a case where there was a sale of a majority holding and a retention of a minority holding, because it would be quite wrong to give the same value to the shares which were retained, bearing in mind that they were not capable of being realised on an assets basis.

The second case my hon. Friend put was one in which he said 60 per cent. of the shares would be sold out of a substantial holding. He suggested that the minority retained should be valued on the same basis, and not on the assets value basis. That is to say, the sale price of the 60 per cent. should be taken as the valuation. I am able to tell my hon. Friend that it is already the practice, where the controlled holding is sold at arm's length, to adopt the sale price as the value for Estate Duty purposes, subject to any adjustment for changes of circumstances since the date of death, and this would apply to shares retained as well as to the shares sold. That meets the point my hon. Friend made in regard to that particular category or shares.

There are other shares where control is broken up so that neither the shares sold nor those retained carry control as, for instance, where 40 per cent. are sold and 40 per cent. retained out of an 80 per cent. holding. It may well be that although 40 per cent. is sold the purchaser of that 40 per cent. has other shares in his possession and is so able, if he chooses, to realise the assets value. It depends on the proportion of the possession of other shares by him, or other members of the family working in association with him. It could be less than that, where, as seems a very unlikely case, the control is broken up so that neither the family nor anyone else has control.

To give an instance, suppose the deceased's holding was 60 per cent. and the other 40 per cent. were held by a number of unrelated shareholders, then, if 30 per cent. or more of the 60 per cent. were sold it would seem prima facie reasonable to adopt the price realised for the shares sold as the value of the assets retained. That would not be so if 20 per cent, were sold and 40 per cent, retained. The value of the 40 per cent. holding would be much greater than that of the 20 per cent, holding. The holder of 40 per cent., where no other shareholder had more than 20 per cent., would be in a dominating position in the company, although he would not get actual control.

I hope that by these observations I have been able to convince my hon. Friend that it would not lead to a fair result to say that the price at which shares are sold under the provisions of the Clause should be taken to be the value of the remaining shares of the same class not sold, whether or not the remaining shares constituted a minority or majority holding and whether or not the quantity of shares sold led to the splitting up of control.

Both the hon. Member for Altrincham and Sale (Mr. Erroll) and the Solicitor-General gave us instances depending on control formal or informal. There are other reasons for rejecting the Amendment.

As we were told just now by the right hon. and learned Gentleman, this is intended to be a form of relief or justice in a certain special case, in effect where shares are sold to meet Estate Duty. If the Amendment were accepted, it would be an invitation and an inducement to have sales, which might be of comparatively small quantities of shares, for a different purpose, and through those sales to extend the scope of what is offered considerably beyond the special cases which is intended to meet.

It might well be that executors, having to consider what property to sell in order to meet Estate Duty, would be induced to sell this type of share, perhaps only in comparatively small quantities, in order to get a relief which they would not otherwise have. It seems to me that proceedings of that sort would not be fair to those who might not get the relief or would not be fair, by and large, to the Revenue. I should regard an Amendment of this sort as offering an inducement which, on public grounds, seems objectionable.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

I want to ask the Solicitor-General one or two questions about subsection (5). I am not clear about it as it now stands. Broadly, it appears to describe how the concessions in subsections (1) and (4) operate in the case of a share split or bonus issue. It appears to give the relief of subsection (1) in respect of the sale of shares or debentures within three years of death and the relief of subsection (4), the so-called quick succession relief, where two deaths occur within five years.

It appears to give the two reliefs to bonus shares as well as to the original shares in respect of which the bonus issue was made, but I am not clear how far this goes. It seems clear that the two reliefs are given to bonus shares, from which it would appear to follow logically that bonus shares are now subject to Estate Duty, but I am not clear that they are subject to Estate Duty. This is a point on which I should be grateful for some clarification.

I understand from people who are much better informed about these matters than I am that, as a result of a court decision in 1940 in the case of the Attorney-General v. Oldham, bonus shares in certain circumstances do not attract Estate Duty at all. The case where they apparently do not attract Estate Duty is the following.

The owner of a private business or a family business may make a transfer of shares to someone within five years of his death. If it were more than five years before his death, this provision would not apply at all, because the shares transferred would not be subject to Estate Duty. If, after the transfer of shares is made, but before the man dies, a bonus issue of shares is made, it appears that, as a result of the judgment which I have mentioned, the bonus issue of shares does not itself attract duty. If this is the case, it appears that this is a comparatively simple way of avoiding large sums of Estate Duty.

I will give an instance to show how easily this could happen. I understand that it frequently happens under the law as it now stands. Let us assume a company with an issued share capital of 100,000 £1 shares but with net assets, including reserves and undistributed profits, equal to £500,000. On the basis of assets valuation or any other common sense basis, the actual value of the shares is £5, although their nominal is £1.

Let us suppose that the sole shareholder of the business transfers 50,000 shares—that is, half his shares—to his son. At the date of transfer the son's shares are worth £250,000, which is 50,000 shares multiplied by £5, the value of each share. If after the assignment of the shares takes place a bonus issue is declared, say, on a one-for-one basis, the son then has his original 50,000 shares plus 50,000 bonus shares. In other words, he has a total of 100,000 shares.

Assuming that the value of the net assets of the company does not in the meantime increase, the 100,000 shares are still worth only £250,000. In other words, they are worth exactly the same as the 50,000 shares which were originally assigned to the son.

Although the 100,000 shares are now worth only the same as the 50,000 shares when first assigned, if the owner of the business who transferred the shares dies within five years of the transfer, a very different picture emerges from the Estate Duty point of view because, under the court judgment to which I referred, bonus shares are apparently not subject to Estate Duty. Therefore, for the purposes of Estate Duty only, the 50,000 shares originally assigned are involved, and their value after the share split is now only £125,000 instead of their original value before the bonus issue was made of £250,000.

The difference from an Estate Duty point of view is a very large one. Estate Duty at 60 per cent., as it would be on £250,000, amounts to £150,000. Estate Duty at 50 per cent., as it would be on £125,000, amounts to only £62,500. Therefore, there is as a result of the bonus issue, if the facts are as I have said, a saving in duty of no less than £87,500, the saving being due partly to the reduced value—that is, to the lower sum on which duty is assessed—and partly to the fact that, because the sum on which the duty is assessed is lower, the duty falls at the lower rate.

I do not know whether the example as I have given it is a valid one under the law as it now stands. I have every reason to believe that it is. If it is, this appears to be an extremely simple way of avoiding very large sums of Estate Duty.

The specific question that I want to ask is what the position will be as a result of subsection (5). It appears that the subsection extends certain reliefs to bonus shares. Does it follow from that that bonus shares are subject to Estate Duty? If it does, presumably the example which I have given is not a valid one at all. In that case, there seems to be a considerable mystery here which ought to be cleared up.

4.30 p.m.

We should be very grateful to the Solicitor-General if he would make a general comment, which I think this Clause gives him a convenient opportunity of doing, on the question of Estate Duty and bonus issues of shares made in the circumstances which I have described. There is a good deal of uneasiness whether, in the kind of circumstances which I have related, the issue of bonus shares is not a convenient and too easy method of avoiding Estate Duty.

Before we part with this Clause, I should like the Solicitor-General to comment on one matter. It seems that the object of this Clause, as well as of the preceding Clauses, is to avoid the breaking up of family businesses owing to Estate Duty. The object is to avoid the family having to sell the business to a combine or break up the assets because they have to find money with which to pay the Estate Duty. It is felt by the Chancellor that there is advantage in businesses of this type, and that they contribute something to our economy which bigger businesses do not provide. Though one may agree with its objective, it seems to me that there are difficulties when we come to Clause 27.

Am I not right in thinking that the effect of the Clause will be that, in certain cases, it might well be more advantageous—in some cases, considerably so—to the family to sell the business outright to a large combine rather than to other members of the same family? It may well be greatly advantageous to sell the business outside the family and, if that is the case, would they not be defeating one of the main purposes of the Government in these Clauses. I should be glad to hear the Solicitor-General's comment on that point, because it is, perhaps, a matter that should be considered between now and Report stage.

I should like to support what has been said by my hon. Friend the Member for Gloucestershire, South (Mr. Crosland), because the case to which he referred related to a well-known company—Messrs. Tate and Lyle—which is always particularly interesting in taxation methods.

In this case, Mr. Tate, shortly before his death, handed over a number of shares to a younger Mr. Tate, and the shares "pupped" in the interval between being handed over and the death of Mr. Tate. That was just too bad for the Revenue, because the result was that, when the court had to consider which were the shares upon which Estate Duty should be raised, the court, both in the first instance and again in the Court of Appeal, held that obviously only the shares that were actually handed over could be liable to Estate Duty. A good deal was said at the time by the Crown, which, in these matters, sometimes looks first one way and then the other, about acting in the spirit of the matter—that one must not look too hard at the actual text of the Act, because it was the spirit that mattered. A number of instances were given, more or less of an animal character, about mares in foal, tame deer and so on, which produced in the same sort of way as shares.

There is obviously a very open means of evasion in the case of companies of the character that we are now considering, because it is perfectly possible to give shares away. It appears to be perfectly possible for the family, in the case we are now considering, to arrange for the bonus issue when the donor is beginning to look "a bit dicky," to use a crude phrase, and, in these circumstances, to get out of paying the Revenue quite considerable sums of money. The Crown then, as distinct from the Crown now, said that that was dead against the spirit and intention of this kind of legislation.

We are only dealing with one kind of firm now, and Messrs. Tate and Lyle, whatever they may have been in the past, are by now, I imagine, valued on an assets basis. There remain the smaller group, where, though, of course, the evasion would not be so much, the opportunity for repetition seems to be considerable. In these circumstances, what astonishes me is that the Government have thought fit in this case only to put in the provision at the end of a Clause which, if I read it rightly, does provide for similar treatment on this point both of the original shares and of the bonus shares. Why no more?

Since 1940, it has always been open to the Government to say, "Why did you not do it?", though we are getting a little tired of that excuse. I wonder why, when dealing with this matter, they have entirely failed, as I read the Clause, to deal with the far wider and much more substantial point which arises out of that particular case. I am not going to repeat the very strong arguments put by my hon. Friend, and I do not believe that any hon. Member of the Committee considers that what was done in the case of the Attorney-General v. Oldham was not right, as far as the law was concerned, but that it was dead against the wish of this Committee with regard to Estate Duty. We do not want the door to be left open, when an opportunity might be taken of dealing with something else when we are concerned with a very narrow field, and I want to ask the Government why they did not go the whole hog, do the job properly and cover that major point.

May I put to the learned Solicitor-General another point concerning a different subsection of this Clause? Clause 27 is something of a mixed grill, and I think that a few moments spent on the matters under discussion might be useful.

Before coming to subsection (3), on which I wish to ask a question, I should like to express the hope that the right hon. and learned Gentleman will be able to assure us that subsection (5) will, in fact, deal with the type of case which was so clearly explained by my hon. Friend the Member for Gloucestershire, South (Mr. Crosland). When one sees the figures in an example like this, one realises what enchanting possibilities there are when a person possesses wealth. The football pools have nothing to compare with this kind of exercise. Here one is bound to win a prize if one only knows what to do with one's resources. The example given by my hon. and learned Friend shows how a simple transaction from father to son may eventually lead to a very substantial relief from Estate Duty on the family resources.

I have done my best to see whether subsection (5) means what it appears to mean. In parenthesis, perhaps I might make an appeal for a revision of our out-of-date procedure in Committee so that when a complicated matter comes before us we can have an explanation of the Clauses. We could then study them, instead of having to probe their meaning on the Floor of the Committee by asking hon. and right hon. Gentlemen on the Government Front Bench to tell us the purpose of the Clauses.

My hon. Friend the Member for Gloucestershire, South raised a particular matter on which I understand there has, up till now, been a genuine difference of opinion among those who offer themselves as experts. It is whether subsection (5) does or does not stop the practice of avoidance of Estate Duty by the issue of bonus shares during the lifetime of one member of a family to another member of the family, thereby in the end paying Estate Duty only on the shares actually transferred, even though at the time of death they are worth probably half what they were worth at the time of transfer, owing to the subsequent issue of bonus shares.

Subsection (3) appears to deal with what I understand to be an injustice in regard to companies where Estate Duty has been levied on the assets basis, when an additional levy of Profits Tax is made on distributed profits after the date of death. When profits are distributed there is an additional charge to Profits Tax. If the distribution is made after the date of death, although it arises from conditions and circumstances existing before the date of death, the distribution charge for Profits Tax is not, strictly speaking, allowable against the assets basis of valuation. It is not regarded as a charge against the valuation not even as a contingent liability against it. If subsection (3) removes that anomaly, the Committee will approve of it.

I notice that the Clause says, in page 31, line 35:
"Any liability of the company arising, or which may arise, after the death for taxation on income or profits shall be taken into account as if it were an actual but contingent liability at the date of the death."
That seems to cover possible charges to taxation, apart from Profits Tax, on the distribution of profits made after death. Does it permit of Income Tax, recoverable as a result of some misdemeanour, failure or neglect on the part of the taxpaying company, after death to be set off against the assets basis of valuation? If so, where there is some culpable failure, or even worse, on the part of the company to disclose the true liability to Income Tax before the date of death, one wonders whether liability arising and discovered after death should be given any special relief from Estate Duty. I hope that that does not sound too vindictive, but any deterrent we can put into our legislation against the malpractices which go on in a small number of cases, the better for the health of our taxation system.

I should like the Solicitor-General to find the right place in his brief this time and to tell us just what subsection (3) of the Clause is going to do, and also to give the assurance asked for by my hon. Friend the Member for Gloucestershire, South.

4.45 p.m.

The hon. Member for Gloucestershire, South (Mr. Crosland) and the hon. and learned Member for Kettering (Mr. Mitchison) raised questions in regard to subsection (5). As they no doubt realise, that subsection deals with the case in which there has been some change in the capital structure of a company either by way of the issue of bonus shares or in other ways, as by a sub-division of shares into smaller amounts or their consolidation into larger amounts.

The intention of the subsection is to provide that subsections (1) and (4) shall apply to the new shares after the change as they applied to the old shares before the change, provided that the new shares derive from shares of the same class which have had to be valued on the assets basis, on a death occurring before the change. I hope that the hon. and learned Member for Kettering will feel that his fears in regard to bonus shares in relation to the operation of the Clause are laid and that the Clause deals with the matter satisfactorily.

Before the Solicitor-General leaves that point, perhaps, I may reassure him that I have never had any fears on the point, except that I completely fail to understand why the Clause does not go a great deal further?

If I discussed matters which were not in the Clause I should be out of order, especially in a debate on the Question "That the Clause stand part of the Bill."

On the matter raised by the hon. Member for Sowerby (Mr. Houghton), subsection (3) makes provision, subject to certain limitations, for Income Tax and Profits Tax which are referable to income or profits accruing before death to be deemed as a contingent liability at the date of death and so to be allowable in whole or part as a deduction from the value of the assets "by reference to such estimation as appears to the Commissioners to be reasonable." I am sure that the hon. Member will agree with me that that is a desirable provision in relation to Income Tax, and that it means a slight alteration of the decision in the case of "Re Duffy (deceased)," which was decided in 1948 in relation to Profits Tax. It is a matter on which considerable doubt has been expressed in the case of Estate Duty where Profits Tax liability is concerned. I could give the hon. Gentleman a very long explanation of precisely what subsection (3) does. It is extremely technical and I would be only too glad to explain it later, as I feel sure the Committee would wish to get on.

I do not want to add anything so far as subsection (3) is concerned, but while the Solicitor-General was speaking my hon. and learned Friend the Member for Kettering (Mr. Mitchison) intervened to point out that the right hon. and learned Gentleman had not so far dealt with the main point made by my hon. and learned Friend. The only way in which the Solicitor-General purported to deal with it was to say that he thought that it would be out of order to go outside the Clause. I want to look into the Clause in order to point out what does not figure within it.

What does not figure inside its four walls is the very matter with which my hon. and learned Friend was dealing. He was saying—and I feel sure that the Solicitor-General must have understood—that we have the decision in the case of the Attorney-General v. Oldham which was decided as long ago as 1940 and still has not been put right. I quite agree that since then several Governments have intervened. So far as that aspect of Clause 27 is concerned, the only point we put is whether, while the Government were putting right what they considered to be anomalies in the workings of this particular section of the Estate Duty code, it would not have been a very excellent opportunity also to put right the anomaly which has existed since the decision in the case of the Attorney-General v. Oldham?

It is to that point that we have not yet had an answer. The anomaly has been very clearly put by my hon. and learned Friend the Member for Kettering and by my hon. Friend the Member for Gloucestershire, South (Mr. Crosland). It concerns the situation which arises when there is a gift of shares and, before the death, the shares have, as my hon. and learned Friend put it so graphically, pupped. Have not the Government that point clearly in mind, and do they not agree that this would be a very suitable opportunity to deal with the matter?

On a point of order, Mr. Hoy. I think we are not allowed to discuss on the Question, "That the Clause stand part of the Bill" anything which is not in the Clause.

I am most anxious to keep within the rules of order, Mr. Hoy, but in criticising a Clause actually in the Bill am I not entitled to look strictly at its wording and see whether it goes far enough? I would respectfully submit that it was in order to examine and appraise the conditions of the Clause as it stands and to express a mild word of regret that it does not go further.

It is rather difficult for a layman to give an interpretation of something which might be strictly legal, but I would say that the right hon. and learned Gentleman would not be in order if he went outside what is in the Clause. I think he certainly might ask a question, but it would not be in order to debate something not contained in the Clause.

I am obliged, Mr. Hoy, and take that Ruling to mean that I was strictly in order.

Further to that point, Mr. Hoy. If I am asked a question about something not in the Clause—and there is no reference to the subject matter of the Attorney-General v. Oldham in the Clause—surely it would be out of order for me to seek to give an answer to the question?

I thought that I had made it clear that the Solicitor-General should not attempt to reply to remark's about something not in the Clause. All I say is that it would not be right for the Committee to debate something not in the Clause itself.

I am much obliged for that Ruling, Mr. Hoy. In effect, it draws the line between myself and the right hon. and learned Gentleman. We are both right and both wrong.

If I might try in obedience to your Ruling, to stick strictly to my side of the tape, I would simply conclude by voicing, as I have said, a note of regret, and almost of lament, that the Government have framed the Clause as they have done—I am talking only about the Clause—and have not found themselves able to take a somewhat wider view, and do not contemplate bringing within its provisions these very important matters which my hon. and learned Friends have raised with such insistence in the course of this debate.

It has not been made clear what need there is for this subsection at all. As my hon. Friend the Member for Gloucestershire, South (Mr. Grosland) pointed out so clearly, if under the most recent ruling of the courts Estate Duty is not paid on bonus shares which are issued in the period of five years, why is it necessary to have this subsection granting relief for substantially the same circumstances? As I understand, neither in the case of subsection (1), which refers to the sale of shares within three years of death, or subsection (4) which refers to death within five years, would Estate Duty, under the present ruling of the court, be payable on bonus shares. I admit that this is a very complicated question, but, if that is the case, what is the purpose of introducing this subsection at all?

That is what the Solicitor-General did not make clear and what we are trying to find out. It is rather important. I do not know how the courts will interpret this in future. I do not know if courts do interpret by inference, but will they by inference interpret this as meaning that it is the view of the Government—or Parliament—that bonus shares issued within the period of five years of death are, in fact, to be liable to Estate Duty on their full value and not on the value of the number of shares at the date of death? That is the important point.

Frankly, it is extremely confusing. We still do not know the Solicitor-General's views on this. Does he hold a view contrary to that of the courts? If that is the case, we can well understand his subsection. But, if he accepts the view of the courts—as presumably he must—why on earth is this subsection needed at all? We are extremely concerned, of course, with this obvious method of Estate Duty evasion, but, as you have pointed out, Mr. Hoy, it would not be in order for us to discuss that. However, I think that I am in order in asking why it is necessary to put into this Bill this farrago of words which seems to have no meaning at all.

I should like to repeat in a very much simpler way the question addressed to the Solicitor-General by my hon. Friend the Member for Edmonton (Mr. Albu). He can give to the Committee an assurance, which on this side we should be very glad to have, simply by replying to this question. Is it the opinion of the Solicitor-General that, if this subsection were not in the Clause, the Inland Revenue would lose money? If the Solicitor-General can assure us that the subsection has been put in to protect the Revenue, then I do not doubt that we on this side would be very much more disposed to accept the whole thing. Surely all that matters is, does it or does it not protect the Revenue? If it does, let us say so. If it does not, we should like to know why—and we should have our own idea why the subsection has been put in.

5.0 p.m.

I rose to my feet only very slowly, because I wished to give the Solicitor-General every opportunity to intervene, and I could hardly believe that he would not do so. I was extremely surprised at the right hon. and learned Gentleman's reply.

As on several occasions when hon. Members sat down the hon. Gentleman gave indications that he intended to rise, I thought I would wait until I heard his observations. I did that as a matter of courtesy and for no other reason, because I can get to my feet without his inspiration.

May I say straight away that the need for this subsection is clearly established, because, if it were not there, there would be all sorts of arguments as to what effect an alteration of shares would have on the operation of subsections (1), (2), (3) and (4). It removes that doubt.

Regarding the other questions put to me in relation to the case of the Attorney-General v. Oldham and to the issue of bonus shares in relation to Estate Duty generally, I dare say that we could have a very interesting debate on that. However, I do not think that I could answer those questions without causing you, Mr. Hoy, to rise to your feet in much the same way, perhaps, as the hon. Member for Stechford (Mr. Roy Jenkins) has caused me to rise to mine. While it would be an interesting matter for debate, I do not believe that I could answer those questions and still remain within the bounds of order. That being so, I must disappoint the hon. Gentleman opposite by not giving my views on the interesting case which was decided in 1940.

I am sorry if there is any confusion between the Solicitor-General and myself. My hon. Friend the Member for Nottingham, South (Mr. Norman Smith) made a sign to the Solicitor-General which was intended to ask him whether or not he was going to get to his feet. Quite frankly, the right hon. and learned Gentleman gave no indication that he was going to reply. I am bound to say that, while it is courteous of him to rise to his feet, he has not by so doing helped the Committee very much, and he has not replied, at least not in a way that I can understand, to the point put to him by my hon. Friend the Member for Edmonton (Mr. Albu).

I still do not understand what would be the position if subsection (5) were not included in the Clause. Would this relief which is being accorded to bonus shares exist or not; would bonus shares be called upon to pay this duty or not? The Solicitor-General dealt with this point in only one sentence. I was unable to take down what he said, but I found that it shed very little light indeed on the decision. The right hon. and learned Gentleman did not say what the position would be if this subsection were not in the Clause.

We are in difficulties because we all recognise that there is an underlying

Division No. 174.]


[5.5 p.m.

Aitken, W. T.Campbell, Sir DavidFletcher, Sir Walter (Bury)
Allan, R. A. (Paddington, S.)Cary, Sir RobertFletcher-Cooke, C.
Alport, C. J. M.Channon, H.Ford, Mrs. Patricia
Amery, Julian (Preston, N.)Clarke, Col. Ralph (East Grinstead)Fort, R.
Amory, Rt. Hon. Heathcoat (Tiverton)Clarke, Brig. Terence (Portsmouth, W.)Foster, John
Anstruther-Gray, Major W. J.Clyde, Rt. Hon. J. LFraser, Hon. Hugh (Stone)
Arbuthnot, JohnCole, NormanFraser, Sir Ian (Morecambe & Lonsdale)
Assheton, Rt. Hon. R. (Blackburn, W.)Colegate, W. A.Fyfe, Rt. Hon. Sir David Maxwell
Astor, Hon. J. J.Conant, Maj. Sir RogerGalbraith, Rt. Hon. T. D. (Pollok)
Baldock, Lt.-Cmdr. J. M.Cooper, Sqn. Ldr. AlbertGalbraith, T. G. D. (Hillhead)
Baldwin, A. E.Cooper-Key, E. M.George, Rt. Hon. Maj. G. Lloyd
Baxter, Sir BeverleyCraddock, Beresford (Spelthorne)Glover, D.
Beach, Maj. HicksCrookshank, Capt. Rt. Hon. H. F. CGodber, J. B.
Bell, Philip (Bolton, E.)Crosthwaite-Eyre, Col. O. E.Goush, C. F. H.
Bell, Ronald (Bucks, S.)Crouch, R. F.Gower, H. R.
Bennett, F. M. (Reading, N.)Crowder, Sir John (Finchley)Graham, Sir Fergus
Bennett, William (Woodside)Crowder, Petre (Ruislip—Northwood)Grimond, J.
Bavins, J. R. (Toxteth)Darling, Sir William (Edinburgh, S.)Grimston, Hon. John (St. Albans)
Birch, NigelDavidson, ViscountessGrimston, Sir Robert (Westbury)
Bishop, F. P.Davies, Rt. Hn. Clement (Montgomery)Hall, John (Wycombe)
Black, C. W.Deedes, W. F.Harris, Frederic (Croydon, N.)
Boothby, Sir R. J. G.Digby, S. WingfieldHarris, Reader (Heston)
Bossom, Sir A. C.Dodds-Parker, A. D.Harrison, Col. J. H. (Eye)
Boyd-Carpenter, Rt. Hon. J. A.Donaldson, Cmdr. C. E. McA.Harvey, Air Cdre A. V. (Macclesfield)
Boyle, Sir EdwardDoughty, C. J. A.Harvey, Ian (Harrow, E.)
Braine, B. R.Douglas-Hamilton, Lord MalcolmHarvie-Watt, Sir George
Braithwaite, Sir Albert (Harrow, W.)Drayson, G. B.Hay, John
Braithwaite, Sir GurneyDugdale, Rt. Hon. Sir T. (Richmond)Head, Rt. Hon. A. H.
Bromley-Davenport, Lt.-Col. W. H.Duncan, Capt. J. A. L.Heald, Rt. Hon. Sir Lionel
Browne, Jack (Govan)Duthie, W. S.Heath, Edward
Buchan-Hepburn, Rt. Hon. P. G. T.Eccles, Rt. Hon. Sir D. M.Henderson, John (Cathcart)
Bullard, D. G.Eden, J. B. (Bournemouth, West)Higgs, J. M. C.
Bullus, Wing Commander E. E.Elliot, Rt. Hon. W. E.Hill, Dr. Charles (Luton)
Burden, F. F. A.Erroll, F. J.Hill, Mrs. E. (Wythenshawe)
Butcher, Sir HerbertFinlay, GraemeHirst, Geoffrey
Butler, Rt. Hon. R. A. (Saffron Walden)Fisher, NigelHolland-Martin, C. J

point of considerable importance which is not directly related to the Clause. But it is difficult to discuss the Clause without having some idea of the Government's view of whether the position is what it appears to be from the decision in the case of the Attorney-General v. Oldham in 1940. It bears very directly upon the position as it arises under subsection (5), and I think that in telling us. in words which we can understand, exactly what is the purpose of subsection (5) the Solicitor-General could, without in any way transgressing the rules of order, throw a little light on the Government's view on this question which underlies the whole of the Clause, and which, unless the Government can shed some light upon it, is bound to make us very dissatisfied with the whole Clause.

As it appears that the Clause cannot be discussed without transgressing the rules of order, and as none of us would wish that to happen, I can only draw the conclusion that it is a most unsatisfactory Clause, and must therefore ask my hon. Friends to divide against it.

Question put.

The Committee divided: Ayes, 278; Noes, 222.

Hollis, M. C.Marlowe, A. A. H.Shepherd, William
Holt, A. F.Marples, A. E.Simon, J. E. S. (Middlesbrough, W.)
Hope, Lord JohnMarshall, Douglas (Bodmin)Smithers, Peter (Winchester)
Hopkinson, Rt, Hon. HenryMaude, AngusSmithers, Sir Waldron (Orpington)
Horobin, I. M.Maudling, R.Smyth, Brig. J. G. (Norwood)
Horsbrugh, Rt, Hon. FlorenceMaydon, Lt.-Comdr. S. L. C.Snadden, W. McN.
Howard, Hon. Greville (St. Ives)Medlicott, Brig. F.Spearman, A. C. M.
Hudson, Sir Austin (Lewisham, N.)Mellor, Sir JohnSpeir, R. M.
Hulbert, Wing Cdr. N. J.Molson, A. H. E.Spence, H. R. (Aberdeenshire, W.)
Hurd, A. R.Monckton, Rt. Hon. Sir WalterSpens, Rt. Hon. Sir P. (Kensington, S.)
Hutchison, Sir Ian Clark (E'b'rgh, W.)Moore, Sir ThomasStanley, Capt. Hon. Richard
Hutchison, James (Scotstoun)Morrison, John (Salisbury)Stevens, Geoffrey
Hyde, Lt.-Col. H. M.Mott-Radclyffe, C. E.Stewart, Henderson (Fife, E)
Hylton-Foster, H. B. H.Nabarro, G. D. N.Stoddart-Scott, Col. M.
Iremonger, T. L.Neave, AireyStorey, S
Jenkins, Robert (Dulwich)Nicholls HarmarStrauss, Henry (Norwich, S.)
Johnson, Eric (Blackley)Nicholson, Godfrey (Farnham)Stuart, Rt. Hon. James (Moray)
Johnson, Howard (Kemptown)Noble, Comdr. A. H. P.Studholme, H. G.
Jones, A. (Hall Green)Nugent, G. R. H.Summers, G. S
Joynson-Hicks, Hon. L. W.Nutting, AnthonySutcliffe, Sir Harold
Kaberry, D.Odey, G. W.Taylor, Sir Charles (Eastbourne)
Kerby, Capt. H B.O'Neill, Hon Phelim (Co. Antrim N.)Taylor, William (Bradford, N.)
Kerr, H. W.Ormsby-Gore, Hon. W. D.Teeling, W.
Lambert, Hon. G.Orr, Capt. L. P. S.Thomas, Rt. Hon. J.P. L (Hereford)
Lambton, ViscountOrr-Ewing, Charles Ian (Hendon, N.)Thomas, Leslie (Canterbury)
Lancaster, Col. C. G.Osborne, C.Thompson, Kenneth (Walton)
Langford-Holt, J. A.Page, R. G.Thompson, Lt.-Cdr. R (Croydon, W.)
Leather, E. H. C.Peake, Rt. Hon. O.Thorneycroft, Rt. Hn. Peter (Monmouth)
Legge-Bourke, Mai. E. A. H.Perkins, Sir RobertThornton-Kemsley, Col. C. N.
Legh, Hon. Peter (Petersfield)Peto, Brig. C. H. M.Tilney, John
Lennox-Boyd, Rt. Hon. A. T.Pickthorn, K. W. M.Touche, Sir Gordon
Linstead, Sir H. N.Pilkington, Capt. R. ATurner, H. F L.
Llewellyn, D. T.Pitman, I. J.Turton, R. H.
Lloyd, Rt. Hon. G. (King's Norton)Pitt, Miss E. M.Tweedsmuir, Lady
Lloyd, Maj. Sir Guy (Renfrew, E.)Powell, J. EnochVane, W. M. F.
Lloyd, Rt. Hon. Selwyn (Wirral)Price, Henry (Lewisham, W.)Vaughan-Morgan, J K
Lockwood, Lt.-Col. J. C.Prior-Palmer, Brig. O. L.Vosper, D. F.
Longden, GilbertProfumo, J. D.Wakefield, Edward (Derbyshire, W.)
Low, A. R. W.Raikes, Sir VictorWakefield, Sir Wavell (St. Marylebone)
Lucas, Sir Jocelyn (Portsmouth, S.)Rayner, Brig. R.Walker-Smith, D. C.
Lucas, P. B. (Brentford)Redmayne, M.Wall, Major Patrick
Lucas-Tooth, Sir HughRees-Davies, W. RWard, Hon. George (Worcester)
Lyttelton, Rt. Hon. O.Remnant, Hon. P.Ward, Miss I. (Tynemouth)
McAdden, S. J.Renton, D. L. MWaterhouse, Capt Rt. Hon, C
McCorquodale, Rt. Hon. M. SRidsdale, J. E.Watkinson, H. A
Macdonald, Sir PeterRoberts, Peter (Heeley)Webbe, Sir H. (London & Westminster)
Mackeson, Brig. Sir HarryRobertson, Sir DavidWellwood, W.
McKibbin, A. J.Robinson, Sir. Roland (Blackpool, S)Williams, Rt. Hon. Charles (Torquay)
Mackie, J. H. (Galloway)Rodgers, John (Sevenoaks)Williams, Sir Herbert (Croydon, E.)
Maclay, Rt. Hon. JohnRoper, Sir HaroldWilliams, Paul (Sunderland, S.)
Maclean, FitzroyRopner, Col. Sir LeonardWilliams, R. Dudley (Exeter)
Macleod, Rt. Hon. Iain (Enfield, W.)Russell, R. S.Wills, G.
Macmillan, Rt. Hon. Harold (Bromley)Ryder, Capt. R. E. DWilson, Geoffrey (Truro)
Macpherson, Niall (Dumfries)Sandys, Rt. Hon. D.Wood, Hon. R.
Maitland, Comdr. J. F. W. (Horncastle)Savory, Prof. Sir Douglas
Maitland, Patrick (Lanark)Schofield, Lt.-Col. W.TELLERS FOR THE AYES:
Manningham-Buller, Rt. Hn. Sir ReginaldScott, R. DonaldSir Cedric Drewe and Mr. Oakshott.
Markham, Major Sir FrankScott-Miller, Cmdr. R


Acland, Sir RichardBraddock, Mrs. ElizabethDavies, Harold (Leek)
Albu, A. H.Brockway, A. FDavies, Stephen (Merthyr)
Allen, Arthur (Bosworth)Brook, Dryden (Halifax)de Freitas, Geoffrey
Allen, Scholefield (Crewe)Brown, Rt. Hon. George (Belper)Deer, G.
Anderson, Frank (Whitehaven)Brown, Thomas (Ince)Delargy, H. J
Attlee, Rt. Hon. C. R.Butler, Herbert (Hackney, S.)Dodds, N. N.
Awbery, S. S.Callaghan, L. JDonnelly, D. L.
Bacon, Miss AliceCarmichael, J.Driberg, T. E. N.
Balfour, A.Castle, Mrs. B. A.Dugdale, Rt. Hon. John (W. Bromwich)
Bartley, P.Champion, A. J.Ede, Rt. Hon. J. C.
Bellenger, Rt. Hon. F. J.Chetwynd, G. R.Edwards, W. J. (Stepney)
Bence, C. R.Clunie, J.Evans, Albert (Islington, S. W.)
Benn, Hon. WedgwoodColdrick, W.Evans, Edward (Lowestoft)
Benson, G.Collick, P. H.Evans, Stanley (Wednesbury)
Beswick, F.Cove, W. G.Fernyhough, E.
Bing, G. H. C.Craddock, George (Bradford, S.)Finish, H. J.
Blackburn, F.Crosland, C. A. R.Fletcher, Eric (Islington, E.)
Blenkinsop, A.Crossman, R. H. S.Follick, M.
Blyton, W. R.Cullen, Mrs. A.Foot, M. M.
Boardman, H.Daines, P.Forman, J. C.
Bottomley, Rt. Hon. A. GDalton, Rt. Hon. H.Fraser, Thomas (Hamilton)
Bowden, H. W.Darling, George (Hillsborough)Freeman, John (Watford)
Bowles, F. G.Davies, Ernest (Enfield, E.)Gaitskell, Rt. Hon. H. T. N

Gibson, C. W.MacPherson, Malcolm (Stirling)Shurmer, P. L. E.
Gooch, E. G.Mainwaring, W. H.Silverman, Sydney (Nelson)
Gordon Walker, Rt. Hon. P. C.Mallalieu, E. L. (Brigg)Silverman, Sydney (Nelson)
Grey, C. F.Mallalieu, J. P. W. (Huddersfield, E.)Simmons, C. J. (Brierley Hill)
Griffiths, David (Rother Valley)Manuel, A C.Skeffington, A. M.
Griffiths, Rt. Hon. James (Llanelly)Marquand, Rt. Hon. H. A.Slater, Mrs. H. (Stoke-on-Trent)
Griffiths, William (Exchange)Mason, RoySlater, J. (Durham, Sedgefield)
Hall, Rt. Hon. Glenvil (Colne Valley)Mayhew, C. P.Smith, Ellis (Stoke, S.)
Hall, John T. (Gateshead, W.)Mellish, R. J.Smith, Norman (Nottingham, S.)
Hamilton, W. W.Messer, Sir F.Snow, J. W.
Hannan, W.Mikardo, IanSorenson, R. W.
Hardy, E. A.Mitchison, G. RSoskice, Rt. Hon Sir Frank
Hargreaves, A.Monslow, W.Sparks, J. A.
Harrison, J. (Nottingham, E.)Moody, A. S.Steele, T.
Hastings, S.Morgan, Dr. H. B. W.Strachey, Rt. Hon. J.
Hayman, F. H.Morley, R.Strauss, Rt. Hon. George (Vauxhall)
Healey, Denis (Leeds, S. E.)Morrison, Rt. Hon. H. (Lewisham, S.)Stross, Dr. Barnett
Henderson, Rt. Hon. A. (Rowley Regis)Mulley, F. W.Summerskill, Rt. Hon E
Herbison, Miss M.Noel-Baker, Rt. Hon. P. J.Swingler, S. T.
Hewitson, Capt. M.Oldfield, W. H.Sylvester, G. O.
Hobson, C. R.Oliver, G. H.Taylor, Bernard (Mansfield)
Holman, P.Orbach, M.Taylor, Rt. Hon. Robert (Morpeth)
Holmes, HoraceOswald, T.Thomson, George (Dundee, E.)
Houghton, DouglasPadley, W. E.Thornton, E.
Hudson, James (Ealing, N.)Paling, Rt. Hon. W (Dearne Valley)Tomney, F.
Hughes, Emrys (S. Ayrshire)Palmer, A. M. F.Viant, S. P.
Hughes, Hector (Aberdeen, N.)Pannell, CharlesWallace, H. W.
Hynd, J. B. (Attercliffe)Pargiter, G. A.Warbey, W. N
Irving, W. J. (Wood Green)Parker, J.Watkins, T. E
Isaacs, Rt. Hon. G. A.Parkin, B. T.Weitzman, D.
Janner, B.Paton, J.Wells, Percy (Faversham)
Jay, Rt. Hon. D. P. T.Pearson, A.Wells, William (Walsall)
Jeger, George (Goole)Peart, T. F.West, D. G.
Jeger, Mrs. LenaPlummer, Sir LeslieWheeldon, W. E.
Jenkins, R. H. (Stechford)Popplewell, E.White, Mrs. Eirene (E. Flint)
Johnson, James (Rugby)Porter, G.White, Henry (Derbyshire, N. E.)
Johnston, Douglas (Paisley)Price, J. T. (Westhoughton)Wigg, George
Jones, David (Hartlepool)Proctor, W. T.Wilcock, Group Capt. C. A. B.
Jones, T. W. (Merioneth)Pryde, D. J.Willey, F. T.
Keenan, W.Pursey, Cmdr. H.Williams, Rev. Llywelyn (Abertillery)
Key, Rt. Hon. C. W.Rankin, JohnWilliams, Rt. Hon. Thomas (Don V'll'y)
King, Dr. H. M.Reeves, J.Williams, W. R. (Droylsden)
Kinley, J.Reid, Thomas (Swindon)Williams, W. T. (Hammersmith, S.)
Lawson, G. M.Reid, William (Camlachie)Willis, E. G.
Lee, Frederick (Newton)Robens, Rt. Hon. A.Winterbottom, Richard (Brightside)
Lee, Miss Jennie (Cannock)Roberts, Albert (Normanton)Woodburn, Rt. Hon. A.
Lewis, ArthurRoberts, Goronwy (Caernarvon)Wyatt, W. L.
Lipton, Lt.-Col. M.Robinson, Kenneth (St. Pancras, N.)Yates, V. F.
Logan, D. G.Ross, WilliamYounger, Rt. Hon. K.
MacColl, J. E.Royle, C.
McKay, John (Wallsend)Shinwell, Rt. Hon. ETELLERS FOR THE NOES:
McLeavy, F.Short, E. WMr. John Taylor and Mr. Rogers.

Clause ordered to stand part of the Bill.