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Orders Of The Day

Volume 529: debated on Wednesday 7 July 1954

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Finance Bill

Order for consideration, as amended, read.

3.33 p.m.

I beg to move,

That the Bill be recommitted to a Committee of the whole House in respect of the Amendments to Schedule 2, page 43, lines 7, 30 and 36, and page 44, line 39, standing on the Notice Paper in the name of the Chancellor of the Exchequer.
I move this Motion formally in order to enable us to fulfil, not exactly undertakings, but what we said in Committee, with a view to making certain Amendments to the Second Schedule. Hon. Members will remember that certain points were put to us with a view to making the Second Schedule a little clearer and perhaps a little tighter. The Second Schedule refers to the withholding and withdrawal of investment allowances. It is to enable us to discuss the Government's proposals and to meet the points put forward that I move this Motion.

I do not propose to select the two Amendments to the Motion since these matters have recently been discussed in Committee of the whole House and decided on Divisions.

Question put, and agreed to.

Bill immediately considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Second Schedule—(Provisions Supple Mentary To S 16 (New Provision For "Investment Allowances"))

I beg to move, in page 43, line 7, to leave out from "occurs," to "no," in line 9, and to insert "within the relevant period."

This Amendment is linked with the Amendment proposed in page 43, line 36, at the end, to insert:
(3) The relevant period in relation to any such event as aforesaid shall be three years, except that in relation to a sale or transfer falling within paragraph (d), or a sale, transfer or other dealing falling within paragraph (e), of the last foregoing sub-paragraph the relevant period shall be five years.
These two Amendments, which it might be convenient to discuss together if the Committee agree, extend the time-limit in relation to sales or transfers of property coming within sub-paragraph (2) (d) of paragraph 1 of the Second Schedule or other transfers and other dealings under sub-paragraph (2) (e) which is the subject of the next Amendment in page 43, line 30. On the Committee stage the Economic Secretary, in response to requests made by the Opposition, undertook to consider extending the period of three

(e) any sale, transfer or other dealing with the property representing the expenditure by the person incurring the expenditure or an associate of his, being a case where it appears either—
5(i) that the expenditure was incurred in contemplation of the property being so dealt with; or
(ii) that the sole or main benefit which accrued from that person's incurring the expenditure and the property being so dealt with was or derived from the investment and other allowances in respect of the property;
10and not being a case where it is shown either that the purpose of obtaining tax allowances was not the sole or main purpose of that person's incurring the expenditure or of the property being so dealt with, or that his incurring the expenditure and the property being so dealt with were bona fide business transactions and were not designed for the purpose of obtaining tax allowances.

This is a somewhat complicated Amendment, which I shall endeavour to explain as shortly and clearly as I can. The object is to tighten up the Schedule against possible abuse and at the same time to permit genuine business transactions. If the Committee look at subparagraph (2) ( d) of paragraph 1 of the Schedule, they will see that it applies to a sale or transfer to a person not acquiring for a qualifying purpose, that is to say, not for a business use, and that it applies where a sale or transfer was in contemplation when the expenditure was incurred.

That sub-paragraph was the subject of considerable consideration in Committee and this proposed new sub-paragraph ( e) in this Amendment goes considerably further than sub-paragraph ( d). Subparagraph ( e) applies to a sale or transfer whether for a business or for private use or "other dealings"—that is to say, any event which gives rise to a balancing allowance, such as, for instance, the scrapping or destruction of the property—if any of those kinds of transaction were in contemplation when the property was so dealt with. That is one limb.

The second part of the Amendment makes it apply where

"…the sole or main benefit…"

years mentioned in the Schedule to a longer period in relation to what one might call collusive transactions. These Amendments are the result of that consideration. Their effect would be considerably to extend the possibilities of checking collusive sales, transfers and other dealings for the purpose of getting investment allowances and so they would considerably strengthen the Schedule.

Amendment agreed to.

of the transaction was the investment and other allowances in respect of the property dealt with. I would point out that for sub-paragraph (2) ( e) to apply, one does not have to show that the result was contemplated. All one has to show is that that is the result. If this Amendment is accepted, the Revenue will be able to disallow an investment allowance under this new sub-paragraph (2) ( e) where there is a prima facie case that the property, and the expenditure upon that property, comes within one of these two provisions to which I have referred.

If the Revenue can show that, then the taxpayer will still get the investment allowance if he can show one of two things; either that the tax allowance was not the sole or main purpose of the expenditure, or, alternatively, that it was a bona fide business transaction not designed for the purpose of obtaining a tax allowance. It is the bogus, collusive arrangement to secure investment allowance that we want to stop. We do not want to stop the genuine business transaction. It is because we do not desire to stop the genuine business transaction that one finds the last few lines inserted in this Amendment. This Amendment, if accepted, will considerably strengthen the provision.

I beg to move, as an Amendment to the proposed Amendment, to leave out lines 9 to 13.

One must concede that the Government have made a very serious effort to meet the objections we made in Committee to the inadequacies of the Second Schedule as it stood. We pointed out—and I think that the Chancellor himself recognised—that the possibility of abuse was inherent in the whole system of investment allowance. I am moving this Amendment to the proposed Amendment because, while we appreciate that the Chancellor has made an effort to redeem his promise by tightening this up to some extent, we do not yet feel that he has gone far enough.

We return to the matter for two reasons at least. As the Committee will remember, we were very disturbed by certain remarks of the Financial Secretary which seemed to show that there was a difference of opinion between us as to what might constitute an abuse. We are, therefore, anxious that everything which we regard as an abuse should be excluded from the benefit of an investment allowance. I listened very carefully to what the Solicitor-General said in explaining this Amendment. In some senses it is linked with his earlier Amendment which the Committee has just adopted.

In approaching this problem, one must bear in mind that there are two different kinds of cases which have to be dealt with. First, there is the collusive case. Secondly, there is the transaction which, though not collusive—because it does not involve any collusion of any kind—is a transaction whereby the taxpayer may buy plant and machinery for the purpose, not of genuine investment, but of getting tax remission.

The Solicitor-General was careful to say that he had put down the Amendment with a view to trying to stop the bogus or collusive transaction. By extending from three years to five years the period within which the conditions in subparagraphs (2) (d) and (2) (e) operate, I should have thought that the Chancellor had gone a long way towards eliminating the possibility of a collusive transaction in that sense. I imagine that the people who enter into collusive transactions which are to take effect after five years must be very few and far between, and the calculations which they might have to make must render any such scheme very difficult. We therefore welcome the extent to which the Chancellor has met us so far.

There remains the second type of possibility of avoiding tax, namely, the person who buys some plant and machinery, not for a bona fide purpose, and not collusively, but merely for the purpose of getting a remission of taxation. As the Chancellor recognised during the Committee stage, that was a real possibility. I thought, however, that he was rather inclined to minimise the number of cases in which it might occur, because he did not think that there were many Surtax payers paying more than 16s. 6d. in the £, and he gave some figures as to the extent to which it might occur.

Would the hon. Member suggest that the case of the purchase for the single purpose, as he said, of getting remission of taxation or getting allowances is not dealt with by subparagraph (2) (e) (ii)?

There is nothing in the Solicitor-General's speech which led me to that conclusion. That was one reason why we put down this Amendment to his Amendment. If that is the objective, I think it is achieved with much greater certainty if he omits, as we suggest, the provisos at the end of sub-paragraph (2) (e), because, in my view, they contradict what has gone before.

3.45 p.m.

I was saying that we have to deal with the persons who may invest in plant and machinery for the chief object of earning a remission of taxation. The Chancellor concedes that, if they do that, then they are not persons to whom he wishes to give an incentive by this investment allowance and that it is proper to exclude them from those benefits. Therefore, what we really have to examine is whether by this Amendment the Chancellor has gone as far as he reasonably can to secure his objective.

The first question I should like to ask the Solicitor-General is what he conceives to be comprehended in the words "other dealing." The most significant distinction between the language in sub-paragraphs (2) (d) and (2) (e), which at first sight appear to cover a good many identical transactions—as I think they do—is that sub-paragraph (2) (e) for the first time uses the words "or other dealing." In the hypothetical case referred to in Committee of a person buying some plant and machinery and not using it, there would obviously be neither a sale nor a transfer. In a sense, there would be no dealing but a complete absence of dealing. We want to make quite sure that the language:
…any sale, transfer or other dealing…"
is calculated to cover the case where there has been no dealing in the property at all. That is the case about which my hon. Friends were talking. I should have thought at first glance that "dealing" meant "no dealing," but perhaps the Solicitor-General may be able to reassure us on that point.

I am afraid that it is necessary to look at the language of the sub-paragraph a little closely. It is calculated to exclude from the benefit of an investment allowance a person who incurs expenditure with a view to obtaining the allowance and for no other purpose. It also covers the case of a person whose primary purpose in incurring the expenditure is not that of investment. I should be happy with the Government Amendment if my Amendment to it were accepted. I find it difficult to understand why it is necessary to add words which appear either to contradict what has gone before or to be surplus.

If the Amendment were to stop at the end of sub-paragraph (2) (e) (ii) that would meet precisely the case which we are trying to put. We should exclude from the benefit of the allowance any transaction
"…with the property representing the expenditure by the person incurring the expenditure…"
when the
"…expenditure was incurred in contemplation of the property being so dealt with."
I am assuming that that covers the case of persons buying plant and machinery and not using it at all. Then the next provision deals precisely with a person whose chief object is to get the benefit of the investment allowance. It seems to me that that result is negatived if the taxpayer is then allowed to show that he has some other purpose. If it is not negatived, I find it impossible to understand why it is necessary that the words should be inserted.

If one takes the case of a person who could show that he had some legitimate bona fide object in incurring the expenditure, then he would not come within the scope of sub-paragraph (2) (e) as it stands in any circumstances. It is odd that, having defined circumstances in affirmative language, it should then be necessary to define in a negative form the exact opposite. I should have thought that if the provision were left in this con,- fused and unusual form, it would produce considerable doubts and would not be neatly as satisfactory from our point of view. It would not achieve what I understood was the Chancellor's object nearly as satisfactorily as if my Amendment to the proposed Amendment were accepted. In the knowledge that it is the Chancellor's object to make the provisions of the Schedule as stiff and as tight as possible, we hope that he will accept our suggestion.

Should I be in order, Sir Charles, in referring to the next two Amendments which are in my name?

Yes. Both these Amendments deal with part of the words proposed to be left out by the hon. Member for Islington, East (Mr. E. Fletcher).

On that basis, I agree with my hon. Friend the Member for Islington, East (Mr. E. Fletcher) that far the simplest thing would be to omit these lines and in that way to leave two alternative tests, one a subjective one of intention and the other an objective one of result. However, if that is not to be done, I take objection to the lines as they stand. I propose to state my objections and, having done so, to suggest that the Amendments in my name would provide a much simpler and easier method of doing what is apparently intended by these lines.

I want to make it clear that I can see no real objection to omitting the lines altogether. I imagine that the Government take no serious objection as far as the subjective test is concerned. Where in fact
"…the expenditure was incurred in contemplation of the property being so dealt with…"
surely there can be no question that the investment allowance ought not to be given, because that is the case where the man was contemplating it and intended to do it, and that is exactly what it is desired to exclude.

Turning to the objective test, which is simply the way in which it works out, the Chancellor has sought to limit that and perhaps to some extent to limit the other test also by a most peculiar form of words. I agree entirely with the Solicitor-General that this is a complicated provision, but it is made infinitely more complicated 'by these lines. If they were not there, the Amendment at least would have the merit of being very much plainer.

If we are to have them in, it is open to the taxpayer to show either that the purpose of obtaining tax allowance was not the sole or the main purpose of incurring the expenditure or of the property being so dealt with. There are two separate transactions. The first is incurring the expenditure. The second is dealing with the property. Dealing with the property means, in the most obvious case, reselling it. The statute is to be strictly construed in favour of the subject. It seems to me that if the taxpayer is able to show that either the one or the other of these two separate transactions fell within that exception, he will be entitled to escape from the consequences of the provision notwithstanding that either the main objective or the main subjective test would otherwise have applied it to him.

I cannot believe that that can be the intention of the Government. If one reads the Amendment, one finds the word "or" and in the next half of the provision one finds the word "and". I am certain that attention would have to be given to the distinction.

The next point is that the taxpayer is supposed to prove a negative. This discussion shows how very complicated the matter is for the purpose of debate and how complicated it will be for the purpose of administration. The taxpayer has to show that it was not the sole or the main purpose. Surely, by far the simplest thing to do, and what he would do in practice, is to show that there was some other main purpose or perhaps some other sole purpose. It would only be a sole purpose if he had never considered this as anything at which he was aiming and if he was so completely disinterested that investment allowances did not enter into the picture. He might be able to show that he had a main purpose. If, for instance, he had bought a new farm tractor every year and said that he found it economical and wise to run his farm and to buy his farm machinery in that way, I should imagine that he would have gone a very long way towards establishing that he had another definite purpose. Of course, some business purposes are far less obvious than that. One would have to search for some time to find any example that would be so clear.

4.0 p.m.

Surely the simplest thing is to say that and leave it at that, that is to say, where we are considering the subjective, not the objective, test. If a man can show positively that he has some other purpose in mind as his sole or main purpose, then, if the exception is persisted in, he may be allowed to avail himself of it and to treat the transaction as one that ought to attract investment allowance. To go beyond that seems to me unnecessary and difficult.

I come to the second alternative. The second thing he must show is that he incurred the expenditure and dealt with the property—both things this time—as a bona fide business transaction, and that they were not designed for the purpose of obtaining tax allowances. I do not know what the difference between something in contemplation and something that is "designed for" is in this kind of matter, but let us assume there is some difference or other. What exactly has one to show?

I should say that this kind of inquiry is an inappropriate one. I agree that we have gone quite a long way from the time—in the Middle Ages, I think—when we were told that the mind of man was not triable, but we are now allowing the Inland Revenue to try it. Surely the trial that is contemplated in this case will be a fantastically complicated one? Take the second alternative. He may apparently incur the expenditure in contemplation of a resale, but if that was a bona fide business transaction and was not designed for the purpose of obtaining an investment allowance, then this lack of an investment allowance will not apply to that case.

I find that a subtlety that ought not to be introduced into a taxing statute, if only on the ground that it involves not merely a trial of a man's mind but a trial of a subtlety more suitable to the days of the Inquisition than to modern Treasury practice. I should think it much better left out altogether. For these reasons, I should prefer the simple course of leaving this out altogether.

I see no real reason why a man who gets the sole or the main benefit out of these two transactions should be allowed to get an investment allowance out of them, but even if it is persisted in and we are to have some limiting words, then they should be much simpler than the words here.

Surely the substantial point is that once we have a sort of subjective limitation of what was the sole or main purpose, then, if he can show that it was some other purpose, well and good, and then, subject to what I have already said, one could let that pass; but if we apply the proposed Amendment, what we do in fact is to stop up one loophole, which was recognised in Committee before, and stop it up with a piece of mesh wire containing a mass of other loopholes.

Therefore, in the name of simplicity, in the name of justice, I believe, and certainly in order to prevent such appallingly difficult psychological questions being posed to the Revenue and becoming a test of the taxpayer's liability, I suggest that we should either leave out the lines, as proposed, or put in some simpler form as suggested in my Amendments to the proposed Amendment.

I think we all agree that, so far as the proposed Amendment goes, we welcome it—all of us, that is, with the possible exception of the Financial Secretary to the Treasury, because the proposed Amendment is a substantial departure from the attitude that he took when he replied to an Amendment of ours in Committee on this subject. Then the Financial Secretary scoffed at any arguments we put forward; implied that there was no problem here, that it did not matter if a few people did a certain amount of dealing in this way and made a profit out of this arrangement; that it was not a matter of great concern, and that we had all enormously exaggerated the problem. We are very glad his views have not prevailed, that the Chancellor's rather more moderate views have prevailed, and that we have this proposed Amendment to this Schedule, even though it did not appear from what the Financial Secretary said that we were very likely to get it.

We should recognise just how far the proposed Amendment goes and how far it does not go. It is clear that, while it will stop certain abuses, it does not deal with what is, perhaps, the major problem—that, for the first time, under this investment allowance provision it will remain possible to make an actual cash profit out of the installation of a piece of machinery, and that, therefore, for the, first time in our taxation history, it will in certain circumstances pay individuals to install machinery without themselves making any financial sacrifice at all to pay for it.

That is now the situation, and it is not entirely dealt with. Of course, the situation is dealt with—and we welcome it—where it can be shown that people are taking advantage of it to make a sort of Inkiness of installing machinery, and doing it on a large scale, but the fact remains that certain people will have their plant and machinery more than paid for by the Inland Revenue under Clause 16 and the Second Schedule, even as amended. The proposed Amendment, as it stands, makes a substantial amount of progress, but it appears to be somewhat weakened by its last five lines.

Substantial criticisms of them have been put forward, and I hope that the Solicitor-General, who, I trust, will reply to this debate, will at any rate tell us exactly what, in his mind, is designed to be accomplished by these last five lines that would not be accomplished by the proposed Amendment as it would stand without the last five lines. Even if we accept, as may be we shall—we cannot at the present time—after we have heard the Solicitor-General, that there is a desirable purpose to be served by the inclusion of the last five lines, I think it must still be accepted that the last five lines are an extraordinarily confused and muddling way of accomplishing any purpose at all.

Double negatives are always fairly difficult to deal in, but I think the double negative that we have in these last five lines is without exception the most difficult to grasp I have ever come across:
"and not being a case where it is shown either that the purpose of obtaining tax allowances was not the sole or main purpose of that person's incurring the expenditure…"
It so happens that I myself have had a certain amount of unfortunate experience with double negatives. Some, months ago I wrote a letter on a different subject to "The Times," in collaboration with my hon. Friend the Member for Yardley (Mr. Usborne). When my hon. Friend showed me the draft of his letter, I said I agreed with the substance of it but I thought it needed a little redrafting and touching up, and in the course of redrafting it I inserted a double negative, a very simple double negative in comparison with that which we have here:
"…and few would now contend that too many checks cannot be at least as harmful to democracy as too few."
That, I think, was a very simple one, but it called forth a comment which, I regret to say, appeared in "The Times" the following day, and that could be applied far more positively to the double negative in the proposed Amendment than to the double negative inserted by me in the draft of the letter of my hon. Friend:
"I have read this 15 times: 10 times silently, four times aloud and once in a psalm chant. I have written it out in columns, in coloured chalks, in concern. I have tried the translator's trick of transposition—' Few…cannot,' therefore Many…can.' And I am still defeated."
I am bound to say that the view which I took at the time was that this was a most exaggerated comment, but I do not think that it is in any way an exaggerated comment upon the Amendment which the Solicitor-General has moved. The only possible way in which I believe we can understand this Amendment, after reading it a great number of times and after giving it a great deal of thought by means of this translator's trick of transposition, is to turn the double negatives into affirmatives, which is the only way in which one can see what it is all about. It is an extraordinarily confused piece of language to attempt to place in a statute.

If the two Amendments in the names of my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and my hon. Friend the Member for Gloucestershire, South (Mr. Crosland) were accepted, the proviso, instead of consisting of this extraordinarily complicated language, would read like this:
"and not being a case where it is shown that the sole or main purpose of that person's incurring the expenditure or of the property being so dealt with, was a purpose other than the purpose of obtaining tax allowances."
If there is something which is necessary about the two subsections before line 8, I should have thought that the Amendment in the names of my hon. Friends would meet the position far more completely than the very confused and tortuous language of the Solicitor-General.

The right hon. and learned Gentleman is confused and tortuous when dealing with a simple Amendment, but when we have the Solicitor-General confused and tortuous in applying himself to a confused and tortuous Amendment, we are certainly in a very complicated position indeed. I hope very much that the Solicitor-General will not only accept the views we have expressed about this extraordinarily complicated language, but will also tell us why it is necessary to have these five lines in the Bill at all.

I should like to take the suggestion made by my hon. Friend the Member for Stechford (Mr. Roy Jenkins) a little further, and ask the Solicitor-General to give us an example of the kind of transaction which will be caught by the Chancellor's Amendment and the kind of transaction which would get by under this Amendment. I should also like to ask him whether anyone who has had anything to do with the drafting of the Amendment has even been an inspector of taxes. Somebody will have to administer this provision, which is a clear example of the cure being worse than the disease.

It seems to me that, first of all, the inspector of taxes has to discover what are the appearances of the matter—whether it appears that the expenditure was incurred in contemplation of the property being so dealt with—whether he intended to do it all along—or whether the sole or main benefit which has accrued from this expenditure has been to get tax relief in the form of investment allowance. When one of these two things appears to be the case, then he must go a step further and find out whether appearances are not to some extent deceptive. It is not so much a case whether appearances are not what they appear to be as whether or not there is some other explanation.

If the inspector, first of all, is satisfied with the appearance of the matter, and, after inquiry, discovers that the taxpayer intended to do it all along, or if, although the main benefit which has accrued to him is tax relief in the form of investment allowance, he was perfectly bona fide in his intention, or if it was shown to be part of a perfectly genuine business transaction, then he should be let off That is what it is all about.

Apart from the difficulty of discovering the truth in various aspects of complex matters of this kind, would there be any real injustice done to the taxpayer if we allowed the matter to stand as it is in subparagraphs (e) (i) and (ii)? Is any real injustice done to the taxpayer, however genuine he was and however well motivated he was, if, when he had done certain things, the main benefit which accrued to him was tax relief in the form of investment allowance? Do we need to go any further? Do we need to delve deeper and deeper into how genuine the transaction was and whether it was in the normal course of business that he did it or not?

4.15 p.m.

There are some weaknesses inherent in the very idea of investment allowances on an indiscriminate basis which I think it is quite impossible to remedy by over-elaborate safeguards. The test which one has to apply is whether the allowance should be given, with its accompanying tax relief, in certain circumstances in which it is clear that the tax relief is the main benefit which the taxpayer obtains from the transaction. I really do not know what an inspector of taxes will make of it.

Can the Solicitor-General and the Financial Secretary to the Treasury contrive to keep within the rules of order and jointly give us their impression of a discussion between a taxpayer's legal adviser, on the one hand, and an inspector of taxes, on the other? I am sure that the Committee would listen enchanted to the wrangling that would go on, and to the penetrating questions which the Financial Secretary to the Treasury would ask of his right hon. and learned Friend as to what he had in mind when he did certain things, and what had been intended. Why, the Solicitor-General might even have to call upon his local vicar or another independent legal friend, or even a member of his family to testify to the genuineness of a particular transaction and be given credit as to his character.

The whole thing seems to me fantastic. How on earth inspectors of taxes, who already have between 150,000 and 200,000 back cases in their notebooks, are to cope with that kind of interrogation, I do not know. It seems to me that, although some taxpayers may feel a little hard done by, justice would, in fact, be done if the proposed Amendment ended at the end of line 8, and we left it to the first two paragraphs to govern the admissibility of the allowance. To go further is to get into complexities with which the ordinary man cannot cope.

I take it, Sir Charles, that you will not mind if I begin with a double negative. It would not be gracious not to acknowledge that the Chancellor, in putting forward this Amendment, has gone some way to meet the points raised by my hon. Friends during the Committee stage of the Bill, but the credit which he duly received for that is shared with my hon. Friends who, very properly, have emphasised the great dangers which the Bill, as previously drafted, involved.

I want to say that, to some extent, this Amendment is satisfactory to us. How far it is satisfactory I think will already be apparent from the speeches of my hon. Friends. Broadly speaking, we are happy about it down to the words in line 8 "in respect of the property." On that part of the Amendment only, I want to ask one or two questions of the Solicitor-General. I take it that there is no question here that the individual concerned would, so to speak, escape this provision merely by selling the property to somebody who was using it for a qualified purpose. In this case, we are covering every kind of sale, so long as it is of the character dealt with in sub-paragraphs (e) (i) and (ii).

Secondly, I would ask the Solicitor-General whether he is satisfied that the words "other dealing" literally cover—to take our earlier example—leaving the tractors to rust in the field, or just leaving them, whether they rust or not? Apart from that, we are reasonably happy with that part of the Amendment; but we are by no means happy about the rest of it. It is not necessary for me to emphasise how extremely complex the wording is. When my hon. Friend the Member for Stechford (Mr. Roy Jenkins) was explaining somebody else's views on a letter which my hon. Friend wrote to "The Times," I rather feared that my hon. Friend was going to start to chant the Solicitor-General's Amendment to see whether he could make it any more intelligible in that way, but he spared us. I think we all agree that it is extremely complex.

I echo what was said by my hon. Friend the Member for Sowerby (Mr. Houghton); let us try to keep Income Tax legislation simple, if we can. I know that it is the view of my right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross)—I think it will be generally agreed that he is a distinguished lawyer—that Income Tax law is among the worst in English law. The proposed Amendment would make it a great deal worse.

We feel that the last five lines let out far too much. I do not propose to go over the ground so well covered by my hon. Friends, but I will take the two cases where the Amendment bites. The first is where the expenditure was incurred in contemplation of the property "being so dealt with." Can it be seriously argued that in a case where the expenditure was incurred in contemplation of doing this particular deal—resale, or whatever it may be—that there is any reason whatever for giving the man concerned the investment allowance? I cannot see that there is any need to qualify that paragraph. The second case arises out of the sob-paragraph which states:
"that the sole or main benefit which accrued from that person's incurring the expenditure and the property being so dealt with was or derived from the investment and other allowances in respect of the property."
If that is the case, there is no reason why he should get an allowance either. I do not think we need investigate in the second case what his purpose may be. The fact is shown in the result and that is a good argument for withholding the allowance.

I have one other argument to put to the Solicitor-General. If this were the case of some penalty being imposed, a fine or even worse, I could understand its being necessary to be extremely careful that no injustice was done by reason of the Amendment, but here we are dealing with whether or not a particular grant should be given or withheld. We are not even depriving the man concerned of the initial allowance but simply of the investment allowance. In view of that, it is not necessary to have these qualifications. I strongly support my hon. Friend the Member for Islington, East (Mr. E. Fletcher) in preferring to omit these five lines altogether.

Unless the Solicitor-General can give us a convincing explanation on these points, we ought to take the matter further. We agree that it is extremely difficult to follow these complex provisions, but they would be simplified if the Solicitor-General gave illustrations and said: "This is the sort of thing we are worried about. This is the kind of case in which an individual ought to be allowed to get investment allowance but would not be allowed to get it if we deleted these five lines." I hope that he will be able to deal with the matter in that way and to give us the assurance for which we ask.

I share the view expressed by the right hon. Member for Leeds, South (Mr. Gaitskell) that it is desirable to get our Income Tax law as clear and simple as possible, but it has proved in the past and will no doubt prove in the future a matter of extreme difficulty to get the statute law into that degree of clarity and simplicity that one would desire, if it is to operate as one wishes. That is not a reason for not trying to make it as clear and simple as possible.

Having that view myself, I have spent a considerable time upon the Amendment to see whether it was possible to achieve the result one wanted with clarity and simplicity of language. The Amendment deals with a complicated subject, built up upon past statute law, but I hope I can satisfy the right hon. Gentleman whether he thinks we have gone far enough or not, that there are good reasons for the Amendment being in its present form.

Very little criticism was presented to the first part of the Amendment. The hon. Member for Islington, East (Mr. E. Fletcher) asked me the significance et the phrase "or other dealing." I tried to explain it in moving the Amendment. By those words we hope to cover events of a character which would give rise to a balancing allowance. I gave two examples, the scrapping of a vehicle and the destruction of it. If either of those events occurred, there would presumably be a case for a balancing allowance and they would certainly come within the phrase "other dealing."

The hon. Gentleman asked whether just letting the implement lie on the farm would come within that definition. At first sight, I would think it did not, nor would it have given rise to a balancing allowance; but the time might come when the implement had been left so long that the vehicle would be regarded as scrapped. In that case it would come within the wording. I cannot carry my answer on that point any further, and I hope that I have dealt satisfactorily with it.

The next point put by the hon. Member for Islington, East was that the Clause did not bite upon the case where the single purpose was that of getting the remission.

The Solicitor-General has been asked a number of questions about the "other dealing." Would there be any objection if the phrase were defined in the Bill in the way in which he is now defining it? I think that the Income Tax Acts contain a statement of the circumstances in which balancing charges and allowances are payable, and the definition could be done by reference.

I will certainly look at that point. There is a great deal to be said for treating it in this way and for leaving it to the inspectors in the first place, to the Commissioners in the second place, and possibly then to the courts, to determine whether or not it becomes "other dealing."

I was referring to the question put to me by the hon. Member for Islington, East, whether this new subhead dealt with the case of a transaction with the single purpose of getting remission of taxation. It does deal with cases where the transaction is for the purpose of getting an investment or other allowance. If that is the sole or main purpose of the transaction, it would be caught within the first part of the subparagraph.

4.30 p.m.

The right hon. Gentleman asked me a question with regard to sale. He is right in thinking that the "sale, transfer or other dealing" can be with persons who acquire for a qualifying purpose as well as with persons who acquire for other purposes. It is in that respect, although there is a little degree of overlapping, wider than subhead (d).

The real criticism here has been of what has been called the proviso, that is, the passage beginning "and not being a case where." The hon. Member for Islington, East argued that that last part beginning with these words should be omitted. He wanted to know why it was necessary to add what is called the proviso. I tried to indicate the reason quite shortly in moving the Amendment. It is to seek to exclude from the operation of subhead (e) genuine bona fide business transactions
"not designed for the purpose of obtaining tax allowances."
Unless there is something like what is in the last six or eight lines, it may be found that quite genuine transactions
"not designed for the purpose of obtaining tax allowances"
are caught by (ii) and, indeed, caught by (i). There might well be a case where the possibility of tax and investment allowance was taken into account quite legitimately by someone engaged in a bona fide business transaction, and there might also be a case in which the sole or main benefit accruing, although not intended, is one which was derived from an investment or other allowance.

It is a complicated subhead. The hon. Member for Islington, East and the hon. and learned Member for Kettering (Mr. Mitchison) may ask, "If that last part of the Amendment is to deal solely with bona fide business transactions
'not designed for the purpose of obtaining tax allowances,'
why do you have the first alternative; namely, that
'the purpose of obtaining tax allowances was not the sole or main purpose of that person's incurring the expenditure or of the property being so dealt with…'?"
I can give a simple illustration to show the reason for that. Suppose that a piece of property, a tractor, which is bought in the bona fide carrying on of the business, catches fire and is destroyed. No one could say that that destruction was a bona fide business transaction, and it would not, therefore, come within the second part of the paragraph.

This part of the subhead is founded on Section 412 of the 1952 Income Tax Act, which deals with tax avoidance by the transfer of income to persons abroad. I am advised that that provision has proved to work satisfactorily. In spite of the criticisms that have been advanced to this draft, in my view this subhead also will prove to work satisfactorily.

The hon. Member for Sowerby (Mr. Houghton) made great play with the difficulties of inspectors of taxes. I agree that anyone who has to study our Income Tax laws sometimes has to try to tie a damp towel round his head and hope that he will get the right answer. I believe, however, that having regard to that precedent and to the fact that when one studies it the balance in this subparagraph really is not so difficult, the inspectors of taxes will surmount this problem as well as they surmount so many others.

The hon. Member for Stechford (Mr. Roy Jenkins), in his entertaining speech, in which he was so complimentary to my right hon. Friend and to myself, talked a great deal about double negatives. I thought that he must be referring to the last time he played cricket, but he made it quite clear that it was to the last time he wrote a letter to "The Times." I think I have covered the points that the hon. Member raised.

The Clause as it stands is intended to strengthen what is in the Schedule. When the hon. Member says that under the Bill it is possible for it to pay people merely to install machinery to secure the investment allowance, I say to him that in my view, if that were the main object of the transaction, whether it was a dealing with someone also engaged in trade or someone who was not engaged in trade—as, for instance, the passing over by a shopkeeper of a refrigerator to a friend to use in his private house—that sort of transaction would be satisfactorily caught by the Clause.

I hope I have not taken too long in trying to explain something which is somewhat complicated. I shall certainly give careful consideration to the suggestions that have been put forward in relation to the drafting. I doubt very much whether the suggestions put forward by the hon. and learned Member for Kettering would improve the drafting, because he suggested that we should provide that the taxpayer should be required to show that he had some other purpose. If the taxpayer can show that he had some other purpose, that is one way of establishing the negative that this provision requires.

It seems to me that this type of case is likely to occur. A taxpayer might say, "I contemplated getting an investment allowance. It was one of the reasons that I bought this tractor. The other was that I needed it on my farm." He would be asked, "Which was your main reason?" and he would reply, "I had both reasons in mind, and they are not comparable." Is that taxpayer to get his investment allowance in that case?

The answer, quite simply, is that if it appears to the inspector or to the Revenue that the taxpayer had in contemplation the investment allowance, it would be open to the inspector in the first place to say that the investment allowance would be disallowed. It would then be open to the taxpayer to say, "It is quite true that I had the investment allowance in contemplation, because I knew the provisions made in the last Budget—that was one of the things I took into account; but this was a perfectly bona fide business transaction and it was

'not designed' "—
there is a good deal of importance to be attached to the word "designed"—
"for the purpose of obtaining tax allowances '."
If the taxpayer can satisfy the inspector—or, it may be, the Commissioners—of that, he would be entitled to his investment allowance, although, in the first place, one of the matters that he took into consideration was the possibility of an investment allowance.

I am bound to say that I found the right hon. and learned Gentleman's second speech most unsatisfactory. He answered some of the questions but he made no attempt to answer the crucial question which a number of my hon. Friends and my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) asked. I do not want to go over the ground again, but I must put my finger on the crucial question which the Solicitor-General completely failed to answer.

He claimed that the object of the proviso was to protect the bona fide transaction, and we have been asking him why the proviso is necessary to do that. Is it not the case that the bona fide transaction gets the benefit of the investment allowance anyhow, and that such a transaction is not defeated by the paragraph without the proviso? My right hon. Friend asked the Solicitor-General to give any case of a bona fide transaction in respect of which an investment allowance would be lost if our Amendment is accepted and the proviso deleted.

The only example which has been given to us was that of a tractor which, having been purchased, was destroyed by fire. Surely in that case the taxpayer would get the benefit of the investment allowance if our Amendment were accepted. There is nothing whatever, if the proviso is deleted, to deprive the taxpayer of the benefit of the investment allowance if bona fide he acquires some property, and then, through some reason beyond his control, the property is destroyed.

No one suggests in that case, which the Solicitor-General took, that the property was acquired in contemplation that it would be subsequently destroyed by fire, or that the person concerned acquired a tractor for the sole or main purpose of getting an investment allowance because ex hypothesi on the Solicitor-General's own illustration, the person purchased the tractor bona fide without the know

Division No. 189.]


[4.44 p.m.

Aitken, W. T.Braine, B. R.Craddock, Beresford (Spelthorne)
Allan, R. A. (Paddington. S.)Braithwaite, Sir Albert (Harrow, W.)Crookshank, Capt. Rt. Hon. H. F. C.
Alport, G. J. M.Braithwaite, Sir GurneyCrosthwaite-Eyre, Col. O. E.
Amery, Julian (Preston, N.)Bromley-Davenport, Lt.-Col. W. H.Crouch, R. F.
Amory, Rt. Hon. Heathcoat (Tiverton)Brooke, Henry (Hampstead)Crowder, Sir John (Finchley)
Arbuthnot, JohnBrooman-White, R. C.Crewder, Petre (Ruislip—Northwood)
Assheton, Rt. Hon. R. (Blackburn, W.)Browne, Jack (Govan)Darling, Sir William (Edinburgh, S.)
Astor, Hon. J. J.Buchan-Hepburn, Rt. Hon. P. G. T.Davidson, Viscountess
Baldock, Lt.-Cmdr. J. M,Bullus, Wing Commander E. E.Davies, Rt. Hn. Clement (Montgomery)
Baldwin, A. EBurden, F. F. A.Deedes, W. F.
Banks, Col. CButcher, Sir HerbertDigby, S. Wingfield
Barlow, Sir JohnButler, Rt. Hon R. A. (Saffron Waldon)Dodds-Parker, A. D.
Baxter, Sir BeverleyCampbell, Sir DavidDonaldson, Cmdr. C. E. McA.
Beach, Maj. HicksCarr, RobertDonner, Sir P. W.
Bell, Ronald (Bucks, S.)Gary, Sir RobertDoughty, C. J. A.
Benett, F. M. (Reading, N.)Channon, H.Douglas-Hamilton, Lord Malcolm
Bennett, William (Woodside)Churchill, Rt. Hon. Sir WinstonDrayton, G. B.
Bevins, J. R. (Texteth)Clarke, Col. Ralph (East Grinstead)Drewe, Sir C.
Bishop, F. P.Cole, NormanDuncan, Capt. J. A. L.
Black, C. W.Colegate, W. A.Duthie, W. S.
Bottom, Sir A. C.Conant, Maj. Sir RogerEccles, Rt. Hon. Sir D. M.
Boyd-Carpenter, Rt. Hon. J. A.Cooper, Sqn. Ldr. AlbertEden, J. B. (Bournemouth, West)
Boyle, Sir EdwardCooper-Key, E. M.Erroll, F. J.

ledge that it would catch fire and be destroyed. If that is the best answer that the right hon. and learned Gentleman can give us, I hope we shall divide on the Amendment to the proposed Amendment.

The Solicitor-General was kind enough to give one illustration, and I should like to follow my hon. Friend the Member for Islington, East (Mr. E. Fletcher) in pressing this point. An individual buys a tractor which subsequently catches fire. Surely there is nothing under sub-paragraph (e, i) which would catch that individual. There was no suggestion in the illustration given that the individual intended that the property should catch fire. That lets him out so far as sub-paragraph (e, i) is concerned. I would ask the Solicitor-General whether the individual could possibly be caught by sub-paragraph (e, ii). Would the phrase "being so dealt with" really cover the case which the right hon. and learned Gentleman has in mind?

I do not imagine that what the Solicitor-General explained to us will cover the case of something catching fire. I absolutely agree with my hon. Friend that the Solicitor-General's answer was quite unconvincing. If he likes to have another try, we shall gladly listen to him, but if he prefers to remain silent, I hope we shall divide the Committee.

Question put, "That the words proposed to be left out stand part of the proposed Amendment."

The Committee divided: Ayes, 269; Noes, 200.

Finlay, GraemeLlewellyn, D. T.Robinson, Sir Roland (Blackpool, S.)
Fisher, NigelLloyd, Rt. Hon. G. (King's Norton)Robson-Brown, W.
Fleetwood-Hesketh, R. F.Lloyd, Maj. Sir Guy (Renfrew, E.)Rodgers, John (Sevenoaks)
Fletcher, Sir Walter (Bury)Lloyd, Rt. Hon. Selwyn (Wirral)Roper, Sir Harold
Fletcher-Cooke. C.Lockwood, Lt.-Col. J. C.Ropner, Col. Sir Leonard
Ford, Mrs. PatriciaLongden, GilbertRussell, R. S.
Fort, R.Low, A. R. W.Ryder, Capt. R. E. D.
Foster, JohnLucas, Sir Jocelyn (Portsmouth, S.)Savory, Prof. Sir Douglas
Fraser, Hon. Hugh (Stone)Lucas, P. B. (Brentford)Schofield, Lt.-Col. W.
Fraser, Sir Ian (Morecambe & Lonsdale)Lucas-Tooth, Sir HughScott, R. Donald
Fyfe, Rt. Hon. Sir David MaxwellMcCorquodale, Rt. Hon. M. S.Scott-Miller, Cmdr. R.
Galbraith, Rt. Hon. T. D. (Pollok)Macdonald, Sir PeterShepherd, William
Garner-Evans, E. H.Mackeson, Brig. Sir HarrySimon, J. E. S. (Middlesbrough, W.)
George, Rt. Hon. Maj. G. LloydMcKibbin, A. J.Smithers, Peter (Winchester)
Glover, D.Mackie, J. H. (Galloway)Smithers, Sir Waldron (Orpington)
Godber, J. B.Maclay, Rt. Hon. JohnSnadden, W. McN.
Gomme-Duncan, Col. A.Maclean, FitzroySpearman, A. C. M.
Gough, C. F. H.Macleod, Rt. Hon. Iain (Enfield, W.)Speir, R. M.
Gower, H. R.MacLeod, John (Ross and Cromarty)Spence, H. R. (Aberdeenshire, W.)
Graham, Sir FergusMacmillan, Rt. Hon. Harold (Bromley)Spans, Rt. Hon. Sir P. (Kensington, S.)
Grimond, J.Macpherson, Niall (Dumfries)Stanley, Capt. Hon. Richard
Grimston, Hon. John (St. Albans)Maitland, Patrick (Lanark)Stevens, Geoffrey
Grimston, Sir Robert (Westbury)Manningham-Buller, Rt. Hn. Sir ReginaldSteward, W. A. (Woolwich, W.)
Hall, John (Wycombe)Markham, Major Sir FrankStewart, Henderson (Fife, E.)
Harris, Frederic (Croydon, N.)Marlowe, A. A. H.Storey, S.
Harris, Reader (Heston)Marples, A. E.Strauss, Henry (Norwich, S.)
Harrison, Col. J. H. (Eye)Maude, AngusStuart, Rt. Hon. James (Moray)
Harvey, Ian (Harrow, E.)Maudlins, R.Studholme, H. G.
Hay, JohnMaydon, Lt.-Comdr. S. L. CSummers, G. S.
Head, Rt. Hon. A. H.Medlicott, Brig. F.Sutcliffe, Sir Harold
Heald, Rt. Hon. Sir LionelMellor, Sir JohnTaylor, Sir Charles (Eastbourne)
Heath, EdwardMolson, A. H. E.Taylor, William (Bradford, N.)
Henderson, John (Cathcart)Monckton, Rt. Hon. Sir WalterTeeling, W.
Higgs, J. M. C.Moore, Sir ThomasThomas, Rt. Hon. J. P. L. (Hereford)
Hill, Dr. Charles (Luton)Morrison, John (Salisbury)Thomas, Leslie (Canterbury)
Hinchingbrooke, ViscountMott-Radclyffe, C. E.Thomas, P. J. M. (Conway)
Hirst, GeoffreyNabarro, G. D. N.Thompson, Lt.-Cdr. R. (Croydon, W.)
Holland-Martin, C. J.Neave, AireyThornton-Kemsley, Col. C. N.
Holt, A. F.Nicholls, HarmarTilney, John
Hope, Lord JohnNield, Basil (Chester)Touche, Sir Gordon
Hopkinson, Rt. Hon. HenryNoble, Comdr. A. H. PTurner, H. F. L.
Hornsby-Smith, Miss M. P.Nugent, G. R. H.Turton, R. H.
Horobin, I. M.Nutting, AnthonyTweedsmuir, Lady
Horsbrugh, Rt. Hon. FlorenceOakshott, H. D.Vane, W. M. F.
Howard, Hon. Greville (St. Ives)O'Neill, Hon. Phelim (Co. Antrim, N.)Vaughan-Morgan, J. K
Hudson, Sir Austin (Lewisham, N.)Ormsby-Gore, Hon. W. D.Vosper, D. F.
Hulbert, Wing Cdr. N. J.Orr, Capt. L. P. S.Wade, D. W.
Hutchison, Sir Ian Clark (E'b'rgh, W.)Orr-Ewing, Charles Ian (Hendon, N.)Wakefield, Edward (Derbyshire, W.)
Hyde, Lt.-Col. H. M.Page, R. G.Wakefield, Sir Wavell (St. Marylebone)
Hylton-Foster, H. B. H.Peake, Rt. Hon. O.Walker-Smith, D. C.
Iremonger, T. L.Peto, Brig. C. H. M.Wall, Major Patrick
Jenkins, Robert (Dulwich)Peyton, J. W. W.Ward, Hon. George (Worcester)
Jennings, Sir RolandPickthorn, K. W. M.Ward, Miss I. (Tynemouth)
Johnson, Eric (Blackley)Pilkington, Capt. R. AWaterhouse, Capt. Rt. Han. C.
Johnson, Howard (Kemptown)Pitt, Miss E. M.Watkinson, H. A.
Jones, A. (Hall Green)Powell, J. EnochWebbe, Sir H. (London A Westminster)
Joynson-Hicks, Hon. L. W.Price, Henry (Lewisham, W.)Wellwood, W.
Kaberry, D.Prior-Palmer, Brig. O. L.Williams, Gerald (Tonbridge)
Kerby, Capt. H. B.Profumo, J. D.Williams, Sir Herbert (Croydon, E.)
Kerr, H. W.Raikes, Sir VictorWilliams, Paul (Sunderland, S.)
Lambton, ViscountRamsden, J. E.Williams, R. Dudley (Exeter)
Lancaster, Col. C. G.Rayner, Brig. R.Wills, G.
Langford-Holt, J. A.Redmayne, M.Wilson, Geoffrey (Truro)
Leather, E. H. C.Rees-Davies, W. R.Wood, Hon. R.
Legge-Bourke, Maj. E. A. H.Remnant, Hon. P.
Lennox-Boyd, Rt. Hon. A. T.Ronton, D. L. M.TELLERS FOR THE AYES:
Lindsay, MartinRidsdale, J. E.Mr. T. G. D. Galbraith and
Linstead, Sir H. NRoberts, Peter (Heeley)Mr. Legh.


Allen, Arthur (Bosworth)Blenkinsop, A.Clunie, J.
Allen, Scholefield (Crewe)Blyton, W. R.Coldrick, W.
Andersen, Frank (Whitehaven)Boardman, H.Collick, P. H.
Attlee, Rt. Hon. C. R.Bottomley, Rt. Hon. A. G.Corbel, Mrs. Freda
Awbery, S. S.Bowden, H. W.Cove, W. G.
Bacon, Miss AliceBowles, F. G.Craddock, George (Bradford, S.)
Balfour, A.Brockway, A. F.Crosland, C. A. R.
Bartley, P.Brook, Dryden (Halifax)Cullen, Mrs. A.
Beattie, J.Brown, Thomas (Ince)Daines, P.
Bence, C. R.Burke, W. A.Dallen, Rt. Hon. H.
Benn, Hon. WedgwoodButler, Herbert (Hackney, S.)Darling, George (Hillsborough)
Benson, G.Callaghan, L. J.Davies, Ernest (Enfield, E.)
Blackburn, F.Champion, A. J.Davies, Stephen (Merthyr)

Deer, G.Jones, Jack (Rotherham)Reid, William (Camlachie)
Dodds, N. N.Jones, T. W. (Merioneth)Rhodes, H.
Donnelly, D. L.Keenan, W.Richards, R.
Driberg, T. E. N.Kenyon, C.Robens, Rt. Hon. A.
Dugdale, Rt. Hon. John (W. Bromwich)Key, Rt. Hon. C. W.Roberts, Goronwy (Caernarvon)
Ede, Rt. Hon. J. C.King, Dr. H. M.Rogers, George (Kensington, N.)
Edelman, M.Kinley, J.Ross, William
Edwards, Rt. Hon. John (Brighouse)Lawson, G. M.Shackleton, E. A. A.
Edwards, Rt. Hon. Ness (Caerphilly)Lee, Frederick (Newton)Shinwell, Rt. Hon. E.
Edwards, W. J. (Stepney)Lee, Miss Jennie (Cannock)Short, E. W.
Evans, Albert (Islington, S.W.)Lindgren, G. S.Silverman, Julius (Erdington)
Evans, Edward (Lowestoft)Lipton, Lt.-Col. M.Silverman, Sydney (Nelson)
Evans, Stanley (Wednesbury)MacColl, J. E.Simmons, C. J. (Brierley Hill)
Fernyhough, E.McGovern, J.Skeffington, A. M.
Fienburgh, W.McInnes, J.Slater, Mrs. H. (Stoke-on-Trent)
Fletcher, Eric (Islington, E.)McKay, John (Wallsend)Slater, J. (Durham, Sedgefield)
Follick, M.McLeavy, F.Smith, Ellis (Stoke, S.)
Forman, J. C.Mainwaring, W. H.Smith, Norman (Nottingham, S.)
Fraser, Thomas (Hamilton)Mallalieu, E. L. (Brigg)Sorensen, R. W.
Freeman, Peter (Newport)Mann, Mrs. JeanSoskice, Rt. Hon. Sir Frank
Gaitskell, Rt. Hon. H. T. N.Manuel, A. C.Sparks, J. A.
Gibson, C. W.Marquand, Rt. Hon. H. A.Steele, T.
Glanville, JamesMason, RoyStokes, Rt. Hon. R. R.
Gordon Walker, Rt. Hon. P. C.Mayhew, C. P.Summerskill, Rt. Hon. E.
Grenfell, Rt. Hon. D. R.Mellish, R. J.Sylvester, G. O.
Grey, C. F.Messer, Sir F.Taylor, Bernard (Mansfield)
Griffiths, Rt. Hon. James (Llanelly)Mitchison, G. RTaylor, Rt. Hon. Robert (Morpeth)
Hall, Rt. Hon. Glenvil (Coins Valley)Moody, A. J.Thomas, Iorwerth (Rhondda, W.)
Hall, John T. (Gateshead, W.)Morgan, Dr. H. B. W.Thomas, Ivor Owen (Wrekin)
Hamilton, W. W.Morley, R.Thomson, George (Dundee, E.)
Hannan, W.Morris, Percy (Swansea, W.)Thornton, E.
Hardy, E. A.Morrison, Rt. Hon. H. (Lewisham, S.)Timmons, J.
Harrison, J. (Nottingham, E.)Mort, D. L.Tomney, F.
Hastings, S.Moyts, A.Ungoed-Thomas, Sir Lynn
Hayman, F. H.Mulley, F. W.Usborne, H. C.
Healey, Denis (Leeds, S.E.)Oldfield, W. H.Watkins, T. E.
Henderson, Rt. Hon. A. (Rowley Regis)Oliver, G. H.Weitzman, D.
Herbison, Miss M.Oswald, T.Wells, Percy (Faversham)
Hobson, C. R.Paling, Rt. Hon. W. (Dearne Valley)West, D. G.
Holman, P.Paling, Will T. (Dewsbury)Wheeldon, W. E.
Holmes, HoracePalmer, A. M. F.White, Mrs. Eirene (E. Flint)
Houghton, DouglasPannell, CharlesWhiteley, Rt. Hon. W.
Hoy, J. H.Pargiter, G. A.Willey, F. T.
Hughes, Cledwyn (Anglesey)Parker, J.Williams, David (Neath)
Hughes, Emrys (S. Ayrshire)Paton, J.Williams, Rev. Llywelyn (Abertillery)
Hynd, J. B. (Attercliffe)Pearson, A.Williams, W. R. (Droylsden)
Irving, W. J. (Wood Green)Pearl, T. F.Williams, W. T. (Hammersmith, S.)
Isaacs, Rt. Hon. G. A.Popplewell, E.Willis, E. G.
Janner, B.Porter, G.Winterbottom, Richard (Brightside)
Jeger, George (Goole)Price, J. T. (Westhoughton)Wyatt, W. L.
Jenkins, R. H. (Stechford)Price, Philips (Gloucestershire, W.)Yates, V. F.
Johnson, James (Rugby)Proctor, W. T.
Johnston, Douglas (Paisley)Pryde, D. J.TELLERS FOR THE NOES:
Jones, David (Hartlepool)Rankin, JohnMr. Wilkins and Mr. John Taylor
Jones, Frederick Elwyn (West Ham, S.)Reid, Thomas (Swindon)

Proposed words there inserted.

Further Amendment made: In page 43, line 36, at end, insert:

(3) The relevant period in relation to any such event as aforesaid shall be three years, except that in relation to a sale or transfer falling within paragraph (d), or a sale, transfer or other dealing falling within paragraph (e), of the last foregoing sub-paragraph the relevant period shall be five years.—[The Solicitor-General.]

I beg to move, in page 44, line 39, at the end, to insert:

"or about any other dealing with the property."
This Amendment is consequential, but I think it better to say a word about it. It is to enable information to be secured, not only in relation to sales or transfers,

but in relation to any other dealings in property.

Amendment agreed to.

Bill reported, with Amendments; as amended (in Committee and on recommittal), considered.

New Clause—(Salaries Of Employees Of International Wheat Council)

(1) So long as the seat of the International Wheat Council established by the International Wheat Agreement signed at Washington on the twenty-third day of March, nineteen hundred and forty-nine, is in the United Kingdom, an employee of the said Council who is not a citizen of the United Kingdom and colonies shall enjoy exemption from income tax in respect of any emoluments received by him as an officer or servant of the said Council.

(2) This section shall be deemed to have applied to emoluments for any period since the thirty-first day of July, nineteen hundred and fifty-three (that is to say the date on which the Government of the United Kingdom ceased to be a member of the said Council).

(3) This section shall be without prejudice to the powers conferred by the International Organisations (Immunities and Privileges) Act, 1950 (which relates to organisations of which the Government of the United Kingdom is a member).—[ Mr. Boyd-Carpenter.]

Brought up, and read the First time.

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

This new Clause has as its purpose to enable us to continue the exemption for foreign employees of the International Wheat Council from taxation on their salaries which was given to them while this country was a member of the International Wheat Council.

The International Wheat Agreement of 23rd March, 1949, provided that the Government of the country where the seat of the Council is located should grant exemption from taxation on the salaries paid by the Council, except to its own nationals. The Council chose London as the seat of the Wheat Council and, consequently, while this country was a member of the International Wheat Council, it was under an obligation to grant this exemption. The exemption was effected by Order in Council under the International Organisations (Immunities and Privileges) Act, 1950, and was subject to affirmative Resolution in this House in the usual way.

The United Kingdom ceased to be a member of the International Wheat Council on 31st July, 1953, and, consequently, the power to grant exemption under the Act of 1950 lapsed, as it applies only to organisations of which this country is a member. It is now necessary either to provide for exemption, as is provided by this Clause, or to subject these salaries to tax.

As this country is no longer a member of the International Wheat Council, it is clear that the obligation under the Agreement of 1949 is no longer strictly binding. But I would suggest to the House that it would be at least a piece of international bad manners for this country to withdraw the exemption previously given on the grounds that the United Kingdom has ceased to be a member of the International Wheat Council. Admittedly, the case is somewhat unusual. I know of no other in which there is located in London an international body of which this country used to be a member and of which it is no longer a member. However, that is here the case, and we are faced with a rather awkward situation.

Unless we proceed as is suggested in the new Clause, we shall be forced to impose taxation on these salaries. That, I am bound to say, would be regarded by our former associates in the Organisation as—although within our legal rights—somewhat oppressive behaviour. I would further suggest to the House that it is a good thing to encourage international organisations to have their seat in London. Were this new Clause accepted, the financial consequences would be quite trivial. We are concerned, at the moment at any rate, with only four non-United Kingdom employees of the International Wheat Council, and their salaries average £450 a year. The amount of taxation involved is extremely small and the case for this Clause rests, not on any particular hardship, but on the basis that this is the sort of behaviour which this country ought to show to an international organisation of which it was once a member.

5.0 p.m.

I think it might be convenient to discuss the Amendment in the name of the hon. Member for Islington, East (Mr. E. Fletcher) to leave out lines 7 to 10, on the Question "That the Clause be read a Second time," and divide on the Amendment, if necessary, after the Clause has been read a Second time.

I would have liked—and I gather that it is in accordance with your suggestion, Mr. DeputySpeaker—formally to move my Amendment, and then—

No, the idea was that we should discuss it now, and then after the Clause has been read a Second time, it can be moved and a Division can take place upon it if necessary.

If you please, Mr. Deputy-Speaker.

I noticed that the Financial Secretary was studiously silent about subsection (2) of this new Clause, and I was surprised that he devoted almost the whole of his speech to attempting to justify what should be done in future. He has made no attempt whatever to explain why he thinks this new Clause should have retrospective effect. I can only conclude that his silence is due to considerable embarrassment on his part, bearing in mind that he used to regale us, when he was in Opposition, on the vices of retrospective legislation.

Now the right hon. Gentleman brings forward a new Clause which blatantly proposes that the law should go back to an earlier date nearly a year ago, and there is not one word of explanation from him about it. I can well understand that he felt that he should try to cover up this lamentable failure by a reference to international good manners—not that I think that we should accept him necessarily as being the last word on that subject.

In view of the right hon. Gentleman's silence, I must ask him some questions. Am I right in thinking that since the United Kingdom ceased to be a member of the International Wheat Council, the employees of that Council who are not United Kingdom citizens have been liable for tax? I assume that the answer to that question is in the affirmative. Then I should like to know whether they have, in fact, been paying tax. Presumably, tax under the P.A.Y.E. system has been deducted from their salaries since the date when they became liable for tax. Am I right in thinking that that is the case?

Thirdly, have we had any representations either from the International Wheat Council itself, or from any member of the Council, that legislation should be introduced in this House to give the members of that Council the immunity which the Financial Secretary seeks to give them, or is this something which is sponsored by the Government of their own volition?

In the absence of answers to those questions, it is a little difficult to comment on the merits of the proposal as it stands. The amount of tax involved is so small that I would have thought that it was not worth making a great deal of fuss about. But there is a question of principle involved, and there are some people who feel that there must be some limit to the immunities from United Kingdom Income Tax that are enjoyed by international organisations of one kind or another. I would have thought that, taking the matter by and large, this country has been rather generous on that subject and that we have gone as far as most taxpayers would have thought we were justified in going in granting immunity from tax to members of international organisations.

The number of international organisations with non-United Kingdom employees is growing. Some of these organisations are Government-sponsored and some are not, but there must be a limit to this, and I think it is probably very salutory that the Government should have been compelled to seek to justify this proposal to the House. I do not know what my hon. Friends think about it, with regard to the future, but I take the strongest objection to making a provision of this kind retrospective, without having the information which we require. If an attempt is to be made to justify retrospective legislation, we must be told why it is necessary.

If the Government think that this is such a good thing, why did not they propose it before? Why leave it until this Finance Bill? They may say that they did not think of it before. If so, when did they think of it? The Chancellor may say that we did not leave the International Wheat Council until July last year. But the Government knew before July that they were going to do so, and, if necessary, they could have made some provision in last year's Bill. Why did they not introduce legislation as soon as it became necessary, rather than leave it until now? Why did not this provision appear in the Finance Bill when it was first printed? Why leave it until the Report stage?

We have a good many new Clauses and our time is limited. It seems to me to be rather unsatisfactory that the matter should be dealt with in this way. Whatever the House does about this new Clause, I hope that we shall not agree to subsection (2).

I hope very much that we shall have a reply to the pertinent questions put by my hon. Friend. I agree that some explanation must be given about what has been happening since the end of July last year in the case of the taxation of the persons concerned. Equally, I think we must be told why the Government have discovered this difficulty only after all this time has elapsed—I presume that must be the explanation—and have come forward with this new Clause at this late stage.

I think that probably my hon. Friends will agree that on the merits of the proposal, we should not wish to oppose it. I agree with the Financial Secretary that it is, no doubt, a matter of international courtesy that we should continue to grant the same tax concessions to the employees of the International Wheat Council although we have ceased to be members. But it is a very strange situation to have an international body obtaining concessions under our tax laws although we are not members of that body.

We are very glad to see in the Chamber the Joint Under-Secretary of State for Foreign Affairs, and it would be helpful if he could tell the House what is the prospect. Is the Wheat Council likely to remain in England, or is the headquarters moving, or is it hoped that if it stays here, Her Majesty's Government may change their minds and rejoin the Wheat Council?

This proposal which we are now considering creates a very curious situation. Suppose that 10 years hence we are still outside the Wheat Council and it still has its headquarters here. Shall we still continue to grant these tax concessions? I think that a good deal depends on how long the present situation is likely to continue. If we could have a few words from the Joint Under-Secretary, I think it would help the House to come to a decision.

This is a very unusual proposal, and I think that some of us on this side of the House ought to ask for an assurance that it is not regarded as a precedent. On the Order Paper, awaiting approval, there are eight Motions concerning diplomatic immunities to be accorded to members of various organisations. We have not reached them yet, but we shall have to discuss them some time before the end of this Session. We might leave any one of those organisations, in which case a similar situation would arise. I do ask my right hon. Friend to give the House an assurance that this case will not be treated as a precedent, in case a similar situation arises in connection with any other of these organisations. I suppose it would be out of order to congratulate my right hon. and gallant Friend the Minister of Food for his decision to leave the International Wheat Council, but I should like to do so. I think he was perfectly right.

I hope that my right hon. Friend will answer the question put by the right hon. Member for Leeds, South (Mr. Gaitskell). It may be that we shall want to rejoin the International Wheat Council in the future it may pay us to do so. What are the terms upon which we can rejoin? They may provide one good reason for the action that is proposed in this case. I should like my right hon. Friend to explain the meaning of subsection (3). Unless there is a hidden meaning behind it it seems to be an unnecessary piece of verbiage.

Lastly, I would point out that there were two ways of dealing with this matter—this way, or by amending the International Organisations (Immunities and Privileges) Act, 1950. I consider that my right hon. Friend has chosen the right way. It is very much better to deal with it in this way than to try to amend the Act. I do not oppose the Motion because I realise that it deals with an exceptional situation, but I hope that my right hon. Friend will give the assurances for which I have asked.

With the leave of the House, I should first like to reply to the points raised in connection with the proposed new Clause and then come to the question of retrospection which was raised by the hon. Member for Islington, East (Mr. E. Fletcher). The right hon. Member for Leeds, South (Mr. Gaitskell) said that the situation with regard to the International Wheat Council was an unusual one, and I agree. I know of no other organisation, with a seat in this country, of which we were once a member and no longer are.

I cannot answer his question as to the length of time the International Wheat Council will remain in London, but I can say that we welcome its presence here. We think it is a good thing that international organisations should have their seats in London, and we hope that this one will remain. As we are not now a member, however, it is difficult to forecast what are its intentions.

If this situation continues for a long time, shall we not arrive at a curious position? As I understand, if we do not belong, and never have belonged, to an international organisation with a seat in London, we do not make tax concessions, yet we shall apparently continue to do so in this case, even if this organisation remains here for another 10 years. Surely the Financial Secretary ought to endeavour to discover the intentions of the International Wheat Council.

I do not think that we should put ideas of leaving into its head, but I appreciate the right hon. Gentleman's point. He is quite right in saying that in the case of organisations to which we do not belong we have no power under the 1950 Act to grant tax immunity; hence the necessity for this new Clause, which deals separately with this body. To some extent that is the reply to the question asked by my hon. and gallant Friend the Member for South Angus (Captain Duncan). He will have noted that the proposal relates solely to the International Wheat Council and does not give power to confer tax immunity upon any other body.

My hon. and gallant Friend asked what was the meaning of subsection (3). That subsection ensures that the power given to us by the 1950 Act—to grant tax exemption to organisations to which we do belong—shall not be treated as being in any way affected by this specific provision which enables us to give tax exemption to a body to which we do not belong.

5.15 p.m.

I now come to the point raised by the hon. Member for Islington, East. I am sorry he thought that I should have dealt with the question of retrospection when I moved the Motion. I did not do so because I had seen his Amendment, and had no doubt that he would deploy his argument upon it either when he moved it or on the main Question, and I thought it would be more convenient to him, and possibly less tedious to the House, if I postponed what I had to say until I had heard what he had to say. I did not intend to let that aspect of the matter go by without any reference to it.

The hon. Member referred to the fact that I have occasionally said one or two things upon the subject of retrospection, but I think he will agree that my criticisms of retrospection have been made in cases where tax has been imposed and not where relief has been granted. From the ordinary, commonsense point of view of the human interests concerned it is obviously quite a different matter to exempt someone retrospectively from tax than it is to impose a tax retrospectively. Therefore, the general arguments about retrospection do not apply to this case, where we are relieving a body from liability to tax.

The hon. Member then asked what had been the position since the tax exemption lapsed on 31st July, 1953. The normal procedure of P.A.Y.E. is not open to us in this case. As the International Wheat Council is a collection or assembly of foreign Governments its employees are not subject to the P.A.Y.E. regulations. Whatever may be the position with regard to the tax liability of its employees, we have no power to impose upon the Council the duties we normally impose upon employers. Consequently, P.A.Y.E. cannot be applied to the salaries paid by it. In any event, whatever the House may decide about tax liability, we are not in a position to apply P.A.Y.E.

If the House should decide not to grant this proposed exemption it would be necessary—in relation to the period from 31st July of last year to the end of the last financial year—to assess these people for Income Tax, and, in the normal way, such assessments would be made towards the end of the summer. The position with regard to that tax has not been prejudiced in any degree by the fact that the exemption lapsed on 31st July and that no tax has been levied, physically, upon them since then. The position is entirely open, and if the House decided that this Clause should not operate retrospectively, assessments could be served upon the people concerned in the ordinary way in a few weeks' time.

I should like to explain why I think it is right to make this provision retrospective. I proceed on the assumption that the House is in favour of giving this exemption, at any rate, "as of now." as our American friends say. The question arises whether it is either right or sensible to levy it for the period between 31st July of last year and the date when this Bill comes into force. I think that the International Wheat Council and its employees would consider that we were being a little pernickety and, perhaps, even a little oppressive, if, having decided in principle to put through the House of Commons a provision giving a special exemption to these employees alone, we were none the less to levy a tax upon them in respect of the short intervening period.

I think it would spoil the effect of what we are trying to do, and, in view of the fact that the amount of money involved is absolutely trivial, I think that we should be wrong to throw away a good deal of the impression which I hope that what we are doing will create. In view of those considerations, I hope that the House will be prepared to do the job properly and allow exemption to take effect as from 31st July last year.

Is not this a case of coming clean? There is one significant question that the Financial Secretary has not answered, and that is, why this Clause did not appear in the Bill in the first place. Is it not a fact that, since Homer sometimes nods, and, I suppose even Macaulay did sometimes, the Board of Inland Revenue on this occasion overlooked the existence of these taxpayers as taxpayers and that, consequently, no steps were taken to collect tax from them?

In this case Homer has not nodded. The reason is that it is only in the last two weeks that representations have been made on behalf of the International Wheat Council.

Question put, and agreed to.

Clause read a Second time.

Does the hon. Member for Islington, East (Mr. E. Fletcher) wish to move his Amendment to the proposed new Clause, to leave out lines 7 to 10?

In view of the very full explanation that the right hon. Gentleman has given the House, and as this is a small matter, I do not propose to move the Amendment.

Clause added to the Bill.

New Clause—(Pool Betting Duty (Exemption))

(1) Pool betting duty shall not be charged on bets made by way of pool betting in a competition for prizes for making forecasts as to sporting or other events, if, in relation to that competition the following conditions are satisfied, that is to say—

  • (a) that the promoter of the competition is a society not conducted or established for profit, or is a member of such a society and authorised by the governing body of the society to promote the competition;
  • (b) that the total amount payable by way of winnings in the competition does not exceed two hundred and fifty pounds;
  • (c) that the whole proceeds of the competition, after deducting the prizes therein and any expenses incurred in connection therewith, are applied for the purposes of the society; and
  • (d) that every coupon or other entry form shall bear upon the face of it the name and address of the society by which, or by the authority of which, the competition is promoted.
  • (2) For the purposes of this section the expression "society" includes a club, institution, organisation or other association, by whatever name called, and also includes any local or affiliated branch or section of such a club, institution, organisation or other association; and the expressions "pool betting duty," "pool betting," "promoter," have the same meanings as they have in the Finance (No. 2) Act, 1947.—[ Mr. Mulley.]

    Brought up, and read the First time.

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

    The purpose of this Clause is to exempt from Pool Betting Duty, which is at present levied at the rate of 30 per cent. of the total money staked, certain small pools that comply with the conditions set out in the Clause. The first is as to size, that the total paid by way of winnings does not exceed £250. As the prizes are unlikely to be less than 40 per cent. or 50 per cent. of the total money the pool would not be in size more than about £400 or £500 a week. Even if the prizes amounted to as little as 25 per cent. of the proceeds the total size of the pool would be limited in this way to about £1,000.

    Under the Pool Betting Act, 1954, as from 1st January next the pools will have to publish weekly and annual statements of the prizes paid and the moneys deducted for expenses. Obviously, if a society made a very small return in prizes out of the moneys received that would come to the notice of the people who patronised it, and would, in consequence, not exist very long. In addition, there is general supervision by the accountant to be appointed by the local authority with which the society is required to register. So there are sufficient safeguards to ensure that this exemption, if it were granted, would not be abused.

    The exemption will apply only to competitions conducted by or on behalf of societies not conducted or established for profit, and whose proceeds, after deductions for prizes and expenses, are devoted to the purposes of the society. I am advised that this definition will be wide enough to include football and cricket supporters' clubs, Church and charitable organisations, political and social clubs.

    Can the hon. Gentleman say whether this would cover the inhabitants of a small village desirous of building a village hall, and running such a pool for that purpose?

    I cannot claim to be an expert on the law in the matter, but presumably it would, because it applies to non-profit-making organisations, and if the purpose of the village society were to build a hall and the pool proceeds were devoted to that purpose, I should think that the society would fall within the conditions of the Clause. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) is hoping to speak on this new Clause, and if he does he will be able to deal at greater length with the hon. Member's question.

    The necessity for the Clause arises from a series of prosecutions and the closure in recent months on police advice of a large number of competitions that were run by these types of organisations. Having been advised to close under the provisions of the Betting and Lotteries Act, their only alternative is to turn themselves into pools as defined by the Finance Acts of 1947 and 1952. In so doing they possibly become legal and they certainly attract Pool Betting Duty at the rate of 30 per cent., which is a very large amount, and is particularly hard on the smaller societies, because 30 per cent. tax probably represents a bigger sum than they are getting for the expenses of running a lottery or pool.

    The extent to which these organisations are registering as pools can be gauged from figures the Chancellor gave me in reply to a Written Question on 1st June. On 1st January, 1954, there were 47 pools registered to pay duty and 35 paying duty. By 1st May the number had risen from 47 to 90, and the total paying duty had risen from 35 to 73, more than double. Although from the figures the Chancellor gave me it is impossible to say that the increase is entirely due to organisations of the kind I have been talking about and such as would be covered by the new Clause, there is good reason to suppose that most of them will be those societies and clubs obliged to operate as pools, and so obliged to pay 30 per cent. duty. But for the tax many of the societies that have been closed would have been operating and would have been permitted to operate as pools.

    Even with the tax at 30 per cent. the number grows. There is evidence of that in "The Times" of 5th July. Under the heading, "Hope of saving aid to county cricket. Scheme to legalise competitions," there appeared the following news:
    "A scheme has been put forward which will, it is hoped, save the football competitions organised by supporters' associations of several county cricket clubs, which have recently been banned by the police.…All the associations represented at the meeting had agreed to recommend to their committees that the scheme be brought into force. The new competitions would have to be registered as football pools and would be liable to taxation."
    The plight of the competitions is likely to get much worse, judging by the following passage in "The Times":
    "Police have warned officials of Colchester United Football Supporters' Club that the football competition which their club have been running for their 38,000 members is illegal and must cease. It is understood that similar action is being taken with the Chelmsford City and Clacton Town competitions. At the Colchester supporters' annual meeting last week it was reported that £11,000 had been contributed to the parent club."
    Those are but examples of many instances that have occurred during the year.

    County cricket is especially worthy of the Chancellor's consideration, because only last year he made a special tax concession to county cricket in view of its special circumstances. County cricket would not go on in the less fashionable counties, even with the benefit of the tax concession, unless it had supporters' clubs able to raise considerable sums of money. The Chancellor here has a great opportunity to provide a relief which would give widespread satisfaction.

    5.30 p.m.

    I will deal with the matter of cost in a moment. It may be objected that what is needed is not an amendment to the Finance Bill, but an amendment of the Betting and Lotteries Act to enable the competitions to continue to be run as formerly as lotteries under Section 24 of that Act. Of course, they would not attract any Pool Betting Duty.

    It may be argued that it would be unreasonable to attempt to amend the betting law by means of a new Clause to the Finance Bill, but, of course, we should not be doing that. We should only be dealing with the matter of taxation, and while I would not pretend for a moment that the better way of doing what I seek to do by this Clause would be by an amendment of the Betting and Lotteries Act, I think that we have to be very realistic about it and realise that such an amendment is not likely to take place for some time.

    The Government have been fairly sympathetic, but they have given no undertaking, or even an indication that they will introduce legislation for this purpose next year. It may be that a private Member will see fit and have the good fortune to do so, but one does not know, and, even with the maximum of good fortune, this state of affairs is bound to last for at least another year.

    I had hoped, in my own Bill, to meet the point, but the situation did not arise until after the Bill was drafted, and, of course, the long Title prohibited dealing with this lottery point. While I hope that the Financial Secretary or the Chancellor will tell us that some legislation is contemplated at an early date, I submit that in the meantime this new Clause could meet the point.

    I suggest to the Chancellor that it would cost him nothing at all, at least nothing in the way of revenue that he expected to get. No tax remission, of course, ever costs nothing, but the Chancellor could surely not have foreseen, when drawing up his Budget, that there would be this wave of prosecutions and all this closing down of lotteries, and the application by the societies concerned, to become pools, and, therefore, to become liable to pay the Pool Betting Duty. At any rate, I do not think the Chancellor contemplated that, in the present week, there would be county cricket supporters' associations contemplating the paying of Pool Betting Duty next year.

    I may be wrong, but, obviously, the Chancellor could not have anticipated, when drawing up his expenditure and revenue for this year, any additional revenue in this way from the tax. Therefore, any tax which these bodies pay is in the nature of a windfall to the Chancellor, and one, I submit to him, which he can very well do without. The Pool Betting Duty was never designed to be imposed upon football supporters' clubs and Church and charitable organisations. Indeed, when the duty was first imposed in 1947, all these organisations were, in fact, operating as lotteries, and therefore did not come within the definition.

    It may be that the Financial Secretary will fall back on the technical argument of drafting as a reason for resisting the Clause. However, I think he will appreciate that even though I had the benefit and assistance of my hon. and learned Friend the Member for Kettering in the matter, it is very difficult to draft Clauses of this character so as to satisfy the very exact standards of the Customs and Excise. This Clause was on the Order Paper during the Committee stage, but, unfortunately, it was not called. Therefore, I hope that the Financial Secretary will not fall back on the technical excuse of drafting.

    I wish to make it quite clear that I am not especially tied to the form of words used in the Clause, or even to the figure of £250. I am seeking to get the Government to accept the principle that Pool Betting Duty need not be charged in the case of charitable non-profit-making organisations which have formed themselves into pools as a result of the limitations of the Betting and Lotteries Act. I suggest to the Financial Secretary that, even if he is unable to accept the Clause in its present form, he should accept the principle contained in it and amend the Bill in another place.

    I doubt whether this Bill will get a certificate as a money Bill. Does the Financial Secretary deny the possibility of amending it in another place? If the Government think that something on these lines should be done, then I am sure that they should not allow a little inconvenience to stand in their way. Otherwise, I think it ought to go on record that the Government are prepared to let a little inconvenience stand between thousands of people and the relief which they seek. If that is so, then I think that the Financial Secretary should make it clear so that the people may know what the situation is when these matters are raised, as they frequently are, in the constituencies.

    To suggest that the Finance Bill should be amended in another place is surely an unusual suggestion to come from the benches opposite.

    Though the hon. Gentleman is very learned in the matter, I would remind him that more than half the Finance Bills in recent years have not been classed as money Bills, and I think that the present Bill is one of them. The necessary Amendment would be of a technical character, and it would come back to this House. Therefore, I can see no objection to it. I do not wish to go into the constitutional argument as, otherwise, I may strain the patience of the Chair. I hope that we shall get a favourable reply from the Financial Secretary because this duty is causing considerable hardship to a great number of very worthy organisations.

    Although the proposed new Clause would not provide the complete solution to the problem, it would at least provide a temporary relief. I would point out to the Chancellor that he will lose this money in any event when the Betting and Lotteries Act is amended—as it must eventually be—because the organisations concerned will then become lotteries, and will not be subject to the Pools Betting Duty.

    There is also, I submit, considerable administrative and management charges involved in collecting small packets of tax of this sort, and I doubt very much whether in some cases the cost of collection would not be greater than the tax itself. In addition, it may well be that some organisations are still running illegal lotteries, and that, nevertheless, the Customs and Excise are collecting duty from them as though they were pools, because the law on the point is extremely obscure. I am sure that it would be very embarrassing for the Customs and Excise if it were subsequently shown that they had been taking money in respect of a competition that was, in fact, an illegal competition.

    Therefore, I suggest to the Chancellor that on administrative grounds and on those of equity he should give up his claim to a tax windfall which he did not expect to get, because that is really all this Clause means. If he does that, he will give encouragement and hope to thousands of voluntary workers in the organisations concerned, and will enable a number of football and cricket clubs to continue in existence which, in default of a relief of this kind, may next season be obliged to close their doors.

    I beg to second the Motion.

    I wish to tell the House why I think that this is a matter of very considerable importance. The object of the proposed new Clause is a simple one—the removal of the obligation to pay Pool Betting Duty on non-profiting-making pools, subject to certain conditions concerning the size of the prizes and subject to no commissions being paid.

    I should have thought that, in general, the type of pool that might be organised in aid of a village hall or similar purpose would be helped by this Clause. In the past, it has not been the practice in very many cases to have this type of small non-profit-making pool. Of course, there have been some, but they have not been very numerous. What has happened is that there have been lotteries—the line between a lawful pool and an unlawful lottery is a very fine one—run for good purposes, sometimes on quite a small scale. An obvious instance is the football supporters' clubs.

    Recently, the police have gone round the country and have told people running these lotteries that they were illegal, or might be illegal, and that they would have to prosecute if the lotteries were continued. This has raised a serious social question which I will not go into at any length now, but it seems to me quite clear that in a number of these cases the lotteries in question were serving a perfectly good purpose, and the line between what is and what is not a lottery in this country is so fine and so difficult to draw that it is quite impossible to make a moral distinction depend upon it.

    A football pool in the usual form is legal and has been held to be legal. If we put it into a different form, and make it depend on the number of goals instead of merely on the winning teams, it becomes illegal. Even the exercise, to which I have never been able to aspire, commonly known as the crossword puzzle, is held to be a lottery in certain circumstances. Surely, if a football pool is not a lottery and a crossword puzzle is a lottery, there is something wrong and absurd about the law.

    The position in which these people have been put is this. They have either to bring themselves within the very limited Clauses, to which my hon. Friend the Member for Sheffield, Park (Mr. Mulley) has referred, about private lotteries in the 1934 Act, or they have to convert themselves into football pools. The obstacle about converting themselves into football pools is the tax. That is the main obstacle.

    I do not believe that the tax was ever intended to apply to that sort of case. I am not saying "intended to imply" in the technical sense in which, of course, it applies at present; but I do not believe that when the tax was imposed originally anyone was thinking of the circumstances which have now arisen. I repeat "the circumstances." People who have been running small illegal lotteries, for what I believe we would all say were, on the whole, good purposes or, at any rate, not bad purposes, have now been prosecuted or threatened with prosecution when, in fact, they had deliberately been overlooked before. They are, therefore, faced with the alternative, either of bringing themselves within the small private lottery provisions of the 1934 Act, which is an exceedingly difficult thing to do, or of converting themselves into lawful football pools.

    The hon. and learned Gentleman referred to such a conversion as an obstacle. Surely it is not an obstacle, it is merely an additional financial burden on the small pool that is created.

    I think it would have the effect of deterring a very large number of people from going on with the pool. I think that it would be a real deterrent to the type of thing which we have in mind.

    I have been asked in my own constituency, "What do we do about our football supporters' clubs?" and I have said, "There are only two choices before you—one is to bring yourselves within the provisions of the 1934 Act"—and there will have to be very substantial changes in order to do it, but I should not be in order in discussing that—"or you turn yourselves into a football pool." The answer I received—and hon. Members who may have said the same thing on a similar occasion have probably received the same answer—was, "Well, in that case we have to pay the Pool Betting Duty, and it simply is not worth it."

    It is not only the case of the Pool Betting Duty, they are also, of course, to be supervised—they do not object to that—but it is the actual amount of this rattier heavy Duty of 30 per cent. which, I believe, is deterring people. If it is held that that is a doubtful case, we could not have a better reason than the one produced by an hon. Member opposite just now of raising money for something in the nature of a village hall.

    We have to take people as we find them, and the fact remains that if we raise money by something of this sort we get more money than if we ask for direct subscriptions. I am not here drawing a fine distinction about the morality of these matters. I say frankly that it does not seem to me in that sort of case to be wrong. I can understand that other people may think otherwise, but I do not believe that the broad sense of the community takes that view. I think that they look, as British people always do, at the real substance of the matter, and the same reasons that led to the legalisation of small raffles and small lotteries to a limited extent in the 1934 Act would induce them to say that it is perfectly right to give a similar protection, although in an entirely different field, to these small pools.

    5.45 p.m.

    I said just now that the line is a fine one. It is, of course, fine both for purposes of the law and for purposes of morality. One might object to football pools. They are, however, legal, and, so long as that is the position, it does not seem to me that there ought to be any moral objection to seeing that the duty is fairly applied and limited to the kind of cases which, I believe, the House had in mind when they were passing the original duty.

    The Chancellor of the Exchequer will no doubt tell us what this is to cost. I think that my hon. Friend made it quite clear that what we had in mind by this new Clause was not only and perhaps not mainly the present position, but that we were deliberately intending to open the door to a certain amount of small pool-making, if I may use that term. That is to say, we deliberately intended to allow people, so far as the financial position was concerned, to run and support small pools.

    I entirely agree with what my hon. Friend said, that it would be far more satisfactory if, instead of dealing with a matter of this sort in a Finance Bill, we were able to discuss, fully and properly, the whole position about lotteries as well as pools and, indeed, the whole position about betting and wagering. I do not want to get out of order and, therefore, I would only say this: I think that the recent change in the attitude of the police authorities all over the country, for whatever reason, from the attitude they adopted, and said they adopted, when they were giving evidence before the Royal Commission in 1950—that that change of attitude and one or two other things has made a thorough revision of that sort absolutely imperative.

    If it is not done I think that a great many sporting, charitable and, possibly, religious organisations will find themselves in very serious difficulty because the law is in a mess and the Government have not the courage to bring forward a Measure to put it right. I say at once that I think it needs a lot of courage for this is an extremely touchy and difficult matter, but it ought to be done.

    Until it is done, and also because this is right in itself, I support the Clause. I hope that the Chancellor will accept it as it is. It is not a very complicated Clause. I do not think we need worry too much about having it amended or not amending it. Why should we not take it as it is? It is in plain English and says what it means. It is a very good Clause for a very good purpose; it has been very skilfully drafted, and it is even better in its intention and effect than in its language.

    I am sure that the House will agree that the right way to achieve the object for which the proposed Clause is drawn is, as was said by the hon. and learned Member for Kettering (Mr. Mitchison), by reform of the betting and lotteries legislation. However, whatever strictures may be passed upon the present administration, I am sure the hon. and learned Member will recognise that were it to change within the next two or three years reform of that legislation would still be waiting to be dealt with in the future. Thus, we are faced with an immediate problem.

    The problem has arisen as a result of the apparent change in policy of police forces in various parts of the country which has led them to advise those who organise football competitions, in aid, particularly, of football clubs, that they are acting illegally.

    The part of the country which I represent is particularly affected. We have a small and struggling team which, unfortunately, last year ended fairly low in the Third Division. This team has depended very largely upon the work of its supporters and the financial help which it has received during the last few years by means of a football competition. The team is supported by a number of constituents of my right hon. Friend the Chancellor of the Exchequer. He may well feel, as he may be, as I am, a member of the supporters' club, the indignation of the members of the Colchester United Supporters' Club when they found that they were no longer able to give the team such financial help in the future.

    Admittedly, there is a way out, and it was pointed by the hon. Member for Sheffield, Park (Mr. Mulley). It is possible to turn the football competition into a football pool, but if that is done it will be subject to the 30 per cent. tax. It is a very different matter to get enthusiastic supporters to raise money in this way if they know that 30 per cent. of the reward of their efforts will go to the Exchequer. I am sure that all hon. Members are anxious to support the Exchequer normally according to the law, but it is hard if, in one's spare time, one is called upon to work to provide additional revenue for the Treasury.

    Consequently, although the drafting may not commend itself to my right hon. Friend, I feel that the object of the Clause ought to commend itself to the House. I am sure that I should be supported in these remarks by my hon. Friend the Member for Chelmsford (Mr. Ashton) if he were in the Chamber, because one of the teams most recently affected by the decision was Chelmsford Town. On the other side of my constituency, Clacton Football Club has also been affected by it.

    The decision affects the more modest football teams throughout the country who are struggling against considerable financial difficulty and whose supporters want to be able to ensure that their teams continue to give the entertainment and pleasure which these small clubs give.

    Even if my right hon. Friend cannot accept the wording of the proposed Clause, I hope that he will at any rate give us some hope that he looks upon the Clause, or will do so next year, with sympathy so that it will be possible for those who desire to continue to support activities of this sort, which are very desirable and essential, will have some expectation that in future their efforts will not be subject to 30 per cent. tax.

    I imagine that hon. Members on both sides of the House will sympathise very much with the object of the proposed Clause. The hon. and learned Member for Kettering (Mr. Mitchison) suggested—I agree with him—that the attitude of the police authorities until 1950 was probably more in keeping with public opinion all over the country than their attitude since then. We all recognise that their duty is to enforce the law, and the existing law apparently forbids these lotteries, but what disturbs me is why for so many years the police authorities did not do anything. I always understood that the kind of lottery which was then taking place was illegal.

    Be that as it may, here is an attempt to give some assistance to non-profit-making bodies which are forced into a difficult position by the chaotic nature of our law on this subject. I can give two examples from my own constituency. The Glamorgan County Cricket Club was one of the less fashionable county clubs in the past, but in recent years it has been more successful than hitherto. It was among the clubs which desired to maintain county cricket in soil which has not always produced county cricketers. To do this, it was induced to institute a scheme, and a supporters' club was established. My hon. Friend the Member for Kidderminster (Mr. Nabarro) should not be too hasty in condemnation of this, because I believe that the idea was copied from the Worcestershire Cricket Club.

    As a result of its efforts, the supporters' club bought certain equipment for the cricket club, paid for seating in some of the county grounds and instituted two nurseries for the training of young cricketers. All of these were desirable objects. The purist who objects to all forms of gambling will say that these are improper objects, but I am sure that the great majority of our people, whether they be associated with an organised religious body or not, will feel that that view is not tenable and that these objects are completely different from the form of gambling which is calculated to damage the social life of a family. The weekly subscription to the cricket team's supporters' club was 1s. per person. No one could be led into a life of intemperate gambling by subscribing to such a scheme.

    There was a not dissimilar scheme at Rudry, in my constituency, to which I referred in an intervention to the hon. Member for Sheffield, Park (Mr. Mulley). The local inhabitants formed a body with the very laudable object of building a village hall. There is no proper hall where the villagers can hold social functions. By means of some such scheme the people of the village have contrived, since the last war, to accumulate a few thousand pounds, which is a very large sum for such a small village. They are now faced with a strange state of affairs, that they cannot go on without turning their former scheme into a football pool or without using great ingenuity to bring it within the terms of the 1934 Act, possibly an even more difficult feat.

    I sincerely hope that there will be a wholesale re-examination of the inadequacy of our betting laws; that the Financial Secretary will be able to say that he views this Clause with sympathy and understanding; and that he will do his best to implement its object, because I feel that here is a case which is in keeping with public opinion, and public opinion on such an issue should be considered.

    6.0 p.m.

    This debate has ranged over wide issues covering views very largely on the present state of our laws on betting and lotteries and the whole complexities of the law effecting gambling. There are very great difficulties in discussing those sort of subjects by way of an amendment to the Finance Bill or, indeed, dealing with the problems that arise in connection with them by way of amending the Finance Bill. Apart from anything else, the general responsibility for the law affecting this matter rests, as the House knows, with my right hon. and learned Friend the Home Secretary. We are here only concerned with the very edge of the general problem, because it is sought to alter indirectly the effect of the general law on this subject by way of an adjustment of our taxation law.

    That is a very difficult thing to do, and if I may say so, perhaps of doubtful merit on principle. I fully understand the practical considerations, and I will in a moment come to them and to what lay behind the remarks of the hon. Member for Sheffield, Park (Mr. Mulley) and of other hon. Members. I think it is fair to say that if this House wants to consider the laws affecting betting and lotteries it is very difficult to give full weight to the differing views that are held in different parts of the country, and not at all along party lines, on the very narrow and limited point with which alone we are strictly concerned here, namely, the proposed new Clause to the Finance Bill. The hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Sheffield, Park themselves regard this new Clause as, at the most, the second best compared with what they really wish to do.

    I think I can make the matter quite clear by saying that if the law were amended the need for the new Clause would not arise, because there would be no such societies registered as pools. I agree that the point is difficult to deal with in this way, but surely on the Finance Bill we have to take notice of the fact that a tax which was designed for one purpose has been changed and is beginning to be applied to matters for which in the first instance it was not designed. That is why it is raised in this way.

    I fully understand the hon. Member's point and I will answer it in due time, but he appreciates that it is very difficult to deal with the general law on the subject by way of an adjustment to the revenue.

    There is one side issue I should like to mention before dealing with the main consideration. I was surprised to hear a criticism of the present position as it affects cricket. At an earlier stage of our debates on the Finance Bill we heard criticism of the favourable way in which my right hon. Friend had treated cricket, and I should have thought that we have an extraordinary good case in cricket, so good that hon. Members opposite wished other games and sports to have the same terms. Our hands are singularly clean in cricket, sometimes even in catching the ball.

    The general point of the difficulty of dealing with this matter by way of an amendment to the Revenue law is very clearly brought out when one looks at what precisely it is proposed to do, and my criticism of the Clause is not that it is ill-drafted. I think the hon. and learned Gentleman who drafted it performed a workmanlike job in so doing, but when we come to consider it in detail it 'brings out the very real difficulty which arises once we try to tinker with the laws on betting and lotteries by way of amending the Finance Bill.

    Let us see what it is that is proposed. Under the first subsection it is proposed
    "that the promoter of the competition is a society not conducted or established for profit."
    Immediately we try to apply those words to the subject matter with which hon. Members are concerned—that is, the subject matter of these small pools connected particularly with sporting clubs—we come up against the difficulty that these words do not bite on the problem at all.

    In practice, these small pools are organised generally not by the club itself which is to get the ultimate benefit but by a committee or individual on its behalf, and that committee or individual is, in fact, conducting a business of operating pools and certainly—here I fall into the condemnation of the hon. Member for Stechford (Mr. Roy Jenkins) about double negatives—not being conducted not for profit. The whole object of those who are promoting pools in that way is the raising of money for a good purpose, and, as I understand, they would not be covered by the benefit given by this new Clause nor, indeed, if we follow the matter back—

    If the right hon. Gentleman would read the Clause he would see that they are covered by these words:

    "…or is a member of such a society and authorised by the governing body of the society to promote the competition."
    That, I think, meets the situation.

    It does not meet it at all. The promoter is either a separate person or a member of the committee. In both cases if he conducts the matter in the way which I have described he would not get the benefit of not conducting for profit. It does not make the slightest difference if it is looked at as an alternative. The result is precisely the same.

    Let us come to the question of the ultimate recipient. Reference has been made to professional football clubs. Generally speaking, they do not come within this definition either, so even if it were possible to get over the initial difficulty of the actual person promoting or conducting the Bill and get to the principle of the recipient of the money, then at any rate in many of the cases, and in particular the cases to which hon. Members have indicated that they attach considerable importance, this proposal would not benefit them. The ordinary, professional football club is not in law a body not conducted for profit, and, therefore, a supporters' club attempting to raise money to assist such clubs is not covered, because it will come under the second difficulty of the ultimate recipient.

    I do not make that point to demonstrate that the new Clause is drafted on bad grounds. I tried to draft too many Amendments in Opposition myself to say that, but it is an indication that, however well a provision is drafted along these lines, it simply does not fit the facts. Therefore, we cannot deal with this matter satisfactorily in this way, and that, I am afraid, is the conclusion about the proposal to which, after a good deal of consideration, my right hon. Friend has come.

    There are other difficulties which I should put before the House. There is certainly the difficulty of principle in exempting from tax a normal trading activity because the profits are to be given to a good cause. That is a general principle which obviously gives rise to considerable difficulties. There is the problem, too, of competition with the small professional pools—the question whether it is fair to exempt completely this kind of pool and maintain tax at a high rate on the small professional pool. Apart altogether from the fact that the Clause does not do what it is intended to do, I do not think that the House will find a satisfactory solution to the problem on the lines of this proposal, and I do not think that we shall find it by amendment or alteration of the Clause, such as the hon. Member for Sheffield, Park was generous enough to suggest.

    I shared the excitement of my hon. Friend the Member for Handsworth (Sir E. Boyle) when I heard the hon. Member's suggestion that the Finance Bill should be amended in another place. I understand that that has not been done since another place amended Lloyd George's Finance Bill in 1909. Such a suggestion would raise most serious questions of Privilege. The suggestion was all the more remarkable in that it came from that side of the House which has not been always notorious for its advocacy of the rights of another place.

    Perhaps the right hon. Gentleman would bear in mind the possibility that the satisfactory outcome of the events of 1911 might be repeated.

    I do not know that that would be a particular inducement to another place to take the line which the hon. Member was good enough to suggest.

    This is a very real problem. I realise that the proposal is put forward because of the difficulty which is arising in the case of lotteries, which are now held to be outside the law. It is no duty of mine to comment upon the exercise of their rights by the prosecuting authorities, nor does it fall to me or my right hon. Friend to deal with proposals for amending the law itself. This is a problem which my right hon. Friend will be glad to discuss with my right hon. and learned Friend the Home Secretary in the coming year. The Home Secretary is considering this general aspect of the law at present, although, of course, it is not possible to hold out hopes of early legislation. I can say, however, that this debate has been extremely helpful in bringing out very clearly and underlining at any rate one of the difficulties that can arise in the present state of our law, and in raising the particular aspect of it to which attention can and will be given during the coming year.

    What the result of consideration of a complex, difficult and controversial matter of this sort would be, it would be wrong for me to attempt to forecast, but I can say to my hon. Friend the Member for Colchester (Mr. Alport) that full consideration will be given to this aspect of the matter and that during the coming year the law on this subject will be subjected by the Home Secretary to very careful thought to see whether improvements can be made. For the reasons that I have given—that it does not do what it sets out to do and that it only touches a corner of the very real problem—it is not possible for my right hon. Friend to accept the new Clause.

    It has been known for some time that this problem would become as acute as it has become recently. When the matter is being considered, will the right hon. Gentleman bear in mind that unless something is done the "Poppies" who play football for Kettering and the "Steelbacks" who play for Corby will not be able to continue their activities?

    6.15 p.m.

    The remarkable unanimity of the four speeches that we have heard on this subject led one to expect that the Financial Secretary would come down heavily on the side of doing something in this new situation, but the right hon. Gentleman advanced general reasons why the new Clause could not be accepted. He said that he did not think it right to use taxation, or relief from taxation, for this kind of purpose. In fact, we commonly use relief from taxation as a way of encouraging enterprises and projects which we think are desirable. Certainly, in the field of entertainment this is now fairly common.

    The Financial Secretary gave the example of cricket, where, he said, his hands were unusually clean.

    I beg the right hon. Gentleman's pardon if I appeared to be offensive and to be suggesting that his hands were not usually clean. The right hon. Gentleman took the case of cricket and showed where taxation relief had been used to encourage something that was desirable. If it could be done in the case of cricket, it could be done in circumstances like these.

    In the main, however, our case must rest on two sets of arguments. The first is that it really ought not to be impossible to distinguish between the football pool promoter who is in business for profit and the society or other undertaking that is trying to raise some money. Secondly, it is important to appreciate the difference in the circumstances—that circumstances have changed by reason of the very strict application of the law in recent times, about which perhaps the Joint Under-Secretary of State for the Home Department might tell us if that were in order.

    In these circumstances, in which there, has been a change compelling people who used to raise money in one way to raise it in another, we ask whether the Government cannot do something to give some relief. We are, therefore, very disappointed with the Financial Secretary. Without any reflection on the choice, I must say that this new Clause had been put down at an early stage but was not selected and, therefore, we recognise that there is a difficulty about the matter. All the same, we expected a more forthcoming reply from the Financial Secretary. We hope that even at this late hour he will go further to meet us than he has done so far.

    Question put.

    The House divided: Ayes, 206; Noes, 265.

    Division No. 190.]


    6.19 p.m.

    Albu, A. H.Harrison, J. (Nottingham, E.)Pearson, A.
    Allen, Arthur (Bosworth)Hastings, S.Peart, T. F.
    Allen, Scholefield (Crewe)Hayman, F. H.Popplewell, E.
    Anderson, Frank (Whitehaven)Healey, Denis (Leeds, S.E.)Porter, G.
    Attlee, Rt. Hon. C. R.Henderson, Rt. Hon. A. (Rowley Regis)Price, J. T. (Westhoughton)
    Awbery, S. S.Herbison, Miss M.Price, Philips (Gloucestershire, W.)
    Bacon, Miss AliceHobson, C. R.Proctor, W. T.
    Balfour, A.Holman, P.Pryde, D. J.
    Bartley, P.Houghton, DouglasPursey, Cmdr. H
    Beattie, J.Hoy, J. H.Rankin, John
    Bence, C. R.Hubbard, T. F.Reid, Thomas (Swinden)
    Bonn, Hon. WedgwoodHughes, Cledwyn (Anglesey)Reid, William (Camlachie)
    Benson, G.Hughes, Emrys (S. Ayrshire)Rhodes, H.
    Blackburn, F.Hynd, J. B. (Attercliffe)Richards, R.
    Blenkinsop, A.Irving, W. J. (Wood Green)Robens, Rt. Hon. A.
    Blyton, W. R.Isaacs, Rt. Hon. G. A.Roberts, Goronwy (Caernarvon)
    Boardman, H.Janitor, B.Robinson, Kenneth (St. Pancras, N.)
    Bottomley, Rt. Hon. A. G.Jeger, George (Goole)Rogers, George (Kensington, N.)
    Bowden, H. W.Jeger, Mrs, LenaRoss, William
    Bowles, F. G.Jenkins, R. H. (Stechford)Royle, C.
    Brook, Dryden (Halifax)Jones, David (Hartlepool)Shackleton, E. A. A.
    Broughton, Dr. A. D. D.Jones, Frederick Elwyn (West Ham, S.)Shinwell, Rt. Hon. E.
    Brown, Thomas (Ince)Jones, Jack (Rotherham)Short, E. W.
    Burke, W. A.Jones, T. W. (Merioneth)Simmons, C. J. (Brierley Hill)
    Butler, Herbert (Hackney, S.)Keenan, W.Skeffington, A. M.
    Callaghan, L. J.Kenyon, C.Slater, Mrs. H. (Stoke-on-Trent)
    Castle, Mrs. B. A.Key, Rt. Hon. C. WSlater, J. (Durham, Sedgefield)
    Champion, A. J.King, Dr. H. M.Smith, Ellis (Stoke, S.)
    Clunie, J.Kinley, J.Smith, Norman (Nottingham, S.)
    Coldrick, W.Lawson, G. M.Sorensen, R. W.
    Collick, P. H.Lee, Frederick (Newton)Soskice, Rt. Hon. Sir Frank
    Corbet, Mrs. FredaLee, Miss Jennie (Cannock)Sparks, J. A.
    Cove, W. G.Lever, Leslie (Ardwick)Steele, T.
    Craddock, George (Bradford, S.)Lindgren, G. S.Stokes, Rt. Hon. R. R.
    Crosland, C. A. R.Lipton, Lt.-Col. M.Summerskill, Rt. Hon. E.
    Cullen, Mrs. A.MacColl, J. E.Sylvester, G. O.
    Daines, P.McGovern, J.Taylor, Bernard (Mansfield)
    Dalton, Rt. Hon. H.McInnes, J.Taylor, John (West Lothian)
    Darling, George (Hillsborough)McKay, John (Wallsend)Taylor, Rt. Hon. Robert (Morpeth)
    Davies, Stephen (Merthyr)McLeavy, F.Thomas, Iorwerth (Rhondda, W.)
    Deer, G.Mainwaring, W. H.Thomas, Ivor Owen (Wrekin)
    Dodds, N. N.Mallalieu, E. L. (Brigg)Thomson, George (Dundee, E.)
    Dugdale, Rt. Hon. John (W. Bromwich)Mann, Mrs. JeanThornton, E.
    Ede, Rt. Hon. J. C.Manuel, A. C.Timmons, J.
    Edelman, M.Marquand, Rt. Hon. H. A.Tomney, F.
    Edwards, Rt. Hon. John (Brighouse)Mason, RoyUngoed-Thomas, Sir Lynn
    Edwards, Rt. Hon. Ness (Caerphilly)Mayhew, C. P.Usborne, H. C.
    Edwards, W. J. (Stepney)Hellish, R. J.Watkins, T. E.
    Evans, Albert (Islington, S.W.)Master, Sir F.Weitzman, D.
    Evans, Edward (Lowestoft)Mitchison, G. R.Wells, Percy (Faversham)
    Evans, Stanley (Wednesbury)Moody, A. S.Wells, William (Walsall)
    Fernyhough, E.Morgan, Dr. H. B. W.West, D. G.
    Fienburgh, W.Morley, R.Wheeldon, W. E.
    Fletcher, Eric (Islington, E.)Morris, Percy (Swansea, W.)While, Mrs. Eirene (E. Flint)
    Follick, M.Morrison, Rt. Hon. H. (Lewisharn, S.)Whiteley, Rt. Hon. W.
    Forman, J. C.Mort, D. L.Wigg, George
    Fraser, Thomas (Hamilton)Moyle, A.Wilkins, W. A.
    Gaitskell, Rt. Hon. H. T. NMulley, F. W.Willey, F. T.
    Gibson, C. W.Noel-Baker, Rt. Hon. P. JWilliams, David (Neath)
    Glanville, JamesO'Brien, T.Williams, Rev. Llywelyn (Abertillery)
    Gordon Walker, Rt. Hon. P. C.Oldfield, W. HWilliams, W. R. (Droylsden)
    Grenfell, Rt. Hon. D. R.Oliver, G. H.Willis, E. G.
    Grey, C. F.Oswald, T.Wilson, Rt. Hon. Harold (Huyton)
    Griffiths, Rt. Hon. James (Llanelly)Padley, W. E.Winterbottom, Richard (Brightside)
    Hall, Rt. Hon. Glenvil (Colne Valley)Paling, Rt. Hon. W. (Dearne Valley)Wyatt, W. L
    Hall, John T. (Gateshead, W.)Paling, Will T. (Dewsbury)Yates, V. F.
    Hamilton, W. W.Palmer, A. M. F.
    Hannan, W.Pannell, CharlesTELLERS FOR THE AYES:
    Hardy, E. A.Parker, J.Mr. Holmes and
    Hargreaves, A.Paton, JMr. James Johnson.


    Aitken, W. T.Baldock, Lt.-Cmdr. J. M.Bennett, F. M. (Reading, N.)
    Allan, R. A. (Paddington, S.)Baldwin, A. E.Bennett, Dr. Reginald (Gosport)
    Alport, C. J. Ml.Banks, Col. C.Bennett, William (Woodside)
    Amery, Julian (Preston, N.)Barber, AnthonyBevins, J. R. (Toxteth)
    Amory, Rt. Hon. Heathcoat (Tiverton)Barlow, Sir JohnBishop, F. P.
    Arbuthnot, JohnBaxter, Sir BeverleyBlack, C. W.
    Assheton, Rt. Hon. R. (Blackburn, W.)Beach, Maj. HicksBossom, Sir A. C.
    Aster, Hon. J. J.Bell, Ronald (Bucks, S.)Boyd-Carpenter, Rt. Hon. J. A

    Boyle, Sir EdwardHinchingbrooke, ViscountOrr-Ewing, Charles Ian (Hendon, N.)
    Braine, B. R.Hirst, GeoffreyPage, R. G.
    Braithwaite, Sir Albert (Harrow, W.)Holt, A. F.Peaks, Rt. Hon. O.
    Braithwaite, Sir GurneyHope, Lord JohnPeto, Brig. C. H. M.
    Bromley-Davenport, Lt.-Col. W. H.Hopkinson, Rt. Hon. HenryPeyton, J. W. W.
    Brooke, Henry (Hampstead)Hornsby-Smith, Miss M. P.Piekthorn, K. W. M.
    Brooman-White, R. C.Horobin, I. M.Pitt, Mist E. M.
    Browne, Jack (Govan)Horsbrugh, Rt. Hon. FlorencePowell, J. Enoch
    Buchan-Hepburn, Rt. Hon. P. G. T.Howard, Gerald (Cambridgeshire)Price, Henry (Lewisham, W.)
    Bullus, Wing Commander E. E.Howard, Hon. Greville (St. Ives)Prior-Palmer, Brig. O. L.
    Burden, F. F. A.Hudson, Sir Austin (Lewisham, N.)Profumo, J. D.
    Butcher, Sir HerbertHulbert, Wing Cdr. N. J.Raikes, Sir Victor
    Butler, Rt. Hon. R. A. (Saffron Walden)Hutchison, Sir Ian Clark (E'b'rgh, W.)Ramsden, J. E.
    Campbell, Sir DavidHyde, Lt.-Col. H. M.Rayner, Brig. R.
    Carr, RobertHylton-Foster, H. B. H.Redmayne, M.
    Cary, Sir RobertIremonger, T. L.Rees-Davies, W. R.
    Channon, H.Jenkins, Robert (Dulwich)Remnant, Hon. P.
    Clarke, Col. Ralph (East Grinstead)Jennings, Sir RolandRenton, D. L. M.
    Clarke, Brig. Terence (Portsmouth, W.)Johnson, Eric (Blackley)Ridsdale, J. E.
    Cole, NormanJohnson, Howard (Kemptown)Roberts, Peter (Heeley)
    Colegate, W. A.Jones, A. (Hall Green)Robinson, Sir Roland (Blackpool, S.)
    Conant, Maj. Sir RogerJoynson-Hicks, Hon. L. W.Rodgers, John (Sevenoaks)
    Cooper, Sqn. Ldr. AlbertKaberry, D.Roper, Sir Harold
    Cooper-Key, E. M.Kerby, Capt. H. B.Ropner, Col. Sir Leonard
    Craddock, Beresford (Spelthorne)Kerr, H. W.Russell, R. S.
    Crookshank, Capt. Rt. Hon. H. F. C.Lambton, ViscountRyder, Capt. R. E. D
    Crosthwaite-Eyre, Col. O. E.Lancaster, Col. C. G.Savory, Prof. Sir Douglas
    Crouch, R. F.Langford-Holt, J. A.Schofield, Lt.-Col. W.
    Crowder, Sir John (Finchley)Leather, E. H. C.Scott, R. Donald
    Darling, Sir William (Edinburgh, S.)Legge-Bourke, Maj. E. A. H.Scott-Miller, Cmdr. R.
    Davidson, ViscountessLegh, Hon. Peter (Petersfield)Shepherd, William
    Davies, Rt. Hn. Clement (Montgomery)Lennox-Boyd, Rt. Hon. A. T.Simon, J. E. S. (Middlesbrough, W.)
    Deedes, W. F.Lindsay, MartinSmithers, Peter (Winchester)
    Digby, S. WingfieldLinstead, Sir H. N.Smithers, Sir Waldron (Orpington)
    Dedds-Parker, A. D.Llewellyn, D. T.Snadden, W. McN.
    Donaldson, Cmdr. C. E. McA.Lloyd, Rt. Hon. G. (King's Norton)Spearman, A. C. M.
    Donner, Sir P. W.Lloyd, Maj. Sir Guy (Renfrew, E.)Speir, R. M.
    Doughty, C. J. A.Lloyd, Rt. Hon. Selwyn (Wirral)Spens, Rt. Hon. Sir P. (Kensington, S.)
    Douglas-Hamilton, Lord MalcolmLockwood, Lt.-Col. J. C.Stanley, Capt. Hon. Richard
    Drayton, G. B.Longden, GilbertStevens, Geoffrey
    Drewe, Sir C.Low, A. R. W.Steward, W. A. (Woolwich, W.)
    Duncan, Capt. J. A. L.Lucas, Sir Jocelyn (Portsmouth, S.)Stewart, Henderson (Fife, E.)
    Duthie, W. S.Lucas, P. B. (Brentford)Storey, S.
    Eccles, Rt. Hon. Sir D. M.Lucas-Tooth, Sir HughStrauss, Henry (Norwich, S.)
    Eden, J. B. (Bournemouth, West)Lyttelton, Rt. Hon. O.Stuart, Rt. Hon. James (Moray)
    Erroll, F. J.McCorquodale, Rt. Hon. M. S.Studholme, H. G.
    Finlay, GraemeMacdonald, Sir PeterSummers, G. S.
    Fisher, NigelMackeson, Brig. Sir HarrySutcliffe, Sir Harold
    Fleetwood-Hesketh, R. F.McKibbin, A. J.Taylor, Sir Charles (Eastbourne)
    Fletcher-Cooke, C.Mackie, J. H. (Galloway)Taylor, William (Bradford, N.)
    Ford, Mrs. PatriciaMaclay, Rt. Hon. JohnTeeling, W.
    Fort, R.Macleod, Rt. Hon. Iain (Enfield, W.)Thomas, Rt. Hon. J. P. L. (Hereford)
    Fraser, Sir Ian (Morecambe & Lonsdale)MacLeod, John (Ross and Cromarty)Thomas, Leslie (Canterbury)
    Fyfe, Rt. Hon. Sir David MaxwellMacmillan, Rt. Hon. Harold (Bromley)Thornton-Kemsley, Col. C. N.
    Galbraith, Rt. Hon. T. D. (Pollok)Macpherson, Niall (Dumfries)Tilney, John
    Galbraith, T. G. D. (Hillhead)Maitland, Patrick (Lanark)Touche, Sir Gordon
    Garner-Evans, E. H.Manningham-Buller, Rt.Hn. Sir ReginaldTurner, H. F. L.
    George, Rt. Hon. Maj. G. LloydMarlowe, A. A. H.Turton, R. H.
    Glover, D.Marples, A. E.Tweedsmuir, Lady
    Godber, J. B.Marshall, Douglas (Bodmin)Vane, W. M. F.
    Gomme-Duncan, Col. A.Maude, AngusVaughan-Morgan, J. K.
    Gough, C. F. H.Maudling, R.Wade, D. W.
    Gower, H. R.Maydon, Lt.-Comdr. S. L. C.Wakefield, Edward (Derbyshire, W.)
    Graham, Sir FergusMedlicott, Brig. F.Wakefield, Sir Wavell (St. Marylebone)
    Grimond, J.Mellor, Sir JohnWalker-Smith, D. C.
    Grimston, Hon. John (St. Albans)Molson, A. H. E.Wall, Major Patrick
    Grimston, Sir Robert (Westbury)Monckton, Rt. Hon. Sir WalterWard, Hon. George (Worcester)
    Hall, John (Wycombe)Moore, Sir ThomasWard, Mitt I. (Tynemouth)
    Hare, Hon. J. H.Morrison, John (Salisbury)Waterhouse, Capt. Rt. Hon. C.
    Harris, Frederic (Croydon, N.)Mott-Radclyffe, C. E.Watkinson, H. A.
    Harrison, Col. J. H. (Eye)Nabarro, G. D. N.Webbe, Sir H. (London & Westminster)
    Harvey, Ian (Harrow, E.)Neave, AireyWellwood, W.
    Harvie-Watt, Sir GeorgeNicholls, HarmarWilliams, Gerald (Tonbridge)
    Hay, JohnNield, Basil (Chester)Williams, Sir Herbert (Croydon, E.)
    Head, Rt. Hon. A. H.Noble, Comdr. A. H. P.Williams, Paul (Sunderland, S.)
    Heald, Rt. Hon. Sir LionelNugent, G. R. H.Williams, R. Dudley (Exeter)
    Wills, G.
    Heath, EdwardNutting, AnthonyWilson, Geoffrey (Truro)
    Henderson, John (Cathcart)Oakshott, H. D.Wood, Hon. R.
    Higgs, J. M. C.O'Neill, Hon. Phelim (Co. Antrim, N.)
    Hill, Dr. Charles (Luton)Ormsby-Gore, Hon. W. D.TELLERS FOR THE NOES:
    Hill, Mrs. E. (Wythenshawe)Orr, Capt. L. P. S.Mr. Vosper and
    Mr. Richard Thompson

    New Clause—(Allowance For Subscription To Professional Organisation)

    The Ninth Schedule to the Income Tax Act, 1952, shall be amended by the insertion after paragraph 7 of the following new paragraph:-

    "(7A) If membership of a specified professional organisation was one of the conditions of appointment to the office or employment of profit, the annual subscription for such professional organisation may be deducted from the emoluments to be assessed."—[Mr. Albu.]

    Brought up, and read the First time.

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

    This new Clause is to deal with what apparently many people may consider a small injustice in connection with allowances for expenses. Frequently in this House we have discussed expense allowances, sometimes at very high level. I freely admit that the figures here are comparatively small, although in present conditions even a small sum of money may be of considerable value to an individual. In any case, I remember a little bit of Latin which begins, "De minimis …". Here we are asking only for the rectification of a small injustice, but that does not make it less important to a large body of very important citizens.

    The difficulty arises out of the very controversial paragraph (7) of the Ninth Schedule of the Income Tax Act, 1952, which defines the allowance to be made for expenses for someone working as an employee. It arises out of words which I can never remember, and have had to write down, that the expenses "must be wholly, necessarily and exclusively incurred in the performance of the duties of the office." They are words which, I am quite sure, are engraved on the heart of my hon. Friend the Member for Sowerby (Mr. Houghton).

    6.30 p.m.

    It might appear that this is merely a question of interpretation and that it is open—as it is—to the inspector of taxes to interpret this Clause widely or narrowly. The class of persons concerned are those people—mostly professional engineers, though there are other professionally-qualified persons—who are employed generally by public authorities and who, as a condition of their appointment, are required to be members of a particular professional organisation. I do not say that this really applies in private industry, because in my experience there is no difficulty whatsoever in getting a private employer to say, as is perfectly true, that if he employs one in that capacity he requires one to be a member of a professional organisation. I got over it by saying that my membership was wholly, necessarily and exclusively incurred in the performance of my employment.

    These qualifications are frequently required in the professional Civil Service. It may not be generally known to hon. Members that in this country for many years the examinations for corporate membership, particularly of the engineering institutions, have been one of the leading methods of getting professional qualification. To prove that one had the necessary educational background, and the practical training and experience, one obtained the qualification by examination and the usual method of proposal for acceptance by the appropriate body. In the course of many years, these qualifications have come to be recognised if not necessarily as the only, at any rate the main, qualifications.

    Will the hon. Member define the words "professional organisation" in the title of the new Clause? Is he able to say whether, if my right hon. Friend accepted this new Clause, my annual subscription to the Institute of Directors would be covered by it?

    It is not possible for me to interpret the law, even after helping to make it. I can only answer that if the Institute of Directors requires examination, and some experience and standing before one can become a member, and if it is a recognised condition of employment, I suppose that would be the case. But that I very much doubt, because one thing which is quite clear about that Institute is that no qualifications whatever are required in order to be a member. Perhaps I may now return to the very serious basis of the argument.

    I was saying that these qualifications have now become recognised frequently as the main qualifications, particularly in the engineering industry. In proof of that, perhaps I can quote from some recent advertisements in the Press for qualified persons. Today in the "Manchester Guardian" the Department of Atomic Energy advertises for a design engineer of whom the qualifications required are:
    "…recognised engineering apprenticeship with Associate Membership of the Institution of Mechanical Engineers, or equivalent …"
    In "The Times" of 9th June, the Mines Inspectorate of the Ministry of Fuel and Power advertised for a Deputy Principal Electrical Inspector of Mines and Quarries, and the advertisement said:
    "Candidates must be Corporate Members of the Institution of Electrical Engineers …"
    On the same day the Air Ministry advertised for civil engineers for duty in their Works Department. Among other things:
    "Candidates must be … Corporate Members of the Institution of Civil Engineers or Institution of Municipal Engineers."
    There was an advertisement on the same day for librarians for a number of different Departments—the Foreign Office, the Royal Air Force College at Cranwell and so on—and the qualification was that:
    "Candidates must be Fellows or Associates of the Library Association or hold the Diploma of the London School of Librarianship."
    It can therefore be seen that, to obtain many of these appointments, one must already be a member of one of these associations. To those hon. Members who do not understand these matters, I can say that one does not just pass an examination. One has to be elected a member and pay the appropriate subscription, which runs to five, six or seven guineas a year.

    This is not the first time that this matter has been raised. On other occasions when it has been raised the attitude of the Treasury has been based either on ignorance or an over-legalistic view. If the Financial Secretary is to reply, I hope that we shall not again get a piece of over-legalism. Last year I wrote to him on the subject, and in return received a most interesting and complicated letter. I was asking, not for legislation but for an interpretation of the present law in favour of the people of whom I am speaking. The letter I got back was, to say the least, Treasury legalism at its very worst. It is perfectly true that in his letter the Financial Secretary did not deny
    "…that the Government very frequently prescribe membership of a professional organisation as a condition of appointment to professional grades in the Civil Service."
    Then he went on:
    "But conditions of employment are quite another matter. The question is whether it is necessary for the Government as an employer to prescribe, either expressly or by implication, that continued membership of the appropriate institution is a sine qua non for continued employment in the job."
    In other words, one has to have paid the subscription and become a member of the professional institution to get the job, and after that it does not matter what one does. If the Treasury is saying that it does not care whether or not its professional officers, its scientists and engineers remain members of the professional institution, it is very ignorant of what these institutions do. Such institutions do not only qualify members by examination. They publish papers, hold conferences and meetings and keep the qualified man up to date with new ideas, changes and so on occurring in his profession. It must surely be to the advantage and interest of the Government service, and of the public service generally, that a man should continue to be a member of one of these institutions and, if necessary, if not one already, to become a full member.

    What we are asking is that where it is a condition of appointment that one must be a member of one of these bodies, it is only right that the subscription to that body should be allowed as expenses. We are not asking that any organisation shall be recognised as a professional body. Surely the appropriate Government Departments and the Treasury are capable of deciding the qualifications they require for particular jobs. I assume that the Civil Service Commission decides that. The Financial Secretary brings prejudice into the matter. He tries to make out that what I am asking for would mean that if a member were ever to resign from his appropriate professional body—and here I quote:
    "…he must ipso facto be sacked."
    What a strange mixture of Latin and slang. I am surprised that the right hon. Gentleman did not say:
    "He must ipso facto be dismissed from his appropriate employment."
    Then he said:
    "I hope that, on reflection, you will not think that this is either mean or dishonest."
    I consider it both.
    "I do not want you to conclude from what I have said anything definite one way or the other about whether the expenses of membership should be allowed for Income Tax purposes: that is quite a separate question. I am dealing only with the question of what it is right for the Government, as an employer, to put in their rules about employment."
    No employer can behave in that way and get out of his responsibilities. It is most extraordinary. I presume that the Treasury cannot bring pressure on the Inland Revenue on the interpretation of the law, but in the circumstances surely the proper thing to do is to accept the new Clause to put the matter beyond doubt. The Treasury is unwilling to say that what is a condition of appointment is also a condition of employment. If this is the sort of thing with which the colleagues of my hon. Friend the Member for Sowerby have to deal, I can only say that dancing on the point of a needle is nothing compared with it.

    No doubt my hon. Friend will support me in this attempt to simplify the law so that the officials do not have to deal with these almost impossible contradictions.

    The position is clear. The Inland Revenue cannot interpret the present provision in favour of the people of whom I am speaking because the Treasury is unwilling to say that what is a condition of appointment is also a condition of employment. Therefore, let us alter the law. It would cost the Treasury practically nothing and it would give a lot of satisfaction to many valuable Government servants.

    We have heard a good deal from hon. Members opposite about the effect of the redistribution of incomes and taxation on the professional classes. This would apply, on the whole, not to the very high level but to the medium level of the professional classes. Let the Treasury accept a fair and just change to put the law beyond doubt.

    6.45 p.m.

    I beg to second the Motion.

    My hon. Friend the Member for Edmonton (Mr. Albu) has spoken with his usual penetration and shown that this matter is of considerable concern to professional people. These arguments have been before the House on previous occasions under various Governments but, because they have been considered before and injustice has been done in spite of the strength of the arguments, there is no reason why the matter should not be considered again.

    I want to stress the difference between the professional man—the engineer, the technologist and the architect—in practice on his own account and the professional man employed by a public body or corporation. The man in business on his own account, whether he be architect, technologist or doctor, is allowed his subscription to his learned body or society. The membership of this society is often determined by examination and the membership is a recognition of qualification and standing. The hon. Member for Kidderminster (Mr. Nabarro) referred, I think jokingly, to the Institute of Directors.

    All right. It comes to the same thing, probably. I should regard the Institute of Directors as a kind of trade union though it is not quite so respectable as others.

    Is not it now patently clear that the whole purpose of the new Clause is to secure that a trade unionist's subscription to his trade union shall escape assessment for Income Tax?

    No. That intervention shows that the hon. Gentleman does not understand the purpose of the new Clause at all. The reason a subscription to the Institute of Directors would not be included is that such a subscription is of the nature of a trade union subscription and we do not ask for them to be included. The new Clause has nothing whatever to do with trade union subscriptions.

    The new Clause deals entirely with membership of a specified learned society or a scientific body. The kind of bodies we have in mind are the Royal Institute of British Architects or the Institutions of Electrical, Mechanical or Civil Engineers, which are not trade unions and which have Royal Charters. The point I was making is that a man in private practice can get an allowance for his subscription to such a body because it can be counted as an expense against his business under Schedule D. However, if the same man gives up business and accepts employment with a public authority or with a corporation, or a private employer for that matter, he can no longer get the allowance against his income. In other words, he must pay Income Tax on a sum of money which he never receives but which goes out so that he can carry on in his work efficiently and effectively.

    I do not think that any man joins a learned or a scientific society for fun though he may get some fun of a kind afterwards as a by-product, but he joins in order to further his work and to make himself more efficient as a member of the working community. I should think that that argument would commend itself to the hon. Member for Kidderminster. He knows that the country needs more trained, scientific and technical people of every kind. It needs professional people who are serious and zealous about their work. They should be encouraged as a matter of public policy.

    In the past the matter has been one of definition. I put down a similar new Clause some years ago and I think that on that occasion we also proposed a Schedule to deal with the difficulty of definition. On this occasion the Clause is drawn fairly narrowly. It is confined to membership of a recognised professional body if that is made a condition of appointment in the first place.

    My hon. Friend quoted a few examples. I propose to quote two from the current issue of the "Electrical Review." Here is an advertisement showing that the Yorkshire Electricity Board's head office wants a second assistant engineer on distribution design. It says,
    "Applicants should be corporate members of the Institution of Electrical Engineers."
    That is an example, and here is another:
    "Kent County Council. Senior Electrical engineers. Applications are invited from chartered electrical engineers for two appointments as above."
    I should have thought that those examples greatly strengthened the very moderate arguments which my hon. Friend has advanced. The Clause is drawn very narrowly—so narrowly that, in the circumstances, I should have thought that the Economic Secretary could have accepted it.

    I have a good deal of sympathy with, and I hope understanding of, the Clause. There is something to be said for it, but the difficulties seem to me to be greater than the advantages. If the Clause were accepted, I think we should find a great increase in the number of societies seeking to become, in the terms of the Clause, "specified professional organisations." Already there are a great number of them, and the Clause is an incitement to the formation of societies which would come within the description. I do not think that would be a very good thing for the existing societies, which have a standing of their own.

    Some remarks of a derogatory character have been made about the Institute of Directors. Would it be qualified under the Clause? I take it that it would, because it is a professional body and one cannot become a member of it unless one is a director. I happen to be a director of a company and I can say that becoming a director is a long, tiresome and tedious business. I understand the envy of hon. Members opposite, who could not qualify, because, in the words of George Bernard Shaw, in his opinion they lacked even the ability to be directors of a whelk stall. He said that, admittedly, some time ago.

    Would the hon. Gentleman tell me when the examinations for the Institute of Directors take place? Are they held annually, quarterly or biennially? What is the composition of the board of examiners?

    It would not be proper for me to take this opportunity to give in detail the qualifications for membership of the Institute of Directors, but the address is Palace Chambers, Victoria, and any inquisitive Opposition Member of Parliament can, by applying there, learn, undoubtedly to his disappointment, that he may not be eligible for membership. The qualifications are indeed very high—rightly so, because the direction of successful industry in this country is a task in which those engaged cannot be too highly qualified. I hope the Institute will be encouraged by hon. Members opposite, who I believe desire to augment their income in one way or another. Possibly this seems a suitable opportunity.

    There is something more important in the plausible arguments put forward by the hon. Member for Edmonton (Mr. Albu) and his colleague, the hon. Member for Cleveland (Mr. Palmer). The terms of the new Clause refer to membership of a "specified professional organisation." The National Union of Teachers is a professional organisation, and rightly so. It has no political associations of a marked character. Does the hon. Member for Edmonton think that every teacher in the country should, under the Clause, be entitled to deduct from his Income Tax the contribution which he makes to this professional Society?

    May I take it a little further and draw attention to the National Association of Local Government Officers. Hon. Members opposite may say that it is a trade union, but it is also a professional body the qualifications are high and it has standards of examination. Is it seriously contended that members of this trade union—no doubt reputable and proper trade union—may deduct their trade union contributions from their Income Tax?

    The hon. Member for Edinburgh, South (Sir W. Darling) completely misunderstands the point. It would have to be a condition of appointment, and although employers may encourage trade union membership, it is hardly likely to be a condition of employment.

    The hon. Member is suprisingly ill-informed on labour and trade union matters. Most hon. Members are aware that many local authorities demand that their employees shall he members of a trade union. They insist upon it as a condition of employment. If the hon. Member reflects, he will remember one which was prominent in the news quite recently—the County of Durham.

    The new Clause is an ingenious device, put forward with all the commanding plausibility which a not-too-successful director, now Member of Parliament for Edmonton, is able to command. Once this Clause is passed, no trade union will be satisfied until it is prescribed as "a specified professional organisation," and trade union subscriptions, quite proper in their place, will be deducted from Income Tax; and an increase in the income of the Labour Party will thereby be secured. I hope that, in the interests of the taxpayers and in the highest public interest, this Clause will be rejected.

    This Clause is one of the facets of the rather complicated problem of what are allowable expenses under what used to be Rule 9 of Schedule E of the Income Tax Act and is now in the Income Tax Act, 1952—the interpretation of the phrase

    "wholly, exclusively and necessarily incurred in the performance of the duties of"
    the particular office.

    The law has been laid down by Parliament and the interpretation of that phrase is in the hands of the courts; and the Inland Revenue, like the Treasury, is bound by what the courts say in the matter of interpretation. It has been clearly held in a number of cases that there is a difference between expenditure necessarily incurred in the performance of the duties of an office and expenditure incurred in order to make one fit to carry out those duties. For example, expenditure on books required for study in order to obtain certain knowledge before taking on the job is not allowed. Expenditure incurred in travelling to work in order to put oneself in a position to do the job is not allowed. Expenditure incurred in travelling in performing one's duties at work is allowed. That is a fairly clear principle which is laid down. It is one to which the Inland Revenue has to work it has no alternative.

    In the case of the subscriptions to learned societies and professional organisations, the classic case was Simpson v. Tate, 1925—a case in which a county medical officer was paying subscriptions to the Royal Society of Medicine and other similar royal and public institutions. These subscriptions were not a condition of his employment and it was clearly held by the court in those circumstances that they could not be deducted for Income Tax purposes.

    On the other hand, these subscriptions can be deducted where they are a definite and continuing condition of employment in order to enable the individual to carry out his duties with efficiency; where they are necessarily expended in the performance of the individual's duties, then they are allowed. Where that condition cannot be met, they are not allowed.

    What the hon. Member for Edmonton (Mr. Albu) seeks in the new Clause is that we should take this form of expenditure out of the general run of expenses and treat it differently—that we should say, in the case of subscriptions to professional organisations, that they should be treated differently from the normal run of expenditure incurred by people in connection with their employment. He is asking that the normal rules dealing with
    "wholly, exclusively and necessarily incurred in the performance of the duties"
    shall not apply in this case.

    May I ask a question about medicine and expenses allowed in this field? I am a member of the British Medical Association, although I disagree with its policy in most respects, and I also want to be a member of the Royal Society of Medicine which, in the case of my speciality—industrial diseases—offers one of the few places where I can get the requisite books.

    Will the Economic Secretary agree with me in recognising as a legitimate expense, from the point of view of earning my own living, my subscription to the Royal Society of Medicine, which is necessary in order to enable me to obtain necessary literature in following what is a comparatively rare speciality? Can he tell Me whether any improvement in the situation is to be expected, and whether this subscription will now be allowed as a legitimate expense for a professional man like myself doing a specialist job?

    7.0 p.m.

    I should hesitate to intervene in any question concerning the hon. Gentleman's own Income Tax.' He can get all the information he requires on that subject elsewhere, and I cannot debate the matter with him, not knowing whether he pays Income Tax under Schedule E or Schedule D. It is a very difficult matter.

    I do not feel that we could accept this proposal for changing the law relating to expenses in this particular regard, but I am advised that it is a matter which is now being considered by the Royal Commission. It is particularly the sort of complicated point on which it would be very much worth while to have the advice of the Royal Commission, and I can assure the hon. Gentleman that, while my right hon. Friend cannot accept this proposal at the present moment, he will be very glad to look at it again when he has received, in addition to the advice of the hon. Member, the advice of the Royal Commission.

    Can I ask the Economic Secretary a question? He has said that the matter is being considered by the Royal Commission. Are we then to have a further report from the Commission on the taxation of the income of individuals?

    The Interim Report has covered a number of points. No doubt, we shall in due course have another report covering all other matters considered.

    As usual, the Economic Secretary has taken refuge in a possible report on this matter which may be presented at some future time, but that does not alter the facts, as far as we see them. It is true, as many hon. Members are aware, that we have discussed this matter on several occasions in past years, but, again, that is no reason why, having discussed the general proposal before and Governments having turned it down, this Government should turn down this particular Clause if, in the view of the House as a whole, the Clause is a good one.

    I listened very carefully to the hon. Member for Edinburgh, South (Sir W. Darling), who, as usual, gave us a very humorous speech, which was quite beside the point. Over and over again, from this side of the House, it has been asserted that we are not here trying—although there is no reason why we should not do so—to get special treatment for trade unionists. If we were, we should only be trying to put trade unionists on all fours with members of the Federation of British Industries, because, so I understand, the subscription to the F.B.I. is allowed to count in this way, and if those people are allowed to count their subscription as an expense, why on earth should not lesser people—if they are lesser people—also be allowed to count their subscriptions to a trade association or to a trade union?

    This Clause is very limited in its scope, and sets out to do one simple thing, It concentrates on the proposition that the annual subscription, which professional men and women have to pay to their professional organisation, where the subscription is obligatory on the individual, should rank for tax allowance.

    The Economic Secretary quoted the case of Simpson v. Tate, which is the leading case on this particular point. There, as the hon. Gentleman very rightly said, the court decided against Mr. Tate, who was a medical officer of health. The hon. Gentleman did not, however, point out to the House that the Special Commissioners, who dealt with the matter before it went to the High Court, granted Mr. Tate his case. In their view, it was a reasonable one. Mr. Tate, however, was not putting forward the narrow claim which would be accepted if this Clause were passed. Mr. Tate was asking for relief on subscriptions to a number of learned societies which, though good in themselves, and did assist him in his professional work, were certainly not obligatory on one holding the position he did.

    What we should like to ask the Economic Secretary is this question: Why is it

    Division No. 191.]


    [7.7 p.m.

    Albu, A. H.Darling, George (Hillsborough)Henderson, Rt. Hon. A. (Rowley Regis)
    Allen, Arthur (Besworth)Davies, Stephen (Merthyr)Herbison, Miss M.
    Allen, Scholefield (Crewe)Dear, G.Hobson, C. R.
    Anderson, Frank (Whitehaven)Dodds, N. N.Holman, P.
    Attlee, Rt. Hon. C. R.Dugdale, Rt. Hon. John (W. Bromwich)Houghton, Douglas
    Awbery, S. S.Ede, Rt. Hon. J. C.Hoy, J. H.
    Bacon, Miss AliceEdelman, M.Hubbard, T. F.
    Balfour, A.Edwards, Rt. Hon. John (Brighouse)Hudson, James (Ealing, N.)
    Bartley, P.Edwards, Rt. Hon. Ness (Caerphilly)Hughes, Cledwyn (Anglesey)
    Beattie, J.Edwards, W. J. (Stepney)Hughes, Emrys (S. Ayrshire)
    Bence, C. R.Evans, Albert (Islington, S.W.)Hughes, Hector (Aberdeen, N.)
    Benn, Hon. WedgwoodEvans, Edward (Lowestoft)Hynd, J. B. (Attercliffe)
    Benson, G.Evans, Stanley (Wednesbury)Irving, W. J. (Wood Green)
    Blackburn, F.Fernyhough, E.Isaacs, Rt. Hon. G. A.
    Blenkinsop, A.Fienburgh, W.Janner, B.
    Blyton, W. R.Fletcher, Eric (Islington, E.)Jeger, George (Goole)
    Boardman, H.Follick, M.Jeger, Mrs. Lena
    Bottomley, Rt. Hon. A. D.Forman, J. C.Jenkins, R. H. (Stechford)
    Bowden, H. W.Fraser, Thomas (Hamilton)Jones, David (Hartlepool)
    Braddock, Mrs. ElizabethGaitskell, Rt. Hon. H. T. N.Jones, Frederick Elwyn (West Ham, S.)
    Brook, Dryden (Halifax)Gibson, C. W.Jones, Jack (Rotherham)
    Broughton, Dr. A. D. D.Glanville, JamesJones, T. W. (Merioneth)
    Brown, Thomas (Ince)Gordon Walker, Rt. Hon. P. C.Keenan, W.
    Burke, W. A.Grey, C. F.Kenyan, C.
    Callaghan, L. J.Griffiths, Rt. Hon. James (Llanelly)Key, Rt. Hon. C. W.
    Champion, A. J.Hall, Rt. Hon. Glenvil (Colne Valley)King, Dr. H. M.
    Clunie, J.Hall, John T. (Gateshead, W.)Kinley, J.
    Coldrick, W.Hamilton, W. W.Lawson, G. M.
    Collick, P. H.Hannan, W.Lee, Frederick (Newton)
    Corbet, Mrs. FredsHardy, E. ALever, Leslie (Ardwick)
    Cove, W. G.Hargreaves, A.Lindgren, G. S.
    Craddock, George (Bradford, S.)Harrison, J. (Nottingham, E.)Lipton, Lt.-Col. M.
    Crosland, C. A. R.Hastings, S.McGovern, J.
    Cullen, Mrs. A.Hayman, F. H.Mclnnes, J.
    Dalnes, P.Healey, Denis (Leeds, S.E.)McKay, John (Wallsend)
    Dalton, Rt. Hon. H.Healy, Cahir (Fermanagh)McLeavy, F.

    that a taxpayer who is taxed under Schedule E is not able to get an allowance of this kind, whereas another individual who is fortunate enough to be assessed under Schedule D can do so? It seems to us grossly unfair that this differentiation should exist, and some time this matter will have to be looked into. Why is it that some individuals who, some people would think partly by chance, are assessed to Income Tax under Schedule D are allowed to set off quite a number of items which no one assessed under Schedule E can get?

    This Clause would help to redress the balance a bit for professional people. I had thought up to now—indeed, I was almost certain—that hon. Members on the other side of the House would have jumped at the chance to support professional men and women to receive these allowances and are surely entitled to them. I do not know how my hon. Friends feel, but for my part I feel strongly on this matter. It is an injustice, and, that being so, I invite them to go into the Lobby in support of the Clause.

    Question put.

    The House divided: Ayes, 204 Noes, 254.

    Mainwaring, W. H.Popplewell, E.Taylor, Rt. Hon. Robert (Morpeth)
    Mallalieu, E. L. (Brigg)Porter, G.Thomas, lorwerth (Rhondda, W.)
    Mallalieu, J. P. W. (Huddersfield, E.)Price, J. T. (Westhoughton)Thomas, Ivor Owen (Wrekin)
    Mann, Mrs. JeanPrice, Philip (Gloucestershire, W.)Thomson, George (Dundee, E.)
    Manuel, A. C.Proctor, W. T.Thornton, E.
    Marquand, Rt. Hon. H. A.Pryde, D. J.Timmons, J.
    Mason, RoyPursey, Cmdr. H.Tommy, F.
    Mayhew, C. P.Rankin, JohnUngoed-Thomas, Sir Lynn
    Mellish, R. J.Reid, Thomas (Swindon)Usborne, H. C.
    Messer, Sir F.Reid, William (Camlachie)Wallace, H. W.
    Mitchison, G. R.Rhodes, H.Watkins, T. E.
    Moody, A. S.Richards, R.Weitzman, D.
    Morgan, Dr. H. B. W.Robens, Rt. Hon. A.Wells, Percy (Faversham)
    Morley, R.Roberts, Goronwy (Caernarvon)Wells, William (Walsall)
    Morris, Percy (Swansea, W.)Rogers, George (Kensington, N.)West, D. G.
    Morrison, Rt. Hon. H. (Lewisham, S.)Ross, WilliamWheeldon, W. E.
    Mort, D. L.Shackleton, E. A. A.White, Mrs. Eirene (E. Flint)
    Moyle, A.Shinwell, Rt. Hon. E.Whiteley, Rt. Hon. W.
    Mulley, F. W.Short, E. W.Wigg, George
    Noel-Baker, Rt. Hon. P. J.Simmons, C. J. (Brierley Hill)Wikins, W. A.
    O'Brien, T.Skeffington, A. M.Willey, F. T.
    Oldfield, W. H.Slater, Mrs. H. (Stoke-on-Trent)Williams, David (Neath)
    Oliver, G. H.Slater, J. (Durham, Sedgefield)Williams, Rev. Llewelyn (Abertillery)
    Oswald, T.Smith, Ellis (Stoke, S.)Williams, W. R. (Droylsden)
    Padley, W. E.Smith, Norman (Nottingham, S.)Willis, E. G.
    Paling, Rt. Hon. W. (Dearne Valley)Sorensen, R. W.Wilson, Rt. Hon. Harold (Huyton)
    Paling, Will T. (Dewsbury)Soskice, Rt. Hon. Sir FrankWinterbottom, Richard (Brightside)
    Palmer, A. M. F.Sparks, J. A.Woodburn, Rt. Hon. A.
    Pannell, CharlesSteele, T.Wyatt, W. L.
    Parker, J.Summerskill, Rt. Hon. E.Yates, V. F.
    Paton, J.Sylvester, G. O.
    Pearson, A.Taylor, Bernard (Mansfield)TELLERS FOR THE AYES:
    Peart, T. F.Taylor, John (West Lothian)Mr. Holmes and
    Mr. James Johnson.


    Aitken, W. T.Crowder, Sir John (Finchley)Hill, Mrs. E. (Wythenshawe)
    Allan, R. A. (Paddington, S.)Crowder, Petre (Ruislip—Northwood)Hinchingbrooke, Viscount
    Alport, C. J. M.Darling, Sir William (Edinburgh, S.)Hirst, Geoffrey
    Amery, Julian (Preston, N.)Davidson, ViscountessHolland-Martin, C. J.
    Arbuthnot, JohnDeedes, W. F.Holt, A. F.
    Assheton, Rt. Hon. R. (Blackburn, W.)Digby, S. WingfieldHopkinson, Rt. Hon. Henry
    Astor, Hon. J, J.Dodds-Parker, A. D.Hornsby-Smith, Miss M. P.
    Baldock, Lt.-Cmdr. J. M.Donaldson, Cmdr. C. E. McAHorobin, I. M.
    Baldwin, A. E.Donner, Sir P. W.Horsbrugh, Rt. Hon. Florence
    Banks, Col. C.Doughty, C. J. A.Howard, Gerald (Cambridgeshire)
    Barber, AnthonyDouglas-Hamilton, Lord MalcolmHoward, Hon. Greville (St. Ives)
    Barlow, Sir JohnDrayson, G. B.Hudson, Sir Austin (Lewisham, N.)
    Baxter, Sir BeverleyDrewe, Sir C.Hulbert, Wing Cdr. N. J.
    Beach, Mai. HicksDuncan, Capt. J. A. L.Hutchison, Sir Ian Clark (E'b'rgh, W.)
    Bell, Ronald (Bucks, S.)Duthie, W. S.Hutchison, James (Scotstoun)
    Bennett, F. M. (Reading, N.)Eccles, Rt Hon. Sir D. M.Hyde, Lt.-Col. H. M.
    Bennett, Dr. Reginald (Gosport)Eden, Rt. Hon. A.Hylton-Foster, H. B. H.
    Bevins, J. R. (Toxteth)Eden, J. B. (Bournemouth, West)Iremonger, T. L.
    Black, C. W.Erroll, F. J.Jenkins, Robert (Dulwich)
    Bossom, Sir A. C.Finlay, GraemeJennings, Sir Roland
    Boyd-Carpenter, Rt. Hon. J. A.Fisher, NigelJohnson, Eric (Blackley)
    Boyle, Sir EdwardFleetwood-Hesketh, R. F.Johnson, Howard (Kemptown)
    Braine, B. R.Fletcher-Cooke, C.Jones, A. (Hall Green)
    Braithwaite, Sir GurneyFord, Mrs. PatriciaJoynson-Hicks, Hon. L. W.
    Bromley-Davenport, Lt.-Col. W. H.Fort, R.Kaberry, D.
    Brooke, Henry (Hempstead)Foster, JohnKerby, Capt. H. B
    Brooman-White, R. C.Fraser, Sir Ian (Morecambe & Lonsdale)Kerr, H. W.
    Browne, Jack (Govan)Fyfe, Rt. Hon. Sir David MaxwellLancaster, Col. C. C
    Buchan-Hepburn, Rt. Hon P. G. TGalbraith, Rt. Hon. T. D. (Pollok)Langford-Holt, J. A.
    Bullus, Wing Commander E. E.Garbraith, T. G. D. (Hillhead)Leather, E. H. C.
    Burden, F. F. A.Garner-Evans, E. H.Legge-Bourke, Maj. E. A. H.
    Butcher, Sir HerbertGeorge, Rt. Hon. Maj. G. LloydLegh, Hon. Peter (Petersfield)
    Butler, Rt. Hon. R. A. (Saffron Walden)Godber, J. B.Lindsay, Martin
    Campbell, Sir DavidGomme-Duncan, Col. A.Linstead, Sir H. N.
    Carr, RobertGough, C. F. H.Llewellyn, D. T.
    Cary, Sir RobertGower, H. R.Lloyd, Maj. Sir Guy (Renfrew, E.)
    Channon, H.Graham, Sir FergusLloyd, Rt. Hon. Selwyn (Wirral)
    Clarke, Col. Ralph (East Grinstead)Grimston, Hon. John (St. Albans)Lockwood, Lt.-Col. J. C.
    Clarke, Brig. Terence (Portsmouth, W)Grimston, Sir Robert (Westbury)Low, A. R. W.
    Cole, NormanHall, John (Wycombe)Lucas, Sir Jocelyn (Portsmouth, S.)
    Colegate, W. A.Harris, Frederic (Croydon, N.)Lucas, P. B. (Brentford)
    Conant, Maj. Sir RogerHarrison, Col. J. H. (Eye)Lucas-Tooth, Sir Hugh
    Cooper, Sqn. Ldr. AlbertHarvey, Ian (Harrow, E.)Lyttelton, Rt. Hon. O.
    Cooper-Key, E. M.Harvie-Watt, Sir GeorgeMcCorquodale, Rt. Hon. M. S.
    Craddock, Beresford (Spelthorne)Heath, EdwardMacdonald, Sir Peter
    Crookshank, Capt. Rt. Hon. H. F. C.Henderson, John (Cathcart)Mackeson, Brig. Sir Harry
    Crosthwaite-Eyre, Col. O. E.Higgs, J. M. C.McKibbin, A. J.
    Crouch, R. F.Hill. Dr. Charles (Luton)Mackie, J. H. (Galloway)

    Maclay, Rt. Hon. JohnPowell, J. EnochSutcliffe, Sir Harold
    Macleod, Rt. Hon. Iain (Enfield, W.)Price, Henry (Lewisham, W.)Taylor, Sir Charles (Eastbourne)
    MacLeod, John (Ross and Cromarty)Prior-Palmer, Brig. O. LTaylor, William (Bradford, N.)
    Macpherson, Niall (Dumfries)Raikes, Sir VictorTeeling, W.
    Maitland, Patrick (Lanark)Ramsden, J. E.Thomas, Rt. Hon. J. P. L. (Hereford)
    Manningham-Buller, Rt. Hn. Sir ReginaldRayner, Brig. R.Thomas, Leslie (Canterbury)
    Markham, Major Sir FrankRees-Davies, W. R.Thompson, Lt.-Cdr. R. (Croydon. W)
    Marlowe, A. A. K.Remnant, Hon. P.Thornton-Kemsley, Col. C. N.
    Marples, A. E.Renton, D. L. M.Tilney, John
    Marshall, Douglas (Bodmin)Ridsdale, J. E.Touche, Sir Gordon
    Maude, AngusRoberts, Peter (Heeley)Turner, H. F. L.
    Maudling, R.Robinson, Sir Roland (Blackpool, S.)Turton, R. H.
    Maydon, Lt.-Comdr. S. L. CRogers, John (Sevenoaks)Tweedsmuir, Lady
    Medlicott, Brig. F.Roper, Sir HaroldVane, W. M. F.
    Mellor, Sir JohnRopner, Col. Sir LeonardVaughan-Morgan, J. K.
    Molson, A. H. E.Russell, R. S.Vosper, D. F.
    Monckton, Rt. Hon. Sir WalterRyder, Capt. R. E. D.Wade, D. W.
    Moore, Sir ThomasSavory, Prof. Sir DouglasWakefield, Edward (Derbyshire, W.)
    Morrison, John (Salisbury)Scholfield, Lt.-Col. W.Wakefield, Sir Wavell (St. Marylebone)
    Mott-Radclyffe, c. E.Scott, R. DonaldWalker-Smith, D. C.
    Nabarro, G. D. N.Scott-Miller, Cmdr. R.Wall, Major Patrick
    Weave, AireyShepherd, WilliamWard, Hon. George (Worcester)
    Nicholls, HarmarSimon, J. E. S. (Middlesbrough, W)Ward, Miss I. (Tynemouth)
    Nield, Basil (Chester)Smithers, Peter (Winchester)Waterhouse, Capt. Rt. Hon. C.
    Noble, Comdr. A. H. PSmithers, Sir Waldron (Orpington)Watkinson, H. A.
    Nugent, G. R. H.Snadden, W. McN.Webbe, Sir M. (London & Westminster)
    Nutting, AnthonySpearman, A. C. M.Wellwood, W.
    Oakshott, H. D.Speir, R. M.Williams, David (Tonbridge)
    O'Neill, Hon. Phelim (Co. Antrim, N.)Spens, Rt. Hon. Sir P. (Kensington, S.)Williams, Sir Herbert (Croydon, E.)
    Ormsby-Gore, Hon. W. D.Stanley, Capt. Hon. RichardWilliams, Paul (Sunderland, S.)
    Orr, Capt. L. P. S.Stevens, GeoffreyWilliams, R. Dudley (Exeter)
    Orr-Ewing, Charles Ian (Hendon, N)Steward, W. A. (Woolwich, W.)Wills, G.
    Page, R. G.Stewart, Henderson (Fife, E.)Wilson, Geoffrey (Truro)
    Peake, Rt. Hon. O.Stoddart-Scott, Col. M.Wood, Hon. R.
    Peyton, J. W. W.Storey, S.
    Pickthorn, K. W. MStrauss, Henry (Norwich, S.)TELLERS FOR THE NOES:
    Pitman, I. J.Stuart, Rt. Hon. James (Moray)Mr. Studholme and
    Pitt, Miss E. M.Summers, G. S.Mr. Redmayne.

    New Clause—(General Scale Of Rates Of Estate Duty)

    In relation to estates of a principal value not exceeding five thousand pounds, the following scale of rate of estate duty shall be substituted for the scale set out in the Seventh Schedule to the Finance Act, 1949:—

    Principal Value of Estate

    Rate per cent. of duty

    Not exceeding £3,000Nil
    Exceeding £3,000 but not exceeding £4,0001
    Exceeding £4,000 but not exceeding £5,0002

    Provided that if the rate or amount of duty which would have been charged on any estate or interest in property of any kind whatsoever other than that on which duty is charged under this section would have been less had this section not been enacted, the rate and amount of duty charged or to be charged on such other estate or interest shall be the same as it would have been if this section had not been enacted.—[ Mr. Dalton.]

    Brought up, and read the First time.

    I observe that later on the Order Paper there is a new Clause proposed by the right hon. Member for Blackburn, West (Mr. Assheton)—[Estate duty (extension of certain exemptions)]. These two new Clauses seem to cover the same ground, and can be discussed together, if that be convenient to the House. [HON. MEMBERS: "Hear, hear."] So be it.

    7.15 p.m.

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

    It is interesting to note that even at this late hour the right hon. Member for Blackburn, West (Mr. Assheton) has been kind enough to put down a new Clause which, so far as I can judge, is identical in purpose with that which I am now moving. I hope that, if the Government are obstinate, the right hon. Member will find his way into the same Lobby as myself.

    The purpose of the proposed Clause is to give further relief at the lower end of the Estate Duty scale to the smallest, and only to the smallest, estates. I would have been glad if it had been possible to discuss this matter at the Committee stage, but in the form in which the proposed Clause was then put down it was held to be out of order. Having taken expert advice, we have now brought the matter into order by adding a proviso, which is a remarkable example of legal English. I do not think I need recite it, but I am assured that the words beginning
    "Provided that if the rate"
    and concluding with the words
    "had not been enacted"
    remove any possibility that this change in the scale of Estate Duty at the lower end might, even indirectly and subsequently, increase the charge upon some second party to a settlement or some other person remotely interested. I am glad to find that the proposed Clause is therefore in order and can be debated.

    As the Chancellor of the Exchequer will recall, it was the great Sir William Harcourt, founder of the modern Estate Duty who, in 1894, gave it its present shape and initially fixed the level of exemption at £100, a very low figure indeed. In the intervening period, a number of Chancellors of the Exchequer have modified the scale, but, curiously enough, not for more than 50 years was any modification made at the bottom of the scale. For example, Mr. Asquith—I will cite one or two cases to illustrate what occurred—in 1907 touched up, if I may use such a colloquialism, the Estate Duty scale, but did nothing at the bottom end. He put up the rates on the larger fortunes.

    Mr. Lloyd George twice, while he was Chancellor of the Exchequer, touched up the Estate Duty scale, first in 1909 and again in 1914. After the First World War, Sir Austen Chamberlain set an example to Labour Chancellors of the Exchequer by doubling the rate of duty on the very highest estates, over £2 million. Indeed he more than doubled the rate: that should be remembered by Conservatives as part of their tradition. The late Sir Austen Chamberlain, seeking to reorganise our finances after the First World War, felt that the highest estates should pay more. The present Prime Minister was of the same opinion in 1925. He steeped the scale. Finally, before the Second World War, Lord Snowden, then Mr. Philip Snowden, did the same in 1930. During the war, I believe—I have not checked the later events because they are very well in our memory—both Sir John Simon, as he then was, and Sir Kingsley Wood further put up the scales.

    The extraordinary thing is that although those eminent men, belonging to the three parties, from time to time adjusted the scales, at no time did any of them make any improvement at the lower end, which remained as it was fixed by Sir William Harcourt, in 1894, at £100. Fifty-two years were to pass before any alleviation was brought to the poorer families who were subject to Estate Duty.

    In 1946 I suggested—I think the Opposition of that time accepted my proposal—that we should raise the level from £100 to £2,000. That is where it stands now. I can, therefore, claim that I was the first Chancellor since the time of Sir William Harcourt in 1894 to adjust the scale in that manner.

    I took great care, of course, to lose no revenue by doing this. I also adjusted the scale at the upper end to bring in a total of £22 million more revenue in that year, although I was able to exempt by raising the exemption level from £100 to £2,000—this illustrates another point that I wish to elaborate in a moment—no fewer than 75 per cent. of the estates which would otherwise have been liable. That is a very dramatic example of the grave inequality which prevails in regard to property passing on death, and it also reflects the grave inequality in the property owned by the living.

    One of the arguments in favour of raising the exemption limit which I employed during the debates of 1946 was that one is not only doing an act of distributive justice but also making great administrative savings, in that, evidently, fewer officials are required to keep track of the estates liable to duty if one reduces them to only a quarter of the previous number. That argument still has weight today, although it has less weight since we are now dealing with an exemption limit of £2,000 and not £100. Nevertheless, it still has weight in the proposal which I make to lift the exemption limit from £2,000 to £3,000.

    It is clear from the figures given in Table 102 on page 110 of the latest Report of the Commissioners of Inland Revenue that more than half of the estates which are now subject to duty, given the limit of £2,000 which I introduced in 1946 and which has not since been changed, lie in the range between £2,000 and £5,000. I hope that the Chancellor will be able to give us the effect of my proposal in terms of the number of estates which would be fully exempted.

    As a matter of statistical presentation, it would be rather interesting if the Inland Revenue Commissioners—they are very good; their Annual Report is one of the most interesting productions on our economic front—could, instead of giving us the figures in respect of the single range from £2,000 to £5,000, break the figures up and give us those in respect of the range from £2,000 to £3,000 or £3,500 and then from that figure up to £5,000 in order to break the figures into at least two brackets instead of one.

    According to the information that we get from the table, 52·8 per cent.—more than half—of the total number of estates subject to duty in the last recorded year lie within the range of £2,000 to £5,000; in other words, at the bottom of the scale. One of the advantages of accepting the proposed Clause would be that it would still further restrict—and restrict much more than in proportion to any loss of revenue, for that would be a trifle—the number of cases in which the Revenue authorities would have to be busy with the smaller estates after death. It would then be clearer even than it is now that many of them need not be examined in detail.

    H. G. Wells once used a phrase which I liked and have always remembered. Wells was in favour of many forms of property, but he said that inheritance was a fatty degeneration of property. I think that is a good description, particularly of the fat estates. It is in regard to such estates that in debates on Estate Duty the Opposition have argued that there was great merit in the duty in so far as it fell with considerable weight on the larger estates, thereby preventing an ever-increasing inequality of property ownership.

    I do not regard the very small estates at the lower end of the scale, where the proposed Clause is designed to operate, as falling within the picturesque phrase of H. G. Wells. When we are dealing with estates of £2,000 to £5,000, and even somewhat above that, we may regard them as being within the range which can reasonably be reached by an artisan or other person without large income or initial advantages.

    These estates at the bottom end should be dealt with tenderly. We should do justice all the way down the scale. Justice at the higher levels requires a high contribution, but at the lower levels—I hope that the hon. Member for Edinburgh, South (Sir W. Darling) will later on give me his support for the proposed Clause—the time has come when we should take a further step along the road which I blazed eight years ago. Eight years is long enough to wait before taking another step along that path.

    With regard to cost, I have looked at Table 104 on page 113 of the Report of the Commissioners of Inland Revenue. I will take the total net capital values in respect of the range between £2,000 to £5,000, which is £127 million. What I am proposing is to reduce the levy by 1 per cent. on the range from £2,000 to £4,000. On the range between £2,000 to £3,000 the levy is now 1 per cent., and I propose that it should be nothing at all. On the next level, on the range exceeding £3,000 but not exceeding £4,000, I propose that the levy should be 1 per cent. instead of the 2 per cent. which it is now. With regard to the range between £4,000 and £5,000, I propose that the levy should remain at its present level, and I propose that simply in order to continue the smooth graduation of the scale—if the Government proposed something more generous, I should advise my hon. Friends not to resist it—and to avoid a sharp break in the scale.

    My proposal only covers the first two brackets, and the cost would evidently be, on the basis of the figures which I have given, noticeably less than 1 per cent, of £127 million, the net capital value represented by the estates up to the £5,000 level, because the reduction to 1 per cent. does not go all the way but applies only to the range between £3,000 and £4,000. I guess—the Chancellor will no doubt have the exact figure—that the cost will be less than £1 million a year, and the Chancellor can surely spare that.

    This is less than the cost of the other Estate Duty relief in respect of family businesses, on which we had lengthy debates. This relief would be much more equitable than that. I do not want to reopen the debates on the other relief. Nevertheless, the relief which I propose would be wholly to the benefit of the smallest people. That cannot be said for the family business relief, for that does not do anything for a large number of the smaller people whom I have in mind hare, and the family business relief will also do something for a number of very wealthy people who are not, in my view, particularly deserving recipients of relief at this time. My proposal would be wholly for the benefit of the smallest estates, and it would cost less than the family business relief.

    7.30 p.m.

    I hope that the Chancellor will review this matter in a friendly way, that it will appeal to his sense of what it would be just and reasonable to do at this time. It would relieve estates which are very worthy of being further relieved, because eight years have passed since I raised the level on which Estate Duty should be paid from £100 to £2,000. The lot of the kind of people whom we have in mind has not improved in the last few years owing to the ever-rising cost of living due to the abolition of the food subsidies. These are a very deserving body of people whom I am commending to the Chancellor's attention.

    I should like the Chancellor to join me, when the history of these days is written, as a man who did care for the interests of the poorest section of those subject to Estate Duty. At present, I feel a little lonely—so far I stand alone in some lonely place—but I should like the Chancellor to join me. We could have most interesting talks about other things, too. Let us stand together on some high place below which there could be an inscription—it would go rather well in Latin, but I offer it in English—somewhat in these terms:
    "Alone among the Chancellors of the Exchequer in this modern age, while firmly collecting through the best of all taxes from the large estates of the rich their just contribution to the common good, he justly relieved the small estates of the poor."

    As the right hon. Member for Bishop Auckland (Mr. Dalton) said, the new Clause which appears later on the Order Paper in the names of myself and some of my hon. Friends deals with the same subject as the Clause which he has just moved. I am very tempted, of course, by the right hon. Gentleman's speech to disclose in full to the House the wide differences of opinion which exist between him and me on the subject of Estate Duty. I, for example, do not think that Estate Duty is a good form of tax. I never have thought so.

    I believe that if it is thought desirable, or necessary, to institute some form of capital tax, to institute it at the moment when the head of the family dies, and to levy it at the most difficult period in the life of a family or a business, is neither intelligent nor humane. I shall not, however, pursue the general argument, as, on this occasion. I do not want to upset the right hon. Gentleman because I am hoping in a little while to persuade him to support the new Clause which is down in my name. I want to convince him that in one or two details it has merits which his Clause lacks.

    The right hon. Gentleman tried to convince hon. Members on this side, that Conservative Chancellors of the Exchequer had constantly increased Estate Duty. I am sorry to say that several have, but most of them have been ex-Liberals. I represent a truer—

    Sir Austen Chamberlain surely left the Liberal Party at a very early age?

    He came from a very radical family. I suggest that my approach to this matter represents the Conservative point of view much more closely than did that of the late Sir Austen Chamberlain.

    Coming for a minute to the details of the Clause moved by the right hon. Gentleman, as far as I can understand it—I agree that these matters are extremely difficult and complicated—it provides that, where the settled property escapes Estate Duty on the first death, as a result of the Clause it should, nevertheless, be exempted on the second death. If this formula were adopted, it would create the rather curious situation that if Estate Duty is exempt on the first death by reason of it being under £2,000, it pays it on the second death, but if it is exempt because it is less than £3,000 but more than £2,000, then it is exempt en the second death as well.

    That certainly is not very defensible, and the new Clause which stands in my name goes further than the one moved by the right hon. Gentleman. Therefore, I feel sure that he will be glad to adopt it. It grants exemption on the second death in cases where Estate Duty is not paid on the first death because the value of the estate is below the new exemption limit.

    It also has another advantage over the right hon. Gentleman's Clause in that it clears up the general anomaly under which, under the existing law, an estate of just over £2,000—for example, an estate of £2,001—is franked against any rate of duty payable on the second death by a I per cent. payment on the first death, while an estate of, say, £1,999 is liable to a rate of Estate Duty arising on the second death because none was paid on the first death.

    Therefore, it seems to me that the wording of my proposed new Clause brings about more precisely what is in the mind of the right hon. Gentleman than does the Clause which he has actually moved. Of course, we shall no doubt hear from the Front Bench what the official view is on the matter, but I suggest that there are some advantages in my new Clause which are not in that of the right hon. Gentleman's. Therefore. I hope that hon. Members on this side of the House will agree to support it.

    On the general argument put forward by the right hon. Member for Bishop Auckland, I think there is great sympathy on this side of the House for the small estates. I should like to have seen the Clause put down in the name of the hon. Member for Burton (Mr. Colegate) and in that of the the hon. Member for Orpington (Sir W. Smithers) adopted. That would have suited me much more, but I understand that it would have been very expensive. The right hon. Member for Bishop Auckland pointed out that, happily, this proposal does not cost a very great deal. I hope that my right hon. Friend the Chancellor will be able to confirm that, and I wish to add my voice to that of the right hon. Gentleman in begging the Government to accept my Clause. It only goes a small way in the direction which we all want to go. Indeed, we on this side of the House want to go much further, but if the right hon. Gentleman the Member for Bishop Auckland is willing to help in a small way, then, as far as I am concerned, I want to go along with him.

    The right hon. Gentleman put to me the hypothetical question whether, if the Government rejected the new Clause, I would go into the Division Lobby with him. I do not think it necessary to answer hypothetical questions particularly as this seems such a desirable Clause and one which finds support on both sides of the House. I hope that I shall not be placed in the difficulty in which the right hon. Gentleman thought I might find myself. Therefore, at the appropriate time, I shall move the new Clause which stands in my name.

    I think it will be to the convenience of the House if I rise now, because I think there is a chance of expediting the business on this matter. If we can make progress now, then we shall be able to make a real inroad into the work, and it will not be necessary to keep the House sitting too late. Otherwise, with the business projected for tomorrow, we may have a difficult time.

    That is not my sole reason for rising now, because we always try to listen to the different points of view. My reason for thinking that we can expedite matters is that the right hon. Gentleman who moved the new Clause and the right hon. Gentleman who followed him find me in a very agreeable mood this afternoon. When I listened to the right hon. Member for Bishop Auckland (Mr. Dalton), I could not help thinking that he was staging a Bishop Auckland benefit. Certainly there was nothing lacking in his language extolling the praise of his own exploits in lowering the lower rates of Estate Duty, and he made a passing reference to the wounding fact that higher rates of Estate Duty were introduced by himself, as the House will remember, in 1949.

    It was in 1946 that I made the change which we are now discussing. and I collected a little further revenue from Estate Duty by raising the rate on the higher scales. Sir Stafford Cripps, when Chancellor of the Exchequer consolidated—to get it on the record—Legacy and Succession Duty into Estate Duty.

    It took place in 1946 under the right hon. Gentleman and in 1949 under his successor—that is correct.

    The right hon. Gentleman suggested that I might meet him in another place in happier circumstances. I was not quite clear about whether he was referring to another place along the corridor, which would be an extremely unlikely eventuality for both of us—at least I hope so in my case—or whether he was imagining that we were to meet in the life hereafter, in which case I think it most unlikely that I shall be relegated to the same situation as that in which the right hon. Gentleman may find himself. It would be a situation altogether too warm for me. Whatever other place the right hon. Gentleman may have been referring to. I should certainly be glad to meet him and to discuss these points.

    His right hon. Friend the Member for Leeds, South (Mr. Gaitskell) complained earlier that the Government were not concerning themselves in the least about the more needy section of the population. This was a very unfair jibe which did not enliven our debate and created no intellectual stir in the Chamber. A situation arises today in which I can easily satisfy the right hon. Gentleman by saying that this is a reasonable advance and I should like to put the House out of pain by saying that I shall be ready to accept the Clause in the name of my right hon. Friend the Member for Blackburn, West (Mr. Assheton).

    In view of the subject, I think it would be wrong if I did not explain to the right hon. Gentleman opposite the reason I prefer this Clause. I prefer it precisely for the reason given by my right hon. Friend the Member for Blackburn, West, because subsection (2) and subsection (3) of my right hon. Friend's Clause more suitably meet the situation arising out of the passage of settled property as between spouses than the proviso which the right hon. Member for Bishop Auckland invented so as to get his Clause in order. The reason is that in the case of the estate below £2,000—as explained by my right hon. Friend—there is no provision in the proviso of the right hon. Member for Bishop Auckland about exemption. The exemption and the proviso are only provided for in the case of estates of between £2,000 and £3,000.

    Estates exempted below that would, on the passing of settled property from spouse to spouse on the death of the first, result in the second spouse having to pay death duty. That is not satisfactorily drafted and subsections (2) and (3) of my right hon. Friend's Clause cope with that situation, and preserve the situation for the second spouse. For that reason, I think that the second Clause is better than the first, and that is why I accept my right hon. Friend's Clause. The cost of this concession would be some £400,000 in the current financial year and about £900,000 in a full year.

    In the course of these Finance Bill debates, I have not been able to make many concessions—some would say any concessions—although some minor alleviations have been considered, and very rarely conceded. In this case I do not think that I should be altering the financial poise or balance of the country by making this small concession. I think that it will go to people who are certainly worthy of receiving it.

    The right hon. Gentleman asked me for further figures. It will exempt about 15,000 estates from duty and a further 12,000 from half the duty and so it will have a certain application. However, I should like to add, in taking up the remarks of my right hon. Friend the Member for Blackburn. West, that in my opinion Estate Duty weighs heavily, not only on modest estates such as these, but as heavily, and with even more serious consequences for the country, on the larger estates. I have never been ashamed to say—I said it in a debate the other night—that I most radically disagree with the right hon. Gentleman's quotation from H. G. Wells, that there is a sort of fatty degeneration involved in this process.

    7.45 p.m.

    We are thinking of the future generation and not fatty degeneration. While it is possible to pass a degree of fatty degeneration from one generation to another, it is equally possible that one generation may pass to another most noble and excellent traditions and property, which is in the interests not only of the family, but of the country. I think that these things should be said, because the weight of the Estate Duty is such that it is affecting the continuity of some of our traditions. I do not wish, any more than does the right hon. Member, to perpetuate the wrong sort of habits or contributions to the welfare of our country, but we have great traditions and we should allow them to be carried on with that sense of service with which they have been accumulated, and that is the spirit in which we ought to envisage this matter.

    In answer to my right hon. Friend the Member for Blackburn, West, I would say that I am unable this year to make any major concessions for the very good reason set out in my original Budget speech—because the ordinary balance sheet of the country does not permit it. But we are tackling with determination the problems which I set out in my Budget speech with as much clarity as possible. The country is responding with increased production. Things are buoyant in the country. Things are improving. While, unfortunately, I have not been able to make further concessions this year, we must face the future with precisely that sort of cheerful feeling round our hearts which the right hon. Member for Bishop Auckland had when he was Chancellor—and for not such a good reason as I have it myself.

    It would spoil the atmosphere of this discussion, and not enable us to proceed with the business as I want to proceed with it in accepting this Clause moved by my right hon. Friend, if I did not say that the remarks of the right hon. Member for Bishop Auckland, although not entirely coinciding with my political philosophy or principles, were couched in an agreeable and kindly manner, and I hope that he and his hon. Friends will permit the business to proceed.

    I am happy that the Chancellor has been able to accept in essence what I have been arguing for. It may well be that in some respects the provisos contained in the Clause of the right hon. Member for Blackburn, West (Mr. Assheton) fit the marginal cases better than mine, and I would not debate that. I am glad that the Chancellor has accepted the new scale. That is the important thing—the changes at the bottom of the scale.

    I would not wish the debate on this subject to be further prolonged, but I am very glad that at any rate I was one of the initiating agents in, at long last, provoking a concession from the Chancellor which I am sure will benefit very much those who will enjoy it. There is no doubt that those who are deserving will benefit. Whatever view may be held about the remainder of the death duty scale, on this the Chancellor and I are in agreement, that this particular change will improve the death duty scale as a whole, and I therefore welcome his speech.

    I think that it might be convenient—and I am quite prepared to do so—if I asked leave to withdraw my Motion in order that the proposed new Clause in the name of the right hon. Member for Blackburn, West may be accepted.

    Motion and Clause, by leave, withdrawn.

    The two Clauses were discussed together but I will put the Question when we reach the proposed Clause in the name of the right hon. Member for Blackburn, West (Mr. Assheton).

    New Clause—(Reduction Of Stamp Duties On Certain Conveyances Or Transfers On Sale)

    (1) As from the first day of August, nineteen hundred and fifty-four, the stamp duties chargeable on the conveyance or transfer on sale of any lands, tenements, hereditaments or heritages or of any estate or interest in any lands, tenements, hereditaments or heritages shall, where the amount of value of the consideration for the sale does not exceed three thousand pounds, be such part of the duties which would have been chargeable immediately before that day as is mentioned in the next following subsection.

    (2) The parts referred to in the last foregoing subsection are—

  • (a) where the amount or value of the consideration for the sale does not exceed two thousand five hundred pounds, one-half; and
  • (b) where such amount or value as aforesaid exceeds two thousand five hundred pounds as to the first two thousand five hundred pounds thereof, one-half, and as to the excess over two thousand five hundred pounds, three-quarters.
  • (3) This section shall be construed as one with the Stamp Act, 1891.—[ Mr. Houghton.]

    Brought up, and read the First time.

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

    I do not know whether it is too much to hope that the Chancellor is in the same agreeable mood as he was during our discussion of the last new Clause. This Clause proposes a small concession in Stamp Duty on the transfer of small properties not part of a larger transaction, and it is linked directly to the Government's recent proposals for facilitating house purchase by mortgage arrangements set out in the circular of the Ministry of Housing and Local Government to local housing authorities on 4th May this year.

    In that scheme for assisted house purchase there is a limit on the guaranteed mortgage from building societies on the purchase price or value of the property. That limit is £2,500, and this new Clause proposes that Stamp Duty on houses valued up to £2,500 shall be halved, and that on the purchase price of houses between £2,500 and £3,000 the duty charged shall be three-quarters of the existing rate.

    The latter part of the proposal is merely to provide a sort of taper, but the essentials of the new Clause are to reduce the Stamp Duty on houses which people will be buying largely under the scheme of assisted house purchase set out in the circular of 4th May, 1954.

    I should like to draw attention to the burdens which accompany house purchase, even though the property may be small and the price relatively low. Take, for example, the purchase of a house -valued at £1,800. That, today, does not buy a mansion or anything luxurious. We are talking now of artisans' dwellings with a purchase price of about £1,800. Suppose that in this case the purchaser goes to the local authority and, through them, with the help of the building society, gets a loan of £1,620. Then the costs which the purchaser will have to bear in the case of an unregistered title will amount to £67 15s., made up As follows.

    The purchase costs will be £34 10s. the Stamp Duty on the conveyance will be £18, and it is that amount that this new Clause proposes to cut in half; the mortgage costs will be £11; the Stamp Duty on the mortgage will be £4 5s., making a total of £67 15s. That is a considerable sum for a purchaser to find on top of the lump sum deposit which he must put down in order to get the assistance of the building society and complete the purchase.

    If the purchase price of the house is £2,500 and the loan is £2,250, then the total cost on an unregistered title would amount to £89 15s. [Interruption.] I hope my right hon. Friends will allow me to make my speech.

    I have my own opinion of what my right hon. Friends were talking about. They were talking about the concession given by the Chancellor on the last new Clause and the one that I am not going to get on this new Clause.

    I was saying that where the purchase price is the maximum amount permitted under the scheme to which I have referred, and the loan is £2,250, then the total cost in the case of an unregistered title would be £89 15s., and of that £25 would be the Stamp Duty. This new Clause proposes to cut in half the amount of Stamp Duty on the conveyance in the case of a house purchased separately and not part of a larger transaction, up to £2,500 in value. That is a very modest concession to ask for in order to bring nearer and more rapidly the property-owning democracy which is one of the aims and objects of hon. Members opposite. This is one of the occasions when those of us on these benches can assist in the realisation of the aim of hon. Members opposite.

    I want to make it clear that the concession does not apply to the transfer of stocks and shares. It is limited to property. I have no idea how much this concession would cost, but I hope that on this new Clause, as on the last, the amount of revenue lost would not damage the financial poise of the right hon. Gentleman's Budget this year. It would help to reduce the additional costs which some people find stand between them and buying a house. It is not within the power of this House, in this connection at least, to reduce the legal costs of purchase, and, therefore, the proposal that I am making is confined to halving the Stamp Duty.

    I trust that the Financial Secretary has been left by his right hon. Friend the Chancellor of the Exchequer with his concession on this Finance Bill. Probably there should be fair shares in making concessions between Chancellors and their Financial Secretaries, and I hope that the Chancellor, when leaving the Chamber. left behind authority to the Financial Secretary to continue the agreeable mood which we found so pleasant a little while ago, and that his approach to this new Clause will be equally favourable.

    I beg to second the Motion.

    The advantage in following my hon. Friend the Member for Sowerby (Mr. Houghton) is that he always expresses himself so lucidly and cogently that there is no need to say much in support. I think we can anticipate that we shall get this concession from the Government, because, at this stage of the Bill, they are in a concessionary mood. I do not think this concession will cost very much, and I certainly think that for good public and political reasons the Government ought to make this concession.

    I share the view held by many hon. Members opposite that we ought to encourage people to buy and own their houses. I have never made any bones about supporting the idea of a property-owning democracy. I think it is a good thing. That is why I was very critical of the Government's financial policy which caused the increase in the mortgage rates. It has deterred people from buying houses, and for that reason it is a very had thing.

    8.0 p.m.

    One of the very unfortunate incidents in house purchase is the surprise which faces the house purchaser when he discovers the costs he has to bear immediately upon the purchase of his house. Speaking recently at Rugby, I upset some local members of the Law Society by talking about these costs. Everyone hopes that it will be possible to reduce conveyancing costs, but the question has been examined and re-examined on many occasions without very much saving having been made. This proposal, however, allows for a very easy saving if the Chancellor will bear the burden.

    I realise that the Financial Secretary may point out that the Labour Party increased Stamp Duty in 1947. That is so, but that was a bi-partisan policy. I remember my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) saying that he was following the precedent of Mr. Austen Chamberlain, as he then was, in 1920, when he did the same thing. In 1947, I believe the general view of the House was that we should not place too heavy a burden upon the purchasers of what we call small properties. In fact, my right hon. Friend exempted what he believed to be the smaller properties from the increased Stamp Duty.

    I should have thought that, in the atmosphere which now pervades the House, this might well be one of the first concessions to be made to the purchaser. I can call in aid the Beaverbrook Press, as it is quite clear that that organisation has a very powerful influence upon the Government. On 29th June, the "Daily Express" advanced the general argument that everyone should be his own landlord. It pointed out that £18 had to be paid by way of Stamp Duty upon a property worth £1,800. That is a heavy burden on a person who is facing all sorts of expenditure, and the "Daily Express" was appealing to its friend the Minister of Housing and Local Government, and asking, rhetorically, whom he should see about it. On the matter of Stamp Duty, it suggested that he should see the Chancellor, and it said:
    "Mr. Macmillan should ask him to ease this absurd tax and look elsewhere for revenue."
    Has the Minister seen his right hon. Friend and powerfully expressed this, point of view? If he has, I am quite sure that the Financial Secretary will take this opportunity to make this concession. If he does not, it will give the lie to a good deal of Tory propaganda. As the "Daily Express" went on to say:
    "If the Tories believe in encouraging people to buy their own houses, it is fantastic to deter them with taxes."
    That is the simple issue. This concession would not cost very much, and it would be a great encouragement to people who are buying their own houses. It is the policy of the Government to encourage house purchase. They are making a great deal of it; it is a cardinal point in their policy. Even from the narrow point of view of political expediency I should have thought that the Financial Secretary and the Chancellor would not be so stupid as to oppose the Beaverbrook Press in this matter.

    Therefore, I am most hopeful that the. Financial Secretary, making small easements as he has been doing in the Bill, will give way and provide this small solace to people who are facing these very real difficulties in setting up their own homes.

    I am quite certain that hon. Members on this side of the House will be sympathetic towards the object of this Motion. We believe in making home ownership as easy as possible and bringing it within the reach of as many people as we can. Anything that can properly be done to reduce the cost of house purchase will be generally welcomed. At the same time I cannot fail to notice the extraordinary conversion which has taken place in the attitude of the hon. Member for Sowerby (Mr. Houghton) and the hon. Member for Sunderland, North (Mr. Willey) upon this matter.

    I must refer quite briefly to its history during the last few years. Reference has already been made to the fact that in 1947 the then Government increased—I believe they doubled—the Stamp Duty which was then in existence. In doing so they made house purchase much more expensive. On 28th June, 1951, on the Report stage of the Finance Bill, I tabled an Amendment in terms very similar to those of the proposed new Clause. I moved that Amendment in a speech which very closely resembled the one which has just been made by the hon. Member for Sowerby, although I cannot claim that it achieved the persuasiveness that we all expect from him on any occasion when he addresses the House.

    At that time I was endeavouring to secure for small house purchasers a reduction in a Stamp Duty which was then about double the present rate. It is interesting to notice that on that occasion all six hon. Members whose names appear on the Order Paper in support of this proposed new Clause went into the Division Lobby against it and brought about the defeat of the purpose I had in view. If I had had their support on that occasion the object which they have in mind might have been achieved about three years earlier. I must point out the remarkable conversion which has taken place in the attitude of those hon. Members, although it is none the less welcome.

    We have come forward; hon. Members opposite have gone backwards.

    Since I moved my Amendment in June, 1951, the present Government, with the very enlightened policy Which they have brought to bear in this matter, have given effect to the object I then sought to achieve and which was refused by the Government which was then in power. I am quite sure that it is entirely proper that hon. Members should bring this matter continually to the attention of successive Governments, and that we should all endeavour to secure reductions in the expenses connected with house purchase, but it is not inappropriate that Members should have their memories jogged and be reminded of the history of the matter.

    Does not the hon. Member appreciate the vast difference between the conditions which obtained in 1947 and those of today? The Stamp Duty was doubled in 1947 to impose a tax on a good deal of property speculation and the transfer of houses at profiteering prices.

    I am prepared to agree that since 1951 there has been a tremendous improvement in the fortunes of the country. I agree, furthermore, that that is reffected in the action of the present Government in approximately halving the Stamp Duty as it stood in June, 1951, when I was endeavouring to secure a reduction. Whether it is reasonable to go further is, of course, a matter that the Chancellor must consider.

    The point of my intervention is to draw the attention of the House to some of these matters which I feel some hon. Members might be in danger of forgetting and also to raise the question of whether, if the Chancellor is in a position to make any further concession, having regard to the concession he has already made in this particular field, this is the most worthy place in which, at the present time, a further measure of relief should be given.

    The hon. Member for Wimbledon (Mr. Black), having had his little say, is evidently prepared to come into the Lobby with us in the event of the Government resisting the new Clause because he has explained quite clearly that he expected those of us who have our names to it to have gone into the Lobby against our own Government in 1951.

    I should like to make clear to the hon. Member—perhaps it was not clear in my speech—that what I was seeking to achieve in June, 1951, was subsequently given by the present Government soon after they came into power. The objective I sought, in June, 1951, has now been achieved, and what the hon. Gentleman is now trying to achieve is something different.

    That being the case, I now understand that the hon. Member does not want the Stamp Duty on this kind of purchase reduced and is not prepared to support any suggestion to that effect. I will now tell him why he should. The circumstances in 1947 warranted the increase in the Stamp Duty. The difference today is this. I do not want to be aggressive, because we want a concession to be made and we want to give reasons to the Financial Secretary why he should accept what is a reasonable proposal. The Government are claiming that they are prepared to assist people of modest means to purchase houses for their own occupation. With that end in view there has been a great story made of the fact that the Government are encouraging building societies to advance up to 90 per cent. of the purchase money in cases where the price of the house is £2,500 or below.

    What is very much more important to realise is that a house which is sold for £2,500 today is not the kind of house that could have been purchased some years ago for a similar amount. The purchaser has to put aside out of his earnings what the Government consider to be the maximum that can be expected of him, namely, £250. The costs involved in a purchase of that kind are out of all proportion to that £250 which he has to find, and that is what we are talking about at the present time.

    We are asking the Financial Secretary to realise that the concession that was made in respect of the amount that could be obtained by way of loan is, to a very considerable extent, watered down by virtue of the fact that people who come within the category of those able to make a purchase of that kind of house have to pay a considerable sum in addition to the 10 per cent.

    I do not know whether the hon. Member realises that the purchaser of the house to which he is referring is paying in Stamp Duty only half what he was paying in 1951.

    8.15 p.m.

    I have to be careful in this matter because I want a favourable reply to our request, but I would say that the hon. Member for Wimbledon, like all Members of his party, is always living in the past. Let us talk about the present and the future, especially the bright future that we can provide. We hope hon. Members opposite will assist us to provide it.

    The position is that this imposes a very considerable burden upon the person who wants to buy his own home. What we are asking for is, in fact, a small concession by the Government. The Government say that they are in sympathy with our new Clause. Let us have a little practical sympathy so that the person who wants to buy a house of this size is in a position to do so without having placed upon him a burden which is greater than he can sustain.

    This is a small concession. Not very much is being asked. It is true that in the aggregate it may seem a formidable amount, but actually it is not. It is a very important factor to the individual who is buying a house, and I think that the Financial Secretary, who, at times, is fairly reasonable, and who has been shown an example in the acceptance of the last Amendment by his right hon. Friend, should accept this very reasonable suggestion. I know the difficulty with which people are faced when they go to buy houses of this kind. One frequently comes across cases of men and women who want their own homes, and yet who find that a matter of £10 or £15 in the way of costs is something which is going to make a considerable difference.

    I want to say one other word about the concession. It is for an amount of £2,500 or below, but it is sometimes found that people cannot get the house they want at the price of £2,500 and have to pay £3,000. The Financial Secretary knows that today the £3,000 house is not a very elaborate affair. The person who purchases a house at £2,500 has to find only 10 per cent. of the purchase money, but when he goes beyond that range he is in considerable difficulties if he seeks a mortgage of 90 per cent. The hon. Member for Wimbledon knows that such a purchaser will flit from one building society to another and will search high and low in an effort to obtain a satisfactory mortgage.

    In the case of a purchaser of a house of that kind the concession is not very large, and the mortgage is something that should 'be taken into consideration by the Financial Secretary. This is a matter that cuts across a very large section of the community. They have often to scrape and save to find the necessary money to enable them to purchase such a house, and very often it is just a question of £10, £15 or £20 standing between the possibility of that purchase and being unable to bring it about. In those circumstances, I ask the right hon. Gentleman to regard this new Clause as one which he can accept.

    Like my hon. Friend the Member for Wimbledon (Mr. Black), I have great sympathy with the declared objects of the Clause, namely, the assistance of house purchase. I have held that view for a good many years and it is a view to which the Government have given concrete expression by way of the reduction in Stamp Duty on house purchase, which was effected in the Finance Act, 1952.

    As my hon. Friend the Member for Wimbledon pointed out with great accuracy, in the Finance Act of 1952 and my right hon. Friend's first Budget a substantial reduction was made. It was provided that the lower 1 per cent. rate should run up to £3,000 with a modified provision of 1½ per cent. up to £3,450. We have not only paid lip service to this point of view, but have gone a considerable way to meeting it by practical financial measures.

    The proposed new Clause would carry the matter considerably further and, like all proposed tax concessions, it has to be looked at partly from the point of view of the good that it would do and partly from the point of view of whether in the circumstances of any particular year it is possible to accept the loss of revenue involved.

    Before passing to that subject, I should like to draw the attention of the House to the rather unfortunate way in which, in one respect, the new Clause would operate. The hon. Member for Leicester, North-West (Mr. Janner) referred to the £3,000 house, which, he rightly said, is not necessarily, in these days, a mansion of unbridled luxury. This proposal, however, would operate with a very severe jump just at that £3,000 level. If the Clause were adopted the house of just under £3,000 in value would carry a Stamp Duty of about £16 5s., whereas one of just over £3,000 value would jump to as much as £46 10s. Stamp Duty, that is at the £1 10s. per cent. rate.

    If the right hon. Gentleman thinks that he ought to go further we have no objection at all.

    I am only dealing with the precise proposal that has been put forward. One of the minor objections to it is that it provides this very acute jump at just the level which the hon. Member for Leicester, North-West went out of his way to point out was not a particularly high level. The hon. Member is good enough to say that he is prepared to go further but, if he does, that automatically raises the cost. Indeed, it is perhaps an indication of the difficulty of the proposal that to make it operate fairly and equitably it would be necessary to add to the already substantial cost of the Clause.

    The hon. Member for Sowerby (Mr. Houghton) asked what the cost would be. According to the best estimate that I can obtain, it would be £2 million in the present year and £3 million in a full year. In the light of the figures for the current year, a cost of that sort makes it quite impossible for my right hon. Friend to accept this proposal. For reasons with which the House will be only too familiar, a concession of that amount of revenue is not possible in the circumstances of this year.

    Having said that, it does not mean, of course, that we do not agree that were the resources available this is certainly one of the matters which would call for consideration. The Government attach very great importance to house purchase. It would be a mistake to assume, however, that Stamp Duty is the only, or even a particularly substantial, deterrent. It is the experience of most of us who have discussed this matter, as I have, with our constituents, that the real deterrent in the great majority of cases is the size of the original deposit.

    As the House knows, my right hon. Friend the Minister of Housing and Local Government is seeking to tackle that difficulty by enabling advances to be made up to a far higher proportion of the total cost than has been possible in the past, by way of arrangements which he has succeeded in making under which both the central Government and local authorities undertake to cover the risk of building societies in making increased advances. That factor is a much bigger factor than Stamp Duty, but that does not mean that Stamp Duty is not material.

    It is necessary to put the matter in proportion, however, and to appreciate that, not only by way of Stamp Duty in 1952, but also by way of the new arrangements which were announced a few weeks ago, we have shown that we are seriously concerned about house purchase. Because on the ground of cost it is necessary to reject this proposal this year, it does not mean that we shall not continue the great success that my right hon. Friend has had in stimulating people to house themselves or that that beneficent process cannot continue to a still greater degree than at present.

    The Financial Secretary has just said that this proposal would cost £2 million. Earlier, he said that the cost was small to the individual. It follows, therefore, that it affects a very large number of people and I should have thought that his party, which uses the slogan, "A property-owning democracy," would have acceded to our request. But in his list of costs which the house purchaser has to face, the right hon. Gentleman forgot legal costs. I am surprised that he should have done that, because to the layman legal costs are rather frightening.

    The memory of the hon. Member for Wimbledon (Mr. Black) must be very good, otherwise he would not be able to be a director of as many companies as he directs. One must assume, therefore, that he knew that in 1951 my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) had to face the first instalment of the re-armament budget which, over three years, was costing £4,500 million. That was a terrific item and, therefore, my right hon. Friend was perfectly justified in voting, and we were perfectly justified in voting with him, against Amendments which would reduce the revenue which he had to obtain.

    8.30 p.m.

    I am disappointed in the Financial Secretary. I had thought that perhaps the concession the Government made on the last new Clause portended a new trend. Perhaps there was now a new look in the Treasury; they would see whether they could please the taxpayers and please the House, but no, we are back again with the same old replies, "Cannot be done this year—costs too much—administrative inconvenience"—difficulties of one kind or another. It is surprising because we would have thought that, above all the new Clauses, this would have been the one most popular with the right hon. Gentleman and his right hon. and hon. Friends. After all, here was an opportunity to stimulate people into buying their own houses.

    The right hon. Gentleman referred to the cost of £2 million, but he forgot that in stimulating people to buy their own houses he will save money on housing subsidies, a very important point which I am sure he has in mind in general housing policy. It would be quite consistent with that policy to give a little money away here in order to save a lot more money on the subsidy bill. So I do not think we need take too seriously what the right hon. Gentleman said about costs.

    I am not quite sure where the hon. Member for Wimbledon (Mr. Black) stands. He made a speech which seemed more appropriate to the platform than to this House and made points which I am sure he has made many times before in public and which, I think, have been very adequately dealt with by my hon. Friends. Of course, in 1951 we had to face a terrific increase in defence expenditure. I think it is- in the recollection of the House that that defence expenditure was supported by the party opposite. That year it was quite impossible to make concessions. I was unfortunate, as Chancellor of the Exchequer in the one year in which I had to present a Budget, in having to face an extra £500 million for defence. Therefore, I do not think that we can accept the strictures of the hon. Member too seriously.

    I am still not clear whether he is in favour of the new Clause. When he rose I thought he would give us his blessing. I believe he is connected with building societies and I am sure that building societies in general would not oppose a reduction in Stamp Duty.

    I am glad to see the hon. Member nodding his head. Whatever he does about dividing on this issue, at least we know where his heart is. I hope that the hon. Member will not spoil the excellent expression of his point of view which I am trying to give to the House. While he may feel strongly in favour of this Clause, and may even have meant to speak in support of it, the Financial Secretary has turned it down. It is very regrettable that the right hon. Gentleman has missed a great opportunity to win popularity for himself and for the

    Division No. 192.]


    [8.32 p.m.

    Acland, Sir RichardGreenwood, AnthonyMitchison, G. R.
    Adams, RichardGrey, C. F.Monslow, W.
    Albu, A. H.Griffiths, Rt. Hon. James (Llanelly)Moody, A. S.
    Allen, Arthur (Bosworth)Griffiths, William (Exchange)Morgan, Dr. H. B. W.
    Allen, Scholefield (Crewe)Grimond, J.Morley, R.
    Anderson, Frank (Whitehaven)Hale, LeslieMorris, Percy (Swansea, W.)
    Awbery, S. S.Hall, Rt. Hon. Glenvil (Colne Valley)Mort, D. L.
    Bacon, Miss AliceHall, John T. (Gateshead, W.)Moyle, A.
    Baird, J.Hamilton, W. W.Mulley, F. W.
    Balfour, A.Hannan, W.Noel-Baker, Rt. Hon. P. J
    Bartley, P.Hardy, E. A.Oldfield, W. H.
    Beattie, J.Hargreaves, A.Oliver, G. H.
    Bellenger, Rt. Hon. F. J.Harrison, J. (Nottingham, E.)Orbach, M.
    Bence, C. R.Hastings, S.Oswald, T.
    Bonn, Hon. WedgwoodHayman, F. H.Padley, W. E.
    Benson, G.Healey, Denis (Leeds, S.E.)Paget, R. T.
    Bevan, Rt. Hon. A. (Ebbw Vale)Healy, Cahir (Fermanagh)Paling, Rt. Hon. W. (Dearne Valley)
    Bing, G. H. C.Henderson Rt. Hon. A. (Rowley Regis)Paling, Will T. (Dewsbury)
    Blackburn, F.Herbison, Miss M.Palmer, A. M. F.
    Blenkinsop, A.Hobson, C. R.Pannell, Charles
    Blyton, W. R.Holman, P.Pargiter, G. A
    Boardman, H.Holmes, HoraceParker, J.
    Bottomley, Rt. Hon. A. G.Holt, A. F.Parkin, B. T.
    Bowles, F. G.Houghton, DouglasPaton, J.
    Braddock, Mrs. ElizabethHoy, J. H.Pearson, A.
    Brockway, A. F.Hubbard, T. F.Pearl, T. F.
    Brook, Dryden (Halifax)Hudson, James (Ealing, N.)Plummer, Sir Leslie
    Broughton, Dr. A. D. D.Hughes, Cledwyn (Anglesey)Popplewell, E.
    Brown, Thomas (Ince)Hughes, Emrys (S. Ayrshire)Porter, G.
    Burke, W. A.Hughes, Hector (Aberdeen, N.)Price, Philips (Gloucestershire, W.)
    Callaghan, L. J.Hynd, J. B. (Atterclifle)Proctor, W. T.
    Castle, Mrs. B. A.Irvine, A. J. (Edge Hill)Pryde, D. J.
    Champion, A. J.Irving, W. J. (Wood Greeen)Pursey, Cmdr. H.
    Clunie, J.Isaacs, Rt. Hon. G. A.Rankin, John
    Coldrick, W.Janner, B.Reid, Thomas (Swindon)
    Collick, P. H.Jeger, George (Goole)Reid, William (Camlachie)
    Corbet, Mrs. FredaJeger, Mrs. LenaRhodes, H.
    Cove, W. G.Jenkins, R. H. (Stechford)Richards, R.
    Craddock, George (Bradford, S.)Johnson, James (Rugby)Robens, Rt. Hon. A.
    Crosland, C. A. R.Jones, David (Hartlepool)Roberts, Goronwy (Caernarvon)
    Crossman, R. H. S.Jones, Frederick Elwyn (West Ham, S.)Robinson, Kenneth (St. Pancras, N.)
    Cullen, Mrs. A.Jones, Jack (Rotherham)Rogers, George (Kensington, N.)
    Dalton, Rt. Hon. H.Jones, T. W. (Merioneth)Ross, William
    Darling, George (Hillsborough)Keenan, W.Royle, C.
    Davies, Harold (Leek)Kenyon, C.Shackleton, E. A. A.
    Davies, Stephen (Merthyr)Key, Rt. Hon. C. W.Shinwell, Rt. Hon. E.
    Deer, G.King, Dr. H. M.Short, E. W.
    Delargy, H. J.Kinley, J.Silverman, Julius (Erdington)
    Dodds, N. N.Lawson, G. M.Silverman, Sydney (Nelson)
    Donnelly, D. L.Lee, Frederick (Newton)Simmons, C. J. (Brierley Hill)
    Driberg, T. E. N.Lee, Miss Jennie (Cannock)Skeffington, A. M.
    Dugdale, Rt. Hon. John (W. Bromwich)Lever, Harold (Cheetham)Slater, Mrs. H. (Stoke-on-Trent)
    Ede, Rt. Hon. J. C-Lover, Leslie (Ardwick)Slater, J. (Durham, Sedgefield)
    Edwards, Rt. Hon. John (Brighouse)Lindgren, G. S.Smith, Ellis (Stoke, S.)
    Edwards, Rt. Hon, Ness (Caerphilly)Lipton, Lt.-Col. M.Smith, Norman (Nottingham, S.)
    Edwards, W. J. (Stepney)McGovern, J.Sorensen, R. W.
    Evans, Albert (Islington, S.W.)McInnes, J.Soskice, Rt. Hon. Sir Frank
    Evans, Edward (Lowestoft)McKay, John (Wallsend)Sparks, J. A.
    Evans, Stanley (Wednesbury)McLeavy, FSteele, T.
    Fernyhough, W.Mainwaring, W. H.Strachey, Rt. Hon. J.
    Fienburgh, W.Mallalieu, E. L. (Brigg)Strains, Rt. Hon. George (Vauxhall)
    Fletcher, Eric (Islington, E.)Mallalieu, J. P. W. (Huddersfield, E.)Summerskill, Rt. Hon. E.
    Follick, M.Mann, Mrs. JeanSwingler, S. T.
    Foot, M. M.Manuel, A. C.Sylvester, G. O.
    Forman, J. C.Marquand, Rt. Hon H. ATaylor, Bernard (Mansfield)
    Fraser, Thomas (Hamilton)Mason, RoyTaylor, John (West Lothian)
    Freeman, John (Watford)Mayhew, C. P.Taylor, Rt. Hon. Robert (Morpeth)
    Gaitskell, Rt. Hon. H. T. NMellish, R. J.Thomas, Iorworth (Rhondda, W.)
    Gibson, C. W.Messer, Sir F.Thomas, Ivor Owen (Wrekin)
    Glanville, JamesMikardo, IanThomson, George (Dundee, E.)

    Government. To show our disapproval of this foolish and reckless rejection of the new Clause, I propose that we should divide upon it.

    Question put.

    The House divided: Ayes, 238; Noes, 255.

    Thornton, E.Wells, William (Walsall)Williams, W. R. (Droylsden)
    Timmons, J.West, D. G.Willis, E. G.
    Tomney, F.Wheeldon, W. E.Wilson, Rt. Hon. Harold (Huyton)
    Ungoed-Thomas, Sir LynnWhile, Mrs. Eirene (E. Flint)Winterbottom, Richard (Brightside)
    Wade, D. W.Whiteley, Rt. Hon. W.Woodburn, Rt. Hon. A.
    Wallace, H. W.Wigg, George.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:
    Mr. Bowden and Mr. J. T. Price.


    Aitken, W. T.Ford, Mrs. PatriciaMackeson, Brig. Sir Harry
    Alport, C. J. M.Fort, R.McKibbin, A. J.
    Amery, Julian (Preston, N.)Fraser, Hon. Hugh (Stone)Mackie, J. H. (Galloway)
    Amory, Rt. Hon. Heathcoat (Tiverton)Fraser, Sir Ian (Morecambe & Lonsdale)Maclean, Fitzroy
    Arbuthnot, JohnFyfe, Rt. Hon. Sir David MaxwellMacLeod, John (Ross and Cromarty)
    Assheton, Rt. Hon. R. (Blackburn, W.)Galbraith, Rt. Hon. T. D. (Pollok)Macmillan, Rt. Hon. Harold (Bromley)
    Astor, Hon. J. J.Galbraith, T. G. D. (Hillhead)Macpherson, Niall (Dumfries)
    Baldock, Lt.-Cmdr J. MGarner-Evans, E. H.Maitland, Patrick (Lanark)
    Baldwin, A. E.Glover, D.Manningham-Buller, Rt. Hn. Sir Reginald
    Banks, Col. C.Godber, J. B.Markham, Major Sir Frank
    Barber, AnthonyGomme- Duncan, Col. A.Marlowe, A. A. H.
    Barlow, Sir JohnGough, C. F. H.Marples, A. E.
    Baxter, Sir BeverleyGower, H. R.Marshall, Douglas (Bodmin)
    Beach, Maj. HicksGraham, Sir FergusMaude, Angus
    Bell, Ronald (Bucks, S.)Grimston, Hon. John (St. Albans)Maudling, R.
    Bennett, F. M. (Reading, N.)Grimston, Sir Robert (Westbury)Maydon, Lt.-Comdr. S. L. C.
    Bennett, Dr. Reginald (Gosport)Hall, John (Wycombe)Medlicott, Brig. F.
    Bennett, William (Woodside)Harris, Frederic (Croydon, N.)Mellor, Sir John
    Bevins, J. R. (Toxteth)Harrison, Col. J. H. (Eye)Molson, A. H. E.
    Bishop, F. P.Harvey, Ian (Harrow, E.)Moore, Sir Thomas
    Black, C. W.Harvie-Watt, Sir GeorgeMorrison, John (Salisbury)
    Boothby, Sir R. J. G.Hay, JohnMott-Radclyffe, C. E
    Bossom, Sir A. C.Head, Rt. Hon. A. H.Nabarro, G. D. N.
    Boyd-Carpenter, Rt. Hon J. AHeath, EdwardNeave, Airey
    Boyle, Sir EdwardHenderson, John (Cathcart)Nicholls, Harmar
    Braine, B. R.Higgs, J. M. C.Nield, Basil (Chester)
    Braithwaite, Sir Albert (Harrow, W.)Hill, Dr. Charles (Luton)Noble, Comdr. A. H. P
    Braithwaite, Sir GurneyHill, Mrs. E. (Wythenshawe)Nugent, G. R. H.
    Brooke, Henry (Hampstead)Hinchingbrooke, ViscountNutting, Anthony
    Brooman-White, R. C.Hirst, GeoffreyOakshott, H. D.
    Browne, Jack (Govan)Holland-Martin, C. JO'Neill, Hon. Phelim (Co. Antrim, N)
    Buchan-Hepburn, Rt. Hon P. G. T.Hope, Lord JohnOrmsby-Gore, Hon. W. D.
    Bullus, Wing Commander E. E.Hopkinson, Rt. Hon. HenryOrr, Capt. L. P. S.
    Burden, F. F. A.Hornsby-Smith, Miss M. P.Orr-Ewing, Charles Ian (Hendon, N.)
    Butcher, Sir HerbertHorobin, I. M.Page, R. G.
    Campbell, Sir DavidHorsbrugh, Rt. Hon. FlorencePeaks, Rt. Hon. O.
    Carr, RobertHoward, Gerald (Cambridgeshire)Peyton, J. W. W.
    Cary, Sir RobertHoward, Hon. Greville (St. Ives)Pickthorn, K. W. M.
    Channon, H.Hudson, Sir Austin (Lewisham, N.)Pilkington, Capt. R. A
    Clarke, Col. Ralph (East Grinstead)Hulbert, Wing Cdr. N. J.Pitman, I. J.
    Clarke, Brig. Terence (Portsmouth, W.)Hutchison, Sir Ian Clark (E'b'rgh, W.)Pitt, Miss E. M.
    Cole, NormanHyde, Lt.-Col. H. M.Powell, J. Enoch
    Colegate, W. A.Hylton-Foster, H. B. H.Price, Henry (Lewisham, W.)
    Conant, Maj. Sir RogerIremongor, T. L.Prior-Palmer, Brig. O. L
    Cooper-Key, E. M.Jenkins, Robert (Dulwich)Raikes, Sir Victor
    Craddock, Beresford (Spelthorne)Jennings, Sir RolandRamsden, J. E.
    Crookshank, Capt. Rt. Hon. H. F. C.Johnson, Eric (Blackley)Rayner, Brig. R.
    Crosthwaite-Eyre, Col O. E.Johnson, Howard (Kemptown)Redmayne, M.
    Crouch. R. F.Jones, A. (Hall Green)Rees-Davies, W. R
    Crowder, Sir John (Finchley)Kaberry, D.Remnant, Hon. P.
    Crowder, Petre (Ruislip—Northwood)Kerby, Capt. H. B.Ronton, D. L. M.
    Darling, Sir William (Edinburgh, S.)Kerr, H. W.Ridsdale, J. E.
    Davidson, ViscountessLambton, ViscountRoberts, Peter (Heeley)
    Deedes, W. F.Lancaster, Col. C. GRobinson, Sir Roland (Blackpool, S.)
    Digby, S. WingfieldLangford-Holt, J. A.Rodgers, John (Sevenoaks)
    Dodds-Parker, A. D.Leather, E. H. C.Roper, Sir Harold
    Donaldson, Cmdr, C. E. McALegge-Bourke, Maj. E. A. H.Ropner, Col. Sir Leonard
    Donner, Sir P. W.Legh, Hon. Peter (Petersfield)Russell, R. S.
    Doughty, C. J. A.Lennox-Boyd, Rt. Hon. A. TRyder, Capt. R. E. D.
    Douglas-Hamilton, Lord MalcolmLindsay, MartinSavory, Prof. Sir Douglas
    Drayson, G. B.Linstead, Sir H. N.Schofield, Lt.-Col. W.
    Drews, Sir C.Llewellyn, D. T.Scott, R. Donald
    Duncan, Capt. J. A. LLloyd, Maj. Sir Guy (Renfrew, E.)Scott-Miller, Cmdr. R.
    Duthie, W. S.Lockwood, Lt.-Col. J. C.Shepherd, William
    Eccles, Rt. Hon. Sir D. M.Longden, GilbertSimon, J. E. S. (Middlesbrough, W)
    Eden, J. B. (Bournemouth, West)Low, A. R. W.Smithers, Peter (Winchester)
    Erroll, F. J.Lucas, Sir Jocelyn (Portsmouth, S.)Smithers, Sir Waldron (Orpington)
    Finlay, GraemeLucas, P. B. (Brentford)Smyth, Brig. J. G. (Norwood)
    Fisher, NigelLucas-Tooth, Sir HughSnadden, W. McN.
    Fleetwood-Hesketh, R. F.McCorquodale, Rt. Hon M. SSpearman, A. C. M
    Fletcher-Cooke, C.Macdonald, Sir PeterSpeir, R M

    Spens, Rt. Hon. Sir P. (Kensington, S.)Thompson, Lt.-Cdr. R. (Croydon, W.)Ward, Miss I. (Tynemouth)
    Stanley, Capt. Hon. RichardThornton-Kemsley, Col. C. N.Waterhouse, Capt. Rt. Hon. C.
    Stevens, GeoffreyTilney, JohnWatkinson, H. A.
    Steward, W. A. (Woolwich, W.)Touche, Sir GordonWebbe, Sir H. (London & Westminster)
    Stewart, Henderson (Fife, E.)Turner, H. F. L.Wellwood, W.
    Stoddart Scott, Col. M.Turton, R. H.Williams, Gerald (Tonbridge)
    Storey, S.Tweedsmuir, LadyWilliams, Sir Herbert (Croydon, E.)
    Strauss, Henry (Norwich, S.)Vane, W. M. F.Williams, Paul (Sunderland, S.)
    Stuart, Rt. Hon. James (Moray)Vaughan-Morgan, J. K.Williams, R. Dudley (Exeter)
    Summers, G. S.Vosper, D. F.Wills, G.
    Sutcliffe, Sir HaroldWakefield, Edward (Derbyshire, W.)Wilson, Geoffrey (Truro)
    Taylor, William (Bradford, N.)Wakefield, Sir Wavell (St. Marylebone)Wood, Hon. R.
    Teeling, W.Walker-Smith, D. C.
    Thomas, Rt. Hon. J. P. L. (Hereford)Wall, Major PatrickTELLERS FOR THE NOES:
    Thomas, Leslie (Canterbury)Ward, Hon. George (Worcester)Mr. Studholme and
    Mr. Robert Allan.

    New Clause—(Amendment Of Part Viii Of Income Tax Act 1952 (Personal Allowances))

    Supplementary personal allowance

    Part VIII of the Income Tax Act, 1952, shall be amended by the insertion after clause two hundred and twenty of the following new clause:—

    220A.—(1) if for any year of assessment the aggregate (hereinafter called 'the standard aggregate') of all relief allowed to a claimant under the sections of this Act which are mentioned in the next following subsection is less than the minimum personal allowance as hereinafter defined, the claimant shall be entitled to a deduction (hereinafter called a 'supplementary personal allowance') from the amount of income tax with which he is chargeable.

    (2) The sections referred to in the last foregoing subsection are sections two hundred and ten, two hundred and twelve and two hundred and thirteen.

    (3) The minimum personal allowance referred to in subsection (1) of this section is the sum of sixty-three pounds and two-sevenths of any amount by which the standard aggregate exceeds sixty-three pounds.

    (4) The supplementary personal allowance shall be the difference between the minimum personal allowance and the standard aggregate.—[ Mr. Mitchison.]

    Brought up, and read the First time.

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

    I feel that at this stage of the Finance Bill we are all agreed on one thing, at any rate, and that is that the system of taxation is highly complicated and that the Income Tax is about the most complicated part of it. This new Clause relates to the question of a personal allowance for Income Tax. It carries out, to some extent but not quite completely, the proposals of the Royal Commission on Taxation. We put it forward not by any means as the last word, because I do not think it is or ought to be the last word on this matter, but as a first step in the right direction.

    I shall have to remind the House that a personal allowance, and for that matter a personal allowance with a marriage allowance included, serves two purposes. It serves, or should serve, the purpose of lightening taxation especially at the bottom of the scale; and secondly, it is a part of the whole machinery of graduation and a part to which we have long been accustomed.

    The Royal Commission gave this question the most detailed and careful consideration. The point they had in mind and upon which they were all agreed is that the lowest limit and the lower part of the scale receive unfair treatment in the matter of personal allowance. If we regard this as an instrument for graduating the tax, no doubt it serves its purpose, but it has so constantly been regarded in that light that it does not in fact make a sufficient concession to the people right at the bottom of the scale.

    The matter is involved because in the majority, though not necessarily in all, of these cases there will either be earned income relief or some element of earned income relief in the small income. It is not in a very large number of cases that we find so small an income being the only income and entirely unearned.

    8.45 p.m.

    Naturally, such cases exist, but the Royal Commission carefully considered the question whether the hardship which it had in mind would be sufficiently relieved by dealing with the earned income allowance. It concluded that in cases of this sort there was an elementary fairness in extending a measure of additional relief in the case of these small incomes, whether earned or unearned. It devoted another part of its Report to a consideration of the question of earned income.

    When the Royal Commission came to the remedy—all the members were agreed that there was something wrong at the bottom of the scale—there were differences of opinion both in the body of the Report and between various members of the Royal Commission. I would simply say that what is proposed in the new Clause is the very smallest thing—if, indeed, it is all that—that the Royal' Commission recommended. I will quote the words of the Royal Commission at the beginning of paragraph 170 of its Report:
    "We are all of us agreed that a minimum allowance scheme of this modest sort "—
    what is proposed now is just that—
    "would be at team a step in the right direction."
    If I may immediately cut away the ground from the Economic Secretary, I will read the next sentence:
    "The cost is small, and the effect on incentive of the rise in the marginal rate would be negligible. However, the rise in the exemption limit is also small, and the relief of tax on small incomes is not very considerable. There is therefore a strong case for trying to find something more ambitious."
    I entirely agree with the last sentence; there is indeed a strong case for trying to find something more ambitious. We Are engaged for the moment in testing the intentions of the Government in regard to this matter, and I am certain that they would agree that the acceptance of this scheme would not at all preclude them from trying something more ambitious at a later stage, if indeed they do not choose to do it on this Bill.

    Let me frankly put the test as I see it. This is a cheap, small, inadequate concession to people at the very bottom of the Income Tax scale. Outside the Conservative Club in Kettering there is a large notice which says:
    "The country is better off. Trust the Tories."

    I am glad that the right hon. Member for Blackburn, West (Mr. Assheton) agrees with that. If the country is better off, this is certainly the sort of concession which ought to be made to people at the bottom of the Income Tax scale, and that is exactly the point that I am making. I should be out of order if I added anything about old-age pensioners, but the point is obvious.

    Taking for the moment the particular matter that we have in mind, let us see exactly what the Royal Commission required, for it is upon that that the Clause is founded. Here again, the Royal Commission put its requirements in a clear and succinct form. It said:
    "The basis would be a minimum allowance of £63 for the single person."
    That, of course, means £63 and not the tax on £63. It went on:
    "For each taxpayer entitled to more than the bare single personal allowance, this minimum would be increased by 2/7ths of the difference between the single personal allowance and the actual personal allowances to which the taxpayer was entitled."
    I tell the House frankly that I am not quite certain what that means. The phrase "personal allowances" is used in various senses, both in this Report and actually in the 1952 Act. Therefore, what we have done is to put down the very minimum of what could be regarded as a personal allowance; that is to say, what is strictly called the single man's allowance, with the addition thereto for a wife, making it a married man'; allowance, and then the child's allowance.

    I am not going into the figures in any detail. It is sufficient to say that I do not think that anyone who has any practical sense of how people live would disagree with me when I say that, if we find that something is too little for the single man's personal allowance, it is quite certain that the additions to the allowances which are made for a married man and for children will not remedy that unfairness. They are certainly not too much, and certainly they do not fully meet the requirements for which they are intended.

    Therefore, I can start off by pointing out that at present, taking the case of earned income, the starting point for a single man is £155, and if I take the single man as an instance, I do not do so because he is a particularly meritorious instance. I think that actually the case is even stronger for the married man or the married man with children. I take the case of the single man knowing that I said just now that the additional allowances in the case of marriage or children will certainly not meet the difference in the requirements which a taxpayer has to pay for in his daily life by reason of the agreeable burden of a wife and children, and I only take it for that reason.

    Now, taking the present figure of £155, one has only to ask oneself one simple question. Can a man reasonably live on it? Of course, the exemption figure makes a slight difference, but, quite obviously, it is well below the standard of living that one considers reasonable or indeed practicable. Perhaps the most startling light is thrown upon the matter by one very small point which I noticed in the Report of the Royal Commission revealing that the exemption limit, which I think now stands at £135, in 1894 was actually £160. Prices in 1894 were a very different matter from what they are today, and what has happened is that changes in taxation have been made from time to time, and that every time the effect of those changes on the people at the bottom of the scale has not been considered. That is the reason for it.

    What we propose to do is to start at the very bottom of the scale and put up the single man's allowance by a matter of £20 or £30, and I call it little more than a token step, though it is roughly the step which the Royal Commission recommended.

    I am waiting to see what objections the Government make to accepting this Clause now. Let me take the usual standard objections. The first is that the Government are waiting for the advice of the Royal Commission. They have it. It is that this concession is the very minimum, only a first step. The next objection is that it would be administratively difficult. The Royal Commission considered that point very carefully and in very great detail. The odd fraction, two-sevenths, reflects their favourable conclusion about it. We could reconcile it with the requirements of P.A.Y.E. and produce what the experts call an "even band" throughout the Income Tax arrangements.

    What is the next objection? "Not this year, but next year," like the old game we used to play: "This year, next year, some time, never." This objection has gone on for a very long time. It is true that the Royal Commission has only made its Report recently, but it knows what it is talking about. It consists of practical people. Nobody can say that the Commission is unduly generous in its recommendations or that this is a minor matter. It is a thing upon which the Commission hung a very large part of its recommendations. Therefore, one does not see what can be the reason for delaying the introduction of this proposal, as a first step.

    I put one discreditable thought to the House, only to reject it. Let me confess to the Economic Secretary, who is to reply, that when I listened to the Budget I said to myself, "That means no Election this year. The concessions and the Election will come next year." I am a very nasty-minded person or the thought would never have occurred to me. I must have an unduly suspicious nature. Of course, if by any chance the Economic Secretary were to say that he could not take the proposed step this year because he or his Department wanted longer to think about it, I should begin to wonder whether I might not have been right and whether they are keeping the whole thing back only to bring it forward on the plate next year.

    This proposal will affect quite a large number of voters, including that mythical animal the floating voter. This might be a very good electoral stunt. I know that the Economic Secretary is a very high-minded person, and that the Chancellor of the Exchequer is in many ways, comparatively speaking—comparing him with the others, of course—the sea-green incorruptible of the Tory Party. It would be just an unfortunate coincidence if this happened in connection with an Election. I hope that they will not tell us that this minimum step cannot be taken this year. The right thing to do is to take this little step this year and bring all the popularity that will result from so doing; and then to go one better next year. That would have a certain electoral effect. It might be a surprise; one never knows. That is the argument for it.

    9.0 p.m.

    I shall not go in very great detail into the explanations. This is a very simple new Clause. We are compelled by the rules of order to put the matter in a particular way. Indeed, I see very little alternative. What we are seeking is a supplementary personal allowance which would be the difference between what the Royal Commission recommends—as interpreted by me, and I am not sure that I have the whole of the Commission's recommendations right—and what the man is already getting by way of the three reliefs which I have mentioned. Instead of taking one allowance and substituting another, we are providing a supplementary allowance, which will conform with the rules of order and have the same result.

    It is possible to say, "You have not gone even as far as the Royal Commission"; and I am not sure that we have. That may be a reason for doing more. It is certainly not a reason for rejecting the very small step which we wish to take. The House should remember who will be affected by the Clause. It will affect the average, ordinary, quite small income—the small wage earner, the unskilled man, those who are living on small savings, the ordinary humble folk in the community, who seem to me to have been neglected in the Budget.

    We have been talking high and mighty things about investment allowances, chicory and other obscure subjects. Here is the first opportunity to do something for the ordinary small man and woman. While I hesitate to appeal to the Economic Secretary on grounds of electoral expediency—the Clause would make him and his party a little more popular, but it is not my business to help him over that—I put the Clause to him as a matter of obvious common justice towards the ordinary people of the country with small incomes.

    I beg to second the Motion.

    The case for this new Clause has been admirably made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), who has made a great study of this subject. Like him, I regard it as one of the major defects in the Budget that no attempt was made to carry out any of the recommendations of the Royal Commission, and particularly that there was no attempt whatever, in accordance with the recommendations of the Royal Commission, to assist the class of small Income Tax payer who is so badly hit today compared with the situation a decade or two ago.

    I do not know whether it was for electoral reasons or for some other reasons that the Chancellor made no attempt to give effect to the recommendations. It may have been for electoral reasons; it may be that the Government are saving up this concession. It is most important that the country should know that we on these benches are most anxious that at the earliest possible moment the recommendations, which have the authority of the Royal Commission, for assisting the lowest grade of Income Tax payers in the country should be carried out, because until they are carried out these people are suffering a very great injustice.

    My hon. and learned Friend has explained the details of the new Clause and I shall not weary the House by repeating them. I want to try to explain in my own words the principle which underlies the new Clause and the necessity for doing something on these lines. As the Royal Commission pointed out, our present Income Tax system has become considerably distorted by reason of inflation. The broad lines of our progressive scale of Income Tax were laid down some time ago, and have been looked at from time to time.

    I had overlooked the fact, until it was pointed out by the Royal Commission, that the exemption limit has not risen proportionately with the degree of inflation that has taken place in this country. In other words, the inflation that has occurred has distorted the operation of the Income Tax system, particularly with regard to the exemption limits, the allowances, and the differential as between a single man, a married man and a man with children, and so on.

    It is high time that the necessary rectification was carried out because, until it is, it is the poorer sections of the community who will suffer as they are now only getting the benefit of the exemption limits, the personal allowances, and so forth, that were relevant at a pre-inflation date, and before the cost of living rose to its present level.

    My hon. and learned Friend quoted in support of his new Clause the precise terms of the Royal Commission's Report, because the Clause follows its suggestions. It may only be a beginning, but I regard it as a very important beginning, and I shall not be satisfied unless we hear from the Economic Secretary tonight that he accepts the principles on which these proposals are based. We have not heard a word at any stage of the Finance Bill to indicate whether or not the Chancellor even accepts the principles which the Royal Commission has recommended.

    This is how the Royal Commission put it in justification and explanation of the precise recommendation which we are now considering. In paragraph 172, it says:
    "We must emphasise that the question we have been discussing is intimately connected with the inflation which has been experienced during the past decade. A progressive tax is bound to be distorted by inflation;"—
    it has been distorted by inflation, but it must be corrected if justice is to be done—
    "for since it fixes the proportion of income paid in tax by reference to the money value of the income, each class of the community takes up the burden of a higher rate of tax as money incomes rise and prices rise with them."
    In other words, prices rise, but the exemption limit available for Income Tax purposes does not rise in proportion. The result is that people are not getting an exemption limit which corresponds to the degree of inflation that has taken place, and that it operates unfairly on the lowest grade of Income Tax payers. The Report goes on:
    "Thus at present a single man with an earned income of £500 pays 11 per cent. of his income in tax; in 1938 conditions, at 1938 prices, such a man could not be expected to have been earning more than £250; at £250, with present tax rates he would pay less than 5 per cent. This automatic stiffening of the tax burden proceeds all along the scale … Nevertheless, just because the stiffening has been to this extent automatic, rather than deliberate, its consequences have been somewhat different from those which would have been easily accepted as part of a deliberate policy."
    In other words, we are faced with a situation in which there has been a shift in emphasis of taxation which puts a greater burden on those in the lower income groups compared with the others because the exemption limit has not been changed.

    There has been a shift in the emphasis of the burden over a decade or two as the result of inflation and to some extent it has been imperceptible. It takes some time for economic consequences to make themselves apparent and we may not always appreciate the process. But the result has been indicated by the Royal Commission, and I see no justification whatever for the singular omission in this year's Budget of any reference to this growing need to remedy an injustice. There is nothing to which I attach greater importance than that there should be some recognition of the fact that relief for the Income Tax payers at the lower end of the scale is overdue. This is only a beginning. I hope that the Clause will be accepted. I hope, also, that it may be followed by a recognition of the other suggestions contained in the Report of the Royal Commission.

    We are here attempting to lay down the principle of a minimum personal allowance on earned income. The text of the Clause has been drafted to take account, as far as possible, of the detailed recommendations in the Report of the Royal Commission. I hope that no one will assume from anything that has been said that we should be satisfied merely by the acceptance of this modest beginning to what we wish to bring about.

    I was particularly impressed by the observations contained in paragraph 8 of the Minority Report, where it is put in a different manner. The broad reasons which led to the conclusion are explained succinctly. Reference is made to some complicated tables which are printed in various pages of the Report and I would invite hon. Members who are interested to study them. Paragraph 8 states:
    "Three broad conclusions emerge from these tables. In the first place, the starting point of liability is at a much lower level of real income than before the war."
    That is what we complain about. Owing to inflation, the starting point of liability for Income Tax today is at a much lower level of real income than ever before. Surely that proposition has only to be stated to be appreciated and I think that the House will accept the corollary that something should be done to remedy it. The, 20 on to say:
    "In the second place, the rise in taxation has been proportionately much greater in the lower categories of Income Tax payers … than on those higher up the scale."
    They go on—and this is very relevant to the Clause—
    "In the third place, the rise in the tax burden has been much greater on the family man than on married persons without children; and it has been much greater on married persons than on single persons."
    9.15 p.m.

    In other words, what has occurred is this. This gradual increase in the cost of living has completely thrown out of Rear what we regard, and what I imagine is commonly regarded, as a properly balanced system of Income Tax liability measured as between different categories of persons in the community—the single man, the married man, the married man with two children and so forth. The result has not merely been to distort that system: it has done so in a sense which is completely anti-social.

    When these reliefs and allowances were originally devised, they were devised for the specific purpose of encouraging the married man with children. Everybody knows—it is common experience—that it is the married man with a wife and two or three children who is most severely hit today, both by the cost of living and also by the incidence of the Income Tax system which has become so distorted as a result of inflation. Nothing has been done in the Budget to correct that. We have not heard whether the principles underlying the Report are to be accepted.

    As the Chancellor realises, this is the only way in which we can bring to the notice of the community our insistence on something being done about this matter without delay. As my hon. Friend has said, we have drafted this Clause in this particular way because it is not easy to draft a large number of new Clauses to give effect to all the recommendations of the Royal Commission. In the course of the Finance Bill we have already done a great deal of work for the Chancellor which we think ought to have been done in the Treasury, and he has from time to time expressed his gratitude for our assistance. But had time permitted and had the opportunity arisen, I should like to have seen a great many more new Clauses put down on the lines proposed by the Royal Commission.

    I am therefore supporting this new Clause not merely because it contains a specific, precise recommendation on the lines of the Commission's Report, which. I hope, the Chancellor will accept, but also because it enshrines the principles which have actuated the Royal Commission in drawing the attention of the country to the necessity, if justice is to be done, for a complete reorganisation of our whole system of personal allowances, minimum liability, differentials, and so forth, all of which should be done in order to give overdue relief to the lowest Income Tax payers in the community.

    The hon. and learned Member for Kettering (Mr. Mitchison) gave the House the benefit of his very interesting thoughts on paragraphs 169 and 170 of the Report of the Royal Commission, but what we are now discussing is not that, but the proposed new Clause, and there is quite a difference between one and the other. The hon. and learned Member himself said that there was a difference, but according to my interpretation of the matter the difference is a good deal wider than he appears to think.

    I want to say a word or two about this recommendation of the Royal Commission. Like the other recommendations, it is an extremely interesting one, but my right hon. Friend is not proceeding with it this year because, as he has already explained to the House, he has not a great deal of revenue to spare this year, and he is not prepared to pick out one individual recommendation from the whole group put forward by the Royal Commission. The recommendation contained in paragraph 169 would cost about £8 million, which is a very substantial sum, and the cost of the recommendations mentioned in paragraph 170 would be a great deal more, namely, £56 million. For that reason my right hon. Friend did not proceed to implement that recommendation, any more than any of the others, although he will study them all carefully between now and next year's Budget.

    The proposed new Clause would have an effect very different from the recommendation of the Royal Commission, but I do not intend to advise the House to reject it on any of the grounds which the hon. and learned Gentleman proposed. The grounds I put forward are that it would cost about £60 million and the benefit would go entirely to single people. No benefit would go to married people, about whom the hon. Member for Islington, East (Mr. E. Fletcher) spoke with great feeling but without a very accurate appreciation of the effect of the proposal.

    The effect would be to give a supplementary relief in a case where the aggregate of all the reliefs under certain Sections of the Income Tax Act, 1952, was less than £63. As I understand it, that can happen only in the case of a single man, whose relief from tax on a sun of £120 is £54. He would therefore receive an allowance of £9 in terms of tax which, grossed up, would be £20, making up the difference between £120 and £140, to which difference the hon. and learned Member referred. That is the effect of the proposal as I understand it, and it is quite clear that it can have no other effect, and can be of benefit only to people whose tax relief is below the figure I have mentioned. These people could only be single people, and a concession costing £60 million a year would be given to them.

    The hon. and learned Member talked in a spirit of badinage on the subject of elections, but I would ask him if he thinks it would be a good election move to vote in favour of giving a £60 million concession entirely to single people.

    This is a relief which is additional to any present relief. It is founded on a certain sum, plus two-sevenths of the personal allowances. Those personal allowances are obviously larger in the case of a married man, and larger still in the case of a married man with children. What I fail to understand is why two-sevenths of a larger sum is not larger than two-sevenths of a smaller sum. Perhaps the hon. Member can explain the matter to me.

    The hon. and learned Member has made the precise point. It is true that reliefs for married men are much larger than for single men, but the relief in this case would arise only where the present reliefs are as small as possible. This proposed new Clause would cover the situation only where the standard aggregate was less than £63, and that would apply only in the case of a person with the minimum personal allowance, namely, a single man. It is because this proposal would cost £60 million a year and would benefit only single persons that my right hon. Friend cannot accept it.

    Before the hon. Gentleman sits down, might I ask him one further question? This may differ in one small respect from the recommendations of the Royal Commission but it may differ only because it does not include all the personal allowances it had in mind. Subject to that, it follows exactly the passage that I read from the Report. The Royal Commission gives a table showing the effect as regards married men and single men, and I completely fail to understand—and I do not believe I am the only person who fails to understand—why that table is quite wrong and why following out what the Royal Commission said is apparently the opposite to that which they concluded it would be.

    I am sorry that the Opposition have put down such a bad Clause. I sympathise with them because I know how difficult it is without the assistance of the Parliamentary draftsmen to put ideas clearly into a draft Clause. I do not wish to challenge the drafting, but I want to make one point about this proposal. The minimum personal allowance is referred to in subsection (3) in these words:

    "… the sum of sixty-three pounds and two-sevenths of any amount by which the standard aggregate exceeds sixty-three pounds."
    I only want to say that I think that is far too complicated a thing to introduce into our Income Tax law, and I hope that account will be taken of the general trend of the arguments which led to that particular proposal and that a more plain and simple proposition will be put by the Chancellor of the Exchequer when he comes to deal with it in due course.

    I am getting rather tired of having to start my speeches at this stage of the Bill by saying that the hon. Gentleman's or the right hon. Gentleman's reply is very disappointing, but I can assure the Economic Secretary that his answer on this new Clause was extremely disappointing. I thought he fell below his usual standard of courteous explanation. He dismissed curtly, and without any argument at all, the drafting of this Clause; indeed, I could not follow what he had to say at all. I will not go into detail, because my hon. and learned Friend the Member for Kettering (Mr. Mitchison) is far better equipped to do that than I am, and I have no doubt that he will take full opportunity of pressing the hon. Member on this point.

    But even supposing that the drafting is difficult, the hon. Gentleman's reply was not adequate to a Clause of this importance. We are concerned here with one of the major proposals of the Royal Commission, and I would say to the Economic Secretary that I do not think it was even polite to the members of that Commission to dismiss the proposal in the way that he did.

    I was most careful to say that my right hon. Friend would study all the proposals of the Royal Commission with great care.

    For how long? After all, this Report has been out for some time, and I have little doubt that the Treasury was informed of the contents before it was published.

    I am not sure that we can accept that. The report was received by us actually after the Budget and, therefore, it was not possible to make any detailed examination which I should like to give to the Report in the time; but I am not responsible for that.

    I am concerned with whether the Chancellor had an opportunity of studying the Report before it was printed and published. I should be very surprised if he was not given the Report in typescript so that he could at least have some opportunity of looking through it.

    In any case, some time has elapsed since the Budget, and to say, "We cannot consider any of these proposals as we have said on an earlier occasion" is not good enough. I come back to the point that here we have a major proposal of the Royal Commission. It is not a completely new idea. As a matter of fact, I think great credit is due to my right hon. Friend the Member for Battersea, North (Mr. Jay), who has repeatedly pressed for a higher minimum tax figure. The scheme which the Royal Commission recommends is, in certain respects, very like the proposals which he has put forward in this House on earlier occasions.

    9.30 p.m.

    The case is based largely on two grounds. First of all, obviously if one can secure substantial administrative economies at very little cost, from the sheer efficiency point of view there is a great deal to be said for it. If one can write off a million or two people from the Income Tax scheme altogether and the cost is only a few million pounds there is a substantial gain on that account. I do not think that the Economic Secretary would deny that.

    Secondly, the Royal Commission itself argues with great pertinacity that there ought to be a subsistence level which should not attract Income Tax at all and the Commission discusses in some detail what that level should be. It points out that the present situation is anomalous and unsatisfactory because the effective minimum is determined by the personal allowances only and the earned income allowance, and the Commission puts forward very powerful arguments why that is not really satisfactory from the point of view of a fair fiscal system.

    The Commission points out that if one wanted to raise the minimum figure by raising the personal allowance one would have to give away in tax relief an enormous amount to people who are far above the levels of income with which the Commission is concerned. The Commission also points out that if one raises the personal allowance to £200 and £320 respectively, thereby exempting about 7 million people, a very substantial number, it would cost no less than £290 million on the basis of doing it that way, although only £37 million would relate to those who would be completely exempted from tax. Therefore, the Commission concludes that we ought to find a new system by which there is a higher effective minimum than the personal allowances at present provided.

    My hon. Friends have explained the matter with extraordinary clarity and lucidity. I hope they will not take offence when I say that though they are both lawyers and not economists, they seem to have an admirable grasp of the economics of the Royal Commission's Report and have explained with great detail exactly what is involved. They have referred to the specific proposal relating to the minimum personal allowance as the sum of £63 plus two-sevenths of any amount by which the standard aggregate exceeds £63 and that the supplementary personal allowance shall be the difference between the minimum personal allowance and the standard aggregate. Although this may seem only a modest step it is an important step forward. I think that we have shown some restraint in selecting this particular variation of the general idea of a minimum earned income relief instead of the much more extensive one which occurs later in the Report.

    The case for introducing something of this kind is very powerful indeed and one would suppose that even if the Economic Secretary could not have conceded the new Clause he would have presented some arguments about it at least. We have not the slightest notion whether the Government think that this is a good idea or a bad idea and whether there are any difficulties in it. It would have been interesting for the House to know whether it is thought practicable by the experts of the Inland Revenue, whose advice the hon. Gentleman swallows completely whole when it comes to drafting, without apparently being able to pass on exactly what they say to the House.

    That would not necessarily have committed the Government. It is entirely unsatisfactory that when we put forward schemes of this kind, drawn from the Report, we should be told that nothing out of the Report can be accepted, because it is in the Report. That is very discourteous to the Royal Commission and certainly very unsatisfactory for the Opposition. I do not know what my hon. Friends who support this Clause feel, but I still hope that we shall get a better explanation, at least on the drafting point.

    The hon. Gentleman is an extremely intelligent person—he is not only an economist, but a lawyer as well, which is a very rare combination. He is quite capable, if the Chancellor would only take off his muzzle, of holding forth to us on this very interesting and important subject for a long time. I strongly suspect that he would have done so if the Chancellor had not come in at that time. No doubt that is the real trouble. Now that this little plot has been exposed, I hope that the Chancellor will allow the Economic Secretary to give a better reply and at least explain why this new Clause is so unacceptable to the Government.

    We do hope we shall get something from the Economic Secretary. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) has deployed a very powerful case and the Chancellor is taking a personal interest in this.

    When I first started to be interested in the Inland Revenue, 25 years ago, there was not an exemption limit, but there was its equivalent in the sense of a single man's personal allowance plus earned income relief. In 1930 that allowance amounted to £160. One did not start to pay Income Tax until one had an income of £160. Today, as I understand the Royal Commission's Report, one starts to pay tax at £155. This is a most singular change in the level of taxation.

    My hon. Friend the Member for Islington, East (Mr. E. Fletcher) said that we ought to double the old exemption allowance to bring it into line with modern conditions. He could have put it the other way and have said in effect that the level of exemption which existed in the middle years between the wars at £160 was really equivalent to only £80 today and that in fact we have substantially worsened—practically halved—the position of those people.

    I do not take the view—and I hope the Economic Secretary will not deploy it as part of his political armoury—that to take the part of the single person against the married person is a vote loser. I would remind the Economic Secretary that there is a very large number of single people now enjoying incomes—if that is the appropriate phrase to use—of between £155 and £183 a year and they are very badly off. We are talking about a wage of between £3 and £3 10s. a week. If the hon. Gentleman would pause and consider the case, he would find that there are large numbers of young people whose employment takes them from home, and who have to live in lodgings, getting between £3 and £3 10s. a week. They are young people, but that is no reason why they should not have the same consideration as married people, or anyone else.

    The very fact that the Economic Secretary has told us that this concession would cost so much money—the only reason he has advanced for rejecting it—is in itself a reason for examining it much more carefully. If he is saying that the amount of revenue he secures from a great many single young people whose wages are between £3 and £3 10s. a week is so important to him, he might equally consider whether there is not a case, on common grounds of humanity, for relieving that very section of young people. Many of us know of some young persons trying to get along on these small incomes and know what a benefit such a concession would be to them.

    I shall not talk about the technical merits or demerits of the proposed Clause, but I hope that before you put the Question finally. Mr. Speaker, we may have some views from the Economic Secretary on its merits and on the attitude of the Government to it—whether it is a good idea or not and whether he does not accept some of the considerations put forward by my hon. Friends on behalf of this class of person. Or will he subside behind his Treasury brief and turn down the Clause on the ground that it is defective and would cost a lot of money? I hope that we shall have an answer from him.

    I wonder whether I may have the leave of the House to say a few words more?

    Being on Report, it is not desirable that a Minister, or indeed any person, should take part twice in our debates. [An HON. MEMBER: "Why not?"] It is not usual on Report. I am merely trying to observe the proprieties.

    I can quite understand the interest of hon. Members. I had supposed, having got here before me an extract from the Report of the Royal Commission, in paragraphs 169 and following, that they had hoped under this to follow up the point made by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) who took part in the debate on Clause 13—which is now Clause 14. In his speech on 15th June he referred to the desire of the Royal Commission that a specific minimum relief should be introduced for the purpose of affording a graduated exemption limit in favour of the smallest incomes. He said that he hoped that that would be one of the ideas which might find a place in the next Budget.

    It therefore does not seem to me that the Opposition is entirely logical because at that time I thought that was sensible, namely, that we should look at this with a view to making it one of our ideas for the next Budget. But tonight hon. Members opposite are pressing a Clause which is not on all fours with the Royal Commission's recommendation, which does not cost—as I have calculated that the Royal Commission recommendation would cost—about £8 million per annum but which, as drafted, would cost £60 million per annum. That, I think, we could not possibly accept in relationship to all the arguments, claims and counterclaims which we have had in the course of the Finance Bill debates.

    Hon. and right hon. Members opposite will therefore see that the contribution made by the Economic Secretary was absolutely just. This Clause, as drafted, is too expensive. It does not apply to married men or to single persons entitled to child allowance, it costs far too much money and is not, I think, effective. The actual recommendations in paragraphs 169 and 170 of the Royal Commission's Report which I have set out before me with their tables, and which were referred to by some hon. Members opposite, would be within our scope and more possible to accept.

    From the right hon. Gentleman's previous contribution, I understood that be wished those ideas to be raised in connection with next year's Budget. Now he comes with a Clause costing £60 million which he says he wants dealt with in this Budget. It is not a consecutive argument. Either we consider something quite rationally—as the right hon. Gentleman did in June when he asked us to consider these ideas in the next Budget—or we have a proposition which is not within the scope of the amount of surplus I have available with which to grant concessions.

    That was on an earlier Amendment. There was no reason why the Chancellor should not give the further consideration which we hope that he will give to the other recommendations of the Royal Commission with a view to next year's Budget, but also there is no reason why there should not be a beginning made now by the acceptance of these principles. If this particular Clause is objectionable, perhaps the Chancellor would be prepared to have some modified form of it which he could accept. That would show a willingness to move on the road advocated by my hon. and right hon. Friends in this debate.

    I naturally considered this. We consider every single Clause on the Order Paper. I have already accepted one put forward, in essence, by the right hon. Gentleman because I thought it was within the scope of what I could accept. I am afraid that this is not within the scope, even if it were on the basis of the Royal Commission's original recommendation, namely, £8 million per annum, because, if we are to accept anything as an initial step towards accepting part of the Royal Commission's recommendations, I would rather have accepted something for the child allowance, which has been for some time very near my heart.

    9.45 p.m.

    That would have cost in one form approximately this—£8 million—and in its main form it would have cost about twice this—about £16 million—but I was obliged to refuse. I, personally, would have given it priority over this one. The right hon. Gentleman and his hon. Friends will see that had I accepted in a hurry any of the recommendations of the Royal Commission, I would have given priority to the child side rather than to this new Clause in making my decision.

    Both the right hon. Gentleman and the Economic Secretary have told us that this new Clause would cost many times as much as the recommendation of the Royal Commission upon which it is intended to be founded. No one has yet explained what the difference is.

    The difference is broadly that the Clause would give no benefit either to married men or to single persons entitled to child allowances. I give the reasons. Their minimum standard aggregates of tax relief, £210 at 9s. in the £ and £205 at 9s. in the £, equal £94 10s. and £92 5s. respectively, and are far more than the minimum personal allowance as defined in subsection (3) of the Clause; £94 10s. must be more than £63 plus two-sevenths of the difference between £63 and £94 10s. So, to give relief all the way up the scale to single persons without dependants and to do nothing for family men would, in our view, be indefensible and would, incidentally, if carried out according to the drafting, cost £60 million.

    That is the explanation which has been provided far me in interpreting this new Clause. The hon. and learned Member asked for it. I have given the explanation as best I can and, in order to clinch the argument, whether it costs £60 million or £8 million, I am afraid that I could not accept the new Clause for the reasons I have given in my statement. I have given the answer to the hon. and learned Gentleman on the specific point, incomprehensible though it is to him and to me. Whether it would cost £60 million or £8 million, I regret that, in view of our general attitude to the recommendations of the Royal Commission, I could not accept it.

    I am sorry that the right hon. Gentleman has not answered the question I asked him. I read out to him the very clear and short statement of the recommendation of the Royal Commission. Conceit is an abominable vice, self-defence a permissible virtue. I should like to know in what respect the Clause differs from the recommendation.

    I should like to say that I considered all the recommendations of the Royal Commission and I asked for time, both for myself and for public opinion, to study them with the care which they undoubtedly deserve. In answer to the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), I would say that it is perfectly true that unfortunately the Report did not appear in time for consideration before this year's Budget. I cannot help that. The one thing Ministers are powerless over, besides some of their colleagues, is a Royal Commission. I would willingly have tried to get this Report of the Royal Commission in time to consider some of the recommendations. Unfortunately, it did not report in time. Therefore, I say in all sincerity that when men with the great ability of Lord Radcliffe and his confreres have taken all this time to produce their Report, the least compliment we can pay them is to give the Report more consideration and to introduce our recommendations when we have had a little more time to consider it.

    Question put.

    The House divided: Ayes, 231; Noes, 260.

    Division No. 193.]


    [9.49 p.m.

    Acland, Sir RichardHardy, E. A.Pargiter, G. A
    Adams, RichardHargreaves, A.Parker, J.
    Albu, A. H.Harrison, J. (Nottingham, E.)Parkin, B. T
    Allen, Scholefield (Crewe)Hastings, S.Paton, J
    Anderson, Frank (Whitehaven)Hayman, F. H.Pearl, T. F.
    Awbery, S. S.Healey, Denis (Leeds, S. E.)Plummer, Sir Leslie
    Bacon, Miss AliceHealy, Cahir (Fermanagh)Popplewell, E.
    Baird, J.Henderson, Rt. Hon. A. (Rowley Regis)Porter, G.
    Balfour, A.Herbison, Miss M.Price, J. T. (Westhoughton)
    Bartley, P.Hobson, G. R.Price, Philips (Gloucestershire, W.)
    Beattie, J.Holman, P.Proctor, W. T.
    Bellenger, Rt. Hon. F. J.Holmes, HoracePryde, D. J.
    Bence, C. R.Houghton, DouglasPursey, Cmdr. H
    Benn, Hon. WedgwoodHoy, J. H.Rankin, John
    Benson, G.Hubbard, T. F.Reid, Thomas (Swindon)
    Bevan, Rt. Hon. A. (Ebbw Vale)Hudson, James (Ealing, N.)Reid, William (Camlachie)
    Bing, G. H. C.Hughes, Cledwyn (Anglesey)Rhodes, H.
    Blackburn, F.Hughes, Emrys (S. Ayrshire)Richards, R.
    Blenkinsop, A.Hughes, Hector (Aberdeen, N.)Robens, Rt. Hon. A.
    Blyton, W. R.Hynd, J. B. (Attercliffe)Roberts, Goronwy (Caernarvon)
    Board man, H.Irvine, A. J. (Edge Hill)Robinson, Kenneth (St. Pancras, N.)
    Bottomley, Rt. Hon. A. G.Irving, W. J. (Wood Green)Rogers, George (Kensington, N.)
    Bowden, H. W.Isaacs, Rt. Hon. G. A.Ross, William
    Bowles, F. G.Janner, B.Royle, C.
    Braddock, Mrs. ElizabethJeger, George (Goole)Shackleton, E. A. A.
    Brockway, A. F.Jeger, Mrs. LenaShinwell, Rt. Hon. E
    Brook, Drydon (Halifax)Jenkins, R. H. (Stechford)Short, E. W.
    Broughton, Dr. A. D. D.Johnson, James (Rugby)Silverman, Julius (Erdington)
    Brown, Rt. Hon. George (Belper)Jones, David (Hartlepool)Simmons, C. J. (Brierley Hill)
    Brown, Thomas (Ince)Jones, Frederick Elwyn (West Ham, S.)Skeffington, A. M.
    Burke, W. A.Jones, Jack (Rotherham)Slater, Mrs. H. (Stoke-on-Trent)
    Butler, Herbert (Hackney, S.)Jones, T. W (Merioneth)Slater, J. (Durham, Sedgefield)
    Callaghan, L. J.Keenan, W.Smith, Ellis (Stoke, S.)
    Castle, Mrs. B. A.Kenyon, C.Smith, Norman (Nottingham, S.)
    Champion, A. J.Key, Rt. Hon. C. W.Sorensen, R. W.
    Clunie, J.King, Dr. H. MSoskice, Rt. Hon. Sir Frank
    Coldrick, W.Kinley, J.Sparks, J. S.
    Collick, P. H.Lawson, G. M.Steele, T.
    Corbet, Mrs. FredaLee, Frederick (Newton)Strachey, Rt. Hon. J.
    Cove, W. G.Lee, Miss Jennie (Cannock)Summerskill, Rt. Hon. E.
    Craddock, George (Bradford, S.)Lever, Harold (Cheetham)Swingler, S. T.
    Crosland, C. A. R.Lever, Leslie (Ardwick)Sylvester, G. O.
    Cullen, Mrs. A.Lindgren, G. S.Taylor, Bernard (Mansfield)
    Dalton, Rt. Hon. H.Lipton, Lt.-Col. M.Taylor, John (West Lothian)
    Davies, Ernest (Enfield, E.)MacColl, J. E.Taylor, Rt. Hon. Robert (Morpeth)
    Davies, Harold (Leek)McGovern, J.Thomas, Iorwerth (Rhondda, W.)
    Davies, Stephen (Merthyr)McInnes, J.Thomas, Ivor Owen (Wrekin)
    Deer, G.McKay, John (Wallsend)Thomson, George (Dundee, E.)
    Delargy, H. J.McLeavy, F.Thornton, E.
    Dodds, N. N.Mainwaring, W. H.Timmons, J.
    Donnelly, D. L.Mallalieu, E. L. (Brigg)Tomney, F.
    Dugdale, Rt. Hon. John (W. Bromwich)Mallalieu, J. P. W. (Huddersfield, E.)Ungoed-Thomas, Sir Lynn
    Ede, Rt. Hon. J. C.Mann, Mrs. JeanUsborne, H. C.
    Edwards, Rt. Hon. John (Brighouse)Manuel, A. C.Wallace, H. W.
    Edwards, Rt. Hon. Ness (Caerphilly)Marquand, Rt. Hon. H AWarbey, W. N.
    Edwards, W. J. (Stepney)Mason, RoyWatkins, T. E.
    Evans, Albert (Islington, S.W.)Mayhew, C. PWeitzman, D.
    Evans, Edward (Lowestoft)Mellish, R. J.Wells, Percy (Faversham)
    Evans, Stanley (Wednesbury)Messer, Sir F.Wells, William (Walsall)
    Fernyhough, E.Mitchison, G. RWest, D. G.
    Fienburgh, W.Monslow, W.Wheeldon, W. E.
    Fletcher, Eric (Islington, E.)Moody, A. S.White, Mrs. Eirene (E. Flint)
    Follick, M.Morgan, Dr. H. B. WWhiteley, Rt. Hon. W.
    Foot, M. M.Morley, R.Wilkins, W. A.
    Forman, J. C.Morris, Percy (Swansea, W.)Willey, F. T.
    Fraser, Thomas (Hamilton)Mort, D. L.Williams, David (Neath)
    Gaitskell, Rt. Hon. H. T. N.Moyle, A.Williams, Rev. Llywelyn (Abertillery)
    Gibson, C. W.Mulley, F. W.Williams, W. R. (Droylsden)
    Glanville, JamasOldfield, W. H.Willis, E. G.
    Greenwood, AnthonyOliver, G. H.Wilson, Rt. Hon. Harold (Huyton)
    Grey, C. F.Orbach, M.Winterbottom Richard (Brightside)
    Griffiths, Rt. Hon. James (Llanelly)Oswald, T.Woodburn, Rt. Hon A.
    Griffiths, William (Exchange)Padley, W. E.Wyatt, W. L.
    Hale, LesliePaget, R. T.Yates, V. F.
    Hall, Rt. Hon. Glenvil (Colne Valley)Paling, Rt. Hon. W. (Dearne Valley)Younger, Rt. Hon. K
    Hall, John T. (Gateshead, W.)Paling, Will T. (Dewsbury)
    Hamilton, W. WPalmar, A. M. F.TELLERS FOR THE AYES:
    Hannan, W.Pannell, CharlesMr. Pearson and Mr. Arthur Allen.


    Aitken, W. T.Glover, D.Moore, Sir Thomas
    Allan, R. A. (Paddington, S.)Godber, J. B.Morrison. John (Salisbury)
    Alport, C. J. M.Gomme-Duncan, Col. AMott-Radclyffe, C. E.
    Amery, Julian (Preston, N.)Gough, C. F. H.Nabarro, G. D. N.
    Amory, Rt. Hon. Heathcoat (Tiverton)Gower, H. R.Neave, Airey
    Arbuthnot, JohnGraham, Sir FergusNicholls, Harmar
    Assheton, Rt. Hon. R. (Blackburn, W.)Grimond, J.Nield, Basil (Chester)
    Astor, Hon. J. J.Grimston, Hon. John (St. Albans)Noble, Cmdr. A. H. P
    Baldock, Lt.-Cmdr. J M.Grimston, Sir Robert (Westbury)Nugent, G. R. H.
    Baldwin, A. E.Hall, John (Wycombe)Nutting, Anthony
    Banks, Col. C.Harris, Frederic (Croydon, N.)Oakshott, H. D.
    Barber, AnthonyHarrison, Col. J. H. (Eye)O'Neill, Hon. Phelim (Co. Antrim, N.)
    Barlow, Sir JohnHarvey, Ian (Harrow, E.)Ormsby-Gore, Hon. W. D.
    Baxter, Sir BeverleyHarvie-Watt, Sir GeorgeOrr, Capt. L. P. S.
    Beach, Maj. HicksHead, Rt. Hon. A. H.Orr-Ewing, Charles Ian (Hendon, N.)
    Bell, Ronald (Bucks, S.)Heath, EdwardPage, R. G.
    Bennett, F. M. (Reading, N.)Henderson, John (Cathcart)Peake, Rt. Hon. O.
    Bennett, Dr. Reginald (Gosport)Higgs, J. M. C.Peyton, J. W. W.
    Bennett, William (Woodside)Hill, Dr. Charles (Luton)Pickthorn, K. W. M.
    Bevins, J. R. (Toxteth)Hill, Mrs. E. (Wythenshawe)Pilkington, Capt. R. A.
    Bishop, F. P.Hinchingbrooke, ViscountPitman, I. J.
    Black, C. W.Hirst, GeoffreyPitt, Miss E. M.
    Boothby, Sir R. J. G.Holland-Martin, C. J.Powell, J. Enoch
    Bossom, Sir A. C.Holt, A. F.Price, Henry (Lewisham, W.)
    Boyd-Carpenter, Rt. Hon. J. AHope, Lord JohnPrior-Palmer, Brig. O. L
    Boyle, Sir EdwardHopkinson, Rt. Hon. HenryRaikes, Sir Victor
    Braine, B. R.Hornsby-Smith, Miss M. P.Ramsden, J. E.
    Braithwaite, Sir Albert (Harrow, W.)Horobin, I. M.Rayner, Brig. R.
    Braithwaite, Sir GurneyHorsbrugh, Rt. Hon. FlorenceRedmayne, M.
    Brooke, Henry (Hampstead)Howard, Gerald (Cambridgeshire)Rees-Davies, W. R.
    Brooman-White, R. C.Howard, Hon. Greville (St. Ives)Remnant, Hon. P.
    Browne, Jack (Govani)Hudson, Sir Austin (Lewisham, N.)Ronton, D. L. M.
    Buchan-Hepburn, Rt. Hon. P. G. THulbert, Wing Cdr. N. J.Ridsdale, J. E.
    Bullus, Wing Commander E. E.Hutchison, Sir Ian Clark (E'b'rgh, W.)Roberts, Peter (Heeley)
    Burden, F. F. A.Hyde, Lt.-Col. H. M.Robinson, Sir Roland (Blackpool, S.)
    Butcher, Sir HerbertHylton-Foster, H. B. H.Rodgers, John (Sevenoaks)
    Butler, Rt. Hon. R. A. (Saffron Walden)Iremonger, T. L.Roper, Sir Harold
    Campbell, Sir DavidJenkins, Robert (Dulwich)Ropner, Col. Sir Leonard
    Carr, RobertJennings, Sir RolandRussell, R. S.
    Cary, Sir RobertJohnson, Eric (Brackley)Ryder, Capt. R. E. D.
    Channon, H.Johnson, Howard (Kemptown)Savory, Prof. Sir Douglas
    Clarke, Col. Ralph (East Grinstead)Jones, A. (Hall Green)Schofield, Lt.-Col. W.
    Clarke, Brig. Terence (Portsmouth, W.)Kerby, Capt. H. B.Scott, R. Donald
    Cole, NormanKerr, H. W.Scott-Miller, Cmdr. R.
    Colegate, W. A.Lambton, ViscountShepherd, William
    Conant, Maj. Sir RogerLancaster, Col. C. G.Simon, J. E. S. (Middlesbrough, W.)
    Cooper-Key, E. M.Langford-Holt, J. ASmithers, Peter (Winchester)
    Craddock, Bereford (Spelthorne)Leather, E. H. C.Smithers, Sir Waldron (Orpington)
    Crookshank, Capt. Rt. Hon. H. F. C.Legge-Bourke, Maj. E. A. H.Smyth, Brig. J. G. (Norwood)
    Crosthwaite-Eyre, Col O. E.Legh, Hon. Peter (Petersfield)Snadden, W. McN.
    Crouch, R. F.Lennox-Boyd, Rt. Hon. A. T.Spearman, A. C. M.
    Crowder, Sir John (Finchley)Lindsay, MartinSpeir, R. M.
    Crowder, Petre (Ruislip—Morthwood)Linstead, Sir H. N.Spens, Rt. Hon. Sir P. (Kensington, S.)
    Darling, Sir William (Edinburgh. S.)Llewellyn, D. T.Stanley, Capt. Hon. Richard
    Davidson, ViscountessLloyd, Maj. Sir Guy (Renfrew, E.)Steward, W. A. (Woolwich, W.)
    Deedes, W. F.Lockwood, Lt.-Col. J. CStewart, Henderson (File, E.)
    Digby, S. WingfieldLongden, GilbertStoddart-Scott, Col. M.
    Dodds-Parker, A. D.Low, A. R. W.Storey, S.
    Donaldson, Cmdr. C. E. McALucas, Sir Jocelyn (Portsmouth, S.)Strauss, Henry (Norwich, S.)
    Donner, Sir P. W.Lucas, P. B. (Brentford)Stuart, Rt. Hon. James (Moray)
    Doughty, C. J. A.Lucas-Tooth, Sir HughStudholme, H. G.
    Douglas-Hamilton, Lord MalcolmMcCorquodale, Rt. Hon. M. S.Summers, G. S.
    Draysen, G. B.Macdonald, Sir PeterSutcliffe, Sir Harold
    Drewe, Sir C.Mackeson, Brig. Sir HarryTaylor, William (Bradford, N.)
    Duncan, Capt. J. A. L.McKibbin, A. J.Teeling, W.
    Duthie, W. S.Mackie, J. H. (Galloway)Thomas, Rt. Hon. J. P. L. (Hereford)
    Eccles, Rt. Hon. Sir D. M.Maclay, Rt. Hon. JohnThomas, Leslie (Canterbury)
    Eden, J. B. (Bournemouth, West)Maclean, FitzroyThompson, Lt.-Cdr. R. (Croydon, W.)
    Erroll, F. J.MacLeod, John (Ross and Cromarty)Thornton-Kemsley, Col. C. N.
    Finlay, GraemeMacmillan, Rt. Hon. Harold (Bromley)Tilney, John
    Fisher, NigelMacpherson, Niall (Dumfries)Touche, Sir Gordon
    Fleetwood-Hesketh, R. FMaitland, Patrick (Lanark)Turner, H. F. L.
    Fletcher-Cooke, C.Manningham-Buller, Rt.Hn. Sir ReginaldTurton, R. H.
    Ford, Mrs. PatriciaMarkham, Major Sir FrankTweedsmuir, Lady
    Fort, R.Marlowe, A. A. H.Vane, W. M. F.
    Fraser, Hon. Hugh (Stone)Marples, A. E.Vaughan-Morgan, J. K
    Fraser, Sir Ian (Morecambe & Lonsdale)Marshall, Douglas (Bodmin)Vosper, D. F.
    Fyfe Rt. Hon. Sir David MaxwellMaude, AngusWade, D. W.
    Galbraith, Rt. Hon. T. D. (Pollok)Maudling, R.Wakefield, Edward (Derbyshire, W.)
    Galbraith, T. G. D. (Hillhead)Maydon, Lt.-Comdr. S. L. C.Wakefield, Sir Wavell (St.Marylebene)
    Gammans, L. D.Medlicott, Brig. F.Walker-Smith, D. C.
    Garner-Evans, E. H.Mellor, Sir JohnWall, Major Patrick
    George, Rt. Hon. Maj. G. LloydMolson, A. H. EWard, Hon. George (Worcester)

    Ward, Miss I. (Tynemouth)Williams, Gerald (Tonbridge)Wood, Hon. R.
    Waterhouse, Capt. Rt. Hon. C.Williams, Sir Herbert (Croydon, E.)
    Watkinson, H. A,Williams, Paul (Sunderland, S.)TELLERS FOR THE NOES:
    Webbe, Sir H. (London & Westminster)Williams, R. Dudley (Exeter)Mr. Kaberry and Mr. Wills.
    Wellwood, W.Wilson, Geoffrey (Truro)

    New Clause—(Estate Duty (Extension Of Certain Exemptions))

    (1) The scale of rates of estate duty set out in the Seventh Schedule to the Finance Act, 1949, shall have effect, as respects deaths occurring after the commencement of this Act, with the substitution for the entries relating to estates of a principal value not exceeding five thousand pounds of the following entries:—

    "Principal value of estate

    Rate per cent. of duty

    Not exceeding £3,000Nil
    Exceeding £3,000 and not exceeding £4,0001
    Exceeding £4,000 and not exceeding £5,0002"

    (2) For the purposes of the exemption from estate duty chargeable on property passing on the death of a surviving spouse, estate duty shall be deemed to have been paid on any property passing on the death of the other spouse being property, on which it was not payable, but would have been if the duty were payable on estates of however small a principal value; and in relation to that death the references in this subsection to estate duty hall include estate duty chargeable under the law in force in Northern Ireland.

    (3) Subsection (2) of this section shall apply where the second death occurs after the commencement of this Act, whether or not the first death occurred after that commencement.—[ Mr. Assheton.]

    Brought up, and read the First and Second times, and added to the Bill.

    Clause 13—(Valuation Of Goods)

    10.0 p.m.

    I beg to move, in page 9, line 18, to leave out from "seller," to the end of line 19, and to insert:

    "mainly sells to persons whose purchases are substantially greater than those made by the majority of retail traders."
    This Amendment implements a promise made in Committee to re-examine the working of Clause 13 (2), which was criticised during that debate. It introduces no change of principle, but merely provides more clearly that businesses who specialise in supplying stores and other big buyers are excluded from the subsection.

    No doubt the hon. Member for Stechford (Mr. Roy Jenkins) will be glad to see that although the Clause, in its origi nal form, did not contain a double negative, the Amendment eliminates the negative altogether. It also meets the point raised by my hon. and gallant Friend the Member for Rochdale (Lieut.Colonel Schofield), who expressed concern about textile firms whose main business was with small people catering for the export trade.

    The Solicitor-General is quite right in saying that the Amendment clarifies what the Government have in mind, as compared with the original form of paragraph (c) of subsection 2. In Committee hon. Members on both sides drew attention to its complete obscurity. Although now, by this draft and in the few words he has spoken tonight, the Solicitor-General has made clear what the Government are trying to do he still has not explained why the Government are doing it or what paragraph (c) is all about.

    In the Committee, the right hon. and learned Gentleman most courteously spent much time explaining what he wanted the Clause to mean, but he did not go to any trouble to explain its purpose. My hon. Friends the Members for Blackburn, East (Mrs. Castle) and for Islington, East (Mr. E. Fletcher) sought in vain to find out what the Government thought they were adding to the Bill by paragraph (c), and all they got was a very welcome assurance from the right hon. and learned Gentleman that the matter would be considered again and that we should see it at a later stage if it was possible to make a better draft.

    Now we have this allegedly better draft and it is clearer, but we have not yet been told why the Government find it necessary to have it at all. It was the hope of my right hon. Friend and myself that we could persuade the Government to drop this paragraph altogether, because it adds nothing to the Bill. Our Amendment to that effect was not selected and I should be out of order in discussing it now. All I would now ask the Solicitor-General, or whomsoever is to reply, is the purpose of the Clause, as it will stand when amended. This is a very narrow point.

    As was stated in Committee, the Government, by including this paragraph (c) in its new, amended form, are raising a point which was not in the Grant Report. Throughout the debate on uplift and in Committee the Government have always said that they could not accept this or that Amendment because it was not in the Grant Report. They would stand foursquare on the Majority Report of the Grant Committee. The right hon. and learned Gentleman quite fairly said in the Committee that the present matter was not included in the Grant Committee Report, and that the reason he was putting it in was to eliminate—I think the word he actually used was "forestall" tax avoidance. The right hon. and learned Gentleman has not told us how that is to be achieved.

    Under subsection (2), we understand, uplift will be retained, first of all in those cases where the price payable is lower on grounds of quantity and, secondly, in those cases where the trader in question is performing wholesaling functions or enjoys other special advantages—and the right hon. and learned Gentleman attempted to explain that; but now, with the proposed Amendment to paragraph (c), we have a third condition, which is that the seller must not sell mainly to big buyers.

    What we do not know is how this will be defined. How do we measure the sales of the seller? How do we measure the size of the big buyer? What we think—and this anxiety may be shared on the other side of the House—is that it gives a great deal of discretion to the Customs and Excise in their application of Purchase Tax. There are bound to be big differences between one trade and another. There are bound to be big differences in the organisation of the retail trade and in the average sizes of purchases of some of the big buyers in one retail trade as compared with another.

    It therefore seems to us that Customs and Excise will to some extent be bound to follow different rules and different standards in the application of this paragraph, which widens the area in which they are free to exercise discretion—and that is always a thing about which the House must be wary.

    It is true that the right hon. and learned Gentleman has avoided some of the ambiguities and obscurities which shrouded the original draft. He seemed in Committee to be very concerned that traders might be tempted to make token or dummy sales to ordinary retailers at "phoney" prices. He has got away from all that in the new draft—we make no complaint about that—and it is clear that in addition to those who are cut out of the new uplift provisions on grounds of quantity sales, in addition to those who are cut out because they exercise wholesaling functions or enjoy other special advantages, there is now to be a third class of those who sell to big retailers only.

    Had the right hon. and learned Gentleman attempted to tell us why it is necessary to have these three classes, I suppose he would have said that it was designed to help small shopkeepers. He has not told us that, however—although it is probably in his mind—but, as my hon. Friend the Member for Blackburn, East pointed out in Committee, in a very effective speech on Purchase Tax and uplift—which she said had been one of her preoccupations for some years—the small shopkeeper survives and is popular for quite other reasons. He survives and has his clientele because of the convenience of the situation of the small shop, the nearness to where people live so that customers can slip round the corner and buy what they want without having to pay the bus fare into the town or city or he survives because of the personal service given by the small shopkeeper.

    Against those advantages, the big store can offer a wider choice of goods and advantages of large-scale buying. In the Amendment, the Chancellor—and the right hon. and learned Gentleman in commending it to the House—is saying that those advantages must be offset by the discriminatory tax.

    What I do not think the House is clear about is why it is necessary to add this, because in paragraphs (a) and (b) the particular purchasing advantages, if they are held to be such are dealt with. They deal with the man who enjoys special purchasing advantages, and all the rest. For some reason, the Government want to get a particular kind of seller in order to make certain that the Customs and Excise can catch the sale at both ends. First, they found him in the obscure way in which we dealt with the matter in Committee, and now they find him as a seller who mainly sells to those who make big purchases.

    The right hon. and learned Gentleman should explain why it is that such transactions are not brought under paragraph (a), and what is added to the Bill by paragraph (c). I concede that paragraph (c) is an improvement on what we had in front of us earlier, and, certainly, the improvement has been made in response to the criticisms both of my hon. Friends, and also of the hon. and gallant Member for Rochdale (Lieut.-Colonel Schofield), who produced some very obvious criticisms of paragraph (c) as it originally stood.

    The paragraph is still very imprecise, and leaves a great deal of discretion in the hands of the Customs and Excise. Simply because it increases the area of what might be regarded as arbitrary taxation, it is right that the House should be very careful about it, and that we should have a far better explanation than we have had this evening of why the Amendment has been introduced, or why paragraph (c) is in the Clause at all.

    With the leave of the House, I will certainly endeavour to give the right hon. Gentleman the answers to the questions he has put to me. I dealt with this matter pretty fully in Committee, and I thought that I had explained what paragraph (c) was intended to deal with. Because I did not wish to weary the House by repeating the explanation, in moving the Amendment I dealt merely with the drafting changes.

    The first criticism made in Committee, which the right hon. Gentleman has repeated, was that paragraph (c) was not one of the recommendations contained in the Grant Report. Of course it was not. We know that perfectly well. We have never said that we would stick absolutely rigidly to the four corners of the Grant Report, as the right hon. Gentleman suggested. We said that we would adhere to the main lines of it, and this paragraph (c) follows from the recommendations of the majority in that Report. It follows, and has to follow, if effect is to be given to those recommendations.

    The right hon. Gentleman started by saying quite accurately that paragraphs (a) and (b) set out two of the conditions which have to be satisfied, namely, that the goods have to be bought in normal retail quantities, and, secondly, that the retailer performs no wholesale functions and has no special buying advantage over the generality of retailers. I quite agree that paragraph (c) imposes an additional qualification, namely, that the supplier mainly sells goods in the normal retail quantities, but that is also a factor which affects prices. To give an example, a manufacturer who specialises in selling to a few big stores can usually sell much more cheaply to the small retailers because he recovers his overheads on the large orders and avoids the risk of catering for the general retail trade.

    10.15 p.m.

    As I think I made clear in Committee, this paragraph (c) is necessary for two reasons. First, the one to which the right hon. Gentleman has referred, the necessity of forestalling tax avoidance practices under which suppliers to the big stores might make token or dummy sales to small retailers with a view to avoiding uplift. That is one object. The other is to see that the manufacturers or wholesalers who cater for the big stores are not put in the same assessment category as those who cater for the general retail trader and incur greater distribution costs.

    I hope that I have explained to the right hon. Gentleman the object of subsection (2, c). He has criticised the wording of it but it is desirable that there should be some measure of flexibility. The wording of the Amendment now is that the seller
    "mainly sells to persons whose purchases are substantially greater …"
    "Mainly" is a word which is frequently found in tariff definitions and in practice has not given rise to any difficulty in application. It will usually be taken a; relating to whether more than half the supplier's home trade in the class of goods being valued is with the ordinary retailer or other small buyers though his trade in other goods may also be taken into account if it affects the price; and "substantially" is necessary so that the supplier will not lose the benefits of subsection (2) merely because he sells in quantities only slightly above the average sales to retail traders generally.

    I have replied to the questions which the right hon. Gentleman has put to me about the reasons this subsection is necessary. I have only repeated what I said about that in Committee. So far as the Amendment is concerned, the right hon. Gentleman recognises that it is an improvement on the original wording of the Bill, and I entirely agree.

    We are not worried about the word "mainly." It is often found in statutes of all kinds and frequently in Customs tariffs; but surely the rest of the Amendment is much more vague. It does not say, as the right hon. and learned Gentleman seemed to imply, that the seller mainly sells in quantity. It states:

    "mainly sells to persons whose purchases are substantially greater …"
    Surely that is very vague. "Mainly" is a good working definition, but surely this must mean that the Customs and Excise Department will have a great deal of discretion in deciding whether the purchases of a retailer are or are not
    "substantially greater than those made by the majority of retail traders."
    and whether a particular seller is mainly dealing with people whose purchases are
    "substantially greater than those made by the majority of retail traders."
    I hoped that the right hon. and learned Gentleman would deal with that point, which is still very vague and imprecise.

    Would it not appear that this provision is necessary where retailers who have a great number of retail shops buy centrally, so that the purchases by central buying can, therefore, be treated as not being normal retail purchases? That would seem to be desirable, and if that is what this is intended to cover I think it desirable and necessary.

    I should like a further explanation from the right hon. and learned Gentleman. I am not denying that the Amendment is an improvement on the original subsection, in that it makes it positive rather than negative. It retains the word "mainly" which the right hon. and learned Gentleman attempted to define, but it does appear to be a case where this admittedly vague phrase is determined in practice by the Customs and Excise officers.

    To adduce the evidence, may I remind the right hon. and learned Gentleman of the criticism that was made of this particular phraseology in Committee? I should like to direct the attention of the right hon. and learned Gentleman, as I have already directed the attention of the Treasury, to a particular case. It is said that "mainly" means more than half. But, in practice, that is by no means accepted in the application of this Clause. Outside this Chamber "mainly" apparently means "preponderantly, overwhelmingly"—not a particular percentage, but 80 per cent, to 90 per cent.

    In Committee we argued about manufacturers engaged in trade and the amount of their trade distributed as between wholesalers and retailers. It was mentioned during that discussion that a working arrangement had been arrived at between the trade concerned and the Customs and Excise, whereby, in the case of a firm with more than a certain number of retail accounts and whose overhead costs came to a certain percentage, the Customs and Excise readily brought them under this Clause.

    But, again, we come up against this word "mainly." Although the Customs and Excise arrangements, in their negotiations with the manufacturers concerned, related to 250 retail accounts, in this instance to which I have drawn the attention of the Department there are 1,200 retail accounts, as well as accounts of makers-up amounting to 600. Yet they are excluded from the operation of the Clause because of the word "mainly."

    Another case on which negotiations were conducted between the Customs and Excise on these vague generalities concerned a firm 60 per cent. of whose products went to the Australian export market and 40 per cent. to the home market, until we had the stoppage of Australian exports. Unfortunately, the export trade dropped, so that the percentages were 40 per cent. export and 60 per cent. home market. It is not clear, even at this stage, although those percentages may vary month by month—

    If I may interrupt the hon. Gentleman, the question of exports does not enter into this matter at all. There is no Purchase Tax chargeable at all in the case of registered firms who are exporting. Therefore, the hon. Gentleman is confusing the issue.

    I have not made myself clear. I am not concerned with the question whether Purchase Tax is or is not paid. The assessment is made not on the payment of Purchase Tax but according to the proportion of home and export trade. If only 40 per cent. of one's manufacturing products were consumed at home and the Customs and Excise authorities made an assessment on that basis, it is obvious that one has suffered.

    I suggest to the right hon. and learned Gentleman that although the Amendment improves the Clause it still does not satisfy the needs of firms in this difficulty, and it will certainly enable the Customs and Excise authorities to make an arrangement—euphemistically called a voluntary arrangement—with a firm for the payment of Purchase Tax at 40 per cent. Leaving out of account the question of production for export, I suggest that the Amendment needs to be re-examined, because it will still enable the Customs and Excise authorities to enforce the payment of Purchase Tax. The Amendment should be looked at again to meet the objections which I have mentioned.

    Until the hon. Member for Gillingham (Mr. Burden) spoke I thought that I was fairly clear about the position. The hon. Member for Gillingham appeared to confuse the situation completely by suggesting that the Amendment was designed to deal with a situation where a large retailer was using a central buying organisation and arriving at an advantage as a result. I hope that that is not the position. I thought that that was dealt with by paragraphs (a) and (b), and that the Amendment was designed to deal with the situation where the seller, through an efficient method of distribution arising from an association with large retailers, is able to do something, quite independently of the retailers, at a lower cost than he would otherwise have been able to do it.

    If I am correct in that interpretation of the position we ought to appreciate just how far we are leaning over backwards to help the small shopkeepers. We are saying not only that the big retail stores enjoy the advantage of buying large-scale purchases by virtue of doing their own wholesaling but also, that if the seller is able to do things slightly more cheaply and efficiently because the majority of his customers are big retailers—even though he is selling to some small retailers at the same advantageous price—he is still to be penalised further by having uplift placed upon his sales. If that is so, it makes the position better than it was under the Bill as originally drafted, although it is not really satisfactory.

    10.30 p.m.

    My hon. Friend the Member for Carlisle (Mr. Hargreaves), with his practical experience, made a very valuable point of which the Government must take notice. The best that can be said for the Amendment is that it is some improvement on the words that stood originally in the Bill, which we criticised so successfully in Committee. All that the Solicitor-General has done has been to repeat in very much the same language the speech which he made on 26th May, when he commended the original form of words which, because of our criticism, have now been withdrawn.

    The Solicitor-General has added nothing of substance to what he said then. What is even more serious is that he has repeated something to which I take violent objection. He said that there must be a measure of flexibility in this matter. As my right hon. and learned Friend the Member for St. Helens (Sir H. Shawcross) has said, that is something which ought not to be in legislation of a quasi-penal nature. The Government must take the trouble of putting their legislation in clear, precise and definite a form as possible.

    It is really shameful that the Government should produce legislation of this kind. It is even more scandalous that a Law Officer of the Crown should justify it on the ground that there should be a measure of flexibility. I was brought up to believe that the cardinal principle of our jurisprudence was that the law must be clear and intelligible. The Government are going entirely against that principle.

    What is the result of the Solicitor-General's clamour that there should be this flexibility and that this provision should be expressed in loose, ill-defined words? Does it help him? Does it mean that because the provision is loose and flexible the taxpayer is to have a disadvantage? If that is the Solicitor-General's idea, I hope he is profoundly mistaken. The Commissioners of Customs and Excise will have to take notice not only of what the Government show to be their intentions, but of the comments of my hon. Friend the Member for Carlisle, Surely the result of this flexibility must be that the benefit of any doubt must be given to the taxpayer and not to the Revenue. Therefore, I should have thought that from the Solicitor-General's point of view it defeats the object which he wants to achieve of having the law clearly understood and, therefore effectively administered.

    We, on this side of the House, are obviously in the procedural difficulty that we cannot very well vote against the Amendment in its entirety, because we think it an improvement on the original words, though it is not very much of an improvement since it still contains very vague words such as "mainly," and "substantially greater," and nobody knows what that means, and "the majority of retail traders." Does that mean a majority in numbers or in value or in a particular industry?

    In form, the Solicitor-General is moving an Amendment to leave out all the words in subsection (2, c) after the word "seller." We have on the Order Paper an Amendment, which has not been called, to leave out all the words in lines 18 and 19 of the Clause. I would have preferred to have left them out; and if it were possible I would have voted to have left out all the words proposed after "sellers," but I would not support the words that the Solicitor-General wishes to insert. If I did that, the result would be that subsection (2, c) would read, "that the seller." I do not think that that would be any more ridiculous than the words the right hon. and learned Gentleman has proposed.

    Amendment agreed to.

    I beg to move, "That further consideration of the Bill, as amended, be adjourned."

    We have made considerable progress today. We have dealt with all the new Clauses, and completed the Amendments as far as Clause 13. When I looked at the Order Paper yesterday, I thought it doubtful whether we should get through the new Clauses on the first of the two days, and still less that we should get so far in the Bill. We pass next to Clause 16, which deals with investment allowances, on which we have two important Amendments, but I feel it would be much more appropriate to consider them tomorrow afternoon. There is not much more ground to cover before we complete the Report stage, and in the circumstances I hope the Chancellor of the Exchequer will accept the Motion.

    I understand that if this Motion had not been moved we would have reached the Amendment to Clause 16, page 11, line 19. It is true that we have made good progress but the Government would have preferred to make further progress tonight for the reason that they want to be absolutely sure of reaching the other business down for tomorrow night at the reasonable hour already defined by my right hon. Friend the Leader of the House. We do not expect to be longer than about 8 o'clock in finishing this stage, making allowances for the normal difficulties of navigating. If we could have that understanding, as far as an understanding can be reached on such business, I am perfectly ready to agree to the Motion.

    It may well be taken as reasonable, if the right hon. Gentleman does not rise to correct me, that we should achieve that business at the hour I have mentioned. That will enable us to take the business without keeping the House late tomorrow night, which we have no desire to do. Thus we could do two evenings preserving our tempers and without ruining our constitutions. Pending any unfavourable news which may break in, it would not be a bad thing for the House to rise early to enable us to regain our constitutions and physiques. Subject to human fallibility, I suggest that we accept the Motion.

    Question put, and agreed to.

    Bill, as amended (in Committee and on recommittal), to be further considered Tomorrow.