Skip to main content

Orders Of The Day

Volume 529: debated on Tuesday 29 June 1954

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

Finance Bill

[ Progress, 28th June]

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

3.41 p.m.

I think that it would be for the convenience of the Committee to take the new Clause relating to child allowance in the name of the right hon. Member for Leeds, South (Mr. Gaitskell) with the new Clause to provide a "tapering" for child allowance and the new Clause relating to apprentices in the name of the same right hon. Gentleman, together with the new Clause in the name of the hon. Member for Orkney and Shetland (Mr. Grimond) relating to allowance for children.

We are quite agreeable to having in one debate the discussion of all these Clauses as long as it is understood that if we wish we may divide on the Clause itself.

New Clause—(Child Allowance)

In subsection (1) of section two hundred and twelve of the Income Tax Act, 1952, as amended (which relates to relief in respect of children) the amount of relief shall be increased from tax at the standard rate on eighty-five pounds to tax at the standard rate on one hundred pounds.—[ Mr. Jay.]

Brought up, and read the First time.

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

In view of your Ruling, Sir Charles, I propose to address my remarks mainly to the new Clause that I am moving and to refer to the other proposed new Clause which provides for the tapering of the child allowance. No doubt my hon. Friends will have arguments to advance in favour of the other Amendments. I am glad to notice from the result of the Division that such a large number of hon. Members opposite have attended today to listen to the debate on the Finance Bill.

I make no apology for moving a new Clause which is similar to one that we have moved in previous years from these benches, and one in which I have often previously declared a considerable personal interest. I make no apology because we are merely proposing relief for the large family. We attach very considerable importance to it. Indeed, we would give priority to this suggestion over a great many of the suggestions made in the course of our debates on the Finance Bill. For that reason, I am gratified to find that Members of the Liberal Party have given support to the main Amendment on this issue.

I believe that it is true that much of the poverty and much of the remaining inequality today is due not to the size of the income so much as to the size of the family that is affected. To put it more precisely, the number of dependants in a family in relation to the number of earners determines the real standard of living of the family. Indeed, it might be argued that the main defect of our Income Tax system today is its failure to take adequate account of that fact. I believe that we all tend, sincerely and very understandably, to forget this, because we are naturally inclined to think in terms of the family income rather than in terms of income per head of the household.

I noticed that earlier in our debates the right hon. Member for Blackburn, West (Mr. Assheton) argued that a great deal of the transfer, as he called it, within our taxation and social service systems was what he called horizontal, between one working-class family and another, rather than what he called vertical, between rich and poor. He failed to take account of the fact that a great deal of the transfer is no doubt between the single earner at a given level of income and the earner with a number of dependants. The most graphic way to illustrate the remarkable inequality that exists between families is by a careful study of the position of different families, not in terms of gross income or even of net income of the family as a whole, but in terms of the net income per head in the household, that is to say the income, after tax and after counting family allowances, divided by the number of people in the household or family.

I am not saying that there may not be some savings in overheads on a family of two. Indeed, it can be argued that a household of two is the most economical unit. The Royal Commission on the taxation of Profits and Income gave great support to my general case. It said that it is probably true that the most favourably treated unit at the moment at almost all income levels is the husband and wife, both earning, without children. They have the advantage of having no non-earning dependants, an economical household and considerable benefits from our present Income Tax system. Indeed, the Royal Commission goes so far as to refer to the unduly favourable position of the couple, both earning. Hardship begins to arise when the couple, both earning, begin to have children and the wife, because of the children, is quite rightly unable to go on doing full-time work.

If we make a simple calculation on this basis of the income per head of the household after tax, we get quite interesting results. I am taking several income levels and allowing for our existing tax concessions and also Family Allowance. If we compare two sorts of household, on the one hand the single man or woman and, on the other, the husband and wife with three children, we get these results, if my arithmetic is correct. The single man on an income of £350 a year, or £7 a week has an income after tax of £326. If a man has a wife and three children and his wife is not earning, the income per head of the family is £78. A single man is rather more than four times better off. If we take the level of £600 a year, the figures are £519 and £128, and the single man is a little more than four times better off. At the level of £2,000 a year, it actually works out that the single man is about four and a half times better off. I think those are rather graphic figures.

Of course, it may be said that all those figures really mean is that the family without children can afford various luxuries such as television, tobacco and drink—which we find are consumed in such large amounts, taking the population as a whole—whereas the family with a large number of children has to go without those things. It may be thought that, although they have to go without those things, when we consider the necessities of food, and so on, the large family may be well off. If anyone thinks, that, I would advise him to look at some figures which surprised me in the latest Ministry of Food survey. The survey relates to the year 1951, but I do not imagine that these figures would alter much from one year to another. It gives the actual food consumption and expenditure on food for different sections of the population and different types of family.

The survey, at page 51 of the latest edition, compares a household of one male and one female adult—roughly speaking, presumably the type of family I spoke of, where the husband and wife are both earning and without children—with a family of one or two adults and four or more children. We there find the remarkable result that the expenditure on food per head, quite apart from luxuries, of the family with two adults is actually double that of the family with four or more children. That proves emphatically that the inequality due to large families which still prevails in our system despite the child allowance, married allowance for Income Tax purposes and the family allowance paid by the Ministry of National Insurance, is still very large. If it is the case that the family with no children spends twice as much on food per head, there is clearly a very large inequality.

It may be said that all I have really proved is that if we divide our income by five or six there is very much less left after tax than if we divide it by one. That is a great truth which no one denies but which no one really acts upon—at any rate the Chancellor of the Exchequer does not. An interesting point picked out by the Royal Commission was that in some countries the whole Income Tax structure does attempt to act upon this truth much more effectively than ours. Based on what the Commission called the equation system, it regards the household not as one unit of taxation but as two, three, four, or five units and divides the gross income by that number before charging tax. If we were to do that with our Income Tax system at present, particularly in the lower-middle and middle-class incomes, we would produce most revolutionary effects in the amount of income paid in Income Tax by large families. It is interesting to note that France enforces that system.

We are not suggesting that anything so radically or revolutionarily favourable to the larger family should be introduced into our tax system. Nevertheless, I do think it is worth the Committee recognising, in passing, that that system does prevail. The fact that we do not include it in our arrangements is an ade- quate reason for being rather more favourable to the large family through the traditional child allowance, as we are suggesting in this new Clause.

I speak for myself, although this may include some others, in saying that in this matter we may have been the victims of a certain confusion of mind. We have tended to think we were meeting the problem by increasing the married allowance for Income Tax purposes. The Labour Government, in 1951, increased both the child allowance and the married allowance and we conceived ourselves to be alleviating this problem; but, in so far as one increases the married allowance one actually relieves further the couple who are both earning and without children who, as the Royal Commission showed, are probably the most favoured people under our existing system. I suspected the Chancellor also of falling into that conclusion the other day when he spoke of his sympathy for the married man. He may have had in mind the family with a large number of dependants. Of course it is that family, and not the married man as such, that is suffering under the existing system.

The Royal Commission proposed as a fairly major reform of our system an alteration of the child allowance. The majority Report wants to do that in such a way that the relief per child is greater as we go up the income scale. As I understand the majority proposals, there would be no benefit to anyone where the family income was less than £850 a year. The minority proposals would give benefit up to that level, but above that level would give an increasing benefit as the gross income rose. I am not convinced that it is right to make the child allowance discriminate according to the size of the income. I cannot quite understand why it should cost more to feed or clothe a child because one has a higher income. Therefore, all we are proposing to do is to give a straight increase in the child allowance from £85 to £100 for every child.

I would not be greatly surprised if the Chancellor told us that he could not do that because of the high cost. Nevertheless, I think there is one interesting conclusion from the statistics of this argument that changes in tax which would give very considerable relief to the large family cost surprisingly little in terms of revenue lost. The majority proposals of the Royal Commission would, I think, cost only £16 million a year in revenue. At first sight that may be rather surprising because obviously it would be a very considerable relief to large families. I presume the reason is that there are remarkably few large families in the community; or, at any rate, that the proportion of families with more than two children is surprisingly small.

Of course, the implication of that is that it is possible for this Committee, or for the Government, to give quite considerable relief to the worst cases without involving the total Budget in a very heavy expense. Indeed, the fact is that the families of three, four, five and upwards, are to some extent a small, and—if I may put it vividly—an oppressed minority under our present system of taxation and family allowances.

4.0 p.m.

I am glad to have the support of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) on this rare occasion. Having convinced him, perhaps I have said quite enough on that point, and I would therefore merely add, on the subject of the new Clause referring to the tapering of the child allowance, that it seems to us, at any rate, that the Royal Commission, which deals with this at page 58 of its Report, has made an exceedingly strong technical case for altering the present defects in the existing system. The Report states:

"An income of £85 in the child results in £170 in all being relieved, £85 in the child and £85 in the parent: an income of £86 in the child gives the parent no relief."
That would seem to be a technical fault in the tax as it now stands, and I am sure that the attention of the Chancellor has already been drawn to it. But we have done our best to draw his attention to it by putting down the new Clause, and though, as I gather, we cannot vote on this point, even should we wish to do so, I hope that the Chancellor will give it serious consideration.

Finally, may I emphasise that we feel that on the major issue there is a serious case, quite apart from all partisan argu- ment? If the Chancellor finds, or imagines, that he has not the revenue to sacrifice in order to make this concession this year, I hope that, in the unlikely event of his still being responsible for these matters next year, he will give in his consideration a very high priority in tax relief to these claims.

I do not think that anyone who has had the experience—as the right hon. Member for Battersea, North (Mr. Jay) and I have—of bringing up a family can doubt that it is an extremely expensive business. Nor can they doubt that the concessions at present given by the Treasury come nowhere near compensating for the additional expense.

I believe that two of the new Clauses, those of the right hon. Member about "tapering" and my own, fulfil almost exactly the recommendations of the Royal Commission. The new Clause to which the right hon. Gentleman has chiefly addressed his remarks seeks a straight increase in the child allowance. I am sure that at the moment we could all agree that the family is unduly penalised by our tax system, but I believe that the Chancellor may more willingly take the straight recommendations of the Royal Commission than anything else; nevertheless, I would support both a straight increase and the recommendations of the Royal Commission.

When, earlier in our debates on the Finance Bill, I mentioned this matter, the Chancellor was a little pained, as Chancellor's often are, that he had not been given credit for his good deeds. He wore that expression which one sometimes sees on the face of St. Sebastian in the pictures of the late Italian period, where one sees the saint full of arrows, wearing an expression of resignation and boredom. It is true that he did give some slight concession to the family, but it is also true that the Royal Commission expressly states that in its view the family is still at a very grave disadvantage.

I would also draw the attention of the Financial Secretary to the correspondence which has lately appeared in the "Manchester Guardian," from which it is quite clear that what the medium-grade Income Tax payers finds so expensive is bringing up their children. Even today, if the Financial Secretary looks at the "Manchester Guardian," he will see a letter from someone in which it is pointed out that, even with State scholarships, it costs £300 or £400 to educate two children.

At present the only child allowance is £85, which ceases at the age of 16, unless the child is educated after that age; and it is not available if the child has any other income. In addition, as the right hon. Member for Battersea, North has said, there is no tapering provision, and if the income is £86 the parent loses the whole allowance. As I have said, it cannot be pretended that this allowance anything like covers even the cost of feeding a child, far less clothing or educating one, or providing additional accommodation.

In my view, there are two points to be considered. There is the need for an increase in the child allowance and there is also the strong case which is made by the Royal Commission for making the scale to some extent a sliding scale. The right hon. Member for Battersea, North considers that the majority Report of the Royal Commission is not convincing on this point, but I would ask him to consider—whatever may be the ethical grounds of the whole matter—that in fact the better-off people do have to spend much more on their children. In the present state of society, I think that we must take that for granted.

At present a married man with an income of £500 and two children pays the same tax as a single man with an income of £166. A married man with an income of £2,000 a year pays the same tax as a single man with an income of £1,666. In fact, as we go up the scale, the position of the married man with children gets progressively very much worse compared with that of a single man, or of a family without children. I do not argue that the differential should be carried on right up the scale in the same degree, but I maintain that at the moment the two are too close together in the higher ranges of Income Tax, and therefore there is something to be said for a sliding scale as recommended by the Royal Commission.

It is greatly to the advantage of this country as a whole to encourage the middle classes, the professional classes, the skilled men, the better paid work people in industry, to have children. I would say that those of them who can do so should be responsible for bearing the cost of some part of the education of their children as well as their upbringing.

It seems to me that there may be at least three major objections to these proposals. First, there is the cost, which has been dealt with to some extent by the right hon. Member for Battersea, North. I do not believe that the cost would be so great compared with the injustice which is done at present. If the cost is unbearable, there is at least a strong case, in my opinion, for putting more tax on the single man, or a family without children, and less tax on the family with children. I should be happy to see that done.

The second objection is that the Chancellor may argue that he does not wish to deal with the matter piecemeal. He may say that the recommendations of the Royal Commission have not been published for very long and that he has not had proper time to consider them as a whole. There may be a certain amount of force in that argument. If the Chancellor can assure us that he is favourably disposed towards the general case made from this side of the Committee, I can see that he may have some case for saying that he cannot be expected to do anything at once.

But I would draw his attention to the fact that the conclusions on this matter, as set out in the Report of the Royal Commission, are very complete and self-contained, and that he might at least, after the debates we had on the subject last year, be able to show us which way his mind is working. I must confess, however, that last year I was not convinced that the case was so strong that it required him to act then. Now the Royal Commission has reported and the Chancellor has had a further year to consider the matter, and I feel that he ought to be able to give some idea of his general views.

Lastly, there is the point that it seems that some change of this sort in our tax system would be in accord with the recommendations of the Royal Commission on Population. There may be a dispute as to what the size of the population ought to be but there can be very little dispute that, whatever it is, it ought to be reasonably balanced. Surely it will not be said that it is desirable that the country should encourage a low birth-rate, especially among the skilled and professional classes, at a time when the number of old people is growing very rapidly.

The general case for some change in the tax system which will give both the same general increase in allowances and also do something to cure the discrepancy between the differences in the higher ranges of income and the lower, as between married men with families and single men, is necessary. In view of the Report of the Royal Commission, I very much hope that the Chancellor will be able to give us some encouragement showing that he, too, is of the same mind.

Like the right hon. Gentleman the Member for Battersea, North (Mr. Jay), I declare an interest in this matter, but it is not one which leads me into supporting the new Clause. The right hon. Gentleman failed to make his entire case good, and he did not disclose to the Committee that the proposal covers only a fraction of the field. He made some slighting remarks about those who have a high income and said that he did not think that their children ought to cost them more. I should have thought that if he consulted his professional colleagues in the £2,000 a year class, or just over, he would find that they feel very strongly that any tax lightening for children should apply throughout the scale. I imagine that, like the right hon. Gentleman, they send their children to schools where fees have to be paid and perhaps afterwards to the university, where I believe the right hon. Gentleman went himself.

Although perhaps as a party hon. and right hon. Gentlemen opposite do not think it quite correct and appropriate at the moment to suggest that allowances for children should range through the Surtax scale, the right hon. Gentleman must have had close contact with many people in that scale who would welcome such allowances when they can be given.

I assure the noble Lord that my proposal would help everybody at any level of income within the Income Tax scale. The only people it would not help would be those who are not at present paying any Income Tax. I wish to help them through family allowances, but I did not refer to that because it would have been out of order.

I am sure that the professional friends of the right hon. Gentleman whom I have been trying to imagine—and perhaps they exist in fact—would—agree that his proposals would operate through the scale, but where they would disagree is with his remark that it should not cost anybody in that class anything more to feed and to clothe a child. He left out, perhaps deliberately, education and the general circumstances of living of many people in the professional classes.

To that extent he overtly ignored one end of the scale. He also completely ignored the other end of the scale and did not make that clear to the Committee at all. He did not disclose that no person with three children with an income of between £600 and £700 a year pays any tax provided that the income is all earned. Therefore, the proposal would not affect anybody with three children with an income between £600 and £700. It is designed for a very narrow class of persons earning between £700 and £2,000 a year, over which sum the right hon. Gentleman's political strictures begin to apply. I want the Committee to be quite clear about that. I make the point absolutely firmly because it is the basis upon which I hope to ask the Chancellor to reject the new Clause.

Of course, this is an alteration of Income Tax and it can apply only to Income Tax payers. It might well be that those who support the proposal would also think it desirable to increase the family allowance or widows' pensions or many other of those benefits which would affect the class of lower income earner to which the noble Lord referred.

4.15 p.m.

I should be only too delighted to have a discussion on family allowances, but it would be out of order now. I am trying to confine my remarks to the proposal, and I maintain that what I have attempted to tell the Committee is true.

On those grounds I hope that the Chancellor will not accept the new Clause. We have received the Report of the Royal Commission. The proposals in it must be with the Treasury. If justice is to be done in this field, it must be done throughout the whole scale. It must he done to those with very small earnings indeed who are finding it extremely difficult to maintain their families and, in justice, it should be carried to the top, or near to the top, of the Surtax scale, provided the proposals are reasonable.

I hope that the Chancellor will not deal piecemeal with the matter this year, but will direct his officials to investigate very carefully the many proposals of the Royal Commission, albeit I thought some of them were not entirely satisfactory, and really get down to a reform in this field of taxation which is crying out for reform when one considers the immense advances that are being made in other countries which are directed towards the growth and maintenance of the population and the general enjoyment of the masses.

I am not at all surprised at the point of view expressed by the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke). It is evident that he realises that in this country there are still two nations. Not only does he realise that, but he is determined that the two nations shall continue.

I am more than surprised to find the hon. Member for Orkney and Shetland (Mr. Grimond) taking almost the same point of view. He said that we took it for granted that the better-off spend more on their families. Of course, we take it for granted that they spend more on their families. The simple reason is that they have much more money to spend than have the poorer people in the community. We do not accept the deduction of the hon. Member for Orkney and Shetland that, because the better-off spend more on their families, we should use public funds to make it possible for them to be in a much better position than they are at present, and use this sliding scale so that the better-off may get an even bigger whack of public money than they do now.

There is no question of giving a whack of public money. This is a question of slightly reducing the amount of tax they pay.

I do not accept that. All of us who are within a definite range of income have to pay Income Tax. Many of us pay it gladly because of the benefit not to ourselves but to others less well off. It is something which we have accepted for a long time. If the hon. Member's suggestion were accepted, it would mean that the better-off would have less responsibility, and they would have it at the expense of the less well-off.

I said that the single man could be more highly taxed and the better-off men with families could be slightly less taxed. In that case there might be no deduction in the amount of tax collected from any class but merely a redistribution between taxpayers in the same class.

The hon. Member is going away from the proposal which he made. He said quite clearly in his speech that he was in support of the majority Report recommendations. Those recommendations were that there should be a sliding scale. In other words, the already better-off would be given a bigger child allowance than the less well-off. I, as a single person, would be willing to be taxed even more heavily if children would benefit, but I should object strenuously to being taxed more heavily so that people much better off than I am would have a bigger whack of the share that I was ready to give up.

If we want to get the support of all those whose taxation would have to be heavier, we would have to show them that we in Parliament were trying to be just. The only way that one could possibly be just would be to accept what my right hon. Friend suggested in introducing the new Clause—to make the allowance the same for every child but higher than the present family allowance. That is of the greatest importance.

The facts given by my right hon. Friend show clearly the great hardships that are being suffered by families with more than two, and particularly with more than three, children. It is also true that wise, sensible and good parents are not only content to think about their children's immediate future. They consider also the future of the child when it becomes an adult. They want the very best for their children. I say to the noble Lord that it is not only people with middle-class incomes or those who pay Surtax who have a great desire to see their children going not only to good schools, but to the university. There are many examples of this in the area from which I come. My own family is a very good example. My father had a very low income as a miner, but he was a parent who desired for his children the best that he could possibly get. He was able to send three of his children to the university on the miserable wage that he was getting.

The hon. Lady misunderstands the purpose of my speech and has allowed a little prejudiced reflection to creep into her criticism of it. I went out of my way to say that I thought something ought to be done for people below £700 a year right down to the lowest wage earner with family responsibilities. I hoped that that would be done next year. I merely pointed out that the proposal of the hon. Lady's right hon. Friend did not attempt to do this.

If my right hon. Friend or I tried to make a case we would be ruled out of order, because the Clause deals only with those who pay Income Tax. The people to whom the noble Lord refers are outside the range of Income Tax. If we were to accept the noble Lord's sliding scale, there would be much less chance for his right hon. Friend the Chancellor of the Exchequer, even next year, to ensure that in another part of the Finance Bill he would be able to give help to those at present below the level of Income Tax. Whichever way one examines the noble Lord's speech, therefore, it is a plea for the people who are already very well-off.

I have spoken about the desire of good parents to get the very best in education for their children. That is good for the individual child, but it is of the greatest importance also for the nation that parents ought to be able to get the best. Every child should be able to develop to the full the talents and skills that God has given it at birth. That is important. not only for the individual child and the happy life to which it will lead, but for the nation, which depends for its whole livelihood on what we can do as a great industrial nation.

For that reason also it would be a very good thing if the Chancellor of the Exchequer this year, not waiting until next year, could accept the very modest request contained in the new Clause. It would relieve harassed parents and would give to every child a chance of developing to the full all its abilities. We on this side do not take for granted that there should be special benefits for children who are born into better-off homes. We take for granted that every child is born equal and ought to have these chances. I beg of the Chancellor of the Exchequer and of his hon. Friends at the Treasury to give these points their serious and sympathetic consideration.

I understand that the new Clause relating to apprentices and their allowances is being discussed in this general debate. I should therefore like to press the case, which we argued not only last year but on two or three previous occasions, for similar treatment for the parents of apprentices as for parents of children undergoing full-time education, who are given a concession equal to £85 at the standard rate of Income Tax.

The Economic Secretary is as well aware of the arguments as I am. We discussed the matter fully last year and the hon. Gentleman was sympathetic to the problem which we posed. The 1938 Act recognised the existence of this problem, and the concession on £13 was given at that time. We then moved from the £13 limit to £26, and last year we asked for the full £85 concession to be made to the parents of apprentices.

The Chancellor of the Exchequer did not feel that he could go the full way with us, but he agreed to accept the principle of what we were saying and he increased the allowance to £52. I do not know whether it was the extremely brilliant speech of the hon. Member who moved the new Clause on that occasion or the obvious justice of the case which influenced the right hon. Gentleman. At any rate, he conceded the principle and suggested that the difficulty which made it impossible to go the full way was that the Royal Commission at that time had still not reported and it would be premature to equate the true allowances until such time as he had had an opportunity to look at the whole complicated problem in the light of the advice which would be submitted to him by the Royal Commission. The position, therefore, is that the gap was narrowed appreciably, and for that we are grateful. We now ask the Economic Secretary to go the whole way.

4.30 p.m.

I put it to the hon. Gentleman that, if he agreed to concede in full the £85, he would in fact equate the two claims, because where children win bursaries or things of that kind their parents are not taxed upon them, although they mean a concession to them of something like £300. I cannot say too strongly that we do not in the slightest degree suggest that there should be a levelling down. We believe that it is right and proper that, where a child is undertaking educational studies of that type, the parents should be given encouragement and should receive all the concessions which it is possible to give them.

The only point we are making is that it is now quite obviously unfair not to give these advantages to the child of a person who sacrifices quite a lot in the way of income from the child in order to ensure that he becomes a good craftsman and undertakes an apprenticeship which, at its termination, will not only serve that boy well but will serve the nation equally well.

We now have the advantage of the advice of the Royal Commission on the Taxation of Profits and Income in their Second Report (Cmd. 9105), in which we see the conclusions to which these distinguished gentlemen came. In paragraphs 187 to 192, they deal very adequately with this problem. They say:
"In the case of the child at an educational establishment, income accruing in the form of scholarship emoluments is not counted in reckoning his income for the purpose of the £85 limit, and the test that decides whether his parent is to receive child allowance in respect of him or not is the simple one of determining whether the child's total income, excluding these emoluments, exceeds £85."
That is the sort of thing which we were saying last year, and which we say now. We think it is right and proper that it should be the case. The Royal Commission also point out:
"But the apprentice comes under a different rule in that an income of less than £85 accruing to him would disqualify his parents from the allowance."
I know that the Economic Secretary to the Treasury realises the educational point here. In paragraph 189, the Report goes on to say:
"We cannot feel surprised that those interested in the position of the apprentice complain that there is no good reason for these distinctions. The cause of them, as we understand the matter, lies in the fact that the 1938 scheme for apprentices was intended to meet the specific case of the unpaid apprentice and was not intended to equate apprenticeship with general education. The figure of £13 allowed was meant to prevent an apprentice who was not altogether unpaid, in that he received something by way of pocket money, from being excluded from the category of those whose parents were entitled to relief. By the same reasoning, on the other hand, the value of free board, lodging or clothing had to be included in the computation of the value of the emoluments. The recent increases of the figure of £26 and now £52 appear to be no more than a recognition that the requirements of pocket money are now somewhat inflated."
That is a masterly under-statement, I should have thought, speaking on behalf of all the fathers present. In paragraph 190, the Report says:
"The distinction between the two oases wears somewhat thin when it is appreciated that an 'educational establishment' includes one that gives purely vocational instruction. But, given the common element in the two cases, we think that it is wrong, because it creates, needlessly, a sense of injustice, to disqualify the parent of an apprentice in any case in which the parent of a child receiving general education would not similarly be disqualified. We recommend accordingly that an apprentice receiving full-time instruction for the specified period (two years or more) should be treated in the same way of this purpose as a child receiving full-time instruction at an educational establishment."
Last year we reached the position in which the Economic Secretary to the Treasury, in replying to the debate, said:
However, I must also put to the Committee certain objections on the other side. We heard the usual thing about Royal Commissions, and that one should not shelter behind them. The Committee must recognise that there are great advantages in obtaining the advice of a body of this experience and knowledge and which is considering this particular problem."—[OFFICIAL REPORT. 11th June, 1953; Vol. 516, c. 584.]
We saw the point of the hon. Gentleman's argument, and we waited, with what patience we could muster, for the Report of the Royal Commission and for this year's debate on this very important subject. We now hope that the Government will recognise the very changed conditions in the sphere of apprenticeship, since the whole background of premiums and pocket money has gone, and will realise that in this age there is indeed very great competition between various types of industry for the services of our young men and women.

It is inevitable, if we are to maintain our ability to earn our living, that we must invest more and more in getting boys into apprenticeships and in encouraging parents not to hang back, as it were, from careers of that kind for their sons in favour of the higher wages to be obtained in unskilled industry, but to realise that, by putting their youngsters to apprenticeships in craft industries, they will ultimately reap the benefit, while the nation as a whole will also benefit.

I should have thought that in these days, when we have this competition, it was essential that we should keep abreast of events, and should make it obvious that we will not penalise parents who put their boys to apprenticeships in craft industries, as I am afraid we have been doing in the past. There is no politics in this; it is purely a matter for consideration by the Government as to the justice of the case we are making for the implementation of the £85 limit.

I should like to repeat that no argument was put from the Treasury Bench last year against the fundamental point which we made in this respect. It was purely a case of awaiting the Report of the Royal Commission, and indeed the Government accepted the principle of the claim when they agreed to advance the allowance from £26 to £52. Therefore, I cannot see a single reason for any further delay. I know that hon. Members opposite feel just as strongly on this matter as some of us do; in fact, some of them said so in the debate.

We therefore ask the Economic Secretary to say that the time has arrived when the Government fully agree that it is in the interests of the nation as a whole that we should invest more in producing good craftsmen, and that the change which has taken place in the conditions of apprenticeship now makes the ideas of 1938 quite out of keeping with modern events.

We hope the Economic Secretary will say that it is the determination of the Government to equate the two allowances in the cases of boys having full-time education and those serving apprenticeships. I hope we shall not be disappointed this time, and I also hope that we shall not have any splitting of the difference in order to arrive at something in the neighbourhood of £70. I speak for the whole of my party on this issue, and I hope the Economic Secretary will tell us that this time the Government agree to equate the two claims.

I wish to add a very few words to the debate in support of what has been said by the hon. Member for Newton (Mr. Lee). I would repeat what I believe was said last year—although I have no OFFICIAL REPORT before me—that there are no party politics in this issue. I feel that it would be wrong as a matter of principle to endeavour to implement piecemeal any of the proposals of the Royal Commission to which the hon. Gentleman made reference. I prefer that they should be dealt with at a later date, upon a more comprehensive basis.

My sole reason for intervening is to make two points, which follow directly from what the hon. Member for Newton said. It is often popularly supposed that the rate of industrial development and expansion, and of scientific progress, depend for the most part upon the money which may be invested in industrial concerns in the form of new capital. In my opinion, that is a lesser consideration, the more important consideration being to attract into general industry over a very wide range of industries, which I shall not attempt to delineate—a continuous flow of suitable young men, and in some instances of young women, as apprentices who will thus ensure that the rate of industrial and scientific progress is maintained in terms of skilled manpower and craftsmanship, both in the nationalised and the private sectors of industry.

Secondly—and this is a psychological factor of the utmost importance—the spread of popular education has meant that many parents who themselves worked for many years in industry regard apprenticeship as something less reputable for their children than secondary or grammar school education followed by university education. A French saying which was often used 30 or 40 years ago in very many applications was Il n'y a pas de sal metier. That is abundantly true today. It is often believed that there is something a little distasteful about a child leaving a secondary or grammar school and becoming an industrial apprentice. I believe that to be a wholly misconceived notion. We ought to do everything possible to encourage young men and young women to go into indentured apprenticeship approved alike by trade unions and employers' associations. The discrimination which still exists today in the allowance for apprenticeship—although my right hon. Friend the Chancellor increased the allowance last year—and the allowance for a child undergoing full-time education at a higher educational establishment is a contributory cause to the insufficient rate of flow of apprentices into industry.

4.45 p.m.

While I am opposed to dealing on a piecemeal basis with the recommendations of the Royal Commission, I remind the Committee that we are just as concerned on this side of the Committee as are hon. and right hon. Gentlemen opposite about the position of apprenticeship in industry generally. We hope that next year my right hon. Friend the Chancellor of the Exchequer will remedy the anomaly that exists in allowing relief of only £52 in the case of apprentices, and £85 in the case of young men and women undergoing full-time education.

The hon. Members for Newton (Mr. Lee) and Kidderminster (Mr. Nabarro) have made very important speeches. I wish I had the opportunity of developing at length the serious point that the hon. Member for Kidderminster has just made about the recognition of industrial apprenticeship as comparable to apprenticeship to the learned professions via the universities.

I wish to raise a narrow point which the Chancellor will find embodied in a proposed new Clause standing in the name of some of my hon. Friends, and which asks him to make a small contribution by way of tax concession to removing one of the anomalies which exist as extra burdens on the parents of children suffering from disabilities. Section 212 (1) of the Income Tax Act, 1952, which is the main Section from which all our discussion flows today, helps parents who have bright children who go on for further education. That is right and proper.

When a child of 16 becomes a wage-earner, tax relief in respect of that child ought to be removed, but if the child stays on at a grammar school, and goes on to a university or some other kind of post-secondary training, he does not earn money, even if he has a scholarship or a bursary or some kind of grant. He still is a financial liability to his parents in college or term time, and certainly during vacation. The father gets relief to the extent of £85 at the standard rate. Moreover, if the bright child is in receipt of an income up to £85, that money is disallowed in conceding to the parent his tax relief. All that is excellent. Indeed, we want to raise the £85 to £100.

Unlike the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), we believe that while special and unjust burdens are being carried by parents of children in income ranges below which we can help in our Finance Bill proposals this time, that fact should not stop us from trying to tidy up and make more just the relief that we give inside the upper income group.

Having called the attention of the Committee to what happens to the father of the bright child, I now want to refer to children who are at the other end of the intellectual scale. For instance, there are the spastics, about whom hon. Members can read in last night's Adjournment debate. There are children suffering from cerebral palsy, epileptics and mentally backward children, who are in every way a complete liability to their parents. Under the present Income Tax law, these children after the age of 16 are classed as dependants. The parent gets dependant relief, which is only £60. If we give tax relief of £85 in respect of the able children proceeding to further education at a university, the same relief at any rate ought to be given to the parents whose children are a complete liability because they do not go out to work or go on to further education.

Few people other than the unfortunate parents who carry such burdens realise what a tremendous disadvantage is suffered by a handicapped child. I have in mind a friend of mine, the father of an epileptic son, who literally can never be left alone. When he goes out into the street, his father or mother must be with him. The worst of the spastic children need constant care and attention by their parents for 24 hours a day. The mentally defective child is the worst, because although it grows up it remains a child, no matter at what age, needing all the care from its parents that a child of three years or four years of age usually gets.

These handicapped children bring nothing into the home. Dependants, for whom Income Tax relief is given, are allowed to earn a maximum yearly income of £85 without interfering with the qualification of the person concerned to get the relief of £60. But the handicapped child cannot earn any money, makes no contribution to the household and is a complete liability. All that it has to give to the parents is the gratitude, affection and love which is one of the most remarkable features of the handicapped children I am speaking about who, handicapped as they may be, do appreciate what the parents are doing for them.

Even more curious is the fact that if the handicapped child goes to a special school for spastics, for the blind, for the deaf, for the epileptic or the cripple, the original Section stands and the parent is entitled to the full tax relief. The handicapped child is continuing its further education and is entitled to the £85 relief which the bright child going to a university is getting, even though, so far as the parent is concerned, the handicapped child in a special school is a less financial as well as less physical and mental liability than if he were at home. The cost to a parent of keeping the child is less when the child goes to a special institution, yet the parent gets a tax relief for a child who goes to a special school.

Not all handicapped children are in a special school. Some are too seriously handicapped to go to any special school in the country. If they are classed as ineducable there is obviously no special school to which they can go. Moreover, in respect of most of the disabilities which exist among children, we are still very short of special school provision. If it is the State's fault that there is not a special school to which a child can be sent, it is certainly unjust to penalise the parent who cannot send his child for special education because provision is not made.

If Members of the Committee will look at the Ministry of Education's latest Report, they will find that we are short of special school accommodation for 20,500 children. Of these, 12,500 are educationally subnormal, so that to penalise financially the parents of an educationally subnormal child because they have not sent the child to a school which does not exist is obviously fantastically wrong. I hasten to say that the concession—the narrow proposal I am speaking about—would not cost 20,000 times £20 a year but a much smaller sum, because many parents of handicapped children are below the income range at which this benefit would operate. It would be concerned with only a very narrow group, between certain ages.

Sometimes the parent will not let the child go to a special school or a mental institution. It is very easy to be glib and to say that a parent ought to do so if some kind of efficient preparation or treatment for the handicapped child exists, or else get only the concession which is given at present. It is very easy to be wise about someone else's parental problems.

The mother who devotes herself to a helpless child is sometimes afraid, having looked after, protected and sheltered the child for five or 10 years, to let it go into whatever may seem to be theoretically the best special institution. Some of us try to persuade mothers, when the opportunity arises, to conquer that fear, and to send children to the special provision which is made, but it is not so easy as it might seem, especially as the provision for various kinds of handicap is not uniformly good.

It is often the most devoted parents and the worst cases of handicapped children who suffer the particular injustice which we are trying to get rid of this afternoon. I admit that the new Clause I have spoken of represents a microscopic amendment. It does very little, and its help will go only to parents whose incomes are large enough to make the concession worth while. But it will help. and it will be some recognition on the part of the Chancellor and this Committee of the valuable work being done by parents who are unfortunate enough to have a handicapped child, and who are proud enough, or affectionate enough, or skilled enough, to handle the whole question of the care and education of the child themselves.

I admit that it is part of a much bigger problem that such parents, if their income is low, lose all kinds of benefits. They lose the family allowance when the child reaches the age of 15 years and, if they are poor, they have to wait until the child is 16 before National Assistance benefit can be claimed. We cannot solve that problem inside this new Clause and in this Bill, but I feel sincerely that if I have stated the case clearly not a single Member of the Committee can fail to be convinced of the necessity to remove what is in the first place an injustice, and an injustice which is being done to some of the finest and most unfortunate parents in the community at the present time. I hope that whatever the Chancellor does on the broad request which is being made, he will at least concede this very narrow point.

I wish to support my hon. Friend the Member for Newton (Mr. Lee) and also the remarks made by the hon. Member for Kidderminster (Mr. Nabarro). I was very interested to hear the hon. Gentleman refer to the fact that the apprenticeship in engineering, or indeed in any trade, was at one time, in a certain respect, rather despised in comparison with entry into a profession. There is still current today an idea that apprenticeship into the engineering industry today is similar to what it was when my hon. Friends the Members for Newton and Leeds, West (Mr. Pannell) and I were apprenticed.

The engineering industry today is a very complicated one, and a successful apprenticeship in modern engineering practice and technique calls for something more than a boy who is in a sense stupid. When my hon. Friends and I were apprenticed, we did not need such great technical or mathematical knowledge as a boy being apprenticed today requires. Employers in modern engineering plants, especially in the Midlands and in Scotland, are spending a lot of money in providing training in the factory and indeed in teaching mathematics in the factory in order to provide for the industry the engineers and technicians who will be needed in the future.

I still remember how a few years ago it always struck me as being rather stupid that when a young lady I knew who succeeded in winning university awards valued at £285 or £305 per year the scholarships were not taken into account when the parents claimed Income Tax relief, and she was in residence at a university for about 28 weeks in the year, whereas in the case of a boy apprentice getting £2 a week and living at home, and who had to go to a technical school, to have instruments bought for him and who had to acquire technical books, his parents were allowed no Income Tax relief at all for him.

5.0 p.m.

That always struck me as being very stupid indeed. Here were parents getting Income Tax relief in respect of a daughter whose income from scholarships for 26 weeks in the year when in residence at the university was higher than theirs. The same parents whose son was an engineering apprentice and who was receiving £2 a week, would receive no Income Tax relief at all. That strikes me as a most stupid anomaly, particularly when the demands made on an apprentice in the matter of education and the acquisition of instruments, which are very expensive, are so high.

It is about time that engineering apprentices were put on the same footing for purposes of Income Tax relief as a student undergoing full-time education. Not long ago, I went round a factory in Glasgow which is running its own school on the premises for the purpose of teaching the boys the rudiments of engineering practice; but I was told that even that was not a sufficient incentive to boys to become apprentices.

I am afraid that today there are many boys, both in engineering and in other fields, who are being pushed and squeezed into wrong careers because not sufficient security is being given to them in the engineering industry. When the hon. Member for Kidderminster talks about boys not becoming apprentices because apprenticeship appears to some to be less dignified than other professions, I would assure him, as one who was an apprentice, who is the father of two children, and who lived in South Wales between 1924 and 1936, that I and many of my colleagues in the engineering industry and many of my friends in the mining industry used to say, as a result of our own experience between the two wars, that if we could help it none of our children would enter those industries. It was not because we felt that members of our trades had a lower status than articled clerks or civil servants, but simply because of our own personal experience between the wars. That is the real reason we are short of engineering technicians today.

Let us be careful when we encourage boys to become apprentices that we give them the assurance that they will not undergo the same experience as their fathers, because, unless we do we may push the industry back to where it was 20 years ago. I ask the Economic Secretary to give serious consideration to the matter of the placing of apprentices in modern engineering plant on an equal footing with those undergoing full-time education, Such boys have to be students and have to acquire as much knowledge and develop as much capacity in observing very intricate engineering problems as university students. We have to place those apprentices, for the purpose of Income Tax relief, on the same level as full-time students.

I rise to support the case which has been made by my hon. Friend the Member for Newton (Mr. Lee) and others for placing apprentices in regard to Income Tax relief on precisely the same footing as all other students. This is a matter which has the support of both sides of the Committee, and the only argument that has been adduced against it was that of the hon. Member for Kidderminster (Mr. Nabarro), who said he did not think that the Chancellor of the Exchequer ought to deal with this matter in a piecemeal fashion. I hope that the Chancellor will not accept that argument.

We have been urging this matter year after year, and for the last two years have been asked to wait because it was under consideration by a Royal Commission. That Royal Commission has now considered the matter, and has completely vindicated everything that we have been urging. It is not good enough for the hon. Member for Kidderminster to say that the Chancellor ought to wait another year in order to make a comprehensive review of this aspect of legislation. It is a matter which can quite easily be segregated from all the other recommendations of the Royal Commission.

The findings of the Royal Commission come out firmly, fully and explicitly in support of putting Income Tax relief for apprentices on precisely the same footing for all other students. As my hon. Friends have urged, the case for that is overwhelming. I am convinced that it is not only a social injustice to maintain this discrimination, but is also a national disservice to do so. The burden on the parents is precisely the same whether the boy is an apprentice or a university student.

To maintain in these days that there should be some discrimination based on social status between the two is quite false, quite unsound and very unwise. Indeed, as my hon. Friend has pointed out, the need for the recruitment of technicians into the engineering industry and into industry generally is one of the foremost national needs at the present time. We require every possible skill and every possible perfection of technique that we can get. This may be only one modest method by 'which we can contribute to that end, but it can be said in its favour that it will not cost the Exchequer a great deal. For these reasons, I raise my voice in support of what has been said in the debate and hope that the Chancellor will accept the proposal.

This is a most important and an extremely interesting subject, and the speeches made from both sides of the Committee have been of great help to the Government in trying to formulate a view on what is, of course, an extremely complex section of our Income Tax law. It is bound to be so. because it probably expresses better than any part of the law the eternal conflict between having a tax system which is simple and one which does justice in the multiplicity of individual cases. It is terribly difficult to try to come to a correct and fair balance between those considerations.

My right hon. Friend the Chancellor of the Exchequer is very grateful indeed to the Royal Commission for the extremely valuable work it has done on this subject, and for the most interesting, helpful and thoughtful recommendations which it has put forward. My right hon. Friend considers—indeed I am sure we all consider—that its recommendations should have the most careful study by all Members of this Committee and by the public as a whole. My right hon. Friend also considers that now that we have the Report of the Royal Commission, and therefore an opportunity really to tackle this complicated branch of the Income Tax law in its entirety, it would be unwise to tackle it except on a comprehensive and logical basis. I will try to explain one or two of the reasons why my right hon. Friend takes that view.

In his Second Reading speech my right hon. Friend said clearly to the Committee that he did not feel that he could this year implement any of the recommendations of the Royal Commission's Report, for a number of reasons. In the first place, there inevitably arises the question of cost, and, as the Committee is aware, my right hon. Friend this year is working to an extremely narrow margin. He does not feel that he has any money to spare for large tax concessions. That is the first point.

Will the hon. Gentleman deal with the cost of each of these proposals?

That is my intention. The next point, of course, is that the Royal Commission did not indicate any particular order of priority in its recommendations which would guide us in the selection of certain recommendations rather than others if we should decide contrary to the views of my right hon. Friend, to pick out some in advance of others.

Then it is true, of course, that the Report was received only very recently and after my right hon. Friend had made up his mind on the main aspect of his Budget proposals. I do not think that either in this Committee or in the public mind generally has there been time for study of the complicated matters which arise in the Commission's Report. These various matters are both complex and interlocking. Many of the suggestions put forward are designed to put right what are considered to be anomalies, but most of those anomalies are so regarded because of comparison with other individual cases.

We often say, "Why should Mr. A in certain circumstances get relief when Mr. B. does not?" of course, if one has an anomaly—what appears to be an unfairness between one citizen and another—one should try to put it right, but in doing so one may find that, unless one deals with the whole situation at the same time, another anomaly is created. I will try to explain why as I go on.

Another point is that the Royal Commission's Report does envisage, together with a number of reliefs of taxation, certain increases of taxation and withdrawal of concessions or allowances that are at present made. I quite understand that it is not within the rules of order for hon. Members opposite to put down Amendments increasing taxation or withdrawing concessions, but the fact is that we are having to consider this afternoon some of the recommendations of the Royal Commission without others which, in the Report, go together as a single comprehensive whole.

Then, of course, it is true that within the Report of the Royal Commission there is a majority and a minority view on some points, and particularly on the major point of child allowance. I think it is only right that opinion generally should have a chance to weigh up and consider the relative merits of the two points of view.

Would not the hon. Gentleman agree that there is an area of common ground between the minority and the majority views? They are not completely in contradiction.

But the area of common ground is far from coincident with the ground of the suggestions put forward by the right hon. Gentleman. In fact, I think that so far as the main proposals are concerned the flat rate increase to £100 for child allowance is quite different from either the majority or the minority proposals of the Royal Commission. That does not necessarily mean that it is wrong, but it is not the same thing.

Perhaps I may take the four main points of the Clauses which we are discussing. The first is the question of raising child allowance generally from £85 to £100. I am quite certain that on both sides of the Committee we always feel that when there is money available for relief of taxation those people with children should be among the very first claimants. They are not necessarily a first priority—after all there are the old people and others—but people with large families are among the first claimants. I would not for a moment dispute the arguments of the right hon. Gentleman who, in these matters, has a personal interest numerically greater than mine, and there is a strong case obviously for arguing, as I think the Royal Commission pointed out, that the man with a large family has a considerable claim for greater taxation relief than at present exists relative to the bachelor.

We should however remember that the child allowance has recently been increased. It was £60, it went down to £50 during the war, but has since increased in three steps to £60, £70, £85 and is now at the highest point it has ever been. There has therefore been quite a substantial increase.

Perhaps the Economic Secretary would agree that in relation to the changed value of money it is really probably lower today than before the war?

5.15 p.m.

I quite agree, but if we bring in the question of changed value of money we shall get into rather wide fields.

Quite frankly, the main problem in this case is the cost. In a full year it would cost £16 million; £13 million this year and £16 million in a full year. I am referring now to the first Clause, which seeks to raise the allowance from £85 to £100. £16 million in a full year is really a rather large sum, and certainly larger than my right hon. Friend could contemplate at present.

Then there is the question of tapering which is raised in another proposed Clause. That, again, is an interesting proposal and, I think—in theory at any rate—clearly has a very strong argument in its support. It does seem anomalous that if a child's income is £85 there should be a full allowance, but if it reaches £86 the allowance should stop altogether. Nevertheless, I think that the argument put forward is open to the objection that, if fully carried out, it might be found that under this proposal a parent might be getting a tax relief in respect of a child receiving an income large enough to be taxed itself.

But the chief difficulty, frankly, is the administrative difficulty. The whole P.A.Y.E. coding system is based on our being able to assess with a fair degree of certainty before the Income Tax year begins what are the proper Income Tax allowances of the individual. Where one has a definite limit of £85 one can, at the beginning of the year, tell with some certainty whether the child's income will be above or below the limit. Under the tapering proposal it would be difficult to know what would be the right allowance to give to the parent. It would therefore mean that before the Income Tax year began inquiries would have to be made of the parents concerned by the inspector of taxes as to likely level of a child's income during the year, and at the end of the year there would have to be check-up adjustments.

I quite agree that these administrative difficulties would arise, though we have a lot already in connection with the operation of the child allowance. No inspector can predict whether a child will earn sufficient in the first year of employment to disqualify the parent from receiving the allowance. All that retrospective adjustment has to be made now. I am not suggesting that it is not inconvenient both to the Inland Revenue and to the taxpayer, but the proposal would not introduce such an entirely novel set of difficulties as the hon. Gentleman would appear to suggest.

No, I suggest not that the difficulties would be novel but that they would be more extensive. This would undoubtedly multiply the inquiries to be made. It might involve the employment, I am informed, of another 450 clerks. As our P.A.Y.E. system now works, it would introduce very great complexities and more administrative work. I do not say that that is a final reason why it should not be adopted. I am putting forward some of the practical difficulties which weigh against the immediate acceptance of these proposals. That deals with the tapering proposal.

I come now to the case of the disabled child, which was mentioned by the hon. Member for Southampton, Test (Dr. King) in a most interesting speech to which I listened with great appreciation. I recognise that here we are dealing with extraordinarily difficult cases, and the hon. Member is right to say that it is unwise to tell parents what they should do—although we often think that we know—with their children. When we come to consider, as my right hon. Friend will consider, the recommendations of the Royal Commission here, quite clearly, is one with a strong claim on our sympathies. However, I would suggest that to accept the recommendation as it stands by itself would give rise to other difficulties, and is an example of what I mean by the interlocking character of some of these matters.

The proposal is that where a child is incapacitated the allowance age should be raised from 16 to 21. The question at once arises—if up to 21, why not beyond? The reason given by the Royal Commission is that beyond that point a parent can, by a settlement, divest himself of part of his income and hand it to his child. That may be true in a number of cases but not in all. There might be many cases where it was not practicable and might not be desirable.

There is also the case of other relatives who are supporting incapacitated children. Suppose an uncle takes over where the parents cannot do it. What about other dependent relatives? By increasing this dependant allowance in the way that hon. Members suggest, would we not create another anomaly as between a dependent relative who is getting £60 and an incapacitated child who is getting £85 up to the age of 21?

I am not putting forward these arguments as reasons for rejecting the hon. Member's main principle. I am pointing out that it is not easy to accept this sort of recommendation immediately without careful consideration of all the other anomalies which may be created or the interlocking factors which may arise.

The cost of the disabled child concession would be very small. I could not give an accurate figure, but it would be negligible. It would be hard to give an estimate of the cost of tapering; I am told that the figure might be £1 million or £1½ million a year, but it is difficult to estimate. In the case of apprentices, the figure would be pretty small.

The question of apprentices has been raised already in previous years by the hon. Member for Newton (Mr. Lee), and I listened with great interest to what was said by my hon. Friend the Member for Kidderminster (Mr. Nabarro) and the hon. Members for Dunbartonshire, East (Mr. Bence) and for Islington, East (Mr. E. Fletcher). Obviously, this is a matter on which there is a great deal of feeling on both sides of the Committee. Here again, as in the case of the disabled child, there is a strong claim for our consideration. The proposed new Clause does not go the whole way with the Royal Commission in this matter, because apart from agreeing with the thesis that the limit should be £85 and not £52, they also wanted to deal with the anomalous situation relating to board and lodgings and the repayment of premiums, which are two matters which I should have thought we should deal with at the same time if we are going to try to deal with the earnings limit.

In the case of apprentices there is also a practical point to which I referred last year and which is related to this question of taper. I am told that nowadays there are few apprentices getting less than £85 a year, so that in practice to increase it from £52 to £85 would not affect many people. But a lot of people do come in the range between £85 and, say, £150. Therefore, clearly there would be strong and reasonable pressure to apply a tapering provision in the case of apprentices.

If we could do this, I think there would be a strong case for doing so. But, as I have explained—and this once again is the interlocking factor coming into play—we cannot see how we could introduce a tapering provision of this kind without great administrative difficulties. The question of helping apprentices—I do not think there is disagreement in principle on this matter—and introducing what hon. Members have in mind is related to all these other different factors that arise in the Report of the Royal Commission. I have tried to explain the attitude of my right hon. Friend to all these matters—

Before my hon. Friend leaves the question of apprentices, may I ask him to bear in mind that all these matters that we are considering are concerned with spending money in the form of giving tax relief, except the matter relating to apprentices, which is a question of earning money by stimulating greater production, and as production is paramount, can my hon. Friend give first consideration to this apprentice matter?

That is just what my right hon. Friend does not want to do. He does not want to give first consideration to any one of these cases because, strong as is the case for this proposal, a strong case exists for the view expressed by the hon. Member for Southampton, Test. My right hon. Friend said in his Second Reading speech that it was not right to pick out any particular recommendation in the Royal Commission Report, because he wants to study the whole Report between now and next year, and he will in the course of that study be assisted by the expressions of opinion from hon. Members on both sides of the Committee on these important matters.

The hon. Gentleman has said that there is not a lot involved financially, but would he not agree that between now and next year the parents of many thousands of boys leaving school will have to come to a decision about their future? I should have thought that if it was possible for the Government to accept this proposal they would be making a most important contribution to the labour force which is now undertaking apprenticeship? I should have thought that to wait until next year would canalise many thousands of youngsters out of apprenticeship into, perhaps, unskilled jobs, or jobs which will not give much of a return to this nation.

The hon. Gentleman has a strong argument there, and he has, indeed, advanced very strong arguments on this point before now. My right hon. Friend has weighed them all before coming to his decision, but his general attitude on this question and on these related questions is that he wants to study the Report, and he will study the views of hon. Members on both sides of the Committee before coming to a conclusion as to what should be done about these matters.

In view of the cost of some of the proposals and the essentially interlocking nature of all of them, he does not think that he would be doing right by accepting the recommendations of the Royal Commission this year or by picking out some recommendations in advance of others. He wants to have time for himself and for the country as a whole to study all these matters with the great care that they undoubtedly deserve.

I think this is an exceptionally disappointing answer. This Government may be great in some respects, but it is very weak on the matter of making concessions—even small concessions which it would be within their power to make. Three new Clauses have been discussed together, and each of them has great merit. They have all been very well presented, and no opposition was put forward to any of them before the Economic Secretary's speech. The case about apprentices was extremely well presented by my hon. Friends the Members for Newton (Mr. Lee) and Dunbartonshire, East (Mr. Bence), both of whom spoke with practical knowledge of the matter, and the Economic Secretary admits that the cost would be negligible.

I could not give the exact figure, but it would almost inevitably lead to tapering, and with tapering it would cost £1 million or £1½ million.

The hon. Gentleman mentioned a figure, which I will come back to in a minute, for the proposal to increase the child allowance. On the question of the disabled child, he said that the cost would be negligible, and then I interjected and asked what would be the cost of the apprentices proposal and I understood him to say that that would be negligible also. He did go on to make an argument to the effect that it would not—

I thought my hon. Friend said that it might amount to £1½ million in his original reply on apprentices.

We only want to get the facts. The Treasury Bench have access to these estimates. I thought the figure of £1 million arose on the question of tapering, but this proposal does not involve tapering. The proposal made by my hon. Friends the Members for Newton and Dunbartonshire, East are to raise the figure from £52 to £85.

My point was that, in our view, to accept the apprentices new Clause would inevitably involve tapering, and the cost would be £1½ million. We could not do one without the other.

I will not pursue that last argument. I should have thought that it was possible to accept the proposals on the Paper as an instalment of reasonable justice. Particularly should it be easy to accept, because the Economic Secretary argued that a number of apprentices would not be much helped by it, and that would further reduce the cost below what it might have been expected to be had it been thought that there was a wider range of applicability. However, when all these estimates have been passed to and fro, it remains true that these are relatively small from the point of view of loss of revenue.

I should have thought that, making all allowance and looking at everything before doing anything—which is obviously a philosophy which can be carried dangerously far—it would have been worthwhile for the Government to have made these two tiny concessions this year. The cost would have been very little. Their acceptance would have created more good will and would have done a little good to a fair number of people. I hope my hon. Friends will express in the Division Lobby their view that these minor concessions might well have been made.

5.30 p.m.

I now pass to the third proposal, which is rather more substantial in terms of finance. This is the proposal to increase the child allowance from £85 to £100. There is a very strong case for this proposal. The noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) contributed to our debate on this subject, and I am glad that he has now returned to the Chamber because I want to comment upon one or two things which were said by him. I think it is generally accepted—as the Royal Commission says; and all those Members who have mentioned the subject this afternoon have said it—that there is still far too wide a gap between the tax liabilities of the person without children and those of the person with children, and, increasingly, those of the person with a large family below the earning age.

No one has controverted that statement. The question we have to decide is, what is the most satisfactory way of narrowing that gap? The Royal Commission made certain proposals, including a differential element. It proposed that in certain conditions greater tax relief should be given in respect of the child of the richer man than of the child Of the poorer man. We reject that proposition. We consider it to be both more just and more simple that every child within the field of applicability of this concession should count for one, and that the relief should in all cases be the same.

We are now discussing only Income Tax. Much might be said in relation to the general thesis put forward by the noble Lord the Member for Dorset, South—with much of which I would agree—hut Income Tax relief alone cannot be the instrument of narrowing the gap to the extent that many of us would desire, and we are precluded by the rules of order from discussing other methods. The noble Lord did not bring out in his speech the fact that the proposal of my right hon. Friend the Member for Battersea, North (Mr. Jay) suggests an exactly equal financial benefit for all children, provided their parents are paying some Income Tax—subject to a taper in the marginal zone. It would apply equally to a person earning £1,000 a year as to a Surtax-payer who was receiving many thousands of pounds a year. They would all receive the same advantage.

No injustice would be done to prolific Surtax-payers; they would be entitled to the same advantage as persons at any other level of income, providing that the latter had to pay some Income Tax. That seems just and right. I know there is an argument about the greater cost of education that may be incurred, but that cannot properly be dealt with by way of Income Tax. There may be some other way of dealing with it, but the only way by which we could do it in the field of Income Tax would be to adopt the objectionable principle of giving a larger Income Tax relief in respect of the child of the richer of two taxpayers. We say that this would widen still further the field of inequality which it is our object to narrow.

Division No. 179.]


[5.37 p.m.

Acland, Sir RichardBenn, Hon. WedgwoodBraddock, Mrs. Elizabeth
Albu, A. H.Benson, G.Brockway, A. F.
Allen, Arthur (Bosworth)Beswick, F.Broughton, Dr. A. D. D.
Anderson, Frank (Whitehaven)Bevan, Rt. Hon. A. (Ebbw Vale)Brown, Rt. Hon. George (Belper)
Attlee, Rt. Hon. C. R.Bing, G. H. C.Brown, Thomas (Ince)
Awbery, S. S.Blackburn, F.Butler, Herbert (Hackney, S.)
Bacon, Miss AliceBlenkinsop, A.Callaghan, L. J.
Balfour, A.Blyton, W. R.Castle, Mrs. B. A.
Barnes, Rt. Hon. A. JBoardman, H.Champion, A. J.
Bartiey, P.Bottomley, Rt. Hon A. GChetwynd, G. R.
Bellenger, Rt. Hon. F. JBowden, H. W.Clunie, J.
Bence, D. RBowles, F. GColdrick, W.

Although this proposal would cost the Government rather more than the others, it should, nonetheless, be given a very high priority. Although the figure is substantially larger than the cost of certain other tax changes in the Bill, this proposal should have been preferred to some of the matters we were discussing yesterday. The Government have not adopted a very reasonable priority in their concessions, and for that reason, besides the merit of the proposals and the need to narrow the advantage which now exists in favour of the person with no child or few children as against the person with many children, I think we should record our view that this is a most desirable relief, and indicate by our votes that we trust that this matter will be given a very high priority whenever the Chancellor is able to carry further his study of these proposals, none of which he is willing to accept today, but some of which we hope he will accept hereafter.

My right hon. Friend said that he would say something about the proposal in regard to incapacitated children.

I thought that I had covered that. I said that it was a most desirable proposal. I intended to add that it stands on the same page—page 70—of the Royal Commission's Report, and is recommended by the Commission in the same terms as those used by my hon. Friend the Member for Southampton, Test (Dr. King) in his admirable speech. It stands next door to the proposal with regard to apprentices. In my judgment, both proposals, having the authority of the Royal Commission behind them and costing such small sums of money, are worthy of being adopted forthwith.

Question put.

The Committee divided: Ayes, 242; Noes, 281.

Collick, P. H.Janner, B.Reid, William (Camlachie)
Cove, W. G.Jay, Rt. Hon. D. P. T.Robens, Rt. Hon. A.
Craddock, George (Bradford, S.)Jeger, George (Goole)Roberts, Albert (Normanton)
Crosland, C. A. R.Jenkins, R. H. (Stechford)Roberts, Goronwy (Caernarvon)
Grossman, R. H. S.Johnson, James (Rugby)Robinson, Kenneth (St. Pancras, N.)
Cullen, Mrs. A.Jones, David (Hartlepool)Rogers, George (Kensington, N.)
Daines, P.Jones, Jack (Rotherham)Ross, William
Dalton, Rt. Hon. H.Jones, T. W. (Merioneth)Royle, C.
Darling, George (Hillsborough)Keenan, W.Shackleton, E. A. A.
Davies, Ernest (Enfield, E.)Key, Rt. Hon. C. W.Shinwell, Rt. Hon. E.
Davies, Harold (Leck)King, Dr. H. M.Short, E. W.
Davies, Stephen (Merthyr)Kinley, J.Shurmer, P. L. E.
de Freitas, GeoffreyLawson, G. M.Silverman, Julius (Erdington)
Deer, G.Lee, Frederick (Newton)Silverman, Sydney (Nelson)
Delargy, H. J.Lee, Miss Jennie (Cannock)Simmons, C. J. (Brierley Hill)
Donnelly, D. L.Lever, Leslie (Ardwick)Skeffington, A. M.
Driberg, T. E. N.Lewis, ArthurSlater, Mrs. H. (Stoke-on-Trent)
Dugdale, Rt. Hon. John (W. Bromwich)Lindgren, G. S.Slater, J. (Durham, Sedgefield)
Ede, Rt. Hon. J. C.Lipton, Lt.-Col. M.Smith, Ellis (Stoke, S.)
Edelman, M.Logan, D. G.Smith, Norman (Nottingham, S.)
Edwards, Rt. Hon. John (Brighouse)MacColl, J. E.Snow, J. W.
Edwards, Rt. Hon. Ness (Caerphilly)McGhee, H. G.Sorensen, R. W.
Edwards, W. J. (Stepney)McGovern, J.Soskice, Rt. Hon. Sir Frank
Evans, Albert (Islington, S.W.)McInnes, J.Sparks, J. A.
Evans, Edward (Lowestoft)McKay, John (Wallsend)Steele, T.
Evans, Stanley (Wednesbury)McLeavy, F.Stokes, Rt. Hon. R. R.
Fernyhough, E.MacMillan, M. K. (Western Isles)Strachey, Rt. Hon. J.
Fienburgh, W.McNeil, Rt. Hon. H.Strauss, Rt. Hon. George (Vauxhall)
Finch, H. J.MacPherson, Malcolm (Stirling)Stross, Dr. Barnett
Fletcher, Eric (Islington, E.)Mainwaring, W. H.Summerskill, Rt. Hon. E.
Follick, M.Mallalieu, E. L. (Brigg)Swingler, S. T.
Foot, M. M.Mallalleu, J. P. W. (Huddersfield, E.)Sylvester, G. O.
Forman, J. C.Mann, Mrs. JeanTaylor, Bernard (Mansfield)
Fraser, Thomas (Hamilton)Manuel, A. C.Taylor, Rt. Hon. Robert (Morpeth)
Freeman, Peter (Newport)Marquand, Rt. Hon. H. A.Thomas, George (Cardiff)
Gaitskell, Rt. Hon. H. T. N.Mason, RoyThomson, George (Dundee, E.)
Gibson, C. W.Mayhew, C. P.Thornton, E.
Glanville, JamesMellish, R. J.Timmons, J.
Gooch, E. G.Messer, Sir F.Tomney, F.
Gordon Walker, Rt. Hon. P. CMikardo, IanUsborne, H. C.
Greenwood, AnthonyMitchison, G. R.Viant, S. P.
Grey, C. F.Monslow, W.Wade, D. W.
Griffiths, David (Rother Valley)Morgan, Dr. H. B. W.Wallace, H. W.
Griffiths, Rt. Hon. James (Llanelly)Morley, R.Warbey, W. N.
Griffiths, William (Exchange)Morrison, Rt. Hon. H. (Lewisham, S.)Watkins, T. E.
Grimond, J.Mulley, F. W.Weitzman, D.
Hale, LeslieNoel-Baker, Rt. Hon. P. J.Wells, Percy (Faversham)
Hall, Rt. Hon. Glenvil (Colne Valley)Oldfield, W. H.Wells, William (Walsall)
Hamilton, W. W.Oliver, G. H.West, D. G.
Hannan, W.Orbach, M.Wheeldon, W. E.
Hardy, E. A.Oswald, T.White, Mrs. Eirene (E. Flint)
Hargreaves, A.Padley. W. E.White, Henry (Derbyshire, N.E.)
Harrison, J. (Nottingham, E.)Paget, R. T.Wigg, George
Hastings, S.Paling, Rt. Hon. W. (Dearne Valley)Wilcock, Group Capt. C. A. B.
Hayman, F. H.Paling, Will T. (Dewsbury)Willey, F. T.
Healey, Denis (Leeds, S.E.)Palmer, A. M. F.Williams, David (Neath)
Henderson, Rt. Hon. A. (Rowley Regis)Pannell, CharlesWilliams, Rev. Llywelyn (Abertillery)
Herbison, Miss M.Parkin, B. T.Williams, W. R. (Droylsden)
Hewitson, Capt. M.Paton, J.Williams, W. T. (Hammersmith, S.)
Hobson, C. R.Pearson, A.Willis, E. G.
Holman, P.Plummer, Sir LeslieWilson, Rt. Hon. Harold (Huyton)
Holmes, HoracePopplewell, E.Winterbottom, Richard (Brightside)
Holt, A. F.Porter, G.Woodburn, Rt. Hon. A.
Houghton, DouglasPrice, J. T. (Westhoughton)Wyatt, W. L.
Hudson, James (Ealing, N.)Proctor, W. T.Yates, V. F.
Hughes, Emrys (S. Ayrshire)Pryde, D. J.Younger, Rt. Hon. K.
Hughes, Hector (Aberdeen, N.)Pursey, Cmdr. H.
Hynd, J B. (Attercliffe)Rankin, JohnTELLERS FOR THE AYES:
Irving, W. J. (Wood Green)Reeves, J.Mr. Wilkins and Mr. John Taylor.
Isaacs, Rt. Hon. G. A.Reid, Thomas (Swindon)


Aitken, W. T.Baxter, Sir BeverleyBoothby, Sir R. J. G.
Allan, R. A. (Paddington, S.)Beach, Maj. HicksBossom, Sir A. C.
Alport, C. J. M.Bell, Philip (Bolton, E.)Boyd-Carpenter, Rt. Hon. J. A.
Amery, Julian (Preston, N.)Bell, Ronald (Bucks, S.)Boyle, Sir Edward
Amory, Rt. Hon. Heathcoat (Tiverton)Bennett, F. M. (Reading, N.)Braine, B. R.
Arbuthnot, JohnBennett, Dr. Reginald (Gosport)Braithwaite, Sir Albert (Harrow, W.)
Assheton, Rt. Hon. R. (Blackburn, W.)Bennett, William (Woodside)Braithwaite, Sir Gurney
Astor, Hon. J. J.Bevins, J. R. (Toxteth)Bromley-Davenport, Lt.-Col. W H
Baldock, Lt.-Cmdr. J. M.Birch, NigelBrooke, Henry (Hampstead)
Baldwin, A. E.Bishop, F. P.Brooman-White, R. C.
Barlow, Sir JohnBlack, C. WBrowne, Jack (Govan)

Buchan-Hepburn, Rt. Hon. P. G. THopkinson, Rt. Hon. HenryPerkins, Sir Robert
Bullard, D. G.Hornsby-Smith, Miss M. P.Peto, Brig. C. H. M.
Bullus, Wing Commander E. E.Horobin, I. M.Pickthorn, K. W. M.
Burden, F. F. A.Horsbrugh, Rt. Hon. FlorencePilkington, Capt. R. A.
Butcher, Sir HerbertHoward, Hon. Greville (St. Ives)Pitman, I. J.
Butler, Rt. Hon. R. A. (Saffron Walden)Hudson, Sir Austin (Lewitham, N.)Pill, Miss E. M.
Campbell, Sir DavidHulbert, Wins Cdr. N. J.Powell, J. Enoch
Cary, Sir RobertHurd, A. R.Price, Henry (Lewisham, W.)
Channon, H.Hutchison, Sir Ian Clark (E'b'rgh, W.)Prior-Palmer, Brig. O. L.
Clarke, Col. Ralph (East Grinstead)Hyde, Lt.-Col. H. M.Profumo, J. D.
Clarke, Brig. Terence (Portsmouth, W.)Hylton-Foster, H. B. H.Raikes, Sir Victor
Clyde, Rt. Hon. J. L.Iremonger, T. L.Ramsden, J. E.
Cole, NormanJenkins, Robert (Dulwich)Rayner, Brig. R.
Colegate, W. A.Jennings, Sir RolandRedmayne, M.
Conant, Maj. Sir RogerJohnson, Eric (Blackley)Rees-Davies, W. R.
Cooper, Son. Ldr. AlbertJones, A. (Hall Green)Remnant, Hon. p.
Cooper-Key, E. M.Joynson-Hicks, Hon. L. W.Renton, D. L. M.
Craddock, Beresford (Spelthorne)Kaberry, D.Ridsdale, J. E.
Crookshank, Capt. Rt. Hon. H. F. C.Kerby, Capt. H. B.Roberts, Peter (Heeley)
Crosthwaite-Eyre, Col. O. E.Kerr, H. W.Robertson, Sir David
Crouch, R. F.Lambert, Hon. G.Robinson, Sir Roland (Blackpool, S.)
Crowder, Sir John (Finchley)Lambton, ViscountRobson-Brown, W.
Crowder, Petre (Ruislip—Northwood)Lancaster, Col. c. G.Redgers, John (Sevenoaks)
Darling, Sir William (Edinburgh, S.)Langford-Holt, J. A.Roper, Sir Harold
Davidson, ViscountessLeather, E. H. C.Ropner, Col. Sir Leonard
Deedes, W. F.Legge-Bourke, Maj. E. A. H.Russell, R. S.
Digby, S. WingfieldLegh, Hon. Peter (Petersfield)Ryder, Capt. R. E. D.
Dodds-Parker, A. D.Lindsay, MartinSandys, Rt. Hon. D.
Donaldson, Cmdr. C. E. McA.Linstead, Sir H. N.Savory, Prof. Sir Douglas
Doughty, C. J. A.Llewellyn, D. T.Schofield, Lt.-Col. W.
Douglas-Hamilton, Lord MalcolmLloyd, Rt. Hon. G. (King's Norton)Scott, R. Donald
Drayton, C. B.Lloyd, Maj. Sir Guy (Renfrew, E.)Scott-Miller, Cmdr. R.
Drewe, Sir C.Lloyd, Rt. Hon. Selwyn (Wirral)Shepherd, William
Dugdale, Rt. Hon Sir T (Richmond)Lockwood, Lt.-Col. J. C.Simon, J. E. S. (Middlesbrough, W)
Duncan, Capt. J. A. L.Longden, GilbertSmithers, Peter (Winchester)
Duthie, W. S.Lucas, Sir Jocelyn (Portsmouth, S.)Smithers, Sir Waldron (Orpington)
Eccles, Rt. Hon. Sir D. M.Lucas, P. B. (Brentford)Snadden, W. McN.
Eden, J. P. (Bournemouth, West)Lucas-Tooth, Sir HughSpearman, A. C. M.
Elliott, Rt. Hon. W. E.Lyttelton, Rt. Hon. O.Speir, R. M.
Erroll, F. J.McAdden, S. J.Spens, Rt. Hon. Sir P. (Kensington, S.)
Finlay, GraemeMcCorquodale, Rt. Hon. M. S.Stanley, Capt. Hon. Richard
Fisher, NigelMacdonald, Sir PeterSteward, W. A. (Woolwich, W.)
Fleetwood-Hesketh, R F.Mackeson, Brig. Sir HarryStewart, Henderson (Fife, E.)
Fletcher-Cooke, C.McKibbin, A. J.Stoddart-Scott, Col. M.
Ford, Mrs. PatriciaMackie, J. H. (Galloway)Storey, S.
Fort, R.Maclay, Rt. Hon. JohnStrauss, Henry (Norwich, S.)
Foster, JohnMaclean, FitzroyStuart, Rt. Hon. James (Moray)
Fraser, Hon. Hugh (Stone)Macleod, Rt. Hon. Iain (Enfield, W.)Studholme, H. G.
Fraser, Sir Ian (Morecambe & Lonsdale)Macleod, John (Ross and Cromarty)Summers, G S.
Fyfe, Rt. Hon. Sir David MaxwellMacmillan, Rt. Hon. Harold (Bromley)Sutcliffe, Sir Harold
Galbraith, Rt Hon. T. D (Pollok)Macpherson, Niall (Dumfries)Taylor, Sir Charles (Eastbourne)
Galbraith, T. G. D. (Hillhead)Maitland, Comdr. J. F. W. (Horncastle)Taylor, William (Bradford, N.)
Gammam, L. D.Maitland, Patrick (Lanark)Teeling, W.
Garner-Evans, E. H.Manningham-Butler, Rt. Hn. Sir ReginaldThomas, Rt. Hon. J. P. L. (Hereford)
George, Rt. Hon. Maj. G. LloydMarkham, Major Sir FrankThomas, Loslie (Canterbury)
Glover, D.Marlowe, A. A. H.Thompson, Kenneth (Walton)
Godber, J. B.Marples, A. E.Thorneycroft, Rt. Hn. Peter (Monmouth)
Gomme-Duncan, Col. AMarshall, Douglas (Bodmin)Thornton-Kemsley, Col. C. N.
Gough, C. F. H.Maude, AngusTilney, John
Gower, H. R.Maudling, R.Touche, Sir Gordon
Graham, Sir FergusMaydon, Lt.-Comdr. S. L. C.Turner, H. F. L.
Grimston, Hon. John (St. Albans)Medlicott, Brig. F.Turton, R. H.
Grimston, Sir Robert (Westbury)Mellor, Sir JohnTweedsmuir, Lady
Hall, John (Wycombe)Molson, A. H. E.Vane, W. M. F.
Harden, J. R. E.Monckton, Rt. Hon. Sir WalterWakefield, Edward (Derbyshire, W.)
Hare, Hon. J. H.Moore, Sir ThomasWakefield, Sir Wavell (St. Marylebone)
Harris, Frederic (Croydon, K.)Morrison, John (Salisbury)Walker-Smith, D. C.
Harris, Reader (Heston)Mott-Radclyffe, C. E.Wall, Major Patrick
Harrison, Col. J. H. (Eye)Nabarro, G. D. N.Ward, Hon. George (Worcester)
Harvey, Air Cdre. A. V. (Macclesfield)Neave, AireyWard, Miss I. (Tynemouth)
Harvey, Ian (Harrow, E.)Nicholls, HarmarWaterhouse, Capt. Rt. Hon. C.
Harvie-Watt, Sir GeorgeNicholson, Godfrey (Farnham)Watkinson, H. A.
Hay, JohnNoble, Comdr. A. H. P.Webbe, Sir H. (London & Westminster)
Head, Rt. Hon. A. H.Nugent, G- R. H.Wellwood, W.
Heald, Rt. Hon. Sir LionelNutting, AnthonyWilliams, Rt. Hon. Charles (Torquay)
Heath, EdwardOakshott, H. D.Williams, Sir Herbert (Croydon, E.)
Higgs, J. M. C.Odey, G. W.Williams, Paul (Sunderland, S.)
Hill, Dr. Charles (Luton)O'Neill, Hon. Phelim (Co. Antrim, N.)Williams, R. Dudley (Exeter)
Hill, Mrs. E. (Wythenshawe)Ormsby-Gore, Hon. W. D.Wills, G.
Hinchingbrooke, ViscountOrr, Capt. L. P. S.Wilson, Geoffrey (Truro)
Hirst, GeoffreyOrr-Ewing, Charles Ian (Hendon, N.)
Holland-Martin, C. J.Osborne, CTELLERS FOR THE NOES:
Hollis, M. C.Page, R. G.Mr, Vosper and
Hope, Lord JohnPeake, Rt. Hon. O.Mr. Richard Thompson.

New Clause—(Child Allowance (Apprentices))

In paragraph ( b) of subsection (3) of section two hundred and twelve of the Income Tax Act, 1952, as amended (which relates to relief for a child undergoing training), for the reference "fifty-two pounds a year" there shall be substituted a reference to "eighty-five pounds a year."—[ Mr. Gaitskell.]

Division No. 180.]


[5.48 p.m.

Acland, Sir RichardGlanville, JamesMesser, Sir F.
Albu, A. H.Gooch, E. G.Mikardo, Ian
Anderson, Frank (Whitehaven)Gordon Walker, Rt. Hon. P. C.Mitchison, G. R.
Attlee, Rt. Hon. C. R.Greenwood, AnthonyMonslow, W.
Awbery, S. S.Grey, C. F.Morgan, Dr. H. B. W.
Bacon, Miss AliceGriffiths, David (Rother Valley)Morley, R.
Balfour, A.Griffiths, Rt. Hon. James (Llanelly)Morrison, Rt. Hon. H. (Lewisham, S.)
Barnes, Rt Hon. A. J.Griffiths, William (Exchange)Mulley, F. W.
Bartley, P.Grimond, J.Noel-Baker, Rt. Hon. P. J.
Bellenger, Rt. Hon. F. J.Hale, LeslieOldfield, W. H.
Bence, C. R.Hall, Rt. Hon. Glenvil (Colne Valley)Oliver, G. H.
Benn, Hon. WedgwoodHamilton, W. W.Orbach, M.
Benson, G.Hannah, W.Oswald, T.
Beswick, F.Hardy, E. A.Padley, W. E.
Bevan, Rt. Hon. A. (Ebbw Vale)Hargreaves, A.Paget, R. T.
Bing, G. H. C.Harrison, J. (Nottingham, E.)Paling, Rt. Hon. W. (Dearne Valley)
Blackburn, F.Hastings, S.Paling, Will T. (Dewsbury)
Blenkinsop, A.Hayman, F. H.Palmer, A. M. F,
Blyton, W. R.Healey, Denis (Leeds, S.E.)Pannell, Charles
Boardman, H.Henderson, Rt. Hon. A. (Rowley Regis)Pargiter, G. A.
Bottomley, Rt. Hon. A. GHerbison, Miss M.Parker, J.
Bowden, H. W.Hewitson, Capt. MParkin, B. T.
Bowles, F. G.Hobson, C. R.Paton, J.
Braddock, Mrs. ElizabethHolman, P.Pearson, A.
Brockway, A. F.Holmes, HoracePlummer, Sir Leslie
Broughton, Dr. A. D. D.Holt, A. F.Popplewell, E.
Brown, Rt. Hon. George (Belper)Houghton, DouglasPorter, G.
Brown, Thomas (Ince)Hudson, James (Ealing, N.)Price, J. T. (Westhoughton)
Butler, Herbert (Hackney, S.)Hughes, Emrys (S. Ayshire)Proctor, W. T.
Callaghan, L. J.Hughes, Hector (Aberdeen, N.)Pryde, D. J.
Castle, Mrs. B. A.Hynd, J. B. (Attercliffe)Pursey, Cmdr. H.
Champion, A. J.Irving, W. J. (Wood Green)Rankin, John
Chetwynd, G. R.Isaacs, Rt. Hon. G. A.Reeves, J.
Clunie, J.Janner, B.Reid, Thomas (Swindon)
Coldrick, W.Jay, Rt Hon. D. P. T.Reid, William (Camlachie)
Collick, P. H.Jeger, George (Goole)Robens, Rt. Hon. A.
Cove, W. G.Jeger, Mrs. LenaRoberts, Albert (Normanton)
Craddock, George (Bradford, S.)Jenkins, R. H. (Stechford)Roberts, Goronwy (Caernarvon)
Crosland, C. A. R.Johnson, James (Rugby)Robinson, Kenneth (St. Pancras, N.)
Crossman, R. H. S.Jones, David (Hartlepool)Rogers, George (Kensington, N.)
Cullen, Mrs. A.Jones, Jack (Rotherham)Ross, William
Dames, P.Jones, T. W. (Merioneth)Royle, C.
Dalton, Rt. Hon. H.Keenan, W.Shackleton, E. A. A.
Darling, George (Hillsborough)Key, Rt. Hon. C. W.Shinwell, Rt. Hon. E
Davies, Ernest (Enfield, E.)King, Dr. H. MShort, E. W.
Davies, Harold (Leek)Kinley, J.Shurmer, P. L. E.
Davies, Stephen (Merthyr)Lawson, G. M.Silverman, Julius (Erdington)
de Freitas, GeoffreyLee, Frederick (Newton)Silverman, Sydney (Nelson)
Deer, G.Lee, Miss Jennie (Cannock)Simmons, C. J. (Brierley Hill)
Delargy, H. J.Lever, Leslie (Ardwick)Skeffington, A. M.
Donnelly, D. L.Lewis, ArthurSlater, Mrs. H. (Stoke-on-Trent)
Driberg, T. E. N.Lindgren, G. S.Slater, J. (Durham, Sedgefield)
Dugdale, Rt. Hon. John (W. Bromwich)Lipton, Lt.-Col. M.Smith, Ellis (Stoke, S.)
Ede, Rt. Hon. J. C.Logan, D. G.Smith, Norman (Nottingham, S.)
Edelman, M.MacColl, J. E.Snow, J. W.
Edwards, Rt. Hon. John (Brighouse)McGhee, H. G.Sorensen, R. W.
Edwards, Rt. Hon. Ness (Caerphilly)McGovern, J.Soskice, Rt. Hon. Sir Frank
Edwards, W. J. (Stepney)McInnes, J.Sparks, J. A.
Evans, Albert (Islington, S.W.)McKay, John (Wallsend)Steele, T.
Evans, Edward (Lowestoft)McLeavy, F.Stokes, Rt. Hon. R. R.
Evans, Stanley (Wednesbury)MacMillan, M. K. (Western Isles)Strachey, Rt. Hon. J.
Fernyhough, E.McNeil, Rt. Hon. H.Strauss, Rt. Hon. George (Vauxhall)
Fienburgh, W.MacPherson, Malcolm (Stirling)Stress, Dr. Barnett
Finch, H. J.Mainwaring, W. H.Summerskill, Rt. Hon. E.
Fletcher, Eric (Islington, E.)Mallalieu, E. L. (Brigg)Swingler, S. T.
Follick, M.Mallalieu, J. P. W. (Huddersfield, E.)Sylvester, G. O.
Foot, M. M.Mann, Mrs. JeanTaylor, Bernard (Mansfield)
Forman, J. C.Manuel, A. C.Taylor, John (West Lothian)
Fraser, Thomas (Hamilton)Marquand, Rt. Hon. H. A.Taylor, Rt. Hon. Robert (Morpeth)
Freeman, Peter (Newport)Mason, RoyThomas, George (Cardiff)
Gaitskell, Rt. Hon. H. T. N.Mayhew, C. P.Thomson, George (Dundee, E.)
Gibson, C. W.Mellish, R. J.Thornton, E.

Brought up, and read the First time.

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

The Committee divided: Ayes, 245 Noes, 281.

Timmons, J.Wheeldon, W. E.Willis, E. G.
Tomney, F.White, Mrs. Eirene (E. Flint)Wilson, Rt. Hon. Harold (Huyton)
Usborne, H. C.While, Henry (Derbyshire, N.E.)Winterbottom, Richard (Brightside)
Viant, S. P.Wigg, GeorgeWoodburn, Rt. Hon. A.
Wade, D. W.Wilcock, Group Capt. C. A. B.Wyatt, W. L.
Warbey, W. N.Wilkins, W. A.Yates, V. F.
Watkins, T. E.Willey, F. T.Younger, Rt. Hon. K.
Weitzman, D.Williams, David (Neath)
Wells, Percy (Faversham)Williams, Rev. Llywelyn (Abertillery)TELLERS FOR THE AYES:
Wells, William (Walsall)Williams, W. R. (Droylsden)Mr. Wallace and Mr. Arthur Allen.
West, D. G.Williams, W. T. (Hammersmith, S.)


Aitken, W. T.Erroll, F. J.Legh, Hon. Peter (Petersfield)
Allan, R. A. (Paddington)Finlay, GraemeLindsay, Martin
Alport, C. J. M.Fisher, NigelLinstead, Sir H. N.
Amery, Julian (Preston, N.)Fleetwood-Hesketh, R. FLlewellyn, D. T.
Amory, Rt. Hon. Heathcoat (Tiverton)Fletcher-Cooke, C.Lloyd, Rt. Hon. G. (King's Norton)
Arbuthnot, JohnFord, Mrs. PatriciaLloyd, Maj. Sir Guy (Renfrew, E.)
Assheton, Rt. Hon. R. (Blackburn, W)Fort, R.Lloyd, Rt. Hon. Selwyn (Wirral)
Astor, Hon. J. J.Foster, JohnLockwood, Lt.-Col. J. C.
Baldock, Lt.-Cmdr. J. M.Fraser, Hon. Hugh (Stone)Longden, Gilbert
Baldwin, A. E.Fraser, Sir Ian (Morecambe & Lonsdale)Lucas, Sir Jocelyn (Portsmouth, S.)
Barlow., Sir JohnFyfe, Rt. Hon. Sir David MaxwellLucas, P. B. (Brentford)
Baxter, Sir BeverleyGalbraith, Rt. Hon. T. D. (Pollok)Lucas-Tooth, Sir Hugh
Beach, Maj. HicksGalbraith, T. G. D. (Hillhead)Lyttelton, Rt. Hon. O.
Bell, Philip (Bolton, E.)Gammans, L. D.McAdden, S. J.
Ball, Ronald (Bucks, S.)Garner-Evans, E. H.McCorquodale, Rt. Hon. M. S.
Bennett, F. M. (Reading, N.)George, Rt. Hon. Maj. G. LloydMacdonald, Sir Peter
Bennett, Dr. Reginald (Gosport)Glover, D.Mackeson, Brig. Sir Harry
Bennett, William (Woodside)Godber, J. B.McKibbin, A. J.
Bevins, J. R. (Toxteth)Gomme-Duncan, Col. A.Mackie, J. H. (Galloway)
Birch, NigelGough, C. F. H.Maclay, Rt. Hon. John
Bishop, F. P.Gower, H. R.Maclean, Fitzroy
Black, C. W.Graham, Sir FergusMacleod, Rt. Hon. Ian (Enfield, W.)
Boothby, Sir R. J. G.Grimston, Hon. John (St. Albans)MacLeod, John (Ross and Cromarty)
Bossom, Sir A. C.Grimston, Sir Robert (Westbury)Macmillan, Rt. Hon. Harold (Bromley)
Boyd-Carpenter, Rt, Hon. J. AHall, John (Wycombe)Macpherson, Niall (Dumfries)
Boyle, Sir EdwardHarden, J. R. E.Maitland, Comdr. J. F. W. (Horncastle)
Braine, B. R.Hare, Hon. J. H.Maitland, Patrick (Lanark)
Braithwaite, Sir Albert (Harrow, W.)Harris, Frederic (Croydon, N.)Manningham-Buller, Rt.Hn. Sir Reginald
Braithwaite, Sir GurneyHarris, Reader (Helton)Markham, Major Sir Frank
Bromley-Davenport, Lt.-Col. W. H.Harrison, Col. J. H. (Eye)Marlowe, A. A. H.
Brooke, Henry (Hampstead)Harvey, Air Cdre. A. V. (Macclesfield)Marples, A. E.
Brooman-White, R. C.Harvey, Ian (Harrow, E.)Marshall, Douglas (Bodmin)
Browne, Jack (Govan)Harvie-Watt, Sir GeorgeMaude, Angus
Buchan-Hepburn, Rt. Hon. P. G. THay, JohnMaudling, R.
Bullard, D. G.Head, Rt. Hon. A. H.Maydon, Lt.-Comdr. S. L. C
Bullus, Wing Commander, E. EHeald, Rt. Hon. Sir LionelMedlicott, Brig. F.
Burden, F. F. A.Heath, EdwardMellor, Sir John
Butcher, Sir HerbertHiggs, J. M. C.Molson, A. H. E.
Butler, Rt. Hon. R. A. (Saffron Walden)Hill, Dr. Charles (Luton)Monckton, Rt. Hon. Sir Walter
Campbell, Sir DavidHill, Mrs. E. (Wythenshawe)Moore, Sir Thomas
Cary, Sir RobertHinchingbrooke, ViscountMorrison, John (Salisbury)
Channon, H.Hirst, GeoffreyMott-Radclyffe, C. E.
Clarke, Col. Ralph (East Grinstead)Holland-Martin, C. J.Nabarro, G. D. N.
Clarke, Brig. Terence (Portsmouth, W.)Hollis, M. C.Neave, Airey
Clyde, Rt. Hon. J. L.Hope, Lord JohnNicholls, Harmar
Cole, NormanHopkinson, Rt. Hon. HenryNicholson, Godfrey (Farnham)
Colegate, W. A.Hornsby-Smith, Miss M. P.Noble, Comdr. A. H. P.
Conant, Maj. Sir RogerHorobin, I. M.Nugent, G. R. H.
Cooper, Sqn. Ldr. AlbertHorsbrugh, Rt. Hon. FlorenceNutting, Anthony
Cooper-Key, E. M.Howard, Hon. Greville (St. Ives)Odey, G. W.
Craddock, Beresford (Spelthorne)Hudson, Sir Austin (Lewisham, N.)O'Neill, Hon. Phelim (Co. Antrim, N.)
Crookshank, Capt. Rt. Hon. H. F C.Hulbert, Wing Cdr. N. J.Ormsby-Gore, Hon. W. D.
Crosthwaite-Eyre, Col. O. E.Hurd, A. R.Orr, Capt. L. P. S.
Crouch, R. F.Hutchison, Sir Ian Clark (E'b'rgh, W.)Orr-Ewing, Charles Ian (Hendon, N.)
Crowder, Sir John (Finchley)Hyde, Lt.-Col. H. M.Osborne, C.
Crowder, Petre (Ruislip—Northwood)Hylton-Foster, H. B. H.Page, R. G
Darling, Sir William (Edinburgh, S.)Iremonger, T. L.Peake, Rt. Hon. O.
Davidson, ViscountessJenkins, Robert (Dulwich)Perkins, Sir Robert
Deedes, W. F.Jennings, Sir RolandPeto, Brig. C. H. M.
Digby, S. WingfieldJohnson, Eric (Blackley)Pickthorn, K. W. M.
Dodds-Parker, A. D.Jones, A. (Hall Green)Pilkington, Capt. R. A.
Donaldson, Cmdr. C. E. McA.Joynson-Hicks, Hon. L. W.Pitman, I. J.
Doughty, C. J. A.Kaberry, D.Pitt, Miss E. M.
Douglas-Hamilton, Lord MalcolmKerby, Capt. H. B.Powell, J. Enoch
Drayson, G. B.Kerr, H. W.Price, Henry (Lewisham, W.)
Dugdale, Rt. Hon. Sir T. (Richmond)Lambert, Hon. G.Prior-Palmer, Brig. O. L.
Duncan, Capt. J. A L.Lambton, ViscountProfumo, J. D.
Duthie, W. S.Lancaster, Col. C. G.Raikes, Sir Victor
Eccles, Rt. Hon. Sir D. M.Langford-Holt, J. A.Ramsden, J. E.
Eden, J. B. (Bournemouth, West)Leather, E. H. C.Rayner, Brig. R
Elliot, Rt. Hon. W. E.Legge-Bourke, Maj. E. A. HRedmayne, M

Rees-Davies, W. R.Speir, R. M.Turton, R. H.
Remnant, Hon. P.Spens, Rt. Hon. Sir P. (Kensington, S.)Tweedsmuir, Lady
Renton, D. L. M.Stanley, Capt. Hon. RichardVane, W. M. F.
Ridsdale, J. E.Steward, W. A. (Woolwich, W.)Vosper, D. F.
Roberts, Peter (Heeley)Stewart, Henderson (Fife, E.)Wakefield, Edward (Derbyshire, W.)
Robertson, Sir DavidStoddart-Scott, Col. M.Wakefield, Sir Wavell (St. Marylebone)
Robinson, Sir Roland (Blackpool, S.)Storey, S.Walker-Smith, D. C.
Robson-Brown, W.Strauss, Henry (Norwich, S.)Wall, Major Patrick
Rodgers, John (Sevenoaks)Stuart, Rt. Hon. James (Moray)Ward, Hon. George (Worcester)
Roper, Sir HaroldStudholme, H. G.Ward, Miss I. (Tynemouth)
Ropner, Col. Sir LeonardSummers, G. S.Waterhouse, Capt. Rt. Hon. C,
Russell, R. S.Sutcliffe, Sir HaroldWatkinson, H. A.
Ryder, Capt. R. E. D.Taylor, Sir Charles (Eastbourne)Webbe, Sir H. (London & Westminster)
Sandys, Rt. Hon. D.Taylor, William (Bradford, N.)Wellwood, W.
Savory, Prof. Sir DouglasTeeling, W.Williams, Rt. Hon. Charles (Torquay)
Schofield, Lt.-Col. W.Thomas, Rt. Hon. J. P. L. (Hereford)Williams, Sir Herbert (Croydon, E.)
Scott, R. DonaldThomas, Leslie (Canterbury)Williams, Paul (Sunderland, S.)
Scott-Miller, Cmdr. R.Thompson, Kenneth (Walton)Williams, R. Dudley (Exeter)
Shepherd, WilliamThompson, Lt.-Cdr. R. (Croydon, W.)Wills, G.
Simon, J. E. S. (Middlesbrough, W.)Thorneycroft, Rt. Hn. Peter (Monmouth)Wilson, Geoffrey (Truro)
Smithers, Peter (Winchester)Thornton-Kemsley, Col. C. N.
Smithers, Sir Waldron (Orpington)Tilney, JohnTELLERS FOR THE NOES:
Snadden, M. McN.Touche, Sir GordonSir Cedric Drewe and Mr. Oakshott.
Spearman, A. C. M.Turner, H. F. L.

New Clause—(Child Allowance (In Capacitated Child Between Ages 16 And 21))

In subsection (1) of section two hundred and twelve of the Income Tax Act, 1952 (which relates to relief for children), after the words "if over the age of sixteen years at the commencement of that year, is receiving full-time instruction at any university, college, school or other educational establishment," there shall be inserted the words "or who, being over the age of sixteen years, but has not attained the age of twenty-one years at the commencement

Division No. 181.]


[6.0 p.m.

Acland, Sir RichardCullen, Mrs. A.Griffiths, William (Exchange)
Albu, A. H.Daines, P.Grimond, J.
Allen, Arthur (Bosworth)Dalton, Rt. Hon. H.Hale, Leslie
Anderson, Frank (Whitehaven)Darling, George (Hillsborough)Hall, Rt. Hon. Glenvil (Colne Valley)
Attlee, Rt. Hon. C. R.Davies, Rt. Hn. Clement (Montgomery)Hamilton, W. W.
Awbery, S. S.Davies, Ernest (Enfield, E.)Hannan, W.
Bacon, Miss AliceDavies, Harold (Leek)Hardy, E. A.
Balfour, A.Davies, Stephen (Merthyr)Hargreaves, A.
Barnes, Rt. Hon. A. Freitas, GeoffreyHarrison, J. (Nottingham, E.)
Bartley, P.Deer, G.Hastings, S.
Bence, C. R.Delargy, H. J.Hayman, F. H.
Benn, Hon. WedgwoodDonnelly D. L.Healey, Denis (Leeds, S.E.)
Benson, G.Driberg, T. E. N.Henderson, Rt. Hon. A. (Rowley Regis)
Beswick, F.Dugdale, Rt. Hon. John (W. Bromwich)Herbison, Miss M.
Bevan, Rt. Hon. A. (Ebbw Vale)Ede, Rt. Hon. J. G.Hewitson, Capt. M.
Bing, G. H. C.Edelman, M.Hobson, C. R.
Blackburn, F.Edwards, Rt. Hon. John (Brighouse)Holman, P.
Blenkinsop, A.Edwards, Rt. Hon. Ness (Caerphilly)Holmes, Horace
Blyton, W. R.Edwards, W. J. (Stepney)Holt, A. F.
Boardman, H.Evans, Albert (Islington, S.W.)Houghton, Douglas
Bottomley, Rt. Hon. A. G.Evans, Edward (Lowestoft)Hudson, James (Ealing, N.)
Bowden, H. W.Evans, Stanley (Wednesbury)Hughes, Emrys (S. Ayrshire)
Bowles, F. G.Fernyhough, E.Hughes, Hector (Aberdeen, N.)
Braddock, Mrs. ElizabethFienburgh, W.Hynd, J. B. (Attercliffe)
Brockway, A. F.Finch, H. J.Irving, W. J. (Wood Green)
Broughton, Dr. A. D. D.Fletcher, Eric (Islington, E.)Isaacs, Rt. Hon. G. A.
Brown, Rt. Hon. George (Belper)Follick, M.Janner, B.
Brown, Thomas (Ince)Foot, M. M.Jay, Rt. Hon. D. P. T.
Butler, Herbert (Hackney, S.)Forman, J. C.Jeger, George (Goole)
Callaghan, L. J.Fraser, Thomas (Hamilton)Jeger, Mrs. Lena
Castle, Mrs. B. A.Freeman, Peter (Newport)Jenkins, R. H. (Stechford)
Champion, A. J.Gaitskell, Rt. Hon. H. T. N.Jones, David (Hartlepool)
Chetwynd, G. RGibson, C. W.Jones, Jack (Rotherham)
Clunie, J.Glanville, JamesJones, T. W. (Merioneth)
Coldrick, W.Gooch, E. G.Keenan, W.
Collick, P. H.Gordon Walker, Rt. Hon. P. CKey, Rt. Hon: C. W.
Cove, W. G.Greenwood, AnthonyKing, Dr. H. M.
Craddock, George (Bradford, S.)Grey, C. F.Kinley, J.
Crosland, C. A. R.Griffiths, David (Rother Valley)Lawson, G. M.
Grossman, R. H. S.Griffiths, Rt. Hon. James (Llanelly)Lee, Frederick (Newton)

of that year is incapacitated by illness, infirmity or disablement from undergoing full-time instruction at any school or other educational establishment or from following any gainful ocoupation."—[ Mr. Gaitskell.]

Brought up, and read the First time.

Motion made, and Question put: "That the Clause be read a Second time."

The Committee divided: Ayes, 245; Noes, 281.

Lee, Miss Jennie (Cannock)Pargiter, G. A.Stross, Dr. Barnett
Lever, Leslie (Ardwick)Parker, J.Summerskill, Rt. Hon. E.
Lewis, ArthurParkin, B. T.Swingler, S. T.
Lindgren, G. S.Paton, J.Sylvester, G. O.
Lipton, Lt.-Col. M.Pearson, A.Taylor, Bernard (Mansfield)
Logan, D. G.Plummer, Sir LeslieTaylor, John (West Lothian)
MacColl, J. E.Popplewell, E.Taylor, Rt. Hon. Robert (Morpeth)
McGhee, H. GPorter, G.Thomas, George (Cardiff)
McGovern, J.Price, J. T. (Westhoughton)Thomson, George (Dundee, E.)
McInnes, J.Proctor, W. T.Thornton, E.
McKay, John (Wallsend)Pryde, D. J.Timmons, J.
McLeavy, F.Pursey, Cmdr. H.Tomney, F.
MacMillan, M. K. (Western Isles)Rankin, JohnUsborne, H. C
McNell, Rt. Hon. H.Reeves, J.Viant, S. P.
MacPherson, Malcolm (Stirling;)Reid, Thomas (Swindon)Wade, D. W.
Mainwaring, W. H.Reid, William (Camlachie)Warbey, W. N.
Mallalieu, E. L. (Brigg)Robens, Rt. Hon A.Watkins, T. E.
Mallalieu, J. P. W. (Huddersheid, E.)Roberts, Albert (Normanton)Weitzman, D.
Mann, Mrs. JeanRoberts, Goronwy (Caernarvon)Wells, Percy (Faversham)
Manuel, A. C.Robinson, Kenneth (St. Pancras, N.)Wells, William (Walsall)
Marquand Rt. Hon. H. A.Rogers, George (Kensington, N.)West, D. G.
Mason, RoyRoss, WilliamWheeldon, W. E.
Mayhew, C. P.Royle, C.White, Mrs. Eirene (E. Flint)
Mellish, R. J.Shackleton, E. A. A.White, Henry (Derbyshire, N.E)
Messer, Sir F.Shinwell, Rt. Hon. E.Wigg, George
Mikardo, IanShort, E. W.Wilcock, Group Capt C. A. B.
Mitchison, G. RShurmer, P. L. E.Wilkins, W. A.
Monslow, W.Silverman, Julius (Erdington)Willey, F. T.
Morgan, Dr. H. B. W.Silverman, Sydney (Nelson)Williams, David (Neath)
Morley, R.Simmons, C. J. (Brierley Hill)Williams, Rev. Llywelyn (Abertillery)
Morrison, Rt. Hon. H. (Lewisham, S.)Skeffington, A. M.Williams, W. R. (Droylsden)
Mulley, F. W.Slater, Mrs. H. (Stoke-on-Trent)Williams, W. T. (Hammersmith, S.)
Noel-Baker, Rt. Hon. P JSlater, J. (Durham, Sedgefield)Willis, E. G.
Oldfield, W. H.Smith, Ellis (Stoke, S.)Wilson, Rt. Hon. Harold (Huyton)
Oliver, G. H.Smith, Norman (Nottingham, S.)Winterbottom, Richard (Brightside)
Orbach, M.Snow, J. W.Woodburn, Rt. Hon. A,
Oswald, T.Sorensen, R. W.Wyatt, W. L.
Padley, W. ESoskice, Rt. Hon. Sir FrankYates, V. F.
Paget, R. T.Sparks, J. A.Younger, Rt. Hon. K.
Paling, Rt. Hon. W. (Dearne Valley)Steele, T.
Paling, Will T. (Dewsbury)Stokes, Rt. Hon. R. R.TELLERS FOR THE AYES:
Palmer, A. M. F.Strachey, Rt. Hon. J.Mr. Wallace and
Pannell, CharlesStrauss, Rt. Hon. George (Vauxhall)Mr. James Johnson.


Aitken, W. T.Butler, Rt. Hon. R. A. (Saffron Walden)Fletcher-Cooke, C.
Alton, R. A. (Paddington, S.)Campbell, Sir DavidFord, Mrs. Patricia
Alport, C. J. M.Cary, Sir RobertFort, R.
Amery, Julian (Preston, N.)Channon, H.Foster, John
Amory, Rt. Hon. Heathcoat (Tiverton)Clarke, Col. Ralph (East Grinstead)Fraser, Hon. Hugh (Stone)
Arbuthnot, JohnClarke, Brig. Terence (Portsmouth, W.)Fraser, Sir Ian (Morecambe & Lonsdale)
Assheton, Rt. Hon. R. (Blackburn, W.)Clyde, Rt. Hon. J. L.Fyfe, Rt. Hon. Sir David Maxwell
Astor, Hon. J. J.Cole, NormanGalbraith, Rt. Hon. T. D. (Pollok)
Baldock, Lt.-Cmdr. J. M.Colegate, W. A.Galbraith, T. G. D. (Hillhead)
Baldwin, A. E.Conant, Maj. Sir RogerGammans, L. D.
Barlow, Sir JohnCooper, Sqn. Ldr. AlbertGarner-Evans, E. H.
Baxter, Sir BeverleyCooper-Key, E. M.George, Rt. Hon. Maj. G Lloyd
Beach, Maj. HicksCraddock, Beresford (Spelthorne)Glover, D.
Bert, Philip (Bolton, E.)Crookshank, Capt. Rt. Hon. H. F. CGodber, J. B.
Boll, Ronald (Bucks, S.)Crosthwaite-Eyre, Col. O. E.Gomme-Duncan, Col. A
Bennett, F. M. (Reading, N.Crouch, R. F.Gough, C. F. H.
Bennett, Dr. Reginald (Gosport)Crowder, Sir John (Finchley)Gower, H. R.
Bennett, William (Wood side)Crowder, Petre (Ruislip—Northwood)Graham, Sir Fergus
Bevins, J. R. (Toxteth)Darling, Sir William (Edinburgh, S.)Grimston, Hon. John (St. Albans)
Birch, NigelDavidson, ViscountessGrimston, Sir Robert (Westbury)
Bishop, F. P.Deedes, W. F.Hall, John (Wycombe)
Black, C. W.Digby, S. WingfieldHarden, J. R. E.
Boothby, Sir R. J. G.Dodds-Parker, A. D.Hare, Hon. J. H.
Bossom, Sir A. C.Donaldson, Cmdr. C. E. McAHarris, Frederic (Croydon, N.)
Boyd-Carpenter, Rt. Hon. J. ADoughty, C. J. A.Harris, Reader (Heston)
Boyle, Sir EdwardDouglas-Hamilton, Lord MalcolmHarrison, Col. J. H. (Eye)
Brains, B. R.Drayson, G, B.Harvey, Air Cdre. A. V. (Macclesfield)
Braithwaite, Sir Albert (Harrow, W.)Drewe, Sir C.Harvey, Ian (Harrow, E.)
Braithwaite, Sir GurneyDugdale, Rt. Hon. Sir T. (Richmond)Harvie-Watt, Sir George
Bromley-Davenport, Lt.-Col. W. H.Duncan, Capt. J. A. L.Hay, John
Brooke, Henry (Hampstead)Duthie, W. S.Head, Rt. Hon. A. H.
Brooman-White, R. C.Eccles, Rt. Hon. Sir D. M.Heald, Rt. Hon, Sir Lienel
Browne, Jack (Govan)Eden, J. B. (Bournemouth, West)Heath, Edward
Buchan-Hepburn, Rt. Hon. P. G TElliot, Rt. Hon. W. E.Higgs, J. M. C.
Bullard, D. G.Erroll, F. J.Hill, Dr. Charles (Luton)
Bullus, Wing Commander E EFinlay, GraemeHill, Mrs. E. (Wythenshawe)
Burden, F. F. A.Fisher, NigelHinchingbrooke, Viscount
Butcher, Sir HerbertFleetwood-Hesketh, R. FHirst, Geoffrey

Holland-Martin, C. JManningham-Buller, Rt. Hn. Sir ReginaldSandys, Rt. Hon. D.
Hollis, M. C.Markham, Major Sir FrankSavory, Prof. Sir Douglas
Hope, Lord JohnMarlowe, A. A. H.Schofield, Lt.-Col. W.
Hopkinson, Rt. Hon. HenryMarples, A. E.Scott. R. Donald
Hornsby-Smith, Miss M. P.Marshall Douglas (Bodmin)Scott-Miller, Cmdr. R.
Horobin, I. M.Maude, AngusShepherd, William
Horsbrugh, Rt. Hon. FlorenceMaudling, R.Simon, J. E. S. (Middlesbrough, W)
Howard, Hon. Greville (St. Ives)Maydon, Lt.-Comdr. S. L. C.Smithers, Peter (Winchester)
Hudson, Sir Austin (Lewisham, N.)Medlicott, Brig. F.Smithers, Sir Waldron (Orpington)
Hulbert, Wing Cdr. N. J.Mellor, Sir JohnSnadden, W. McN,
Hurd, A. R.Molson, A. H. E.Spearman, A. C. M.
Hutchison, Sir Ian Clark (E'b'rgh, W.)Monckton, Rt. Hon. Sir WalterSpeir, R. M.
Hyde, Lt.-Col. H. M.Moore, Sir ThomasSpens, Rt. Hon. Sir P. (Kensington, S.)
Hylton-Foster, H. B. H.Morrison, John (Salisbury)Stanley, Capt. Hon. Richard
Iremonger, T. L.Mott-Radclyffe, C. E.Steward, W. A. (Woolwich, W.)
Jenkins, Robert (Dulwich)Nabarro, G. D. N.Stewart, Henderson (Fife, E.)
Jennings, Sir RolandNeave, AireyStoddart-Scott, Col. M.
Johnson, Eric (Blackley)Nicholls, HarmarStorey, S.
Jones, A. (Hall Green)Nicholson, Godfrey (Farnham)Strauss, Henry (Norwich, S.)
Joynson-Hicks, Hon. L. W.Noble, Comdr. A. H. P.Stuart, Rt. Hon. James (Moray)
Kaberry, D.Nugent, G. R. H.Summers, G. S.
Kerby, Capt. H. BNutting, AnthonySutcliffe, Sir Harold
Kerr, H. W.Oakshott, H. D.Taylor, Sir Charles (Eastbourne)
Lambert, Hon. G.Odey, G. W.Taylor, William (Bradford, N.)
Lambton, ViscountO'Neill, Hon. Phelim (Co. Antrim, N.)Teeling, W.
Lancaster, Col. C. G.Ormsby-Gore, Hon. W. DThomas, Rt. Hon. J. P. L. (Hereford)
Langford-Holt, J. A.Orr, Capt. L. P. S.Thomas, Leslie (Canterbury)
Leather, E. H. C.Orr-Ewing, Charles Ian (Hendon, N.)Thompson, Kenneth (Walton)
Legge-Bourke, Maj. E. A. H.Osborne, C.Thompson, Lt.-Cdr. R. (Croydon, W.)
Legh, Hon. Peter (Petersfield)Page, R. G.Thorneycroft, Rt. Hn. Peter (Monmouth)
Lindsay, MartinPeake, Rt. Hon. O.Thornton-Kemsley, Col. C. N.
Linstead, Sir H. N.Perkins, Sir RobertTilney, John
Llewellyn, D. T.Peto, Brig. C. H. M.Touche, Sir Gordon
Lloyd, Rt. Hon. G. (King's Norton)Pickthorn, K. W. M.Turner, H. F. L.
Lloyd, Maj. Sir Guy (Renfrew, E.)Pilkington, Capt. R. A.Turton, R. H.
Lloyd, Rt. Hon. Selwyn (Wirral)Pitman, I. J.Tweedsmuir, Lady
Lockwood, Lt.-Col. J. C.Pitt, Miss E. M.Vane, W. M. F.
Longden, GilbertPowell, J. EnochVosper, D. F.
Lucas, Sir Jocelyn (Portsmouth, S.)Price, Henry (Lewisham, W)Wakefield, Edward (Derbyshire, W.)
Lucas, P. B. (Brentford)Prior-Palmer, Brig. O. L.Wakefield, Sir Waved (St. Marylebone)
Lucas-Tooth, Sir HughProfumo, J. D.Walker-Smith, D. C.
Lyttelton, Rt. Hon. O.Raikes, Sir VictorWall, Major Patrick
McAdden, S. J.Ramsden, J. E.Ward, Hon. George (Worcester)
McCorquodale, Rt. Hon. M. SRayner, Brig. RWard, Miss I. (Tynemouth)
Rees-Davies, W. FtWaterhouse, Capt. Rt. Hon. C.
Macdonald, Sir PeterRemnant, Hon. P.Watkinson, H. A.
Mackeson, Brig. Sir HarryRenton, D. L. M.Webbe, Sir H. (London & Westminster)
McKibbin, A. J.Ridsdale, J. E.Wellwood, W.
Mackie, J. H. (Galloway)Roberts, Peter (Heeley)Williams, Rt. Hon. Charles (Torquay)
Maclay, Rt. Hon. JohnRobertson, Sir DavidWilliams, Sir Herbert (Croydon, E.)
Maclean, FitzroyRobinson, Sir Roland (Blackpool, S.)Williams, Paul (Sunderland, S.)
Macleod, Rt. Hon. Iain (Enfield, W.)Robson-Brown, W.Williams, R. Dudley (Exeter)
MacLeod, John (Ross and Cromarty)Rodgers, John (Sevenoaks)Wills, G.
Macmillan, Rt. Hon. Harold (Bromley)Roper, Sir HaroldWilson, Geoffrey (Truro)
Macpherson, Niall (Dumfries)Ropner, Col. Sir Leonard
Maitland, Cmdr. J. F. W. (Horncastle)Russell, R. S.TELLERS FOR THE NOES:
Maitland, Patrick (Lanark)Ryder, Capt. R. E. DMr. Stadbolme and Mr. Redmayre.

New Clause—(Personal Allowance— 100 Per Cent Disablement)

The following section shall be added to Part VIII of the Income Tax Act, 1952:—

"228A. If the claimant proves that during the whole of the year of assessment—
  • (a) he has been in receipt of a war disablement pension or an industrial injury pension granted by the Ministry of Pensions and National Insurance and determined by reference to one hundred per cent. disablement, or
  • (b) though not in receipt of a one hundred per cent, war disablement pension or industrial injury pension he nevertheless is disabled in manner and degree equivalent to one hundred per cent, disablement, he shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on one hundred pounds."—[Mr. Willey.]
  • Brought up, and read the First time.

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

    The purpose of the Clause is to provide that a person who, during the whole year of the assessment is suffering to the extent of 100 per cent. disablement as a result of a war or industrial injury, shall be entitled to a personal allowance of £100.

    We concede that special provision is made by way of tax-free grants in the case of wound and disability pensions to ex-Service men, but those of us who have put down the new Clause believe, as the Royal Commission believe, that such provisions do not by any means cover the whole field which ought to be covered if real justice is to be done between taxpayers. I concede also that there are administrative difficulties. It would not serve our purpose to deny that. But we believe, as the Royal Commission believe, that the difficulties are not insuperable and that they ought to be faced.

    To illustrate the hardship that we have in mind, I will quote a letter that I have received from a disabled person. He writes:
    "My case is a typical example of this injustice. I am paralysed in the arms and legs and have never been able to walk. Although I pay at least £4 a week for male attendants, there is no statutory allowance for this and only a small compassionate allowance. Consequently, I have to pay the full rate of tax, and have done this since the beginning of the last war, on money which has already been paid out through my infirmity."
    We are suggesting a limited concession only in such cases. When I pointed out to my correspondent what we proposed to do by means of the new Clause, he very properly pointed out to me:
    "… I shall still be under a financial penalty on account of my disablement, because I shall still have to pay tax on money which I have already paid out for attendants and other expenses incurred through my infirmity. As the minimum allowance of Income Tax for me will be £100, but as I usually pay a minimum of £4 a week for male attendants, on this item alone I shall still have to pay tax amounting to almost £50 which I am very sure is unfair because it is penalising me and putting me at a financial disadvantage because of my infirmity, and there must be many like me."
    There are many like my correspondent. I would point out that it is only a limited alleviation for which we are pleading.

    I shall quote one more case which may have escaped the attention of the Economic Secretary. A letter appeared in the "Sunday Express" a short while ago. In view of the powerful lobby which the Beaverbrook Press exercises on the Government, I should like to quote the letter:
    "Four years ago in the last week of April at the age of 54 years, I had a leg amputated above the knee. I returned to work on 1st September on crutches. Thus, as now, I had to engage a taxi to take me to and from my work at a cost of £174 4s. in amount. I approached the Inland Revenue about a possible tax rebate and received a courteous reply regretting no rebate was possible."
    We always receive a courteous reply, whether the answer is satisfactory or not, because no one can deny that the Chancellor and the other Treasury Ministers possess the Parliamentary quality of courtesy.

    6.15 p.m.

    There are hundreds of such cases, and I should have thought that the Committee as a whole would have been anxious to take the opportunity of doing something to help such disabled persons. After all, that is the view taken by the Royal Commission, which said:
    "The taxpayer's own disability is hardly recognised under the existing system. Yet there are many kinds of disability (putting aside age, which is provided for by a special relief) so severe that they modify the whole conditions of a person's life and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his Income."
    We accept that, and we are trying to support the conclusions reached by the Royal Commission. The Royal Commission faced the practical difficulties and said that there should be some clear definition of disability. We propose in our Clause to accept the recommendation made by the Royal Commission. The Royal Commission had to estimate what a proper allowance would be, and it suggested a figure of not less than £100. After considering the matter, it recommended:
    "Grave incapacity (comparable to the 100 per cent. disability recognised in the administration of war pensions) should give rise to a claim for a tax allowance, which should be at least £100. This would supersede the anomalous and limited relief that is now available in those cases where an incapacitated taxpayer has an unmarried daughter to look after him."
    Surely this is a plain straightforward case on the basis of the examples which I have given, and they could be repeated by the score by my hon. Friends. The Clause has the support of the authority of the Royal Commission. As in the case of the old-age pensioners, the Government will probably say that they must wait. The Government's reply to the case put to the old-age pensioners is that everyone concedes that the old-age pensioners are entitled to a concession, but the Government say, "Let us find some pretext or other and wait."

    Surely the Government will not adopt that formula in this case, saying that they want the opportunity of looking at the whole field in order to ensure that justice is done to all cases. That is not good enough. This case is patent and obvious. It is recognised without reservation or qualification by the Royal Commission. The Committee ought to say quite plainly that this is an injustice which ought not to be tolerated any longer. The Government should recognise that hardship is involved and that they will have to face up to the problem sooner or later and might as well face up to it today.

    Let the Economic Secretary tell his officials that he knows very well the patient way in which they examine the whole field of taxation but that this matter has been thrust before him on the initiative of the Opposition and that it affords him an opportunity to make a concession. Without saying more at this stage, I hope the Economic Secretary will indicate that he is willing to accept the new Clause and so remedy the anomaly and put an end to this hardship forthwith.

    I have very much pleasure in supporting the proposed Clause.

    The Exchequer, when all is said and done, can assume only a given liability. Many calls are made upon it to do something more than has been done in the past, and in every case the question which arises is whether the claim which is being put forward is one which ought to be supported. All sorts of claims are made, and the Exchequer has to balance one against another. This claim ought readily to be received by the Treasury, because it is an attempt to do something more for ex-Service men who are 100 per cent. disabled. Not only that, but it brings in the men in industry who have been injured while at their work, and, by that means, it tends to be equal to all those injured in a similar way.

    The question is: is there anything outstanding about these particular claims? Some may ask why should we have a special benefit for men who already have an income from the State in the shape of a pension. Such people argue that instead of these men being worse off than the ordinary man, they are in a much better position. I do not think that that is quite the view that should be taken.

    Take the case of an industrial man who has a 100 per cent. disability pension. What is his position? He may have disablement and other benefits, but we should remember that in all probability if he were in a position to earn he would have on the average £10 a week. Because of his disability his income is reduced to £5 or £4 a week. Even if there is an allowance for the injury and the harm suffered, that does not in any way meet his position and he is far from being as well off as he was before he was injured.

    This Clause calls attention to the fact that he has not been fully compensated for the disability sustained. He is in a very much worse economic position than he used to be, and the point we are trying to emphasise is that there are men throughout the country who have a tremendous liability because of incapacity. Most of us will admit that any man, no matter how he may be incapacitated, is under a disability compared with those who do not suffer as he has. Therefore, any of these men who have the grit, determination and courage to go into the labour field with this disability are entitled to special consideration and should be given whatever relief is possible for Income Tax purposes.

    The question then rises: how much can the Exchequer give? But there is something in addition to that. There is the question of holding the balance. Which of these particular cases should receive benefit? On this Motion we cannot discuss other cases and the consideration which should attach to other payments and allowances. What we have to do is to ask ourselves whether the Exchequer, despite the number of claims on it, examines the claims that are existing and does justice in the way that it helps the worst kind of case. To my mind, it does not. This Government have not done it, and I would not say that past Governments have done it either. The Exchequer has a responsibility to allocate whatever money can be spared to the most deserving cases, and I think that the class of people we have in mind in this Clause come under that category.

    In 1953 the Government decided to place in a specially advantageous position not the aged people in the ordinary sense, but the aged people with about £15,000 in investments who wore getting between £600 and £700 a year from those investments. They were so hard up that they had to get some extra advantage over and above what they had before. They were allowed another £100 on which they could claim Income Tax deductions.

    That is a typical case of the Government stepping out to help a particular class of the community which has behind it thousands of pounds, and which was given the additional advantage of extra relief. The Government have applied some special relief to another section of the community, the companies. The rich companies are given an investment allowance. I know that I am getting out of order, and I must return quickly to the subject under discussion.

    We admit that there are administrative difficulties, but if that be so, on the other hand, there are no administrative difficulties for the men in the Armed Forces or for the men receiving disablement benefits under insurance. The chief difficulty is applying this particular Clause to others who have not come under the system of examination and have not been declared 100 per cent. disabled.

    All I want to stress is that if this Clause will create administrative difficulties—that is something with which we do not altogether agree—I would appeal to the Government to consider the matter in the light of the need for it. The Government have a discretion. They can overcome the administrative difficulties and extend to these disabled people the relief which we are now advocating.

    How much will it cost? How many men are there who are 100 per cent. disabled, either through industrial injury or through the Armed Forces? A good many will not qualify for taxation relief because they do not pay tax at all. So a very big percentage will not be able to claim this relief or the full amount. It is likely, therefore, that this will cost a small amount, and in dealing with these cases let us remember that we are dealing with ex-Service men and men from industry who have given the best of their lives in the service of their country. Now that they are disabled they have a special claim on us all.

    We appeal to the Government to try to work the scheme proposed in this new Clause. If the wording is not acceptable then we hope that its principle will be.

    6.30 p.m.

    I should like to support the plea which has been made by my hon. Friend the Member for Sunderland, North (Mr. Willey) and my hon. Friend the Member for Wallsend (Mr. McKay) for special consideration for this new Clause. If it were one on which the British people could give an opinion, there would be general support for it. What are we seeking to do? We are seeking to give some financial relief to those within our society who are suffering the greatest hardship.

    The case has been well put, particularly for the ex-Service men and for the workers coming under the Industrial Injuries Acts. I do not want to cover that ground, but the claim of those born with a disability or of those who have subsequently developed a disability making them almost completely dependent upon others, is one which the hon. Gentleman ought to try to accept here and now.

    I know of one or two cases of people born paralysed, people who, from the day they were born up to the present time, are completely dependent upon the kindness, sympathy, tolerance and patience of others. And because of the kindness and sympathy and tolerance shown to them they have overcome a severe physical handicap to a large extent and have fitted themselves to be useful members of our society. Some of them are making a worthwhile contribution to society, but to do so they have to meet expenses which no able-bodied person has to face. One man I know needs a male nurse to attend to him each morning and evening and has to be conveyed from his home to his place of employment. He has to meet the total cost of that.

    Let us assume, however, that he had come from a home which had neglected him and that, by the time he had become an adult, he was incapable of following any occupation or of doing anything for himself. In those circumstances, the State would have had the responsibility of providing hospital or nursing treatment, and it would have cost us a lot more to have given what a Welfare State demands shall be given to people in those circumstances than it would cost to meet this Clause.

    Therefore, I hope that the Economic Secretary will consider this matter seriously. I hope he will recognise that the people on whose behalf we are speaking today are entitled to our admiration and consideration because they have refused to lie down under conditions which have broken thousands. These are the people who, with tenacity and willpower, have overcome tremendous physical handicaps. They are the people we need because they are an example to those of us who have been more fortunate.

    I hope that the pleas which have been made will not fall upon deaf ears and that the Chancellor will see fit to grant this concession immediately, without waiting for the other reforms which presumably he will bring in as and when he decides to review the Income Tax law in the light of the report quoted in this debate by some hon. Members.

    I want to devote myself to that part of the proposed Clause to which reference has just been made, namely, paragraph (b)—

    though not in receipt of a one hundred per cent. war disablement pension or industrial injury pension he nevertheless is disabled in manner and degree equivalent to one hundred per cent. disablement.
    It is already admitted as a principle of taxation that it is the resources available that should be taxed. If we accept that, we must take it into consideration for Income Tax purposes and recognise certain income as being exempt from taxation when it can be shown to be expended in a special way. Nobody will deny that a person handicapped 100 per cent. finds it much more costly to live than does an able-bodied person because he lacks those things which need to be done and for which payment has to be made.

    The House itself has recognised that for, in the National Insurance Act, we give to a section of handicapped people 18s. a week more than to the ordinary recipient of National Assistance because of their handicap of being blind. The same is true of those suffering from tuberculosis. We do not want to deal with this in any sentimental or emotional way, but it is easy to stir the emotions when we see the difficulties of some types of cripple.

    For instance, a person suffering from hemiplegia always has to be carried about because he cannot walk. Again, a person suffering from cerebral palsy or with multiple sclerosis gains our sympathy when describing the difficulty of his life. Indeed, looking at these cases we sometimes wonder whether their lives are worth living at all, but we ought to make their struggle to live as easy as possible.

    This Clause does not do much more than say, "We recognise that you are not an ordinary individual and that it is not possible for you to live in the way that an ordinary person lives." And those coming within the Income Tax scale are handicapped to a greater extent than those who are living on Public Assistance, because the later are provided with service in addition to the amount of money they receive, and this is denied to those others.

    I do not want to make a long speech, but it is obvious that justice demands that we should recognise the position occupied by these people. Already, nature has dealt with them harshly. They have never suffered from an accident, there has been nothing sensational to bring about the conditions under which they live; they have just contracted a disease. Even a disease such as arthritis may be responsible for a man becoming a complete cripple. For these reasons, I hope that the Treasury will recognise that there is a just claim and will accept the proposed Clause.

    I have spent many years working among handicapped people and I had the privilege not long ago of introducing a deputation to the Financial Secretary on one of the special aspects of disablement in an endavour to elicit his sympathy on the very important matter which is now before the Committee. The disability with which I was concerned was that of blindness. We wanted to put to the right hon. Gentleman the position of those persons who have had the courage to take up professional training and have set up in the professional field for which they were trained. We put to the right hon. Gentleman the cost of being blind and I want to put it now to the Economic Secretary.

    My hon. Friend the Member for Tottenham (Sir F. Messer) has spoken of the position of those who suffer from other disabilities, who cause us such great distress when we meet them face to face and have to live with them. All these disabilities involve a special cost. A blind lawyer, for example, has considerably higher expenses than has his seeing colleagues. He has to have a reader, an amanuensis and special books, and new legislation must be put into Braille for him. These are additional expenses which should be considered by the Treasury in relation to the proposed new Clause.

    I have not the slightest doubt that the Economic Secretary is the most kindhearted person on the Front Bench opposite. [An HON. MEMBER: "That is not saying much."] All these disabilities entail an individual charge and it is one of the axioms of welfare services that work is of the finest therapeutic value. There is nothing that makes a man feel that he is as good as his neighbour, although he is deprived of one of his senses, than that he is able to go into the industrial, professional or commercial field and make his contribution on an economic basis. It exalts his spirit and makes him feel that he is as good as the next man. Therefore, I hope that for all these reasons the Economic Secretary will look with sympathy at the new Clause.

    I have no doubt that the Economic Secretary has a handful of reasons for doing nothing about this new proposal. Some of the difficulties about it, which no doubt he has in mind, were referred to in the relevant paragraph of the second interim Report of the Royal Commission, upon whose recommendations the new Clause is based. There are here two major problems, one of equity and the other of administration. Apart from both those problems there is always the natural reluctance of any Chancellor to introduce a new form of Income Tax relief, because he is never sure where it will lead him. He looks with special caution upon any new move into the blue. That is why the Chancellor sticks to the well-tried allowances in the Income Tax code. He feels that there is greater safety in them.

    The Royal Commission referred to the cautious approach which they felt it necessary to make and they confined their proposals to 100 per cent. disablement. The question arises of those who are 80 per cent. or 60 per cent. disabled. Is there a proportionate expense of a lower order incurred by those whose disablement is not the full 100 per cent.? We have to admit the limitations of a proposal which is confined to 100 per cent, disablement, freely acknowledge it and experiment with it. I do not think that there is anything which need deter the Chancellor from making an experiment with a new allowance of this kind.

    The condition of 100 per cent. disablement is easily ascertainable in the case of those who are drawing disablement pension under the war disabilities scheme or who are in receipt of an industrial injury pension. It is not so easy to decide when the person concerned suffers from a congenital deformity or is a cripple who is not subject to medical assessment for pension purposes. The Royal Commission dealt with the problem of administration. Somebody has to decide whether a claimant is 100 per cent. disabled.

    Would not that be done by the tribunal which sits for the purposes of the Disabled Persons Act?

    6.45 p.m.

    I am quite sure, and I was about to make the point, that notwithstanding that difficulty some authoritative source of medical assessment of disablement could be made available. After all, it has been made available already in other matters which lead to considerably more expenditure of State money than does Income Tax relief.

    As for the administration, as long as the Inland Revenue knew what its source of authority was to be, it would be wholly a matter of medical assessment of the degree of disablement and any appeal against the medical assessment would have to be made to the body that was responsible for it and not to the Inland Revenue authorities. In a matter of this kind the Income Tax authorities cannot be the judges of whether the claimant is entitled to relief or not. That evidence must be provided by those who are in a position to do so. If we had that made clear, that duty would not be mixed up with the administration. Inland Revenue officials are many things, but they are not doctors.

    Another difficulty which must be borne in mind and frankly faced is the problem of 100 per cent. disablement arising from advancing age. Age relief is already given to the taxpayer when he or his wife reaches the age of 65. Where age relief is due, earned income relief is given to the relief of unearned income when the taxpayer is getting old. That is a concession to old people who may be living on the yield of investments saved during their lifetime. They are given an income relief which normally applies to pensions.

    Here we have the case of an old person who is completely disabled by old age and who claims to be entitled to this relief on the same footing as a younger person who has a physical or mental disablement, which is more clearly recognisable as a disablement than is the process of getting old. The Royal Commission deals with this matter in paragraph 204 of its Report. It suggests that at an advanced age—it may be 75 or 80 and it could be 93 in the case of my father—the 100 per cent. disablement allowance could apply automatically. It is a matter of argument whether it should be done that way.

    The alternative would be to enable persons of any age to claim the relief and if those persons became 100 per cent. disabled because of the declining years they could claim it on the same footing as a younger person who was 100 per cent. disabled. That would leave out of the relief the hale and hearty octogenarian, proud of his vigour and vitality, who can do 10 miles a day and who might spurn being regarded as 100 per cent. disabled when, obviously, he is not.

    I hope the Economic Secretary will give us a little more comfort on this matter. It seems a little discouraging to have to wait for the Report of the Royal Commission before we can do anything about allowances and then for the Chancellor to say, "I cannot do anything about anything until I can do something about everything." That is a very disappointing doctrine. Here is something on which, apart from all other allowances and reliefs which the Chancellor may have to consider arising out of the Royal Commission's Report, he can make so bold as to meet the wishes of the Committee and, I believe, of the general public, by giving a new allowance. With all its difficulties of administration and other problems it would surely be a worthwhile adventure for an otherwise cautious Chancellor of the Exchequer.

    I do not apologise for taking a few minutes of the time of the Committee to say, in the first place, that I do not think there would be any difficulty, medically, in stating whether a case was 100 per cent, disability or not. For war pensions and under the Industrial Injuries Scheme we already have schedules and we know what is meant by 100 per cent. disability.

    If any cases cropped up which were doubtful—for instance, disseminated sclerosis—knowing that the medical tribunals are assessing these cases from day to day and are quite used to doing so under guidance from the Ministry, there would be no difficulty in being able to advise the Inland Revenue as to whether a case was 100 per cent. disability or not.

    Obviously, people blind in both eyes are disabled 100 per cent. and so are those who are paralysed in both lower limbs—the paraplegic, who has to shuffle his way through life with the aid of crutches or two sticks because his muscles are wasting and he can hardly walk. These are obviously assessed at 100 per cent. disabled.

    In so many of these cases it is true that they have expenses of living not normally met with by people who enjoy full activity and vigour or reasonably full activity and vigour. One or two cases have been quoted. I have one in mind in Stoke-on-Trent of a solicitor who, whilst a young officer in the Army, developed a transverse myelitis of the spinal cord. As a result, both lower limbs are completely paralysed, and will be so long as he lives. With the lion-hearted courage of people of his kind—which we should encourage—he qualified as a solicitor, is in active practice, and has been ever since he qualified.

    Such people have to have a special house in which to live; they cannot climb up stairs and have to have a bungalow. That is an obvious expense. If they are to have transport, with all the courage they have available they learn to drive a car specially adjusted with special controls; maybe they use a wheel chair. Some of these people have to have special assistance to get into bed, to bathe or to be helped out of a bath, and so on.

    We realise that as we are dealing with such a limited number of cases the expense to the Treasury can never be very high. We know the number of people adjudged to be 100 per cent. disabled amongst the war pensioners. That number runs into only a very few thousand, so the Economic Secretary could very well give us a favourable answer.

    We hear so much in this House about offering people incentives to strive with all their might to enrich the country, to increase production and to make businessmen keen to develop new markets. Why should we not offer an incentive to people who have shown sufficient courage to be able to live when many of us cannot understand how they can survive at all? I think we have made a reasonable claim for the sympathy of the Economic Secretary.

    I speak with, for me, unusual modesty and some difficulty on this subject because it is a subject with which I have been living for the last 30 years at least. I want to stress the plea for those industrially disabled. That does not mean that one could not say a great deal about war disabilities of various kinds, either from diseases or wounds. Disabilities from industrial injuries or disease are just a fraction of the difficulty and disability from which these people suffer. It is very much easier in the case of surgical injuries, disablements and ailments. One can always tell that a disabled limb is different from a quite normal limb.

    In addition to accidental injuries, disablement of limbs and of different parts of the body we have a whole series of industrial disabilities from diseases. We have only to pick up a list of the diseases now scheduled as due to industry to see the great difficulty of proving which are due to industry or a particular section of industry because of the constant fight put up by the employers when they are either exaggerating disabilities a man bad before he started his job or trying to minimise the disability from which he suffers through disease.

    In the course of a year I deal with many cases of lead poisoning and often those cases are dealt with by the best men, even by men employed by firms like Imperial Chemical Industries. Those doctors work exceptionally well in industrial cases, but I am constantly trying to see that trade unionists get a fair deal. It is not an easy problem medically, although many people talk as if it were a case of looking at a man and saying, "Disabled by industry," or "Not disabled by industry." From a medical point of view it sometimes takes, not days, but at intervals, weeks of repeated examination to come to the conclusion that in a particular case a man is suffering as the result of his work and should receive compensation up to the percentage to which he is entitled.

    Sometimes the disability is near 100 per cent. for a certain period whilst for another period it is very much less. People talk of a 100 per cent. pension for disability as if the disability were actually continual and static at the same level all the time. That is not so. A man may be capable of doing certain work on one occasion, but during the next three months he may be quite disabled because of the same sort of disability. We tend to regard these cases as neurotic when they are nothing of the kind.

    7.0 p.m.

    It is not an easy problem. Doctors are not correctly taught, either on the surgical or the medical side, with regard to industrial disability. I only wish that every trade union had its medical officer and that every school had a proper department to instruct the students on mental and surgical disabilities in industry. It is difficult to tell a lay audience about these things. It is difficult to decide whether the present condition of a man Jesuits from his work or if it is a recrudescence of something from which he suffered before starting his present employment. We need much more research and study in connection with these problems. We should ensure that these cases are treated as illustrative of a particular form of disability resulting from a man's occupation and the risks which he may run in carrying it out.

    I know that certain doctors employed by insurance companies tend to regard a man with prejudice as soon as he comes to be examined. They consider that he is trying to "put it on," when the man is doing nothing of the kind. The man may be frightened by the strange circumstances in which he finds himself, although he is anxious to justify his case and to prove that he is not normal. I hope that the Home Office, or whichever Department deals with these matters, will take these facts into consideration so that justice may be done to these men.

    I could quote case after case where, after careful examination, I have given an opinion, and said that the case must be fought. But afterwards I have felt that I might have been wrong. These kind of cases are special cases which the authorities should see are properly handled by the medical schools, by the hospitals and by everyone involved. I am sorry if I have not explained myself properly, but it is difficult to do so with the clarity that one would desire. I am satisfied, or at any rate I think, that the men are receiving increasing justice, and that we do not now experience the rank injustices which occurred at one time.

    I wish to support my hon. Friends who have spoken in favour of this new Clause in a series of excellent speeches which were well informed and extremely convincing. I hope that the Economic Secretary will not say that he can do nothing about this, because it is one of a number of proposals in the Royal Commission's Report, and that he cannot do anything about any of those proposals. At an earlier stage he implied that that was the attitude which the Government took on the matter. I hope that I have misunderstood him, because I think it a very unreasonable attitude to adopt.

    One could understand, where there were special complications—special inter-lockings as the hon. Member put it—that some care was necessary before committing oneself to a particular measure. But to say off-hand that you will reject completely all these proposals, whatever they may be, is quite unsatisfactory. Of all the proposals we are putting forward, and which happen to coincide with the Report of the Royal Commission. I think that this one will command the greatest amount of support, both in this Committee and in the country generally. I ask, therefore, that the Economic Secretary should give it very special attention.

    I may say that even had it not been included in the Report of the Royal Commission, there is good reason to suppose that we should have put forward something of this kind, because there is a growing feeling that the present arrangements about taxation in relation to disability are most unsatisfactory. The case has been very well argued already, and I do not propose to detain the Committee by repeating what has been said by others far better than I can say it. But I think that the Royal Commission itself summed up the position extremely well in paragraph 203 of its Report, where it states:
    "Yet there are many kinds of disability (putting aside age, which is provided for by a special relief) so severe that they modify the whole conditions of a person's life and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his income."
    I think that that exactly sums up the case for this proposed new Clause.

    As I said earlier, the law relating to tax allowances for disability is not satisfactory. It is not true to say that no provision whatever is made. There is a provision, which we discussed last year, by which, if an infirm or aged person is maintained by a daughter, there is granted an allowance of £40. I think that sum was increased from £25 to £40 last year.

    I understand that in the case of these disabled people the Commissioners have a discretion. They can make a compensating allowance. But that is not a statutory right, and, therefore, identical cases do not necessarily receive identical treatment.

    My hon. Friend has made a valuable contribution to my general argument, that the law as it stands is not satisfactory and cannot be left as it is. As the Royal Commission pointed out, there is no particular reason why an allowance should be granted statutorily in respect of the case where an infirm person is looked after by a daughter, and not granted in other cases where there does not happen to be a daughter. That being so, the Treasury must face the problem and try to find a solution.

    We have adopted in the new Clause the solution proposed by the Royal Commission. I need not say anything more about that. Admittedly, there are weaknesses in it. My hon. Friend the Member for Sowerby (Mr. Houghton) pointed out, with others, the difficulties of drawing the line at the 100 per cent. disability, but most hon. Members would agree that that disability is much the worst. As my hon. Friend the Member for Sowerby and the Royal Commission say this is surely an instance where it would be wise to experiment by granting allowance in these cases.

    What are the possible objections? First, we must ask whether it will cost a great deal. I cannot suppose that the cost is a serious objection. I am glad to see that the Economic Secretary shakes his head, I think to agree that it is not a serious objection. Indeed, it could fairly be said that one of the limitations of the new Clause is that there are bound to be a great many disabled persons who would not be paying any Income Tax at all or would be paying at a very low rate, and, therefore, would not get a great deal out of it. That is no answer to the proposition that when they pay tax they should get the relief. It does, however, suggest that the cost will not be at all serious.

    Then, is it the administrative difficulty? I can well understand that, as so often happens, the official brief will point out all the administrative complications, but I must say that I was impressed by what my hon. Friends argued on this subject. Here we have, so to speak, a ready made method by which we can test whether a person will be entitled to the allowance. We have the medical tribunals already in existence. They are doing the work all the time in connection with industrial injuries or war pensions. I cannot see that there is any special difficulty about extending their range to cover these persons—as is implied by paragraph (b) of the new Clause—who do not happen to be receiving either a war pension or an industrial injuries pension. Therefore, I cannot see that there should be any special administrative difficulty. For the moment, I cannot think of any other possible objection.

    I hope that the Economic Secretary will be able to give us a favourable answer. The Treasury, in this Finance Bill, has been extremely rigid and obstinate and unwilling to make any concessions at all. I think that the most that we have had is a few vague promises that possibly something might be looked at on Report. Indeed, now I come to think of it, the only significant concession that has been made was the one made yesterday by the Financial Secretary to his own back benchers in respect of Estate Duty. That certainly gives away quite a lot of money on grounds that I should say are wholly unjustifiable.

    I must say to the Chancellor and the Economic Secretary that some of us feel that it is most unsatisfactory that the Government should make concessions to people who are already extremely well off but be quite unwilling to relieve hardship in the way in which it is proposed to be relieved by the new Clause. I am very glad to support it and I hope that we shall now have a favourabe answer from the Government.

    The subject of disability is one which this Committee would always treat with very great and very special interest and care. There is obviously no denying the arguments that people who suffer from 100 per cent. disablement are entitled to receive special consideration and assistance from the Government. What we must consider is what is the best form for that assistance to take.

    Up till now I think it is right to say that successive Governments have taken the view that it is better to assist the 100 per cent. disabled through direct payments rather than through tax remissions. It has always been the practice of Governments to give to the 100 per cent. disabled direct payments which are free from tax. Unlike many other allowances under the National Insurance system, such as family allowances which are subject to tax, the disability allowances are tax-free.

    The principle which has been followed by successive Governments is that the best way of meeting the manifold circumstances of extensive disability in individual cases is by direct tax-free benefit from the State rather than by tax remission. In the case of tax remission it is clear that only those people who pay tax get the benefit of it and the higher a person's income the greater the benefit he gets because he is paying tax at a higher rate.

    7.15 p.m.

    Therefore, in so far as the State recognises and carries out its obligation to assist these people, we consider that the better way of doing it is by way of direct assistance. I think that it is on this ground that, for example, the previous Government did not feel that they could accept in previous years the plea made for a constant attendant allowance—a matter which has often interested both sides of the Committee. It was for that reason that the previous Administration felt that these matters should be dealt with by direct payment rather than by tax remission.

    The Royal Commission, in its Report, quite clearly gave its opinion that there should be alternatives. Either we should have a tax remission or we should have direct tax-free payments, but we should not have both. I think, at first sight, that there is a good deal to be said for that point of view. That is not the proposition in this proposal. I understand that owing to the rules of order it could not be brought forward, because one cannot propose to take away from people concessions which they have at present. However, it is very much worth considering whether the right way of dealing with the problem should or should not be, if we are to give a tax concession, that we should at the same time make a rule that people cannot draw both the tax concession and tax-free disability relief.

    Then, of course, there is the question of the services of a daughter—the allowance of £40 for a daughter assisting an old or infirm taxpayer. Although the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) did not mention it, I think that the Royal Commission recommended that that should be withdrawn. I am not sure that that would be the right thing to do, but it must be considered with the other proposals.

    Then there is the question of the taxpayer over 75 years of age, to whom the hon. Member for Sowerby (Mr. Houghton) referred. There is the interesting suggestion that people over 75 should automatically be given the entitlement to this new relief as an alternative to the age relief.

    Those are all suggestions which have been put forward by the Royal Commission and they are worthy of very careful consideration before we come to a conclusion on these matters. It is true, also, as has been suggested by several hon. Members in their speeches, that in many ways the proposal would not cover the whole field. It covers the position of a taxpayer who is himself 100 per cent. disabled, but there is a strong claim to come from the taxpayer whose wife is 100 per cent. disabled. There is the question of 90 per cent. or 80 per cent. disability.

    One or two hon. Members anticipated that I would raise the point of administrative difficulty which the Royal Commission mentioned. There is undoubtedly a difficulty there, but I am prepared to agree that it is not insuperable, though it would be considerably increased if we brought in not only the 100 per cent. but the 90 per cent, or the 80 per cent. disability.

    It is my impression, particularly from what I have heard from my own constituents, including the British Legion in my constituency, that there is a feeling among many people that while a good deal has been done by successive Governments for the 100 per cent. disabled people, those on a lower degree of disablement tend to be overlooked and their claims are not properly attended to. I cannot help feeling that there is a case for thinking that, if anything of this kind is to be done, we should consider whether we could not bring in also the people at a lower disablement than 100 per cent.

    I have introduced all these considerations to show why, in our opinion, we do not think it would be right now to proceed with this proposal.

    The hon. Gentleman has referred to people who are actually getting monetary benefit from the State. He has not dealt with the people who are born with an incapacity or who subsequently develop an incapacity and who receive no benefit from the State.

    I agree that there is a case for doing something there. It is very strong, but I should have thought that the argument holds good that it is better to try to extend direct benefits from the State rather than to extend tax concessions which benefit less the people at the lower range of income.

    This new Clause commends itself to the sympathies of hon. Members. There is always the feeling that whenever the State can provide additional assistance to any citizens, the disabled, and particularly the 100 per cent. disabled, have one of the strongest claims of all. That my right hon. Friend will continue to bear in mind.

    But I say once again that I think we should consider seriously whether it is not better, in principle, to continue to give and extend, and, as soon as possible, increase, direct tax-free payments rather than introduce a new principle of a tax remission, which would only help that limited class of people concerned who are taxpayers.

    Do we understand the Economic Secretary to be giving any promise or undertaking that the Government have such proposals for increased expenditure in mind?

    I had not come to my final words.

    I was going to say that along with the other points which we have discussed earlier this afternoon, this is a matter which my right hon. Friend intends to consider in the course of the next year. He also, as I have said on many occasions, will have in mind continuously the case, not only of the old age pensioner, but also of the disability pensioner. It would be right for my right hon. Friend to link in his consideration both disability pensions and the possibility of tax allowances for the disabled. In those circumstances, my right hon. Friend, though certainly sympathetic with many of the views advanced with such sincerity and force by hon. Members, does not feel, for the reasons I have tried to explain, that he can at this time accept this proposal.

    I have listened with great interest to the debate, as the Committee will appreciate, since for three years I held the office of Minister of Pensions and had a great deal of experience in the administration of 100 per cent. disability pensions and the like.

    At the end of my three years, I left that office very strongly of opinion that many of the hardest cases which had ever come to my attention were those not of people who had received a 100 per cent. war pension, but of those who had received a war pension at a lower rate of assessment but were, nevertheless, 100 per cent. disabled. Among such men will be found very many examples of severe hardship and great human suffering.

    It so happened by a strange coincidence that I received only this morning from the Minister of Pensions and National Insurance a letter relating to a constituent of mine. I shall not go into the whole story, but here is a man—a man with one eye, as it happens—who was called up for war service and who left the service in a state in which he was almost unable to work. He received a 60 per cent. pension in respect of a condition which was recognised as being aggravated by, but not attributable to, war service.

    Subsequently that condition deteriorated, and the man is now admitted by all his medical attenders to be completely unfit for work. His pension, however, is only 60 per cent. He does get an unemployability supplement. If his pension were less than 50 per cent., he would not get even that. But because he is only 60 per cent. war disabled, though 100 per cent. physically disabled, he cannot get the constant attendant allowance; he cannot get the comforts allowance. When his wife had to give up her work, making some pitiful little earnings by charring and that kind of thing, to look after him, he is ineligible for the constant attendant allowance, too, because he is not technically 100 per cent. war disabled.

    That sort of case is extremely hard indeed. My constituent would not benefit by any concession under Income Tax, because the whole of his income consists of tax-free allowances. Even if it were not tax-free, it is such a small weekly sum that I dare say he would not pay tax even under the ordinary arrangement. The point I wanted to make is that if at some future date—we have no guarantee whatever about it—any improvement is to be made in the present war pensions system, it is particularly necessary in that direction. That is why I was glad to see on the Order Paper that the proposed new Clause provided for tax relief not only to those in receipt of 100 per cent. war pension or 100 per cent. industrial injuries grant, but also to those who are, in fact, 100 per cent. disabled.

    We have listened with some interest, without surprise, and with considerable regret, to the Economic Secretary telling as how difficult all this is. We have heard him say that he appreciates the problem and that he is sympathetic, but that there are all kinds of difficulties in the way of doing what we ask. At the same time,

    Division No. 182.]


    [7.26 p.m.

    Adams, RichardFletcher, Eric (Islington, E.)MacMillan, M. K. (Western Isles)
    Albu, A. H.Follick, M.MacPherson, Malcolm (Stirling)
    Allen, Arthur (Bosworth)Foot, M. M.Mainwaring, W. H.
    Anderson, Frank (Whitehaven)Forman, J. C.Mallalieu, E. L. (Brigg)
    Awbery, S. S.Fraser, Thomas (Hamilton)Mallalieu, J. P. W. (Huddersfield, E.)
    Bacon, Miss AliceGaitskell, Rt. Hon. H. T. N.Mann, Mrs. Jean
    Baird, J.Gibson, C. W.Manuel, A. C.
    Balfour, A.Glanville, JamesMarquand, Rt. Hon. H. A.
    Barnes, Rt. Hon. A. J.Gooch, E. G.Mason, Roy
    Bartley, P.Gordon Walker, Rt. Hon. P. C.Mayhew, C. P.
    Bence, C. R.Grey, C. F.Mellish, R. J.
    Benn, Hon. WedgwoodGriffiths, David (Rother Valley)Messer, Sir F.
    Benson, G.Griffiths, Rt. Hon. James (Llanelly)Mikardo, Ian
    Beswick, F.Grimond, J.Mitchison, G. R.
    Bevan, Rt. Hon. A. (Ebbw Vale)Hale, LeslieMonslow, W.
    Bing, G. H. C.Hall, Rt. Hon. Glenvil (Colne Valley)Morgan, Dr. H. B. W.
    Blackburn, F.Hamilton, W. W.Morley, R.
    Blenkinsop, A.Hannan, W.Mulley, F. W.
    Blyton, W. R.Hardy, E. A.Noel-Baker, Rt. Hon. P. J.
    Boardman, H.Hargreaves, A.Oldfield, W. H.
    Bottomley, Rt. Hon. A. GHarrison, J. (Nottingham, E.)Oliver, G. H.
    Bowden, H. W.Hastings, S.Orbach, M.
    Bowles, F. G.Hayman, F. H.Oswald, T.
    Braddock, Mrs. ElizabethHenderson, Rt. Hon. A. (Rowley Regis)Padley, W. E.
    Brockway, A. F.Herbison, Miss M.Paget, R. T.
    Broughton, Dr. A. D. D.Hewitson, Capt. M.Paling, Rt. Hon. W. (Dearne Valley)
    Brown, Rt. Hon. George (Belper)Hobson, C. R.Paring, Will T. (Dewsbury)
    Brown, Thomas (Ince)Holman, P.Palmer, A. M. F.
    Butler, Herbert (Hackney, S.)Holt, A. F.Pannell, Charles
    Callaghan, L. J.Houghton, DouglasPargiter, G. A.
    Champion, A. J.Hudson, James (Ealing, N.)Parker, J.
    Chetwynd, G. R.Hughes, Emrys (S. Ayrshire)Paton, J.
    Clunie, J.Hughes, Hector (Aberdeen, N.)Pearson, A.
    Coldrick, W.Hynd, J. B. (Attercliffe)Plummer, Sir Leslie
    Collick, P. H.Irving, W. J. (Wood Green)Popplewell, E.
    Cove, W. G.Isaacs, Rt Hon. G. A.Porter, G.
    Craddock, George (Bradford, S.)Janner, B.Price, J. T. (Westhoughton)
    Crosland, C. A. R.Jay, Rt. Hon D. P. TPrice, Philips (Gloucestershire, W.)
    Crossman, R. H. S.Jeger, George (Goole)Proctor, W. T.
    Cullen, Mrs. A.Jeger, Mrs. LenaPryde, D. J.
    Daines, P.Jenkins, R. H (Stechford)Pursey, Cmdr. H.
    Dalton, Rt. Hon. H.Johnson, James (Rugby)Rankin, John
    Darling, George (Hillsborough)Jones, David (Hartlepool)Reeves, J.
    Davies, Ernest (Enfield, E.)Jones, Jack (Rotherham)Reid, Thomas (Swindon)
    Davies, Harold (Leek)Jones, T. W. (Merioneth)Reid, William (Camlachie)
    Davies, Stephen (Merthyr)Keenan, W.Roberts, Rt. Hon. A.
    de Freitas, GeoffreyKenyon, C.Roberts, Albert (Normanton)
    Deer, G.Key, Rt. Hon. C. WRoberts, Goronwy (Caernarvon)
    Delargy, H. J.King, Dr. H. M.Robinson, Kenneth (St. Pancras, N.)
    Dodds, N. N.Kinley, J.Rogers, George (Kensington, N.)
    Donnelly, D. L.Lawson, G. M.Ross, William
    Driberg, T. E. N.Lee, Frederick (Newton)Royle, C.
    Dugdale, Rt. Hon. John (W. Bromwich)Lee, Miss Jennie (Cannock)Shackleton, E. A. A.
    Ede, Rt. Hon. J. C.Lever, Leslie (Ardwick)Shawcross, Rt. Hon. Sir Hartley
    Edelman, M.Lewis, ArthurShinwell, Rt. Hon. E
    Edwards, Rt. Hon. John (Brighouse)Lindgren, G. S.Short, E. W
    Edwards, Rt. Hon. Ness (Caerphilly)Lipton, Lt.-Col. MShurmer, P. L. E.
    Edwards, w. J. (Stepney)Logan, D. G.Silverman, Julius (Erdington)
    Evans, Albert (Islington, S.W.)MacColl, J. E.Silverman, Sydney (Nelson)
    Evans, Edward (Lowestoft)McGhee, H. G.Simmons, C. J. (Brierley Hill)
    Evans, Stanley (Wednesbury)McGovern, J.Skeffington, A. M.
    Fernyhough, E.McInnes, J.Slater, Mrs. H. (Stoke-on-Trent)
    Fienburgh, W.McKay, John (Wallsend)Slater, J. (Durham, Sedgefield)
    Finch, H. J.McLeavy, F.Smith, Ellis (Stoke, S.)

    he has indicated that possibly, some time in the future, his right hon. Friend may consider doing something to increase war pensions. We on this side have considered it, and we know perfectly well what we would do: we would increase them here and now. Therefore, we shall indicate in the Division Lobby our disappointment with this reply.

    Question put.

    The Committee divided: Ayes, 238; Noes, 280.

    Smith, Norman (Nottingham, S.)Thomson, George (Dundee, E.)Wilcock, Group Capt C A. B
    Snow, J. W.Thornton, E.Wilkins, W. A.
    Sorensen, R. W.Timmons, J.Willey, F. T.
    Soskice, Rt. Hon. Sir FrankTomney, F.Williams, David (Neath)
    Sparks, J. A.Usborne, H. C.Williams, Rev. Llywelyn (Abertillery)
    Steels, T.Viant, S. P.Williams, Rt. Hon. Thomas (Don V'll'y)
    Stokes, Rt. Hon. R. R.Wade, D. W.Williams, W. R. (Droylsden)
    Strachey, Rt. Hon. J.Warbey, W. NWilliams, W. T. (Hammersmith, S.)
    Stross, Dr. BarnettWatkins, T. E.Willis, E. G.
    Summerskill, Rt. Hon. E.Weitzman, D.Wilton, Rt. Hon. Harold (Huyton)
    Swingler, S. T.Wells, Percy (Faversham)Winterbottom, Richard (Brightside)
    Sylvester, G. O.Wells, William (Walsall)Woodburn, Rt. Hon. A.
    Taylor, Bernard (Mansfield)Wheeldon, W. E.Wyatt, W. L.
    Taylor, John (West Lothian)White, Mrs. Eirene (E. Flint)Yates, V. F.
    Taylor, Rt. Hen. Robert (Morpeth)White, Henry (Derbyshire, N.E.)
    Thomas, Ivor Owen (Wrekin)Wigg, GeorgeTELLERS FOR THE AYES:
    Mr. Wallace and Mr. Holmes.


    Aitken, W. T.Drayson, G. B.Jones, A. (Hall Green)
    Allan, R. A. (Paddington, S.)Dugdale, Rt. Hon. Sir T. (Richmond)Joynson-Hicks, Hon. L. W
    Alport, C. J. M.Duncan, Capt. J. A. L.Kaberry, D.
    Amery, Julian (Preston, N.)Duthie, W. S.Kerby, Capt. H. B.
    Amory, Rt. Hon. Heathcoat (Tiverton)Eccles, Rt. Hon. Sir D. M.Kerr, H. W.
    Arbuthnot, JohnEden, J. B. (Bournemouth, West)Lambert, Hon. G.
    Assheton, Rt. Hon. R. (Blackburn, W.)Elliot, Rt. Hon. W. E.Lambton, Viscount
    Aster, Hon. J. J.Erroll, F. J.Lancaster, Col. C. G
    Baldock, Lt.-Cmdr. J. M.Finlay, GraemeLangford-Holt, J. A.
    Baldwin, A. E.Fisher, NigelLeather, E. H. C.
    Barber, AnthonyFleetwood-Hesketh, R. FLegge-Bourke, Maj. E. A. H.
    Barlow, Sir JohnFletcher-Cooke, C.Legh, Hon. Peter (Petersfield)
    Baxter, Sir BeverleyFord, Mrs. PatriciaLindsay, Martin
    Beach, Maj. HicksFort, R.Linstead, Sir H. N.
    Bell, Phillip (Bolton, E.)Foster, JohnLlewellyn, D. T.
    Bell, Ronald (Bucks, S.)Fraser, Hon. Hugh (Stone)Lloyd, Rt. Hon. G. (King's Norton)
    Bennett, F. M. (Reading, N.)Fraser, Sir Ian (Morecambe & Lonsdale)Lloyd, Maj. Sir Guy (Renfrew, E.)
    Bennett, Dr. Reginald (Gosport)Galbraith, Rt. Hon. T. D. (Pollok)Lockwood, Lt.-Col. J. C.
    Bennett, William (Woodside)Galbraith, T. G. D. (Hillhead)Longden, Gilbert
    Bevins, J. R. (Toxteth)Gammans, L. D.Lucas, Sir Jocelyn (Portsmouth, S.)
    Birch, NigelGeorge, Rt. Hon. Maj. G. LloydLucas, P. B. (Brentford)
    Bishop, F. P.Glover, D.Lucas-Tooth, Sir Hugh
    Black, C. W.Godber, J. B.Lyttelton, Rt. Hon. O.
    Boothby, Sir R. J. G.Gomme-Duncan, Col. A.McAdden, S. J.
    Bossom, Sir A. C.Gough, C. F. H.McCorquodale, Rt. Hon. M. S
    Boyd-Carpenter, Rt. Hon. J. A.Gower, H. R.Macdonald, Sir Peter
    Boyle, Sir EdwardGraham, Sir FergusMackeson, Brig. Sir Harry
    Braine, B. R.Grimston, Hon. John (St. Albans)McKibbin, A. J.
    Braithwaite, Sir Albert (Harrow, W.)Grimston, Sir Robert (Westbury)Mackie, J. H. (Galloway)
    Braithwaite, Sir GurneyHall, John (Wycombe)Maclay, Rt. Hon. John
    Bromley-Davenport, Lt.-Col. W. H.Harden, J. R. E.Maclean, Fitzroy
    Brooke, Henry (Hampstead)Hare, Hon. J. H.Macleod, Rt. Hon. Iain (Enfield, W.)
    Brooman-White, R. C.Harris, Frederic (Croydon, N.)MacLeod, John (Ross and Cromarty)
    Browne, Jack (Govan)Harris, Reader (Heston)Macmillan, Rt. Hon. Harold (Bromley)
    Buchan-Hepburn, Rt. Hon. P. G. THarrison, Col. J. H. (Eye)Macpherson, Niall (Dumfries)
    Bullard, O. G.Harvey, Air Cdre. A. V. (Macclesfield)Maitland, Comdr. J. F. W. (Horncastle)
    Bullus, Wing Commander E. E.Harvey, Ian (Harrow, E.)Maitland, Patrick (Lanark)
    Burden, F. F. A.Harvie-Watt, Sir GeorgeManningham-Buller, Rt.Hn. Sir Reginald
    Butcher, Sir HerbertHay, JohnMarkham, Major Sir Frank
    Butler, Rt. Hon. R. A. (Saffron Walden)Head, Rt. Hon. A. H.Marlowe, A. A. H.
    Campbell, Sir DavidHeald, Rt. Hen. Sir LionelMarples, A. E.
    Cary, Sir RobertHeath, EdwardMarshall, Douglas (Bodmin)
    Channon, H.Higgs, J. M. C.Maude, Angus
    Clarke, Col. Ralph (East Grinstead)Hill, Dr. Charles (Luton)Maudlins, R.
    Clarke, Brig. Terence (Portsmouth, W.)Hill, Mrs. E. (Wythenshawe)May den, LI.-Comdr. S. L. C
    Clyde, Rt. Hon. J. L.Hinchingbrooke, ViscountMedlicott, Brig. F.
    Cole, NormanHirst, GeoffreyMellor, Sir John
    Colegate, W. A.Holland-Martin, C. J.Molson, A. H. E.
    Conant, Maj. Sir RogerHollis, M. C.Monckton, Rt. Hon. Sir Walter
    Cooper, Sqn. Ldr. AlbertHope, Lord JohnMoore, Sir Thomas
    Cooper-Key, E. M.Hopkinson, Rt. Hon. HenryMorrison, John (Salisbury)
    Craddook, Beresford (Spelthorne)Hornsby-Smith, Miss M. P.Mott-Radclyffe, C. E.
    Crookshank, Capt. Rt. Hon. H. F. C.Horobin, I. M.Nabarro, G. D. N.
    Crosthwaite-Eyre, Col. O. E.Horsbrugh, Rt. Hon. FlorenceNeave, Airey
    Crouch, R. F.Howard, Hon. Greville (St. Ives)Nicholls, Harmar
    Crowder, Sir John (Finchley)Hudson, Sir Austin (Lewisham, N.)Nicholson, Godfrey (Farnham)
    Crowder, Petre (Ruislip—Nortnwood)Hulbert, Wing Cdr. N. J.Noble, Comdr. A. H. P.
    Darling, Sir William (Edinburgh, S.)Hurd, A. R.Nugent, G. R. H.
    Davidson, ViscountessHutchison, Sir Ian Clark (E'b'rgh, W.)Nutting, Anthony
    Deedes, W. F.Hyde, Lt.-Col. H. M.Oakshott, H. D.
    Digby, S. WingfieldHylton-Foster, H. B. H.Odey, G. W.
    Dodds-Parker, A. D.Iremonger, T. L.O'Neill, Hon. Phelim (Co. Antrim, N.)
    Donaldson, Cmdr. C. E. McA.Jenkins, Robert (Dulwich)Ormsby-Gore, Hon. W. D.
    Doughty, C. J. A.Jennings, Sir RolandOrr, Capt. L. P. S.
    Douglas-Hamilton, Lord MalcolmJohnson, Eric (Blackley)Orr-Ewing, Charles Ian (Hendon, N.)

    Osborne, C.Savory, Prof. Sir DouglasThorneycroft, Rt.Hn. Peter (Monmouth)
    Page, R. G.Schofield, Lt.-Cot. W.Thornton-Kemsley, Col. C. N.
    Peaks, Rt. Hon. O.Scott, R. DonaldTilney, John
    Perkins, Sir RobertScott-Miller, Cmdr. R.Touche, Sir Gordon
    Peto, Brig. C. H. M.Shepherd, WilliamTurner, H. F. L.
    Pickthorn, K. W. M.Simon, J. E. S. (Middlesbrough, W.)Turton, R. H.
    Pilkington, Capt. R. A.Smithers, Peter (Winchester)Tweedsmuir, Lady
    Pitman, I. J.Smithers, Sir Waldron (Orpington)Vane, W. M. F.
    Pitt, Miss E. M.Snadden, W. McN.Vosper, D. F.
    Powell, J. EnochSpearman, A. C. M.Wakefield, Edward (Derbyshire, W.)
    Prior, Henry (Lewisham, W.)Speir, R. M.Wakefield, Sir Wavell (St. Marylebone)
    Prior-Palmer, Brig, O. L.Spence, H. R. (Aberdeenshire, W.)Walker-Smith, D. C.
    Profumo, J. D.Spens, Rt. Hon. Sir P. (Kensington, S.)Wall, Major Patrick
    Raikes, Sir VictorStanley, Capt. Hon. RichardWard, Hon. George (Worcester)
    Ramsden, J. E.Steward, W. A. (Woolwich, W.)Ward, Miss I. (Tynemouth)
    Rayner, Brig. R.Stewart, Henderson (Fife, E.)Waterhouse, Capt. Rt. Hon. C.
    Rees-Davies, W. R.Stoddart-Scott, Col. M.Watkinson, H. A.
    Remnant, Hon. P.Storey, S.Webbe, Sir H. (London & Westminster)
    Renton, D. L. M.Strause, Henry (Norwich, S.)Wellwood, W.
    Ridsdale, J. E.Stuart, Rt. Hon. James (Moray)Williams, Rt. Hon. Charles (Torquay)
    Roberts, Peter (Heeley)Studholme, H. G.Williams, Sir Herbert (Croydon, E.)
    Robertson, Sir DavidSummers, G. S.Williams, Paul (Sunderland, S.)
    Robinson, Sir Roland (Blackpool, S.)Sutcliffe, Sir HaroldWilliams, R. Dudley (Exeter)
    Robson-Brown, W.Taylor, Sir Charles (Eastbourne)Wills, G.
    Rodgers, John (Sevenoaks)Taylor, William (Bradford, N.)Wilson, Geoffrey (Truro)
    Roper, Sir HaroldTeeling, W.
    Ropner, Col. Sir LeonardThomas, Rt. Hon, J. P. L. (Hereford)TELLERS FOR THE NOES:
    Russell, R. S.Thomas, Leslie (Canterbury)Sir Cedric Drewe and
    Ryder, Capt. R. E. D.Thompson, Kenneth (Walton)Mr. Redmayne.
    Sandys, Rt. Hon. D.Thompson Lt.-Cdr. R. (Croydon, W.)

    On a point of order. I was wondering whether the next new Clause on the Order Paper—(Reduction of duty on hydrocarbon oils)—which stands in my name has either been accidentally overlooked, or whether it has been decided officially by the Chair that it is not to be called.

    New Clause—(Relief For Accountancy Expenses)

    (1) Where—

  • (a) on or after the sixth day of April, nineteen hundred and fifty-four, an individual, otherwise than for the purpose of a trade carried on by him pays any fees or incurs any expense in connection with the preparation by an accountant of any statement, claim, list or declaration required by or for the purposes of the Income Tax Acts; and
  • (b) those fees or expenses would, if they had been paid or incurred for the purpose of a trade have been allowable as a deduction in estimating the profits or gains thereof there shall be made to him for the year of assessment in which those expenses were paid or incurred an allowance equal to the amount thereof.
  • (2) An allowance shall be made by way of discharge or repayment of tax.

    (3) In this section "accountant" means a person who has been admitted a member of an incorporated society of accountants.

    (4) The provisions of the Income Tax Acts relating to appeals against assessment to income tax including the provision relating to the statement of a case for the opinion of the High Court on a point of law, shall with any necessary modification apply to any claim for an allowance under this section.—[ Mr. Black.]

    Brought up, and read the First time.

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

    The purpose of the new Clause is to rectify what I hope I can satisfy the Committee is an anomaly in the existing Income Tax law. Before coming to the main point that I want to develop, however, there are two preliminary submissions that I would make to the Committee.

    The first is that the complexity of the Income Tax law nowadays necessitates the employment of qualified accountants in preparing Income Tax returns, except in the simplest and most straightforward cases. I do not think I need spend any time in developing that proposition, because all hon. Members who have become familiar with the Committee stage of a Finance Bill will realise the immense complexity which now surrounds the whole question of the liability of the citizen for Income Tax.

    The second submission that I would make is that the employment of qualified accountants is alike advantageous to the Inland Revenue authorities as it is to the individual taxpayer, because it is quite clear that, where qualified accountants are employed in the preparation of Income Tax returns, the Inland Revenue Department is saved a great deal of work, because the returns are much more likely to be accurate and in a satisfactory form than if they are prepared by the taxpayer by his own unaided efforts. Furthermore, they are much more likely to be correct and in accordance with the law having been prepared by experts, and, therefore, there is less possibility of the Inland Revenue failing to receive the tax which is properly due from the individual taxpayer.

    I now want to make clear to the Committee how the anomaly in the existing law arises and operates. It is a fact that, in the case of limited companies, both trading companies and investment companies, accountancy fees in connection with the preparation of tax returns are allowed as permissible expenses for tax purposes. The same allowance is made in the case of an individual carrying on a business in his own name or in partnership with other individuals.

    The one exception to the general rule arises in the case of an individual dealing with his own personal tax affairs, including his investment income, which may, and in some cases clearly does, involve complicated taxation questions in respect of which the expert advice of qualified accountants is absolutely essential. Perhaps I may take one illustration to make clear the kind of case that I have in mind. I am deliberately taking an illustration of rather an extreme kind to show to the Committee the point I am trying to make.

    Take the case of a great landed estate such as the Westminster Estate, the Portman Estate, or the Howard de Walden Estate, comprising hundreds if not thousands of properties where very complicated tax problems arise in connection with repairs and in respect of which the employment of qualified accountants to prepare the Income Tax returns is absolutely essential. The anomaly is that if the estate belongs to an individual and is held by him in his own name he can secure no tax relief in respect of accountancy expenses in dealing with the taxation matters relating to the estate. If his affairs are so arranged that his estate belongs to a limited company and he owns the whole of the shares, that company is in a position to obtain tax relief in respect of the accountancy fees involved in the preparation of the Income Tax returns.

    There can in logic and reason be no case whatever for differentiating in the treatment, according to whether the individual owns his estate direct and in his own name, or whether he owns it indirectly through the ownership of the whole of the shares of a limited company which, in turn owns the landed estate. The illustration makes clear the nature of the injustice, which affects many people, small taxpayers as well as large.

    The Economic Secretary cannot possibly resist making the concession on the ground that a very large amount of revenue would be lost by so doing. I do not know whether he can give us any estimate of the revenue loss by admitting accountants' fees for the preparation of Income Tax returns in the circumstances I have mentioned, but in the nature of the case it can be only a very small amount indeed. The acceptance of the Clause cannot be resisted on that ground, while the case in equity and logic for making this small concession is overwhelming.

    7.45 p.m.

    My hon. Friend the Member for Wimbledon (Mr. Black) has urged this proposition with persistence and, as usual, with eloquence, but I cannot find myself persuaded by his arguments—[HON. MEMBERS: "Hear, hear."]—any more than I can by arguments sometimes advanced from the other side of the Committee. I agree that the cost of making the concession is not very substantial. It is not for any such reason that I resist it. I agree that there is an appearance of anomaly here, but I cannot agree that there is injustice.

    My hon. Friend is quite right in saying that, in practice, accountancy expenses incurred by a company in preparing Income Tax returns are allowed as a deduction, but that arises because a trader is entitled to deduct for Income Tax purposes any expenses incurred for purposes of his trade, and they normally include accountancy expenses. In practice, it is impossible to distinguish between normal accountancy expenses and accountancy work done in preparing a statement of tax liability. If my hon. Friend will consult a judgment given by Lord Porter in 1950.

    he will see set out in very clear language these words:
    "It is true that as a matter of convenience the cost of making up accounts for the Inland Revenue is allowed by the authorities as a deduction from profits, as is the cost of making up the strictly business accounts of the trade, but this is not a matter of principle but of expediency. The two duties overlap and in practice are almost indivisible."
    That statement puts with great clarity the reason why this apparent anomaly exists. Any individual, says my hon. Friend, who employs an accountant to assist him should be able to deduct similarly the expenses of employing that accountant from his assessment for Income Tax purposes. I find that a very difficult principle to accept. The taxpayer is carrying out a statutory liability imposed upon him equally with all other citizens. If he chooses to employ expert assistance in doing so, I do not think that any substantial claim can be made for giving him a special tax allowance. This is a matter of principle, and it is difficult to accept my hon. Friend's suggestion.

    I would, however, observe that this matter, or something akin to it, arose in the first Millard Tucker Committee's Report. Since then, the Royal Commission has been deliberating, and it is possible—although I do not know—that in the course of its final Report it may have something to say on the question of tax relief on expenses incurred in litigation against the Inland Revenue authorities. There may then be a case for saying that we should make some allowance for accountancy expenses incurred in preparing for litigation. That is only hypothetical. If the Royal Commission should have anything to say, my right hon. Friend will examine it with great care. Beyond that, I cannot regard the case made by my hon. Friend, however eloquent and persistent his argument, as one that I can accept on principle. Therefore, I must advise the Committee to reject the proposed new Clause.

    I should like to ask my hon. Friend the Economic Secretary a question. He said that it was a matter of principle whether an individual should be permitted to have the cost of preparation of his taxation papers assessed as a charge for computing his liability to Income Tax and other forms of direct taxation. According to the Economic Secretary there is a statutory liability upon an individual to prepare his tax returns whereas there is evidently a different state of affairs with respect to a company.

    Surely the position is exactly the same. A company has a statutory liability to prepare its accounts and to submit them for assessment to taxation. An individual has the same liability. If the cost of preparation of a company's accounts is admissible as a charge for the purpose of computing the company's liability to tax, the same principle should be applied in the case of an individual.

    I do not wish to argue this point in detail. I would merely ask the Economic Secretary whether, as there is a sound case for the new Clause which my hon. Friend the Member for Wimbledon (Mr. Black) has put forward, he would be prepared to submit this specific point to the Royal Commission for further consideration. There should be equity as between the cost to the individual of carrying out his statutory liability, and that of a company in complying with its statutory liability.

    If the principle applies to the one, then the same principle should apply to the other. I think, therefore, that the matter might be looked at again by the Royal Commission, and I ask my hon. Friend whether he would be prepared to put this specific point which. I would remind him, has come up on successive Finance Bills since the war, to the Royal Commission for further consideration.

    I very much hope that the Economic Secretary will not accede to that suggestion. For one thing, it would be an action of an extremely exceptional character if the Chancellor of the Exchequer were to direct the members of the Royal Commission to apply their minds to a particular small point of tax reform. That is something which has not been done since the Royal Commission was set up, and I hope that the precedent will not be set at all, and certainly not in a case like this.

    The Economic Secretary opposed the Clause not on grounds of principle, but on grounds of administrative convenience. He quoted the judgment to which he referred to show that it would be difficult to differentiate between the work of the accountant in preparing tax figures and the work which he did for the company in other directions. That was the basis of the judgment which he quoted.

    If that argument were correct, then the ordinary audit of a company's accounts must be associated in the mind of the hon. Gentleman with litigation. In fact, the two are not connected.

    The hon. Gentleman really must take up this with Lord Porter and not with me, because I am merely basing myself on the perfectly clear and well-known judgment to which the Economic Secretary referred.

    This new Clause, of course, must be seen as part of this year's Tory campaign on behalf of the accountancy profession. We had the most extraordinary encomium last night of accountants by the hon. Member for Heeley (Mr. P. Roberts), and, indeed, a definition of Toryism by the practice of going to the cleverest accountant in order to get off paying the maximum amount of tax. It is interesting to see a further effort being made on their behalf in this new Clause.

    Even if there were none of the difficulties to which the Economic Secretary referred, I see no case for the Clause. It was moved by the hon. Member for Wimbledon (Mr. Black) on the ground that at present there is a differentiation between an individual and a company. That, of course, is true. But there are all sorts of differentiations between individuals and companies. After all, individuals are subject to Surtax and companies are not. This differentiation between an individual and a company goes right through our taxation law, and is not confined to the minor matter of accountancy expenses.

    It may be that certain people experience the difficulties to which the hon. Member for Wimbledon referred. He talked in heart-breaking terms about the difficulties which the Westminster Company might have in making out its Income Tax return, but we must surely retain a sense of proportion in the matter. Why should the Revenue help companies to minimise their tax liability in this way? The hon. Member for Wimbledon said the Revenue would gain from it. That is an extraordinary opinion. I should have thought that the whole idea of going to an accountant was in order to minimise one's liability to tax. I cannot see that the Revenue would gain in the way of receipts by making this concession because then far more people than now would have their affairs looked after by an accountant.

    I can see no justification for the Clause, and I am sorry that it should have been pressed so strongly and so enthusiastically immediately after we have had from the benches opposite such a lack of enthusiasm for the two or three previous new Clauses. I can only say that I think that this represents part of the general campaign of the Tories and of a party of business men on behalf of the accountants.

    Far be it from me to intervene in this contest between the accountants, on the one hand, and the economists on the other, but it has been said on both sides that there is at the moment a difference of practice in this matter as between individuals and limited companies which amounts to an anomaly.

    I am not aware of any difference of practice. If an individual is in business, if he carries on a trade or a profession, and if he is wise enough and prudent enought to employ an accountant to deal with his accounts year by year, then his accountancy charges are an allowable deduction for Income Tax purposes. He does not have to be a limited company in order to claim them. Just as in the case of the limited company, if his accountant prepares his Income Tax returns and is paid a fee for doing so as part of his general accountancy fees for what is done, then those fees, as well as those of a limited company, are eligible for Income Tax deduction.

    A limited company holding investment or owning property is in a position to obtain taxation relief in respect of accountancy expenses, but an individual holding the same investments or owning the same property cannot so obtain that relief. That is the anomaly.

    It appears to me that what the hon. Gentleman is saying—of course, I may be completely wrong—is that if, to reduce his liability to Income Tax, a man forms a limited company which never carries on any business at all, he derives the advantage from doing so. What the hon. Gentleman wants to do, apparently, is to give the same advantage to all those who have not employed that device, because, otherwise, the man who has been paying in full suffers as against the man who has adopted the device for reducing his liability. That is what the hon. Gentleman calls an anomaly. If it is an anomaly, then I agree with the Economic Secretary that it is not an injustice.

    A good deal has been heard from the Opposition about tax evasion and avoidance, and some general strictures have been made on Members on this side of the Committee because of the quite legitimate desire to pay no more taxes than they should. This idea which we are now discussing raises a peculiar question. It almost forces me to consider doing what others have done in the past, that is, turn myself into a limited company. It was certainly done by Edgar Wallace, and there are many other examples.

    If we were to do that, we should, of course, claim support for the action from the hon. Member for Gloucestershire, South (Mr. Crosland) and also from the hon. Member for Nelson and Colne (Mr. S. Silverman), so that when we converted ourselves into a non-personal organisation in order to meet an anomaly we should not be blamed even more than we are at present, because we would have de-individualised ourselves to please right hon. and hon. Gentlemen opposite.

    I think that this is a very trifling matter. In the interest of the Revenue there should be skill in the presentation of our accounts, and until there is a turnover tax, which would be simple if not just, it is desirable to encourage the expert presentation of our accounts in a proper way in order to see that the Revenue is not defrauded and receives less than it should. Therefore, I think that my hon. Friend might well accept this new Clause.

    Question put, and negatived.

    New Clause—(Allowance For Capital Expenditure On Farmhouse)

    The Income Tax Act, 1952, shall have effect as if in section three hundred and fourteen there were inserted after the word "farmhouse" in paragraph ( a) of subsection (2) thereof the words "having a rateable value of not less than twenty-six pounds."—[ Mr. MottRadclyffe.]

    Brought up, and read the First time.

    8.0 p.m.

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

    My hon. Friend will be aware that under Section 314 of the Income Tax Act, 1952, capital expenditure allowances are given on the full cost of constructing or improving a farm cottage, but only on one-third of the cost of constructing or improving a farmhouse. This is due to some rather curious mathematical formula which the Treasury has evolved by which it has come to the conclusion that one-third of a farmhouse is a place of business and two-thirds a place of residence, no matter how small the farmhouse may be.

    The object of the new Clause is to bring the small farmhouse of a rateable value of less than £26 a year into exactly the same category as the farm cottage for the purpose of a capital expenditure allowance. The present system of the operation of the capital expenditure allowance creates a number of obviously unfair anomalies. For instance, there are owner occupiers, and occupiers of small farmhouses who are in many cases obliged to accept a lower standard of accommodation and fewer amenities than many agricultural workers.

    In the North of England, in particular, and in Scotland—but by no means confined to either district—there are many farms where the farmhouse itself is very small, but where a number of modern agricultural cottages have been built in which the agricultural labourer is enjoying far better amenities than his employer. I would also remind my hon. Friend that in the North of England it is by no means unusual for farm workers to live in the farmhouse and so long as this particular discrimination exists against a building which is technically a farmhouse though no bigger than a farm cottage neither the farm worker nor the farmer can enjoy the improved accommodation which is their due.

    My hon. and gallant Friend the Member for East Grinstead (Colonel Clarke) and I have deliberately put a figure of £26 rateable value into this Clause. We did so for a definite purpose. That value roughly embraces the three or four-bedroom farmhouse and excludes the bigger one. By putting that ceiling we thought we would enable occupiers of small farmhouses to enjoy minimum reasonable standards of accommodation and, at the same time, would prevent the capital expenditure allowance being given for extravagant and excessive expenditure on much larger farmhouses, which would be unreasonable to ask for.

    I hope that my hon. Friend the Economic Secretary will feel that I have made out a fair and a clear case for the removal of an absurd anomaly between one building of three bedrooms used as a farmhouse and another building of three bedrooms used as a farm cottage, both equally in need of repair and improvement.

    I do not wish to detain the Committee, but I want to emphasise the danger of what I might term capital starvation of the farmhouse in favour of the rest of the farm. That arises from the fact that only one-third of the capital expended on the farmhouse ranks under the section to which we have referred. I know of many cases where the farmer in the old farmhouse has a much lower standard of living than some of the men working on his farm. Again, in the case of a family holding, the family perhaps own the farm, live on it and work it, yet have a much lower standard of existence than agricultural workers in the neighbourhood.

    This is very discouraging to those who wish to see what I think the Chancellor of the Exchequer himself has referred to as the "agricultural ladder" become a real feature of the agricultural life of this country. The agricultural worker who saves a certain amount of money and changes from agricultural worker to the occupier of a small farm finds that, just when he has to risk his hard-saved capital he has also to overcome the opposition of his wife, who is probably going from a nice, small, service cottage to a much older house with a much lower standard of amenity. That definitely deters the agricultural worker from the course I have outlined.

    If it is thought that of these small farmhouses two-thirds have nothing to do with the farm at all, I am really amazed. One has only to go into some of the small farmhouses to find that one of the back rooms is the dairy, where the wife spends a great deal of her time. In the cellar such things as seed potatoes are stored, and there may be other seeds in the attics. The front room is the office, where the farmer for at least a good deal of the evening fills in forms, writes his letters and so on.

    The farmhouse is really an essential part of the farm equipment. I hope that this new Clause will be seriously considered, because I believe that as a result of the present legislation small farmhouses are deteriorating below the level of the workers' cottages surrounding them.

    As my hon. Friend the Member for Windsor (Mr. Mott-Radclyffe) and my hon. and gallant Friend the Member for East Grinstead (Colonel Clarke) are aware, my right hon. Friend the Chancellor of the Exchequer takes a particular interest in the problems of the agricultural industry. He believes, for example, that the investment allowance provision which he introduced this year should be of considerable assistance to the farming industries generally. It is also true, as my hon. Friends have pointed out, that the small farmer often has to face not only economic but personal difficulties.

    I very much agree with my hon. Friend the Member for East Grinstead regarding the importance of the small farmer as part of the general agricultural picture. I hope, therefore, that my hon. Friends will believe me when I say that we have considered with great care what they have put forward in this new Clause, but I must say that I find difficulties in detail—and I am afraid in principle—which make it impossible for us to accept the Clause.

    I should perhaps mention, first of all, one or two of the difficulties of detail which arise. For example, the test of rateable value which is proposed would lead to a number of difficulties. For example, it would have very little meaning at all in Scotland, whereas in England and Wales rating valuation varies a good deal. I think it would lead to considerable unfairness between one case and another. Introducing the level of £26 is bound to create unfairness to those people immediately below and immediately above the limit.

    There are those definite objections in detail to the proposal, but the objections in principle are overwhelming. The point really is that writing off of farm buildings used for the purposes of farming is a normal part of our Income Tax structure and that applies to barns, fences and other works, but a farmhouse is a building which functions as a dwelling-house and as part of the capital equipment of the farm. No other dwelling-house, as a dwelling-house, is the subject of a capital allowance.

    Lord Waverley, during the Committee stage of the Income Tax Act, 1945, said, when he was Chancellor of the Exchequer:
    "The farmhouse has to be treated on a different footing from farm buildings in general because, in fact, it serves a dual purpose. It is a dwelling-house and it is the headquarters of a particular unit in the farming industry."—[OFFICIAL REPORT, 15th May, 1945; Vol. 410, c. 2377.]
    One must recognise the force of this argument, that in so far as a farmhouse is used as part of the capital equipment of a farm, it is right and proper that there should be a deduction for Income Tax purposes, but in so far as it provides dwelling accommodation I cannot see that there is any more of a case for Income Tax deduction than there is for a dwelling-house occupied by someone engaged in other business.

    It is true that deductions are allowed in respect of farm cottages, but it would be right to say that the farm cottage is in a different category because the cottage is provided by the farmer as part of the necessary capital equipment of his farm, and expenditure which he incurs on the farm cottage is definitely expenditure incurred wholly for the purpose of earning his farm profit, whereas expenditure incurred in providing himself with a farmhouse is not incurred for the purpose of earning a farm profit.

    There is the question of whether one-third is a proper proportion. When taking a proportion of this kind one has to be arbitrary, and my hon. Friend has made the point that in small farmhouses in particular the accommodation is extremely limited. But we feel that on the evidence we have—and we have a fair amount of evidence of this kind—the proportion of one-third is fair. When we come to assess the farmer's income for the purposes of Schedule D assessment, then it is necessary to make a deduction for the annual value or rent of the farmhouse, and we find, in practice, that although no fraction is laid down by statute in respect of Schedule D, in practice the amounts that we allow rarely exceed one-third. They sometimes come to substantially below one-third. It appears from detailed information which we have that in practice sometimes less than one-third of a farmhouse is used for farming purposes, but more than two-thirds of it is used for dwelling purposes.

    We have studied this proposal with a great deal of care and we believe that it is not possible to make out a case for allowing a tax deduction in respect of capital expenditure on the portion of a farmhouse which is really a dwelling-house. The principle as enunciated by Lord Waverley, then Sir John Anderson, in 1945, has stood the test of time, and while I recognise the concern which my hon. Friends feel, I cannot help feeling that it has worked, on the whole, fairly as between taxpayer and taxpayer.

    I hope my hon. Friends will believe, when I say we cannot accept this proposal, that it is not for lack of consideration or for lack of concern for the farming industry, but because we do not feel that it would be just between taxpayer and taxpayer to introduce this proposal.

    I very seldom disagree with my hon. Friend the Economic Secretary, but on this occasion I should like to put another point of view. He and the Financial Secretary as well as the Chancellor of the Exchequer all have the disadvantage of living in the South of England, and they are probably not as familiar as I am with conditions in the North of England. There are in this country about 300,000 or 400,000 farmers, and the figures which the Ministry of Agriculture and the Board of Inland Revenue supply indicate that by far the greater number of farmers employ no farmworkers at all but live in a very small farmhouse and, with their families, do the whole work on the farm. At least three-quarters of the farms are within that category, and I believe the figure to be rather higher.

    8.15 p.m.

    I should like to take my hon. Friend the Economic Secretary round a great many small farmhouses in the North of England. It has been my duty to go round very many of them, and I am familiar with the details of at least 50 or 60 farmhouses of this sort in that part of the country, so that I know what I am talking about. I could show the Economic Secretary small farmhouses with not more than three or four small bedrooms occupied by a working farmer and his family. Those farmhouses are falling far below the condition in which they ought to be, and that is largely because of this particular discrimination from which they suffer.

    It is possible for a cottage to be built or re-equipped for a farm worker, and for the advantage of this Section to apply to that work. But when it comes to a farm cottage which is designated a farmhouse, although it is nothing more than a very old farmhouse with none of the amenities which many hon. Members feel are wholly necessary, it is not permitted to take advantage of the Section. I assure the Economic Secretary that until, this change is made, farmhouses in the North and West of England will be far behind the standards to which they ought to be brought.

    The cost of modernising an old farmhouse is very considerable these days. It entails installing modern heating ranges, bathrooms, electricity, and so on. These are very great burdens on the small owner and on the owner with a large number of these farmhouses to deal with. I do not think it is fair to say that a cottage is more a part of the farm capital than a small farmhouse. I make no claim for the larger farmhouse. Of course, if a man has a farmhouse with seven or eight bedrooms, that comes in an entirely different category. But the farmhouse with three or four bedrooms does fit into this picture.

    The figure of £26 rateable value was put forward as a difficulty by the Economic Secretary. If he finds that is a difficulty because of the different rating system in Scotland, I should like to consult him and propose some method of getting over that difficulty, because I can think of several methods. If he were to base his differential on the number of bedrooms, that would be one suitable method, and I have no doubt that there are other criteria which could be used.

    I do not know whether hon. Members agree with me, but I consider that the small farmer living on his own farm and working the farm with his family has one of the hardest lives in the country. He milks the cows twice a day for seven days a week, whether he is ill or well. He does not have Saturdays and Sundays off. The larger farmer who is able to employ labour finds himself milking the cows on Saturdays and Sundays, but at least he can take Mondays or Tuesdays off. The small farmer never does. I spoke to a small farmer the other day who had lived in the same house where he was born 60 or 70 years ago, and be had never spent one night from home. This is a hard-working section of the community and it is only fair that they should get the same sort of concession as other people in the community.

    I should like to support the remarks made by my right hon. Friend the Member for Blackburn, West (Mr. Assheton). There is great importance in this comparatively small proposal. My hon. and gallant Friend the Member for East Grinstead (Colonel Clarke) emphasised the position of the farming "ladder" and referred to the wives of the small farmers. As my right hon. Friend has said, this is a seven days a week job, and without taking up any more time I express the hope that my hon. Friend the Economic Secretary will give further consideration to this new Clause.

    The hon. Member for Windsor (Mr. Mott-Radclyffe), in moving the new Clause, based his argument on the fact that it would rectify an anomaly in Section 314 of the Income Tax Act, 1952.

    I rise only to point out that there are other anomalies besides the one to which he referred. My hon. Friends and I had tabled two new Clauses which, in our view, would have rectified greater anomalies. Unfortunately for us, those Clauses have not been called. I congratulate the hon. Member on the fact that his Clause has been called and that he has been allowed to put his case to the Treasury. As we have now heard from the Economic Secretary, the Treasury has considered the case.

    This Clause has given the hon. Member an opportunity, which we should have valued had our new Clauses been called, of taking the matter to a division. A number of his hon. Friends are obviously with him and feel very deeply about the matter, and I hope that they will carry their views to the extent of calling a division and expressing them in the Lobby.

    I ask my hon. Friend the Economic Secretary to look at this matter again before Report stage. He said that the proposal contained in the new Clause was likely to cause unfairness. It is likely to remove unfairness and not cause unfairness as between the small farmhouse and the farm cottage. They are indistinguishable for many purposes.

    It is frequently the custom in the North of England for farm workers to live in the farmhouse. That is not altogether a popular system, but we must face the facts as they exist and as they will be with us for a little time yet. Under the existing law, the owner of a farm cottage who wishes to improve it by adding a bathroom and providing other amenities can get full tax relief. On the other hand, if he is carrying out this improvement on a small farmhouse in which one or two farmworkers live, the tax relief is a great deal less, and that is extremely unfair. It is to remove that unfairness in particular that some such provision as has been suggested should be adopted.

    It is very important to maintain the standard of the small farmhouses. By and large, they are on small farms and not on the best land. If we want to maintain full agricultural production in such areas, it is essential that we do what we can to provide the necessary tools for not only the farmer and the farmworker but also for the farmer's wife.

    I should be misleading my hon. Friends if I gave any undertaking that this matter would be reconsidered before the Report stage. However, I can say that my right hon. Friend the Chancellor will study with great care what has been said, and I know that he will be glad to receive from right hon. and hon. Friends further details of these matters and any further suggestions that they can make about alleviating the difficulties of the small farmers.

    I hope that my hon. Friends will be prepared to leave the matter there. I cannot give any undertaking to reconsider the point, because I find the difficulties of principle in the suggestion insuperable. My right hon. Friend is anxious to consider all matters in detail. If my right hon. Friend the Member for Blackburn, West (Mr. Assheton) is inviting me to see something in practice, I hope I shall have the opportunity of accepting his invitation.

    Question put, and negatived.

    New Clause—(Expenses Allowances, &C)

    In subsection (1) of section one hundred and sixty of the Income Tax Act, 1952 (which provides for expenses allowances to be chargeable to tax subject to any claim being made for money expended "wholly, exclusively and necessarily" in performing the duties of the office or employment), the second paragraph of the said subsection (1) shall be amended to read as follows:—

    "Provided that nothing in this subsection shall prevent a claim for a deduction being made under paragraph 7 of the said Ninth Schedule in such form and detail as the surveyor may prescribe in respect of any money expended wholly, exclusively and necessarily in performing the duties of the office or employment."—[Mr. Houghton.]

    Brought up, and read the First time.

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

    The Clause proposes to add a few words to the second paragraph of Section 160 (1) of the Income Tax Act, 1952. It proposes that the paragraph shall be amended to read as follows:
    "Provided that nothing in this subsection shall prevent a claim for a deduction being made under paragraph 7 of the said Ninth Schedule…"
    Here it is proposed to insert:
    "…in such form and detail as the surveyor may prescribe…"
    That is the end of the new words. The paragraph will then continue:
    "…in respect of any money expended wholly, exclusively and necessarily in performing the duties of the office or employment."
    The background to the new Clause is the rumpus that we have had lately on the subject of directors' expenses and Income Tax. I do not propose to go into the details of the case about which there was a complaint by the Institute of Directors and which was the subject of an apology by the Board of Inland Revenue conveyed in a letter to Brigadier-General Sir Edward Spears by the Financial Secretary on 6th May. There has been some correspondence about it in the "Financial Times" since then, and there have been Questions in the House, and, to an extent at all events, I think that the facts of that case are now known. Anyway, I am satisfied that I know the full facts.

    The inspector of taxes concerned in that case is a member of the Inland Revenue Staff Association, of which I am the general secretary, and, as was his right, he came to tell me all about it from his point of view. Whether or not that apology was justified is not material to our discussion on the Clause, though it was the spark which set off quite a few explosions. The apology from Somerset House was more welcome to a lot of people than if it had come from Moscow.

    Either because it was unexpected or because it was so unusual, the very surprise of it overcame the stolid businesslike qualities of many directors, and they were moved to an emotional reaction. Many of them sat down straightaway during their busy day and wrote letters to the Press. They tell us that they have not got time in their export drive to supply information asked for by the Inland Revenue, but on occasion they find time to write long letters to the newspapers and the professional journals complaining about the treatment which they get from the Inland Revenue.

    Let us take note in this Committee of the fact that there has been a lot of complaint lately from directors of companies and high executives and from their professional advisers about the questions which are being asked by the Inland Revenue on matters concerning benefits in kind and expenses allowances. That is a serious matter, and the Committee ought to consider it in a responsible spirit.

    What has happened to bring about this wave of resentment and hostility towards the Inland Revenue, which is, after all, merely discharging a difficult and unpleasant task imposed upon it by the House of Commons? It is the belief that the Inland Revenue is probably going too far and asking too many questions about too many things. The Institute of Directors, in the evidence which it has given to the Royal Commission on Taxation, has alleged that directors are asked to supply an unnecessary amount of detail, that a claimant has to submit to a searching inquisition and that inspectors make the procedure as difficult and as unpleasant for the claimant as possible.

    These are serious allegations against the wisdom and tolerance of the Inland Revenue authority in discharging their duty.

    8.30 p.m.

    This new Clause is an attempt to recover somewhat the ground which has been lost recently by exchanges which have taken place between the Financial Secretary and the Institute of Directors to give the honest taxpayer some reassurance that this Committee will uphold the law, and to give to the hard pressed Inland Revenue authority a reassurance of our confidence in them—

    Notice taken that 40 Members were not present;

    House counted, and, 40 Members being present—

    8.32 p.m.

    My hon. Friend the Member for Leith (Mr. Hoy) has caused the obligatory attendance of many company directors who are Members of the House. I was glad to see them if only for a brief interval. I have just said what is the purpose of this new Clause. It has to do solely with administration. It does not raise any principle of taxation, because the principle of this matter was settled in Part IV of the Finance Act, 1948, when the House wrote into the Income Tax legislation authority for the taxation of benefits in kind and the treating of expense allowances as perquisites in the case of company directors and in the case also of persons other than directors receiving more than £2,000 a year.

    That was done in 1948, and since then it has been written into the Consolidated Income Tax Act, 1952. I explain that only to clear up any doubt as to whether the provisions of the Income Tax Act, 1952, were, in fact, inaugurated in that year or whether they dated from an earlier time. They do date from an earlier time, from 1948 when there was a Labour Chancellor of the Exchequer.

    None will question the rightness of the principle passed by this House in the Finance Act, 1948, on the Income Tax liability of benefits in kind and expense allowances in the case of company directors and other higher executives, because at that time there was undoubtedly a great deal about the personal expenditure of a good many business men that left much to be explained. The ordinary worker could not understand how it was that, under conditions of heavy and, to some people, penal taxation, many of those in business were able apparently to maintain a standard of life and of personal expenditure which hardly squared with what taxation was supposed to do to personal incomes. There was no doubt that at that time many people were seeking benefits in kind as an alternative to remuneration and were also seeking personal expenses allowances as an alternative to remuneration.

    The reason why it was necessary specially to legislate on these matters was because of the uncertainty of the law regarding the Income Tax liability of benefits in kind and of expenses allowances before that time. There had been rulings of the courts in years past which led generally to the conclusion that benefits in kind were assessable to Income Tax only if they were convertible into money; to be money's worth was not enough, they had to be convertible into money. That was the general belief established by a number of settled cases about benefits in kind, and there were many company directors who were receiving benefits in kind which they could not convert to their personal use, or at least they could not convert into money, and assessments upon which, therefore, under the law as it stood before 1948 were unlikely to be upheld if appeals were made.

    So what the 1948 Act did was to provide that all expenses allowances of company directors and others getting more than £2,000 a year should be treated as perquisites of the office or employment, and that the director or employee should be assessable to Income Tax accordingly. As regards benefits in kind, in Section 161 of the Income Tax Act of 1952 very rigorous conditions were laid down regarding the assessment to Income Tax of living or other accommodation, entertainments, domestic or other services, or all other benefits or facilities of whatsoever nature. No Act of Parliament could go further than that—"of whatsoever nature." And as regards those, it said that they were to be valued and the value of the benefits in kind was to be regarded as having been refunded to the director or the employee concerned and charged to Income Tax accordingly.

    The provisions of Section 160 which deal with expenses allowances, whilst saying that these allowances should be treated as the perquisites of office and added to emoluments for Income Tax purposes, says that
    "nothing in that Section shall prevent a claim being made under paragraph 7 of the Ninth Schedule of the Income Tax Act, 1952, in respect of any money expended wholly, exclusively and necessarily in performing the duties of the office or employment."
    That is to say, if a director or other person covered by those Sections received an expense allowance, he could ask for Income Tax relief on such amount of that allowance as was expended wholly, necessarily and exclusively in the performance of his office, but any balance not so expended obviously formed part of the Income Tax assessment on the person concerned.

    It is that particular paragraph of Section 160 that this new Clause proposes to alter by inserting the words:
    "in such form and detail as the surveyor may prescribe."
    They would remove any doubts about the rights of the surveyor to ask for such information in support of such claim as he thought necessary and just in the circumstances of an individual case.

    In order to complete the picture of explanation, I ought to add that where a company makes payments to a director or provides him with benefits in kind which the company itself certifies are wholly used and expended in the performance of the duties of a director or employee, the surveyor who, in modern parlance is the inspector of taxes, has the power to make what is called a dispensation. That is to say, to the extent that he is satisfied that these payments certified by the company are wholly used and expended in the performance of the duties of the office, he may give straight away a certificate of exemption of these amounts and they would not be taxable on the recipient.

    The only form of which I am aware in this connection—although much has been said about the issue of forms lately—is the one which the Inland Revenue issues to companies asking for a declaration of any such amount paid to directors and others which the companies cannot certify as being wholly and necessarily expended in the performance of the office and which, therefore, may require some inquiry and consideration by the Inland Revenue. That form is called P.11D.

    I hasten to add that the letter "P" does not stand for "persecution." It is a series letter only used for certain forms. Nor does the letter "D" stand for "damned." It refers to directors. This form asks the company or the employer to make a declaration of such expense allowances for 'benefits in kind as are paid to directors or other employees in the higher income ranges which are not the subject of dispensation and which the Inland Revenue, therefore, must know about.

    The new Clause makes no fundamental change either in the obligation of the taxpayer or in the powers of the inspector. It is really a token of confidence in the administration of the Income Tax Act by those entrusted with it and a vote of confidence in Her Majesty's Government in their resolve to uphold the law, which I understand to be the policy of the Exchequer.

    A good deal of nonsense, but quite a lot of good sense, has been written lately about this troublesome matter. I commend to hon. and right hon. Members opposite an article in the "Economist" of 19th June, which I think is the fairest and most balanced comment on this matter that I have read recently, although there was in the "Manchester Guardian" of 23rd June a very helpful and understanding letter, written by a correspondent signing himself "Incognito." In both the article and the letter there is an appreciation of the difficulties of bath the taxpayer and of the Inland Revenue.

    Now the issue is quite plain for the Committee to consider. Are we to uphold the law or are we not? I am sure that the answer would be, "Yes we are." However much hon. Members opposite may have disliked the Sections in Part IV of the Finance Act, 1948—when I was not a Member of the House and cannot therefore say what was the nature of the debate at that time—and however much they disliked what they feared might be the beginnings of some kind of inquisition, it must be acknowledged that those Sections were necessary then and are necessary today.

    8.45 p.m.

    If they were not there I think right hon. and hon. Members opposite would agree that abuses would occur again and that many people would have much more access to the resources of their companies than the great mass of workers lower down, using their incomes to ensure the best arrangements for their remuneration and facilities to enable them to get the best level of wealth they could at the lowest level of tax. That is only natural. The doctrine has been freely expressed by hon. Members opposite that a taxpayer is entitled to make any rearrangement of his affairs open to him in order to lessen the burden of taxation, and that applies to company directors as to anyone else; they are as freely entitled to use their influence as anyone else.

    I am sure it would be agreed that we cannot let these Sections go out of Chapter II, Part IV of the Income Tax Act, 1952. If we cannot let them go but must keep them, they must be applied and administered. The question is, how is that to be done? Here we have to weigh in the balance all those qualities of tolerant yet efficient administration for which our Civil Service is noted throughout the world. Literally, inspectors of taxes, by the powers they have under the Act, could press for every bit of information they thought desirable to enable them to judge matters which come to them for decision, although let us not lose sight of the fact that in the background there are the local commissioners who are the appellant body if any dispute arises between the taxpayer and the local Inland Revenue officers.

    Commissioners are locally appointed and are composed for the most part of persons who fully appreciate all the problems of business directors and others of substantial means. All commissioners of taxes have substantial means, and no one going before the commissioners of taxes could plead that they were not being tried by their peers, for they would be. It is other people who are not quite so certain that they are being tried by their peers, but company directors are not among them.

    Those with whom Chapter II of Part IV of the 1952 Act was concerned can go to the local commissioners of taxes with every confidence that they will get a fair hearing of any complaint they make about unjust treatment by a local inspector of taxes. Many of those who complain attach the whole of the blame to the Inland Revenue and say that it is the Inland Revenue which should mend its ways and which is depriving the taxpayer of a fair deal in this difficult matter.

    Hon. Members may ask what this new Clause will do which is not done already. It would be a token of the right of the inspector in the discharge of his duty to prescribe the form and detail in which he may ask for information regarding expenses allowances and benefits in kind which he must look into if a proper Income Tax assessment is to be made. This does not mean that the law will be administered any more rigorously than in the past. It does not mean that the Inland Revenue will get more vexatious in its dealings with directors than in the past.

    The Chancellor has repeated not only his admiration for the work of this Department, but his determination to uphold it in the reasonable exercise of its duties. I think that everyone will agree that it is simply impossible to do the job which the Inland Revenue has to do without asking questions. These questions must be asked. There is simply no alternative. Information may be given about lump sums and expenses allowances. There may be obvious questions to ask, and a number of things to ask about benefits in kind. Taxpayers must understand why the Inland Revenue is doing what it has to do and how just and fair it is that they should co-operate.

    Take, for example, the case I recently mentioned, of the company director of hotels and shops whose remuneration was 5s. 9d. a week. His firm paid him just enough to buy his insurance stamp. All the rest came out of the firm; his living expenses, his food, his clothing, his travel expenses, his holidays, his children's schooling, his wife's fur coat—everything came out of the firm. He had only 5s. 9d. a week. Clearly, a lot of questions had to be asked about that. Some assessment had to be made of what was the worth of those benefits in kind. It was probably right that he should live on the firm when visiting the hotels or inspecting the shops. But, when he was at home, he should be paying his way like the rest of us. But he was living on the firm.

    In this particular case, I have no doubt, after quite a lot of questions and inquiries, the Inspector of Taxes decided—and it was agreed by the taxpayer's professional adviser—that his personal benefits in kind were worth £2,500 a year. The question asked by the professional adviser was, how was his client to pay the tax? He would be assessed on £2,500 which would include Surtax as well. "My client had no money"—says this professional adviser in a letter to the "Accountant"—"How can he pay? He has gone to his firm, and they say, 'We are not paying. We are paying you no more money, 5s. 9d. is enough for you. You are living on the firm for everything else. You must do the best you can.'"

    The professional adviser was asking all the other professional advisers who read the "Accountant," "What does A do now?" The advice given in the "Accountant" was, first of all, that this was a case for a vigorously conducted appeal—notwithstanding the fact that the professional adviser had agreed that £2,500 was a proper figure. No, a vigorously conducted appeal was called for, and then various suggestions and possibilities—I will not call them loopholes—various possibilities of the situation were explained in a most erudite and technical way.

    I do not know how it will end. Possibly, when the appeal is over, the assessment will be upheld, and this taxpayer, who is getting 5s. 9d. a week and living to the extent of £2,500 a year on the firm, will just turn out his pockets and say, "I cannot pay." It would not be in order for me to pursue the possible sequel to that plea, because the man would then pass out of the hands of the inspector into the equally tender hands of the collector who would, of course, have certain powers either of recovery or of bankruptcy. This is an indication of the sort of thing that can arise.

    I read also in the "Accountant" recently a letter which had been received from an inspector of taxes. It was published in full except that the names of the taxpayer and the inspector were left out. It was presented to the, professional fraternity, and anyone else who reads the magazine, as another outrageous example of the inquisitorial methods of the Inland Revenue.

    Anyone who understands the nature of these cases would realise in a moment that when the inspector inquires about a claim for over £3,000 for car expenses when a man is running four cars, it is not unreasonable to ask the taxpayer whether his wife had the exclusive use of one car. Does anyone in this Committee with four motor-cars deprive his wife of the exclusive use of one, even if they are all on the firm? Any hon. Member who would like to offer evidence for our information on that matter shall have the floor immediately as far as I am concerned, provided he will put all four cars in a common pool to enable my hon. Friends who have not got cars to get home at nights.

    Seriously, however, questions have to be asked. Forms of questionnaire or some other paper device or interview must be gone through in order to get the information. Much of this is done amicably, and agreements are arrived at. I do not want to exaggerate the extent to which this kind of tax avoidance goes on. Many volunteer the information. Most people reply to the questions honestly and truthfully, but there are some who are most difficult to deal with.

    It is for the protection of the honest taxpayer that we must uphold the reasonable exercise of the powers given to the Inland Revenue. If the Committee once departs from that principle, then the whole standard of taxation machinery will begin to decline. We are said to have the most efficient system of direct taxation in the world, and I believe that to be true. There are many other countries where a similar system of direct taxation has proved quite impossible to administer. I venture the opinion that if France had had as efficient a system of direct taxation as this country has, redistribution of incomes and greater social security would have been possible there.

    On a point of order. Is redistribution of incomes a matter which comes within the new Clause?

    I thought that the hon. Member was going a bit beyond the new Clause. We have spent a long time on it already.

    I thought that it was up to the hon. Member who was speaking to illustrate his arguments with reference to wider considerations. Behind the Clause lies a most important principle of administrative efficiency in what we all agree is a difficult and delicate statutory provision. All the time the administration of these Sections of the Income Tax Act is on a knife edge. At any moment the taxpayer can go off the deep end and write a letter to the Chancellor. At any moment temper can give way. Of course, sometimes the officer of the Inland Revenue may find it extremely difficult to maintain his customary calm and dispassionate approach. On the whole, however, I think that without any doubt more complaints are made against Inland Revenue officials and their dealings in this matter than are justified in the circumstances.

    9.0 p.m.

    I trust that the Financial Secretary, when he replies, will take the opportunity of clearing up beyond any further doubt just where the Government stand on this question. Damage has been done in recent weeks. It need not have been done, and as far as possible it should now be repaired. Let us say to all—to those in the Inland Revenue and to taxpayers, honest, indifferent and bad—that this is the law—that it is essential to uphold it and that in the interests of equity of our taxation system reasonable taxpayers will co-operate with reasonable officials and that we put the stamp of approval on what has happened. This will echo the words of the concluding sentence of the article in the "Economist," to which I have referred, which says:
    "The real question is whether the law as it now stands is administered fairly and reasonably. To that question, the fair answer seems to be Yes."

    It says:

    "the fair answer seems to be a qualified Yes"
    if the hon. Member quotes it correctly.

    "To that question, the fair answer seems to be a qualified Yes."
    I thank the hon. Member.

    I have acknowledged that I did not say the word "qualified." Anyhow, the "Economist" says: "a qualified Yes." I do not think there is a big difference. The Administration has its job to do, and I am sure that we need not introduce the word "qualified."

    I question whether in the circumstances the word "qualified" need be introduced.

    Let the Financial Secretary say what is his opinion of the Administration, and I hope we may then get from him the mark of approval on the Administration which does not even include the word "qualified." There is nothing seriously wrong with "qualified" if those who wish to view it that way use that word. It is a most difficult problem to do it to the absolute satisfaction of everybody, but as to the general fairness of the administration I think there can be no serious doubt.

    As I understood the hon. Member for Sowerby (Mr. Houghton) during his speech, which did not err on the side of brevity, his proposal, as he explained it, would not make any substantial alteration in the existing law. Indeed, he did not put it forward on those grounds.

    Three times the hon. Member defended his proposal on what, I think, I can fairly describe as psychological grounds. He used the phrases "a token of confidence," "an attempt to recover ground which has been lost," and "a vote of confidence." As I understand the hon. Member—I do not think I am misrepresenting him—his purpose is not to remedy what he would regard as a manifest defect in the legal powers of the Revenue in this respect. It was substantially to establish the general confidence, to demonstrate, to give a demonstration of, to discuss the general confidence of this Committee in the administration of our tax law.

    So far as that aspect is concerned, it can be dealt with in a moment. My right hon. Friend the Chancellor of the Exchequer, as the hon. Member for Sowerby acknowledged, went out of his way the other day to express his confidence in the way in which what the hon. Member rightly described as "this difficult and complex task" was discharged. I should certainly wish to say that, over this infinitely difficult field which inevitably arouses strong feelings, we are singularly fortunate in this country in having our very complex law of taxation administered by a body as efficient and as able as the Board of Inland Revenue.

    Where I would differ from the hon. Gentleman is in the suggestion made in the earlier part of his speech that that confidence is in any way shaken by the fact that when, as must always happen in any great organisation, it is thought that one particular member of that staff has gone too far, the position is weakened. I would say to the Committee in all sincerity that all the reasonable organisations with which I have been associated are distinguished more by their willingness to admit a rare error than by their obstinate attempts to justify everything they have ever done in all circumstances.

    I agree entirely with the hon. Gentleman that the vast majority of these cases are cases with which hon. Members are never troubled, because they are settled amicably and in the most friendly way between the local inspector on the one hand and the taxpayer on the other. If the purpose of the new Clause is to elicit once more an expression of the confidence of Her Majesty's Government in the administration of the Inland Revenue, that assurance is given here and now.

    It is really quite a different thing to write a token or a vote of confidence into the law, and we have, therefore, considered, as this is put forward as projected legislation, whether it would, in fact, have any effect at all. Whatever the desire to produce a token or vote of confidence may be, this Committee does not want to write into an Act of Parliament something that is unnecessary, and that, as far as the legislative work of the Committee is concerned, would be enacting a fact. I would ask hon. Members who are less familiar than the hon. Member for Sowerby with the way in which the matter works to consider what the existing provision is, in order to make up their minds whether there is any purpose to be served by putting these words into the existing law.

    Let us see, in the first place, what it is that the hon. Member proposes to do. He proposes to add in the middle of the proviso to what is now Section 160 of the Income Tax Act, 1952—which is a consolidation statute, consolidating the earlier provisions—at the point after the reference to paragraph 7 of the Ninth Schedule, in which it is enacted that claims can be made for a deduction in respect of money "wholly, exclusively and necessarily" spent in performing the duties of the office, the words—
    "in such form and detail as the surveyor may prescribe."
    Let us see what effect, if any, that would have. We can best test it by going through what actually happens. In the first place, under the provisions brought into force a couple of years ago, the form to which the hon. Member quite accurately referred—form P.11D—is served on the company which is the employer of the director or executive over £2,000 a year. On that form, the company is required to give information, among other things, about expenses, payments, and benefits in kind to directors or such employees, sums paid in satisfaction of expenses incurred by the director or employee, the cost of providing benefits in kind or facilities or assets transferred, and, similarly, fees, bonuses, commissions, etc. The company is required under penalty to provide that information, and, that information having been provided, the next step is to assess this as income. Then it is for him to explain that these monies were expended wholly, necessarily and exclusively in performing his duties.

    The onus is upon the director to establish this, and to satisfy the inspector that the money was paid to him for those purposes and expended for those purposes. That can be done in a wide variety of ways. As the hon. Member for Sowerby said, in certain easy cases what are called "dispensations" are given, to prevent the inspector and the director concerned going through a lot of formalities in regard to expenses which are well-known and which are repeated year after year. Nobody wants to interfere with that. On the other hand, the amount of information that the inspector may require before he is satisfied that the director has discharged the onus which is upon him that the moneys were paid to him for those expenses will vary from case to case.

    Consider the case of a director of a reputable and well-known public company who, on a salary of £5,000, claims £30 paid in respect of travelling expenses. I doubt whether any very close detail would be required in the normal case. Take another case, nothing like so extreme as that which the hon. Member for Sowerby chose, of a director of a private company who, on a salary of £1,000, is running a figure of £5,000 for expenses. I have no doubt that very considerable detail would generally, and properly, be asked for. Be the information required great or small, it is still for the taxpayer, in this case the director, to establish to the satisfaction of the inspector that the moneys come within the Section.

    The inspector can ask for such information as he likes, and if the information is not furnished he has the very easy remedy of simply disallowing the claim and of assessing the director to tax. Naturally, the matter does not stop there. If the director whose expenses are disallowed objects to that decision, one of two things happens: either he acquiesces reluctantly or enthusiastically and pays the tax on that amount, or he appeals to the Commissioners under the procedure to which the hon. Member for Sowerby referred. I agree with the hon. Member that the people concerned get a very fair deal before the Commissioners. I am glad to pay that tribute to them. If the matter goes to the Commissioners it is still for the taxpayer to establish his case. Otherwise, he is taxed on that amount.

    Looking at the picture in that light, a proposal formally to enact that the claim shall be made in such form and detail as the surveyor may prescribe is unnecessary. The right hon. Gentleman opposite asked what was the objection to it in that case, and I will deal with that point. If something is unnecessary, it is wrong to insert it in legislation. After all, those who have to construe these things have said time and again that in construing them they try to attach some importance to the intentions of this House.

    9.15 p.m.

    On the right hon. Gentleman's own interpretation, would it be doing more than clarifying the present law? Do we not often clarify Clauses in Bills?

    That is done for the avoidance of doubt, but there is no doubt here at all to avoid. I would say in all seriousness that it is really a novel argument to say, "Admittedly it will have no effect, but it will do no harm."

    As I was saying when the right hon. Gentleman intervened, there are people outside who have to seek to construe the legislation which this House enacts, and perhaps particularly in financial matters that is something of no little difficulty. If we are really going to put into a statute words which we deem to be unnecessary, we are really quite deliberately adding to the confusion of legislation.

    For that reason, I suggest that it would be a wrong thing to do, and that we really cannot justify doing it, because, as the right hon. and learned Member for Neepsend (Sir F. Soskice) knows so well, when a proposal is put into an Act which is admitted to be meaningless, it is not a fact which can be drawn to the attention of the court. We have to try to attach some meaning to it. Therefore, I say that if this were a proposal which had some practical effect, I would be very happy to consider it on its merits.

    It would help me very much if the right hon. Gentleman would point to the provision in the Income Tax Act, 1952, which in terms empowers the surveyor to prescribe the form and detail upon which claims for expenses may be made? Would he be so good as to say which is the provision?

    I think that the right hon. and learned Gentleman must have failed to apprehend my argument, which is no doubt my own fault, from the very fact that he puts that question. The sole point which I was putting to the Committee was that it was quite unnecessary to have such a power because we are here dealing with a case in which it is necessary for the taxpayer to satisfy the surveyor. If it is necessary for the taxpayer to do that, then it really seems to me to be adding a completely unnecessary thing to say that he must be bound to satisfy the surveyor in a particular form prescribed by him.

    Let us look at the matter as one of common sense. I am trying to satisfy the right hon. and learned Gentleman who has asked for information in whatever form he likes. If I am trying to satisfy him, I try to give him the information, and it really is not necessary for him to be armed, in addition, with powers to prescribe the particular form in which I furnish it. He will ask the question, and I shall have the best possible incentive for trying to answer it.

    For that reason, it really seems to me that it is unnecessary to prescribe this thing because these words are inserted nowhere else, as the right hon. and learned Gentleman knows perfectly well. As I understood him, the hon. Member for Sowerby did not suggest that the inspectors were handicapped in any way by the fact that these words were not inserted. He put it, as the right hon. and learned Gentleman no doubt heard, on a largely psychological basis, with which I have sought to deal.

    I suggest, with respect, that the hon. Gentleman by doing this would not, in fact, put the inspectors in any stronger position than they are at present for obtaining such information as may be required to establish that this is a bona fide claim. In those circumstances, it really would not be in accordance with the responsibilities of this Committee or of the Government for us to add words which really are not necessary, and which add nothing to the powers of the officials concerned.

    We have listened to the kind of speech at which the Financial Secretary has shown himself very adept. He skilfully skirted round the point of substance made by my hon. Friend the Member for Sowerby (Mr. Houghton) in a speech which, according to the Financial Secretary, did not err on the side of brevity. I am sorry that he said that. I thought it was certainly not a sentence too long, and perhaps I may say to the Financial Secretary that were I to point out the respects in which his own oratory errs I would be pointing to features so well known to the House as to be hardly worth while recapitulating.

    May I get back to the main point of this debate? It is a debate we have had every year for some time now because, as the Financial Secretary himself said last year, the evasion of the provisions as to legitimate deduction of expenses is a serious problem. When we were in office we introduced the provisions, to which my hon. Friend referred, in Chapter II, Part VI, of the Income Tax Act, 1952. We did it because it was generally recognised then, as it is generally recognised now, that expenses are claimed which are not admissible, and by half untruths, if not complete untruths, a deduction is procured in respect of those expenses.

    I should have thought that the Financial Secretary would be ready to accept that if there is one thing which exasperates respectable taxpayers it is to see the obvious evasion which goes on, as anyone can see, in the streets, restaurants and elsewhere. One has only to see the new, expensive, flash cars being driven up and down the streets, and the enormous amounts paid for meals in restaurants, which obviously cannot be paid for out of net income and which are not, whatever pretence the Financial Secretary may seek to set up, paid for except out of expenses which are not, or ought not to be deductable.

    When I say that that is most exasperating, I must say that I do not charge directors, as directors, with doing that sort of thing. I say that directors, for the most part, are people as respectable as other taxpayers. Respectable directors, who are the vast majority, must feel absolutely furious to see other directors letting them down by abusing the expenses provisions. Some taxpayers come under Schedule D and others under Schedule E, but if there is one thing which infuriates not only people earning wages, teachers taxed under Schedule E, architects and others and the great body of respectable directors who do their level best to comply strictly with the Income Tax provisions, it is to see this constant abuse which is practised by—I am quite certain—a small minority of taxpayers and which is not stopped, or adequately stopped, by the Government.

    We revert to the subject year after year, because we think it our duty to 4he vast body of respectable taxpayers—I do not mind whether they are directors, Schedule E or Schedule D taxpayers—who try to obey the law and who are driven to the point of exasperation by seeing these constant abuses going on under their very noses. That is why we come back to the subject this year. So long as this goes on, and so long as we hear the type of com placent speech from Ministers to which we have just listened, we feel that it is our duty to go on prodding the Government and trying to get them to take action to stop, or to diminish, this abuse.

    As I say, when we were in office we devised the sections which are under discussion at the moment. They are sections which, broadly speaking, require that sums paid by companies to directors and highly-paid executives as expenses shall be taxable subject to this: that if the taxpayer—executive or director—in question can affirmatively satisfy the surveyor that he has a legitimate claim to deduct a payment that is allowed. We introduced a complicated set of provisions designed to achieve that end.

    The fact is—and the evidence of one's own eyes tells one—that those provisions have not succeeded. Therefore, my hon. Friend, in a speech which was not one second too long having regard to the importance of the subject with which he was dealing, makes a new proposal to enable the Government to press on still further in an endeavour to stop up this leak of the nation's revenue into the pockets of persons who have no right to it.

    The Financial Secretary did not say whether he, recognises that there is a problem or not. He skirted round it. He avoided dealing with the point of substance and went into a whole rigmarole of form, and rather sketchy form at that. He said first of all—and I am within the recollection of the Committee—that this proposal does not make any change in the existing law. I suppose he had in mind Section 31 of the Income Tax Act, 1952, which gives certain powers. But when I ventured to intervene, and he finally gave way, and I asked him if he could point to any provision in the Income Tax code which enables the surveyor to say, as this proposal does, that expenses are not to be claimed unless they are formulated in accordance with a form and by reference to details which the surveyor is to be entitled to prescribe, he could not point to any such provision in the Income Tax code and he agreed that there was not one.

    He then changed his ground and said that all that he had been maintaining was that this provision was not necessary. Well, it is our best effort. It is what we suggest. If the problem still persists—and I ask the Financial Secretary to contradict me if he really thinks it does not persist—let the Government, of which he is such a distinguished member, take some steps themselves to try to mitigate the loss.

    What we really deplore is this completely supine attitude, both physically and intellectually at the moment, which the Financial Secretary—still more supine now—adopts towards this really very distressing problem which involves, as I say, so much bad feeling among so many millions of honest taxpayers. What my hon. Friend said—and he speaks with more experience on this subject than anybody else in the Committee—was that we could not pretend that the proposal was a panacea. It is obviously not that. We do not pretend that if these powers are given to the surveyor, as if by a stroke of the wand this abuse will stop, but this proposal does provide a power which does not exist at the moment.

    The Financial Secretary said that at the moment the onus is on the taxpayer to make good his claim to deduction of expenses. Of course, it is in law, but I should have thought it was the experience of most people that in practice what happens is that a large claim for expenses is put in. It is unspecified. No detail is given, and then a long wrangle starts between the surveyor and the taxpayer, the surveyor writing letters and endeavouring in vain to ascertain the details, until at long last the unfortunate surveyor is almost overwhelmed with paper and is constrained to allow more than he ought to allow literally to get to some kind of finality in the matter.

    If the surveyor can say, "If you wish to put forward these claims—if, for example, you wish to deduct the cost of running six motor cars and want to have a claim in respect of the expense of running them, you must say what the six motor cars are used for, what the mileage is for each for business purposes "—if he is entitled to say that that kind of question is to be answered at the outset by the taxpayer who claims the expense, then we should be much nearer to getting something like machinery that will come nearer to working. At least, when the surveyor gets the claim he will have it in a pretty particularised form. At the moment, he very often simply gets a lump sum, and it is for him to try to ferret out the details. I should have thought that very often it is next to impossible to do so, especially when one gets unco-operative taxpayers.

    9.30 p.m.

    The Financial Secretary says that the surveyor's remedy is easy and that all he has to do is to disallow the claim. It is far from easy. That type of taxpayer is very persistent. The more respectable taxpayers do not find themselves in that situation because they do not put forward that type of claim. It is the somewhat arrogant and often quite unscrupulous taxpayers who get away with this kind of thing. The Opposition think it is high time the Government did something to stop it.

    I do not want to incur the reproof that my hon. Friend quite improperly incurred from the Financial Secretary, and, therefore, having restated the point which apparently the Financial Secretary did not comprehend, although it was very clearly stated by my hon. Friend, I hope that we shall have a better answer from the Financial Secretary if he proposes to intervene in the debate again. If he does not intervene again, I hope that my hon. Friends will mark by going into the division Lobbies their sense of keen displeasure at the attitude which the Financial Secretary has adopted towards the very reasonable proposal which has been made to deal with a very urgent problem.

    I rise only because the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) was courteous enough to observe that, in his opinion, in my earlier observations I did not deal with what he was pleased to call the point of substance. I do not want to waste the time of the Committee by recalling the earlier debate, but the right hon. and learned Gentleman will know well that his hon. Friend the Member for Sowerby (Mr. Houghton) raised in substance two psychological points on this proposal. I dealt with them at some length, and I do not propose to repeat myself.

    However, the right hon. and learned Gentleman introduced the general question of tax avoidance or evasion and complained, a little unfairly I think, that I had not anticipated him by dealing with the general topic. As he said, he and his right hon. Friend have in different forms, and in different forms of words, raised these points each year, and we have sought to deal with them on their merits.

    The right hon. and learned Gentleman asked me whether we are concerned to prevent tax avoidance or evasion. As he knows perfectly well, the answer is that we are But then the right hon. and learned Gentleman, admitting that his own proposal really would not make much difference, said that it is up to the Government to propose something else. That suggestion springs from the attitude of mind on the other side of the Committee with which most hon. Members on his side of the Committee profoundly disagree. It is the attitude of mind that one must resort to legislation to deal with almost every problem.

    The right hon. and learned Gentleman's suggestion was that, if anything was wrong, it was incumbent upon us either to accept his proposals for legislation or ourselves to introduce a legislative project. I profoundly disagree. As I said during last year's debate, I believe that,

    Division No. 183.]


    [9.36 p.m

    Acland, Sir RichardCrosland, C. A. R.Grey, C. F.
    Adams, RichardGrossman, R. H. SGriffiths, David (Rother Valley)
    Albu, A. H.Cullen, Mrs. AGriffiths, Rt. Hon. Jamas (Llanelly)
    Anderson, Frank (Whitehaven)Daines, P.Hale, Leslie
    Awbery, S. S.Dalton, Rt. Hon. H.Hall, Rt. Hon. Glenvil (Colne Valley)
    Bacon, Miss AliceDarling, George (Hillsborough)Hamilton, W. W.
    Baird, J.Davies, Ernest (Enfield, E.)Hannan, W
    Balfour, A.Davies, Harold (Leek)Hardy, E. A.
    Barnes, Rt. Hon A JDavies, Stephen (Merthyr)Hargreaves, A.
    Bartley, Freitas, GeoffreyHarrison, J. (Nottingham, E.)
    Bellenger, Rt.Hon. F. JDeer, G.Hastings, S.
    Bence, C. R.Delargy, H. JHayman, F. H.
    Benn, Hon. WedgwoodDodds, N. N.Henderson, Rt. Hon A. (Rowley Regis)
    Benton, G.Donnelly, D. L.Herbison, Miss M.
    Beswick, F.Driberg, T. E. N.Hewitson, Capt. M
    Bevan, RI. Hon. A (Ebbw Vale)Dugdale, Rt. Hon. John (W. Bromwich)Hobson, C. R.
    Bing, G. H. C.Ede, Rt. Hon J. C.Holman, P.
    Blackburn, F.Edelman, M.Holmes, Horace
    Blenkinsop, A.Edwards, Rt. Hon. John (Brighouse)Houghton, Douglas
    Blyton, W REdwards, Rt. Hon. Ness (Caerphilly)Hudson, James (Ealing, N.)
    Boardman, HEvans, Albert (Islington, S.W.)Hughes, Emrys (S. Ayrshire)
    Bottomley, Rt. Hon A. GEvans, Edward (Lowestoft)Hughes, Hector (Aberdeen, N.)
    Bowden, H. WEvans, Stanley (Wednesbury)Hynd, H. (Accrington)
    Bowles, F. G.Fernyhough, E.Hynd, J. B. (Attercliffe)
    Braddock, Mrs. ElizabethFienburgh, W.Irvine, A. J. (Edge Hill)
    Brockway, A. F.Finch, H. J.Irving, W. J. (Wood Green)
    Broughton, Dr A. D DFletcher, Eric (Islington, E.)Isaacs, Rt. Hon. G. A.
    Brown, Rt. Hon George (Belper)Follick, M.Janner, B.
    Brown, Thomas (Ince)Foot, M. M.Jay, Rt. Hon. D. P. T.
    Butler, Herbert (Hackney, S.)Forman, J. C.Jeger, George (Goole)
    Callaghan, L. JFraser, Thomas (Hamilton)Jeger, Mrs. Lena
    Champion, A JFreeman, Peter (Newport)Jenkins, R. H. (Stechford)
    Chetwynd, G RGaitskell, Rt. Hon. H. T. N.Johnson, James (Rugby)
    Clunie, J.Gibson, C. W.Jones, David (Hartlepool)
    Coldrick, WGlanville, JamesJones, Jack (Rotherham)
    Collick, P. HGooch, E. G.Jones, T. W. (Merioneth)
    Cove, W. G.Gordon Walker, Rt. Hon. P C.Keenan, W
    Craddock, George (Bradford, S.)Greenwood, AnthonyKenyon, C.

    in general, the legal powers for tax enforcement in this country are adequate, and I believe that the remedy for such abuses as exist—I do not think that they exist on any great scale, but I am not concerned to deny that they do exist—is not by piling additional legal sanctions upon the Executive but by sensible and steady administration. I believe that the fact that the Inland Revenue have succeeded in overcoming many of the arrears of work which presented to them very great problems in the post-war years is enabling steadier and fuller examination to be given, and even better administration.

    Therefore, I would say to the right hon. and learned Gentleman that, in rejecting his proposals for legislation and in offering under this head no proposals for legislation ourselves, we are certainly not suggesting that we do not concern ourselves very fully with this problem. We believe that it is best tackled in the way in which we are tackling it, by steady and sensible administration.

    Question put.

    The Committee divided: Ayes, 242; Noes, 279.

    Key, Rt. Hon. C. W.Paling, Will T. (Dewsbury)Stokes, Rt. Hon. R. R.
    King, Dr. H. M.Palmer, A. M. F.Strachey, Rt. Hon. J.
    Kinley, J.Pannell, CharlesStress, Dr. Barnett
    Lawson, G. M.Pargiter, G. ASummerskill, Rt. Hon. E.
    Lee, Frederick (Newton)Parker, J.Sylvester, G. O.
    Lee, Min Jennie (Cannock)Paton, J.Taylor, Bernard (Mansfield)
    Lever, Harold (Chestham)Peart, T. F.Taylor, John (West Lothian)
    Lever, Leslie (Ardwick)Plummer, Sir LeslieTaylor, Rt. Hon. Robert (Morpeth)
    Lewis, ArthurPopplewell, E.Thomas, George (Cardiff)
    Lindgren, G. S.Porter, G.Thomas, Ivor Owen (Wrekin)
    Lipton, Lt.-Col. M.Price, J. T. (Westhoughton)Thomson, George (Dundee, E.)
    Logan, D. G.Price, Philips (Gloucestershire, W.)Thornton, E.
    MacColl, J. E.Proctor, W. T.Timmons, J.
    McGhee, H. G.Pryde, D. J.Tomney, F.
    McGovern, J.Pursey, Cmdr. H.Usborne, H. C.
    McInnes, J.Rankin, JohnViant, S. P.
    McKay, John (Wallsend)Reeves, J.Wallace, H. W.
    McLeavy, F.Reid, Thomas (Swindon)Warbey, W. N.
    MacMillan, M. K. (Western Isles)Raid, William (Camlachie)Watkins, T. E.
    MacPherson, Malcolm (Stirling)Robens, Rt. Hon. A.Weitzman, D.
    Mainwaring, W. H.Roberts, Albert (Normanton)Wells, Percy (Faversham)
    Mallalieu, E. L. (Brigs)Roberts, Gorenwy (Caernarvon)Wells, William (Walsall)
    Mallalieu, J. P. W. (Huddersfield, E.)Robinson, Kenneth (St. Pancras, N.)Wheeldon, W. E.
    Mann, Mrs. JeanRogers, George (Kensington, N.)White, Mrs. Eirene (E. Flint)
    Manuel, A. C.Ross, WilliamWhite, Henry (Derbyshire, N.E.)
    Marquand, Rt. Hon. H. A.Royle, C.Wigg, George
    Mason, RoyShackleton, E. A. A.Wilcock, Group Capt. C. A. B.
    Mayhew. C. P.Shawcross, Rt. Hon. Sir HartleyWilkins, W. A.
    Mellish, R. J.Shinwell, Rt. Hon. E.Willey, F. T.
    Messer, Sir F.Short, E. W.Williams, David (Neath)
    Mikardo, IanShurmer, P. L. E.Williams, Rev. Llywelyn (Abertillery)
    Mitchison, G. R.Silverman, Julius (Erdington)Williams, Rt. Hon. Thomas (Don V'll'y)
    Monslow, W.Silverman, Sydney (Nelson)Williams, W. R. (Droyleden)
    Morgan, Dr. H. B- W.Simmons, C. J. (Brierley HM)Williams, W. T. (Hammersmith, S.)
    Morley, R.Skeffington, A. M.Willis, E. G.
    Mulley, F. W.Slater, Mrs. H. (Stoke-on-Trent)Wilson, Rt. Hon. Harold (Huyton)
    Noel-Baker, Rt. Hon. P. J.Slater, J. (Durham, Sedgefield)Winterbottom, Richard (Brightside)
    Oldfield, W. H.Smith, Ellis (Stoke, S.)Woodburn, Rt. Hon. A.
    Oliver, G. H.Smith, Norman (Nottingham, S.)Wyatt, W. L.
    Orbach, M.Snow, J. W.Yates, V. F.
    Oswald, T.Sorensen, R. W.
    Padley, W. E.Soskice, Rt. Hon. Sir FrankTELLERS FOR THE AYES:
    Paget, R. T.Sparks, J. A.Mr. Pearson and Mr. Arthur Allen.
    Paling, Rt. Hon. W. (Dearne Valley)Steele, T.


    Aitken, W. T.Butcher, Sir HerbertFord, Mrs. Patricia
    Allan, R. A. (Paddington, S.)Campbell, Sir DavidFort, R.
    Alport, C. J. M.Gary, Sir RobertFoster, John
    Amery, Julian (Preston, N.)Channon, H,Fraser, Hon. Hugh (Stone)
    Amory, Rt. Hon. Heathcoat (Tiverton)Clarke, Col. Ralph (East Grins lead)Fraser, Sir Ian (Morecambe & Lonsdale)
    Arbuthnot, JohnClarke, Brig. Terence (Portsmouth, W.)Galbraith, Rt. Hon. T. D. (Pollok)
    Assheton, Rt. Hon. R. (Blackburn, W.)Clyde, Rt. Hon. J. L.Galbraith, T. G. D. (Hillhead)
    Astor, Hon. J. J.Cole, NormanGammans, L. D.
    Baldock, Lt.-Comdr. J. M.Colegate, W. A.George, Rt. Hon. Maj, G. Lloyd
    Baldwin, A. E.Conant, Maj. Sir RogerGlover, D.
    Barlow, Sir JohnCooper-Key, E. M.Godber, J. B.
    Baxter, Sir BeverleyCraddock, Beresford (Spelthorne)Gomme-Duncan, Col. A.
    Beach, Major HicksCrosthwalte-Eyre, Col. O. E.Gough, C. F. H.
    Bell, Philip (Bolton, E.)Crouch, R. F.Gower, H. R.
    Bell, Ronald (Bucks, S.)Crowder, Sir John (Finchley)Graham, Sir Fergus
    Bennett, F. M. (Reading, N.)Crowder, Petre (Rulslip—Northwood)Grimond, J.
    Bennett, Dr. Reginald (Gospert)Darling, Sir William (Edinburgh, S.)Grimston, Hon. John (St. Albans)
    Bennett, William (Woodside)Davidson, ViscountessGrimston, Sir Robert (Westbury)
    Bevins, J. R. (Toxteth)Deedes, W. F.Hall, John (Wycombe)
    Birch, NigelDigby, S. WingfieldHarden, J. R. E.
    Bishop, F. P.Dodds-Parker, A. D.Hare, Hon. J. H.
    Black, C. W.Donaldson, Cmdr. C. E. McA.Harris, Frederic (Croydon, N.)
    Boothby, Sir R. J. G.Doughty, C. J. A.Harris, Reader (Heston)
    Bossom, Sir A. CDouglas-Hamilton, Lord MalcolmHarrison, Col. J. H. (Eye)
    Boyd-Carpenter, Rt. Hon. J. ADrayton, G. B-Harvey, Air Cdre. A. V. (Macclesfield)
    Boyle, Sir EdwardDrewe, Sir C.Harvey, Ian (Harrow, E.)
    Braine, B. R.Dugdale, Rt. Hon. Sir T. (Richmond)Harvie-Watt, Sir George
    Braithwaite, Sir Albert (Harrow, W.)Duncan, Capt. J. A. L.Hay, John
    Braithwaite, Sir GurneyDuthie, W. S.Head, Rt. Hon. A. H.
    Bromley-Davenport, Lt.-Col. W. H.Eccles, Rt. Hon. Sir D. M.Heald, Rt. Hon. Sir Lionel
    Brooke, Henry (Hampstead)Eden, J. B. (Bournemouth, West)Heath, Edward
    Brooman-White, R. CElliot, Rt. Hon. W. EHiggs, J. M. C.
    Brown, Jack (Govan)Erroll, F. J.Hill, Dr. Charles (Luton)
    Buchan-Hepburn, Rt. Hon. P. G. T.Finlay, GraemeHill, Mrs. E. (Wythenshawe)
    Bullard, D. G.Fisher, NigelHinchingbrooke, Viscount
    Bullus, Wing Commander E. EFleetwood-Heskath, R. FHirst, Geoflrey
    Burden, F. F. A.Fletcher-Cooke, C.Holland-Martin, C. J

    Hollis, M. C.Marlowe, A. A. H.Schofield, Lt.-Col. W.
    Holt, A. F.Marples, A. E.Scott, R. Donald
    Hope, Lord JohnMarshall, Douglas (Bodmin)Scott-Miller, Cmdr. R.
    Hopkinson, Rt. Hon. HenryMaude, AngusShepherd, William
    Hornsby-Smith, Miss M. P.Maudling, R.Simon, J. E. S. (Middlesbrough, W.)
    Horobin, I. M.Maydon, Lt.-Comdr. S. L. C.Smithers, Peter (Winchester)
    Horsbrugh, Rt. Hon. FlorenceMedlicott, Brig. F.Smithers, Sir Waldron (Orpington)
    Howard, Gerald (Cambridgeshire)Mellor, Sir JohnSmyth, Brig. J. G. (Norwood)
    Howard, Hon. Greville (St. Ives)Molson, A. H. E.Snadden, W. McN.
    Hudson, Sir Austin (Lewisham, N.)Monckton, Rt. Hon. Sir WalterSpearman, A. C. M.
    Hulbert, Wing Cdr. N. J.Moore, Sir ThomasSpeir, R. M.
    Hurd, A. R.Morrison, John (Salisbury)Spence, H. R. (Aberdeenshire, W.)
    Hutchison, Sir Ian Clark (E'b'rgh, W.)Mott-Radclyffe, C. E.Spens, Rt. Hon. Sir P. (Kensington, S.)
    Hyde, Lt.-Col. H. M.Nabarro, G. D. N.Stanley, Capt. Hon. Richard
    Hylton-Foster, H. B. H.Neave, AireySteward, W. A. (Woolwich, W.)
    Iremonger, T. L.Nicholls, HarmarStewart, Henderson (Fife, E.)
    Jenkins, Robert (Dulwich)Nicholson, Godfrey (Farnham)Stoddart-Scott, Col. M.
    Jennings, Sir RolandNoble, Comdr. A. H. P.Storey, S.
    Johnson, Eric (Blackley)Nugent, G. R. H.Strauss, Henry (Norwich, S.)
    Jones, A. (Hall Green)Nutting, AnthonyStuart, Rt. Hon. James (Moray)
    Joynson-Hicks, Hon. L. W.Oakshott, H. D.Studholme, H. G.
    Kerby, Capt. H. B.Odey, G. W.Summers, G. S.
    Kerr, H. W.O'Neill, Hon. Phelim (Co. Antrim, N.)Sutcliffe, Sir Harold
    Lambert, Hon. G.Ormsby-Gore, Hon. W. D.Taylor, Sir Charles (Eastbourne)
    Lambton, ViscountOrr, Capt. L. P. S.Taylor, William (Bradford, N.)
    Lancaster, Col. C. G.Orr-Ewing, Charles Ian (Hendon, N.)Teeling, W
    Langford-Holt, J. A.Osborne, C.Thomas, Rt. Hon. J. P. L. (Hereford)
    Leather, E. H. C.Page, R. G.Thomas, Leslie (Canterbury)
    Legge-Bourke, Maj. E. A. H.Peake, Rt. Hon. O.Thompson, Kenneth (Walton)
    Legh, Hon. Peter (Petersfield)Perkins, Sir RobertThorneycroft, Rt. Hn. Peter (Monmouth)
    Lindsay, MartinPeto, Brig. C. H. M.Thornton-Kemsley, Col. C. N.
    Linstead, Sir H. N.Pickthorn, K. W. M.Tilney, John
    Llewellyn, D. T.Pilkington, Capt. R. A.Touche, Sir Gordon
    Lloyd, Rt. Hon. G. (King's Norton)Pitman, I. J.Turner, H. F. L.
    Lloyd, Maj. Sir Guy (Renfrew, E.)Pitt, Miss E. M.Turton, R. H,
    Lockwood, Lt.-Col. J. C.Powell, J. EnochTweedsmuir, Lady
    Longden, GilbertPrice, Henry (Lewisham, W.)Vane, W. M. F.
    Lucas, Sir Jocelyn (Portsmouth, S.)Prior-Palmer, Brig. O. L.Vosper, D. F.
    Lucas, P. B, (Brentford)Raikes, Sir VictorWade, D. W.
    Lucas-Tooth, Sir HughRamsden, J. E.Wakefield, Edward (Derbyshire, W.)
    Lyttelton, Rt. Hon. O.Rayner, Brig. R.Wakefield, Sir Wavell (St. Marylebone)
    McAdden, S. J.Redmayne, M.Walker-Smith, D. C.
    McCorquodale, Rt. Hon. M. S.Rees-Davies, W. R.Wall, Major Patrick
    Macdonald, Sir PeterRemnant, Hon. P.Ward, Miss I. (Tynemouth)
    Mackeson, Brig. Sir HarryRenton, D. L. M.Waterhouse, Capt. Rt. Hon. C.
    McKibbin, A. J.Ridsdale, J. E.Watkinson, H, A.
    Mackie, J. H. (Galloway)Roberts, Peter (Heeley)Webbe, Sir H. (London & Westminster)
    Maclay, Rt. Hon. JohnRobertson, Sir DavidWellwood, W.
    Maclean, FitzroyRobinson, Sir Roland (Blackpool, S.)Williams, Rt. Hon. Charles (Torquay)
    Macleod, Rt. Hon. Iain (Enfield, W.)Robson Brown, W.Williams, Sir Herbert (Croydon, E.)
    MacLeod, John (Ross and Cromarty)Rodgers, John (Sevenoaks)Williams, Paul (Sunderland, S)
    Macmillan, Rt. Hon. Harold (Bromley)Roper, Sir HaroldWilliams, R. Dudley (Exeter)
    Macpherson, Niall (Dumfries)Ropner, Col. Sir LeonardWills, G.
    Maitland, Comdr. J. F. W. (Horncastle)Russell, R. S.Wilson, Geoffrey (Truro)
    Maitland, Patrick (Lanark)Ryder, Capt. R. E. D.
    Manningham-Buller, Rt. Hn. Sir ReginaldSandys, Rt. Hon. D.TELLERS FOR THE NOES:
    Markham, Major Sir FrankSavory, Prof. Sir DouglasMr. Kaberry and
    Mr. Richard Thompson.

    New Clause—(Annuities)

    (1) Where on or after the sixth day of April, nineteen hundred and fifty-four, an individual has purchased an annuity to be payable either for a stated number of years depending on the survival of the annuitant, or during the lifetime of the annuitant, then for purposes of assessment to income tax, each periodical annual payment shall be divided into two parts, as follows:—

  • (a) a part representing the estimated capital content, which shall be exempt from income tax, and
  • (b) the difference, which shall be subject to payment of income tax at the rates in force for the time being.
  • (2) The part representing the estimated capital content shall be calculated by dividing the actual sum paid as the purchase price of the annuity (whether paid in a single payment or as a series of premiums) by the expectation

    of life of the annuitant, as ascertained from a table to be prescribed from time to time by the Treasury.—[ Mr. E. Fletcher.]

    Brought up, and read the First time.

    9.45 p.m.

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

    The object of the Clause is to change the present provision of the law with respect to the treatment for tax purposes of purchased annuities. As the Financial Secretary will be aware, the Clause is inspired by one of the recommendations in the Second Report of the Millard Tucker Committee published in February this year, which deals with the taxation of provisions for retirement.

    This will be the only opportunity that we shall have during discussion of the Bill to comment on this very important Report which one distinguished journal of the Left described recently as being
    "… the most significant social document published in this country since the Beveridge Report."
    It went on to say that whether the Report reveals an equally desirable tendency towards social democracy might be more dubious. There is no doubt that at some time this Committee, or indeed the House of Commons, will have to give most serious consideration to the social implications of the second Millard Tucker Report, which points out the very serious cleavage in the social status of those who enjoy pension rights and those who do not.

    Perhaps the most revealing feature of the Report is that, as a result of the popularity of superannuation schemes, the working population is rapidly being divided into two classes—those who are dependent in their retirement on National Insurance schemes, and those who enjoy the infinitely greater benefits that are obtained from the multiplicity of pension schemes provided by employers. If the main recommendations of the Committee are implemented, they will produce greater uniformity in the benefits obtained by the latter class, and to that extent one of the results will be to aggravate to an even greater degree the rift between the class of persons who enjoy superannuation benefits of one kind or another and those who do not.

    In moving the Second Reading of the Clause, it would not be right for me to venture any further into a general discussion of the very important questions which, sooner or later, will have to be debated by the Committee. I can quite understand and sympathise with the statement which the Chancellor of the Exchequer made in his Budget speech, when he felt compelled to say that because the Report was published only in February of this year he had not yet had time to reach any conclusions on the main issue involved.

    I feel very strongly that the specific and limited object which it is sought to be achieved by the new Clause, dealing with the tax treatment of purchased annuities, is a relatively simple matter which can be segregated from all the other recom mendations of the Report. But the subject matter of the Clause seems to me urgent, and I hope that we shall find that it is non-controversial and that the Clause will be accepted by the Government.

    This recommendation arises because my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), very shortly after assuming the office of Chancellor of the Exchequer, gave a direction which brought this subject within the terms of reference of the Millard Tucker Committee. The Committee will be aware that, as the law stands at present, the basic rule is that an annuity is subject to tax in the hands of the recipient. In view of that, it is perhaps not unnatural to find that the Millard Tucker Committee said, in paragraph 477, that this matter was the subject of more representations to it than any other subject.

    The present position is highly anomalous. Basically, any annuity purchased by an annuitant is subject to Income Tax. It is perfectly true that there has been a variation in recent years of that basic provision because the Court of Appeal decided that if an annuity were purchased, not on the life of the annuitant but for a number of years, the annuity received was taxable only in so far as it represented an interest content and that the part of the annuity referable to the repayment of capital cost of the annuity escaped taxation. Some doubt was thrown on that decision by a subsequent decision of the Court of Appeal but, nevertheless, the result of the earlier decision was that there has grown up, as the Financial Secretary will be aware, a rather complicated system whereby those who desire to purchase an annuity purchase what are called "split" annuities.

    I am sure you will appreciate, Major Anstruther-Gray, that anyone who purchases an annuity does not want merely income for a limited period of years and then to be left without any income at the end of his days. The general object is to purchase an income for the rest of his life, the expectation of his life being a matter of such uncertainty. The whole object, in 99 cases out of 100, is to get security for the remainder of one's life. What happens at present is the very complex system whereby a great many annuities take the form of split annuities which, in essence, are two separate annuities, one, following the decision of the Court of Appeal, being an annuity certain and limited to a definite term of years, and the second a deferred life annuity to commence at the end of the term if the annuitant should have survived to that date.

    Under that scheme on the annuity for the limited period of years tax is payable only on the income content but not on the capital content represented by the annuity during its certain term of years. If the annuitant survives and the deferred life annuity takes effect, Income Tax is wholly payable on the whole of the amount received. That is a highly complicated and very expensive system.

    It was to deal with that situation and in the light of the many representations received by the Millard Tucker Committee that, after examining the history of the subject and noticing the ways in which it is treated in various other countries—notably the United States of America, Australia and Canada—that that Committee came to the conclusion that the present system in this country could not be defended and should be changed. The Committee take the view, which I accept, that it is really highly legalistic to say that when a person sinks his capital in the purchase of an annuity the source of his annuity is not his original capital but a contract with an insurance company. The Millard Tucker Committee, in Paragraph 497, say:
    "…in our view the reality and substance of the matter are that the original capital sum paid to acquire the annuity still remains a part of the source of the annuity, the remaining part being the interest earned by that capital, or by so much of it as from time to time remains not repaid to the annuitant."
    They go on to say that they have examined the question whether any administrative difficulties arise in giving effect to what they think should be the solution, and they find that other countries, such as the United States of America, Australia and Canada, have all devised satisfactory methods, though differing in various details, for dealing with that situation.

    I should, perhaps, here make it quite clear that in this proposed new Clause, we are dealing only with the cases of annuities purchased by individuals themselves, and we are not dealing with the case of annuities which derive from superannuation schemes or insurance schemes of one kind or another. The Committee's Report recommends that
    "…in the taxation of purchased life annuities, the part of each periodical annual payment representing the estimated capital content should be exempted from tax, and only the difference should constitute taxable income."
    The Committee analysed the more complicated subject of the methods whereby the two parts, one subject to tax and the other escaping it, should tie calculated, and they decided that the method employed in Canada works very well, always has worked well, does not produce any administrative difficulties and is a sensible way of dealing with the matter.

    Therefore, my hon. Friends and myself, in framing this new Clause, followed precisely the system adopted in Canada and also the system recommended by the Millard Tucker Committee. I very much hope that, while we are awaiting with considerable interest the Government's general observations and conclusions on the other recommendations of the Millard Tucker Committee, the Government will see fit to give immediate effect to the recommendations which are implemented in this new Clause.

    As the new Clause is drafted, it proposes that the new proposal shall apply to annuities purchased on or after 6th April, 1954. I do not attach any particular significance to that date, and I should be quite happy if the Financial Secretary would say that, if the law is to be changed, the principle should apply equally to annuities purchased before that date. It may be said that otherwise there would be injustice between those who purchase annuities in the future and those who have already purchased them.

    10.0 p.m.

    We all know the nostalgia with which the Financial Secretary used to regard anything which smacked of restrospective legislation, but in the debates on this Bill I have been pleased to notice how his education on this subject has developed. We had a fascinating exposition from him the other night in answer to an Amendment by the hon. Member for Wimbledon (Mr. Black). I am sure that the right hon. Gentleman now realises that the scope of retrospective legislation in its objectionable form is much more limited than he formerly thought it was. I for one would not think that there was any objection to making this provision retrospective if that should appeal to my hon. Friends and to the right hon. Gentleman.

    I intervene to say a few words which might assist the course of the debate. As the hon. Member for Islington, East (Mr. E. Fletcher) knows not only is this matter one of the recommendations of the second Millard Tucker report, but it is also a subject which has been a matter of controversy for many years. I listened with great interest to what the hon. Gentleman said, especially with respect to the different treatment of purchased annuities for a term of years and for life. It is an important point. I agree that, together with the other Millard Tucker recommendations, it will have to be considered by the House of Commons at some time and in great detail.

    The short point, however, is whether it is possible to deal with the matter separately and this year. I was glad to note that the hon. Member referred with some sympathy to what my right hon. Friend said on the point in his Budget speech. My right hon. Friend said:
    "There has not been sufficient time, since the publication of the Report, for me to reach any conclusions on the complex issues involved. In any event, the cost of the proposals would make it impossible for me to implement them in present circumstances. I shall not, therefore, propose this year any change in this part of the Income Tax system."—[OFFICIAL REPORT, 6th April, 1954; Vol. 526, c. 224.]
    We look at this matter with some sympathy, therefore, but from the point of view that these recommendations will have to be considered during the course of the year. The hon. Member suggested that it might be possible to separate this one and to deal with it separately. I put to him two reasons why it would be difficult to do that.

    This proposal has a very close relationship with certain of the other proposals of the Millard Tucker Committee with respect to tax-free lump sum payments. It has the obvious connection that these payments could, and in many circumstances would, properly be used to purchase an annuity. It is impossible to deal with lump sum payments separately from the treatment of purchased life annuities. One must consider them together.

    Secondly, there is the question of cost. When these matters are reviewed by my right hon. Friend it may well be that the question of cost will make it impossible to do some of them. Therefore, there will be the question of weighing which is the most immediately desirable to be done. The hon. Member will appreciate that, if because a new Clause has been put down we arbitrarily select this proposal and put it into the law this year, that is not really a proper way to deal with these immensely important recommendations.

    I do not need to add to what the hon. Member said. These matters are extremely important and stimulating to thought on what is, on the whole, one of the most difficult aspects of our tax law. I repeat, as my right hon. Friend said, that during the course of the year we shall give the closest consideration to these matters on their merits, their relative priorities, and their relative interactions on each other; but I do not think it is reasonable to ask us to pick this one out and deal with it now.

    There is one further aspect which has some bearing. As the result of representations this proposal is, I understand, to be considered by the Royal Commission. We should not take a decision on this matter until we have the advantage of knowing also what the Royal Commission thinks about it.

    For myself, I do not find that reply good enough. Chancellors of the Exchequer and Financial Secretaries seem to me too often at this time of the year to resemble that famous centipede, which, being unable to decide which leg to move first, never moves at all. I have had that feeling over quite a number of the matters which the Committee has been considering this evening, but quite definitely over this one.

    I shall not repeat what my hon. Friend so ably urged on the lines of the Millard Tucker Report as to the merits of the matter beyond saying that it seems to me to be an absurd anomaly that a man should be able to do substantially the same thing for himself by way of provision of an annuity for the rest of his life and have totally different results according to whether it is done by the type of split annuity to which my hon. Friend referred or, as the plain man more often does, simply by buying an annuity.

    I have in mind the case of a professional man who came to see me in Kettering. His happens to be a badly paid profession, and the Financial Secretary will allow me to follow the well known procedure of no names, no pack drill, and go no further into what it is. [Interruption.] My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) provokes me, so I will chance my arm. The man was a teacher.

    The teacher had saved up for many years and bought an annuity. Partly, I own, as a result of the rise in prices, but also because of the incidence of tax on his annuity, he was simply not able to live on it. He said to me, "Is it not most unfair that when I have put my money up in this way, I should have to pay tax on the money itself when it is paid back to me?"

    I agree at once that that is not the strictly legal view of the matter. The legal view is that one puts one's money up, one purchases an annuity and one's only rights depend on the annuity, and the common sense of the transaction, on that legal point of view, completely disappears. But it is a very real hardship on badly off and comparatively badly off people who are in some kind of employment or making a small amount of money in some way that they get an annuity for their old age and then have to pay tax on it. It is even more of a hardship if one is perfectly frank and says to them, "The trouble in your case is that you did not buy the right kind of annuity." That is a monstrous result.

    I cannot see why the very moderate concession that is asked for in the new Clause could not have been made at once. If any concession at all is to be made, this surely represents the very minimum. It represents it on a point upon which the Millard Tucker Committee had more representations than on any other point. It represents it on a matter which for more than 100 years has been the subject of representations before one Royal Commission, Select Committee and the rest of it after another. It deals with a point which any ordinary plain man would say was a manifest piece of injustice; and why this cannot be put right at once and this Clause—for the very short distance that it goes—accepted here and now, I completely fail to understand.

    I wish to support the plea made that the Minister should reconsider the judgment he has given to the Committee that this matter ought to be held up still further. There are undoubtedly thousands of old folk in this country who are living on their superannuation allowance and who are now finding it difficult, because of the rise in the cost of living. Though the amount of this tax may, as a monetary figure, seem comparatively small, for those old people it is sometimes a matter of bread and butter and other essentials of life.

    My own interest in this matter was aroused by a particular case brought to my notice as long ago as 1950. Then the need was urgent, and since that time, because the cost of living has been steadily rising, the need has become increasingly acute. The hon. and learned Member for Wellingborough—[HON. MEMBERS: "Kettering."] The hon. and learned Member for Kettering, of which Wellingborough is an important part—

    Will my hon. Friend allow me to deny at once that monstrous suggestion, both on my own behalf and on behalf of my hon. Friend the Member for Wellingborough (Mr. Lindgren)?

    I accept the correction at once. I would only say that if the hon. and learned Gentleman had suggested that Eton and Slough should not be combined, I should have resisted it as strongly as he has resisted my suggestion.

    Seriously, the point I was making was that back in 1950 this was a severe burden to many old people in this country. In the particular case to which I am referring, the burden has become more and more severe, so that today it is literally a question of the first essentials of life and of decent living.

    The hon. and learned Member for Kettering remarked that this matter had been under consideration for 100 years. I shall go no further back than the appointment of the Committee on the Taxation Treatment of Provisions for Retirement, which was appointed in 1950 by the late Sir Stafford Cripps. It has undertaken a very detailed survey of this whole issue and its Second Report was published earlier this year. If one could only understand that this is a matter of immediate need, week by week, then to have delayed for these four years is sufficient in itself.

    I have communicated with the right hon. Gentleman on this subject more than once, and I wish to acknowledge that I had encouraging letters from him, and that the case put in those letters was forwarded to the Committee. I wish also to acknowledge that, as the time for the Budget approached and I wrote on this matter once again, I was again assured that the matter was under consideration. I listened to the speech of the right hon. Gentleman when he outlined his Budget. It had passages of sympathy with the older people and they aroused my hopes, which were dashed when the Chancellor said that the recommendations of the Report on this point could not be implemented in the Budget or in the Finance Bill.

    10.15 p.m.

    There is not a case for saying that this recommendation should not be dealt with separately from the other recommendations. The point is only whether the savings of the old folk or the interest on those savings should be taxed. Hon. Members on the Government benches strongly denounce Members on this side who suggest a capital levy, but this is in effect a capital levy on those who can least afford to bear it, namely, the old folk who live upon superannuation allowances. This is a very simple proposition that tax should be levied not upon the actual savings but upon the interest on those savings. The justice of that is so clear and the proposition is so simple that I decline to believe the right hon. Gentleman when he said that this proposal could not be embodied in the Finance Bill.

    For those reasons, I urge the Minister to reconsider the decision which he has announced. I make my appeal to the Chancellor of the Exchequer, who is now upon the Government Front Bench. We have heard a plea for the old people frequently from the Government benches recently. The proposed new Clause gives the Government an opportunity to prove their sincerity in this matter, and we ask them to say that there should be priority for the old. We ask them to support the plea made from these benches by accepting the proposed new Clause.

    The Financial Secretary will now be well aware of the very deep disappointment on this side of the Committee at the reply he saw fit to give to the proposal in this new Clause. Not only are we disappointed, but many thousands of people will be equally disappointed when they read in their newspapers tomorrow of the decision of the Government.

    I, for one—and I take it that this is true of many Members on both sides of the Committee—have received letters from those who desire to take out annuities of this kind. They are by no means well-to-do people and are a section which we should seek to help at the earliest opportunity. I cannot help contrasting the way this Clause has been treated by the Government with the way that the same Government, not many hours ago, treated proposals from their own side of the Committee relating to Estate Duty on family businesses, and to the avoidance of duty by individuals who took out several life assurance policies.

    The people with whom we are now dealing are unable, owing to their financial circumstance, to take advantage of the provisions which are to be written into the Bill as the result of pressure on the Government from their own back benches last night. We think it extremely hard that there should be this differentiation, and we must voice our protest at the attitude of the Government towards the proposal.

    I do not desire this evening to make a long speech—in fact everything which is worth saying has already been said by my hon. Friends behind me—but I wish to say how pleased I was when my hon. Friend the Member for Islington, East (Mr. E. Fletcher) paid a well-deserved tribute to Mr. Millard Tucker and the members of his Committee for their very valuable Report.

    I know that the Chancellor intends next year, if he then still occupies his present office, to implement many of the recommendations contained in it, but it is only right and proper for us to take this early opportunity to pay our tribute to those who have worked so hard 'to produce such a magnificent Report.

    All that we are trying to do in this Clause is to help certain people to provide for their old age. There is nothing wrong about that. Hon. Members opposite find nothing wrong in individuals trying to avoid paying more tax than they need. We on this side of the Committee are not objecting to that, but we did hope that hon. Members opposite, equally with us, would not object to the proposal to help certain and mostly poorer sections of the community who want to provide for their old age. It is in the interest of the State and of the community at large that they should be assisted so to do.

    In our opinion, this is a non-party proposal. Many proposals that are from time to time made from both sides are quite definitely political in their intention, but this is something of which, I believe, the whole Committee approves and wants to see implemented. I find it difficult to accept the reasons for refusal put forward by the Financial Secretary tonight. He argued that the Chancellor had not had sufficient time during which to study this Report. It was, I believe, issued last December, and I imagine the Chancellor had it fairly early in January. The Finance Bill was not produced until April, and we did not debate it until May.

    It appears to be argued that that was not sufficient time for the Chancellor, with all he has to do, to study such complicated recommendations as these. But, as my hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out, this particular proposal is almost as old as the hills. It has been discussed in and out of season for years by everybody interested in this kind of thing, and it was obvious from all that we knew, and from all that I am sure the Chancellor knew, that he could have made up his mind, and should have done so, whether, in fact, the Report came into his hands in January or only in February or March.

    Canada, Australia, the United States, and other civilised nations have considered this matter, and have come to a decision upon it. The facts are well known and have been so known for many years. Therefore, we find it difficult to accept the excuse made by the Financial Secretary that the Chancellor has not had time to consider the matter. At the same time we do realise that there are other recommendations in the Report, some of which do connect in some ways with this one, but this is nevertheless one of the utmost priority. It can be singled out, and we suggest that it should be.

    Strongly as we feel on the matter, we do not intend to divide the Committee on this new Clause. At the same time, I would warn the Government with all the strength at my command that we shall seek to return to this matter on Report in order to test whether the House as a House shares with us the desire not to wait another year.

    Is the Chancellor of the Exchequer saving up all these concessions for the Budget which will take place before the next General Election?

    Question put, and negatived.

    New Clause—(Relief From First Assessments On Trade, &C, In Isles Of Scilly)

    Where a person is charged to income tax in the Isles of Scilly for the year 1954–55 under Case I or II of Schedule D in respect of a trade, profession or vocation not carried on by him elsewhere in the United Kingdom, and on a claim made for the purposes of this section within twelve months from the end of that year it is proved that the actual profits or gains of the trade, profession or vocation for that year are less than those by reference to which tax falls to be charged in respect of it' for that year, then

  • (a) that person shall be entitled to such relief from income tax, other than surtax, as will reduce the amount of income tax, other than surtax, payable to the amount which would have been payable if the tax had fallen to be charged by reference to the actual profits or gains for that year; and
  • (b) if that person is an individual or a partnership of or including individuals, any individual concerned shall be entitled to such relief from the surtax, if any, payable by him for that year as will reduce the amount of surtax so payable to the amount which would have been payable if the tax had fallen to be charged as aforesaid.—[Mr. G. R. Howard.]
  • Brought up, and read the First time.

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

    The Clause is consequent upon the decision of the Government, thought unfortunate by some of my constituents, to tax the Isles of Scilly last year. It is designed to bring them into line with the mainland as regards taxation.

    Copying, or perhaps not copying, the example of some hon. Members I propose to speak only for one minute to say that the Government will accept this Clause. The hon. Member for St. Ives (Mr. G. R. Howard) had a very difficult time during the last Finance Bill in dealing with problems connected with the taxation of the Isles of Scilly for the first time. He bore his troubles with an exemplary patience, and was not provoked by the arguments which I was obliged to use.

    The case he puts forward is very simple and perfectly legitimate. It is in the interests as much of the Treasury as of his constituents. I think that the choice which he suggests should be given to his constituents is very reasonable and I have pleasure, therefore, in accepting the Clause.

    As one who has probably had as much experience of the West Country as most, I should like to thank the Chancellor for his courtesy and for the consideration which he has given to the Scilly Isles which, after all, contribute no inconsiderable part to our production. I should also like to congratulate my hon. Friend the Member for St. Ives (Mr. G. R. Howard) for the fine, persistent fight he has put up for his constituency. He has certainly achieved a very considerable Parliamentary victory.

    Question put, and agreed to.

    Clause added to the Bill.

    New Clause—(Amendment Of S 159 Of Income Tax Act, 1952)

    Section one hundred and fifty-nine of the Income Tax Act, 1952, shall be amended by the insertion after the words "his residence and his work," of the words "or

    (c) that no public transport services normally operating and usable by the claimant operate immediately before or immediately after the claimant's working hours, and that as a result the claimant operates a vehicle or motor-cycle in order to get to or from his place of work."—[Mr. Snow.]

    Brought up, and read the First time.

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

    I hope that the present mood of the Chancellor will persist and that this Clause also will be accepted. It arises out of a case which was recently drawn to my attention. An employee of a big industry was, on alternate weeks, on duties which necessitated his reporting for work after public transport had stopped, and coming off duty before public transport had started. The man sought, through his employer, the advice of the local tax inspector. He was advised that although he was subject to an expense in travelling to his place of employment—which happens to be a railway—he did not fall within the provisions of the Income Tax Act, 1952, because there is no allowance for travelling expenses from home to work.

    In point of fact, this type of worker does not get any sort of comfort from the existing provisions of the Income Tax Act, 1952. For the reasons which I have given he cannot claim wear and tear and obsolescence allowance for any vehicle which he may have to purchase and use, nor can he claim any sort of allowance under the replacement or renewal provisions of the same Act.

    10.30 p.m.

    There is a third and rather more delicate and obscure system for which, again, he does not appear to be eligible. That is to say, certain industries, as I am given to understand, rather than upset the existing wage structure, have come to an arrangement with the Board of Inland Revenue whereby any additional expense in travelling, which is incurred because the place of employment is further distant from the home than originally was the case, is borne by the employer and the employer pays the taxation due direct to the Inland Revenue. That is all very comforting to employees whose industries have come to such an arrangement with the Board of Inland Revenue, but it does not apply in the case of British Railways.

    The Chancellor and the Financial Secretary have had a very long day—two days, in fact—and I do not want to labour this point or to read a long extract from a letter on this case, but it seemed to my hon. Friend and myself that this difficulty might be overcome by the suggested new Clause which would be an addition to the existing provision of the Income Tax Act whereby if, through causes of war, a residence has become further away from the place of work than would normally be the case, there is an allowance of £10 a year. It is thought that this modest suggestion, to give this type of employee relief, would meet with the approval of the right hon. Gentleman.

    I should explain also that in this case it is rather a far-fetched argument—and, therefore, I would not attempt to use it—that this is a result of war. In this case a man was transferred to work at Fratton in the Portsmouth area, having previously worked at the Seven Oaks branch, on the same line. By virtue of being transferred he tried to find new accommodation nearer to Fratton, was unable to do so because of the housing difficulty, and his present place of residence is, in fact, approximately nine miles away from his place of work. He goes on duty on alternate weeks before the public transport starts, and comes off duty after it has stopped. Therefore, he has been obliged to purchase a motor-cycle, and under the existing law he can obtain no relief at all. For that reason this new Clause is moved, in the hope that it will meet with the approval of the Chancellor.

    The hon. Gentleman has raised once again the theme of an allowance for expenses of travelling from home to a place of employment. We have debated that theme, I think, on a number of occasions, and I should think the arguments are fairly well known on both sides of the Committee. I do not propose to go into it in detail tonight, but merely to point out that it would be a radical alteration of the Income Tax law to allow such expenses, which are really personal expenses, to be deducted.

    This new Clause makes an addition to Section 159 of the 1952 Act—the provision whereby £10 a year might be allowed to taxpayers assessable under Schedule E for travelling expenses. That allowance was introduced to deal with the cases where additional costs were incurred because either the residence or the place of work had changed through circumstances connected with the war. Therefore, the problem which the hon. Member advanced has really no connection with this provision.

    Whatever may or may not be done in the future about expenses of travelling to and from work, I hope I shall carry the hon. Member with me when I say that it would be wrong to make changes piecemeal. To adopt this proposal in the new Clause would create anomalies and lead to demands that the relief should be extended to what may be claimed to be analogus cases, or cases where the hardship is said to be of the same order.

    The Clause proposes to limit the relief to cases where the claimant cannot use the ordinary public transport services because of his working hours and, in consequence, has to use a vehicle or motorcycle, but a similar claim could be put forward for relief by a man who works quite normal hours but lives in a remote part of the country not well served by public transport even during normal hours. It would be proved difficult, logically, to resist such a claim.

    I feel that it would be wrong to deal with these cases on their own. If there are to be changes made in the long-established principle of tax law that personal expenses in getting to and from work are not deductible it would be much better that that should be made as a general change rather than as a piecemeal change, as put forward in this suggestion. I hope that with that explanation the hon. Member will withdraw the new Clause, although I appreciate the reasons why he has put it forward with such clarity.

    There are many difficulties about this new Clause and the right hon. and learned Gentleman has dealt with quite a number. I am sure my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) will not wish to press it because we understand that it would have repercussions which would be extremely difficult to control without making other provisions. But I think we can impress on the Committee and on the Chancellor the need for looking very seriously later on this whole troublesome question of expenses of getting to and from work, and its connection with Income Tax.

    There are many aspects which need to be examined. Probably the Radcliffe Committee will be devoting some study to this matter. While it is true that the proposal is a radical one it has the merit of being only a little cost because of the limit of £10 which has been mentioned. Secondly, although I agree that Section 159 deals mainly with matters arising out of the war, my hon. Friend and I thought there was no harm in bringing the war to an end for the purposes of accommodating the addition of this new Clause.

    May I ask the Solicitor-General whether, in the public interest, he will confirm or deny one piece of advice which I am given to understand was intimated to this employee by the local tax inspector? That is to say, that where a car is used by a director to get to his place of business and then used for business purposes during his normal hours, regard is taken, in so far as tax allowance is concerned, not only of the actual mileage while on business but in respect of getting to the place of business? It may be that he misunderstood what the inspector said, but it should be clearly stated that there is not one category for the employer getting the allowance whereas the employee does not get it.

    I can answer that quite briefly, because recently I was engaged in a case which dealt with car expenses. The law is that the expenses of taking one's car to one's place of employment are not deductible.

    Motion and Clause, by leave, withdrawn.

    First Schedule agreed to.

    Third to Sixth Schedules agreed to.

    Bill reported with Amendments; as amended to be considered Tomorrow, and to be printed. [Bill 137.]