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Clause 30—(Stamp Duty On Bills Of Exchange And Promissory Notes)

Volume 643: debated on Tuesday 4 July 1961

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I beg to move, in page 24, line 44, after "Kingdom", to insert:

"Where the bill of exchange is payable on demand or at sight or on presentation or within three days after date or sight or where the amount or value of the money for which the bill or note is drawn or made does not exceed one hundred pounds".
Perhaps I may be allowed, at the same time, to refer to the following Amendment, also in line 44, Mr. Speaker, at the end to insert:
Where the amount or value of the money for which the bill (not being a bill of exchange payable as aforesaid) or note is drawn of—

£s.d
Exceeds £100 and does not exceed £500020
Exceeds £500 and does not exceed £1,000050
Exceeds £1,000 and does not exceed £2,0000100
Exceeds £2.000 and does not exceed £10,000100
Exceeds £10,000500

Provided that on a bill of exchange drawn and expressed to be payable out of the United Kingdom, when actually paid or endorsed or in any manner negotiated in the United Kingdom, the duty payable shall be one half of what would otherwise be the appropriate amount under the last foregoing table.

It is the second Amendment upon which the question which I have to raise turns. For some reason which I still find it very difficult to understand, the Chancellor this year made a concession in connection with stamps on bills of exchange, which he estimated would cost about £1½million which, after all, is not a negligible sum. When we came to the Bill, he complained that perhaps not sufficient attention had been paid to the change that he was proposing. Giving his reasons for it, he said:

"It has not been the weight of this duty that has caused the trouble; it has rather been the practical difficulty for traders of keeping a supply of bills stamped with the right amount of duty, or a supply of the special adhesive stamps applying to foreign bills, and of ensuring that the right kinds of stamp are used on the different kinds of bill."—[OFFICIAL REPORT, 4th May, 1961; Vol. 639, c. 1629.]

I should remind the House that the recent very hot weather had not then broken out and, consequently, it was a question, not of the tongues or mouths of the financial tycoons who put on these bills of exchange, but of a deficiency in their powers of calculation or storage arrangements—I am not sure which. This was the reason, and I take leave to say the quite absurd reason, given for a concession costing £1½ million at a time when there are some difficulties in the country's economy.

I pointed that out in Committee, and the Financial Secretary seemed to be a little put out, first, by the reasons given by the Chancellor of the Exchequer—he did not go into those in great detail or explain exactly what had happened—and, secondly, by another very remarkable feature of the concession, which was this. The concession was to cost £1½ million. In 1959–60, the total yield of the tax was a shade over £1,400,000. It was, therefore, a sort of minus concession.

The hon. Gentleman has since kindly explained to me that the Chancellor of the Exchequer, with powers of foresight in this matter which he denies to himself in other respects, had estimated that there would have been a rather larger yield by 1961–62 at the present rates. But he added that he did not dispute that the effect of the change would be to reduce the yield of the duty to a very small figure. If it is not a minus, it is so small that one can hardly see it. That is the result of reducing the duty to 2d. on all bills of exchange, which the Government propose to do by this Clause.

We on this side see no reason for giving away £1½ million because people are too lazy to work out the sum, or have not a cupboard in which to keep the requisite bills of exchange. When the Financial Secretary came to defend it in Committee he said that:

"… the present complicated system and present duty did act as an impediment to business efficiency, and as bills of exchange are used extensively for foreign trade it was very likely that difficulties were most acutely felt there" —[OFFICIAL REPORT, 14th June, 1961; Vol. 64.2, c. 553.]

Apparently the difficulty of the tycoon in trying to find the right kind of stamp and in licking it and putting it on the bill is a serious impediment to foreign trade.

The yield of the tax is over £1 million out of the total on inland bills of exchange and promissory notes. Although I can conceive circumstances in which inland bills of exchange would be used in foreign trade, I should not have thought that they were usually used in that way. I think that the Financial Secretary must have been a little hard put to it to find a good reason for the concession. The yield from foreign bills of exchange and promissory notes amounts to just over £400,000.

One does not wish, especially in this hot weather, to put people in the City of London to any real mathematical difficulties, or to impede foreign trade by asking them to make any complicated calculations. Under the Stamp Act, the duty is graded up to 1s. on £100. After that, the duty is 1s. for each £100. If people cannot do that sum, I doubt whether they are fit to conduct any foreign business. It is absurd to suppose that that cannot be done. However, one must recognise human weakness when one meets it. Apparently, they cannot do it and that is the reason given by the Government for this concession.

These Amendments try to make things simpler for them. They will reduce the yield of the duty quite a bit. Some concession is allowed. We voted against the whole Clause in Committee. What we suggest now is another scale with nice, large round sums—2s., 5s., 10s., £1 and £5. Therefore, the tycoons would need only five heaps of stamps and to do the simplest calculations.

It is absurd that £1½million should be given for this purpose at this moment to people who, as far as I am aware, have no particular claim to receive the money. I do not know what the Government think that they are doing or what they think of people who cannot do a simple sum and cannot keep the right stamps. A great deal of fuss has been made about a horticultural concession costing less than this and there has been a good deal of discussion about a number of other things which would have cost less than this. This quite substantial sum is given for this extraordinary purpose.

The only body which apparently made representations about it was industry. I do not know who industry is. Is there one nitwitted tycoon called "industry" who cannot do his sums? Was there a solemn deputation from the National Union of Manufacturers? I doubt whether that body would have much to do with this matter. Or were the bankers incapable of carrying out this simple operation? Who said to the Chancellor of the Exchequer, "We cannot work out 1s. per £100. We cannot keep all these stamps in our office. We cannot lick them in this hot weather. We do not know where to find them and we cannot work out the sum"?

The hon. and learned Member for Kettering (Mr. Mitchison) seeks, with some ingenuity, to restore in a more simple form the ad valorem duty which is at present chargeable on bills of exchange. I have had another look at this matter in the light of the criticism which the hon. and learned Gentleman made on the Committee stage. I realise that the House wishes to make progress on the Bill, but I should like to say one or two things.

First, I think that the hon. and learned Gentleman exaggerates when he spoke about the "tycoons of finance." Whatever the position may be concerning foreign bills, it is not true that the duty on bills drawn in the United Kingdom—they account for over two-thirds of the duty on all bills—falls on the banks and discount houses. These bills have to be stamped by the person by whom they are drawn. He is normally a manufacturer or a merchant who often may be an exporter as well. I therefore think that the hon. and learned Member's reference to the tycoons of finance in this context was a little exaggerated.

I now turn to the practical difficulties under the present system which the Clause seeks to repeal. I do not want to make too much of this, but these are some of the considerations which weighed with my right hon. and learned Friend the Chancellor of the Exchequer when he was considering this matter. The first was that inland bills must be stamped with special appropriated impressed stamps and, in view of the unlimited range of the duty, it has been impossible for the regular user of such bills, cir, indeed, for Post Offices, to maintain a comprehensive range of stamped bills. If a bill user wants a bill which the Post Office does not hold in stock, it has to be requisitioned from London. Similar difficulties have arisen in relation to foreign bills.

I spoke about industry on the Committee stage. There has also been difficulty here from the point of view of the Revenue Department. The use of appropriated impressed stamps for inland bills means that stamping machines have had to be devoted exclusively to the stamping of bills and notes and could not be used for general stamping purposes at times of pressure. Stamp offices and post offices have had to maintain stocks of special stamps and bills, with all the attendant work of stocktaking and security.

7.30 p.m.

In Committee, the hon. Member for Glasgow, Craigton (Mr. Milian), who, to my regret, we have missed from our proceedings during the last day or two, said that
"bills of exchange are perfectly valid even if not stamped, and the fact that they are not stamped does not invalidate them if it comes to a question, for example, of founding a legal action on them. It is a question of paying the

Division No. 242.]

AYES

[7.32 p.m.

Ainsley, WilliamBaxter, William (Stirlingshire, W.)Bowden, Herbert W. (Leics, S.W.)
Albu, AustenBence, CyrilBowles, Frank
Allen, Scholefield (Crewe)Benson, Sir GeorgeBoyden, James
Awbary, StanBlyton, WilliamBraddock, Mrs. E. M.
Bacon, Miss AliceBoardman, H.Brockway, A. Fenner

penalty and ensuring that they are properly stamped."—[OFFICIAL REPORT, 14th June, 1961; Vol. 642, c. 555.]

I am assured that that is not correct so far as inland bills are concerned. Under the existing law, the general rule is that inland bills must be stamped with the appropriate stamp before execution. If they are not so stamped, they are not enforceable and the defect cannot be remedied by subsequent stamping.

The hon. and learned Member for Kettering has proposed a simplified scale. A simplified scale would produce difficulties of its own. The difficulty about it is that the steps proposed are so large that considerable sums of duty could be avoided by drawing two or more bills where one would normally be drawn. Under the hon. and learned Gentleman's scheme, a bill for £150 would be liable for 2s. duty, but two bills each for £75 would be liable to a total duty of 4d. With this simplified scheme, there could be avoidance on a quite big scale and the whole system would come into disrepute.

Having looked at the matter again, I believe that an ad valorem duty based on instruments used daily in the ordinary course of business of manufacturers and merchants has no place in our modern world. Where the manufacturers and merchants are to a considerable extent engaged in the export trade, the objections to an ad valorem duty are still further strengthened. Therefore, I must advise the House not to accept the Amendment, hut to recognise the concession which my right hon. and learned Friend is making as a perfectly reasonable concession both to the business and manufacturing world and to the revenue Departments and the Post Office as well.

This shows how hard it is to help the tycoons. None the less, we think that the Clause ought not to be here, and the best we can do is to vote for this modification of it.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 174, Noes 224.

Broughton, Dr. A. D. D.Irvine, A. J. (Edge Hill)Probert, Arthur
Brown, Alan (Tottenham)Jay, Rt. Hon. DouglasRandall, Harry
Brown, Rt. Hon. George (Belper)Jenkins, Roy (Stechford)Rankin, John
Butler, Herbert (Hackney, C.)Johnson, Carol (Lewisham, S.)Reynolds, G. W.
Butler, Mrs. Joyce (Wood Green)Jones, Rt. Hn. A. Creech(Wakefield)Roberts, Albert (Normanton)
Callaghan, JamesJones, Dan (Burnley)Roberts, Goronwy (Caernarvon)
Castle, Mrs. BarbaraJones, Jack (Rotherham)Robertson, John (Paisley)
Chetwynd, GeorgeJones, J. Idwal (Wresham)Ross, William
Cliffe, MichaelJones, T. W. (Merioneth)Royle, Charles (Salford, West)
Cronin, JohnKelley, RichardShort, Edward
Crosland, AnthonyKenyon, CliffordSilverman, Julius (Aston)
Crossman, R. H. S.Key, Rt. Hon. C. W.Silverman, Sydney (Nelson)
Cullen, Mrs. AliceKing, Dr. HoraceSkeffington, Arthur
Davies, G. Elfed (Rhondda, E.)Lawson, GeorgeSlater, Mrs. Harriet (Stoke, N.)
Davies, Harold (Leek)Ledger, RonSlater, Joseph (Sedgefield)
Davies, S. O. (Merthyr)Lee, Frederick (Newton)Small, William
Delargy, HughLee, Miss Jennie (Cannock)Smith, Ellis (Stoke, S.)
Diamond, JohnLewis, Arthur (West Ham, N.)Sorensen, R. W.
Dodds, NormanLipton, MarcusSpriggs, Leslie
Dugdale, Rt. Hon. JohnLoughlin, CharlesSteele, Thomas
Ede, Rt. Hon. C.Mabon, Dr. J. DicksonStewart, Michael (Fulham)
Edwards, Rt. Hon. Ness (Caerphilly)McCann, JohnStones, William
Evans, AlbertMacColl, JamesSwain, Thomas
Fitch, AlanMclnnes, JamesSwingler, Stephen
Fletcher, EricMcKay, John (Wallsend)Symonds, J. B.
Fraser, Thomas (Hamilton)Mackie, John (Enfield, East)Taylor, Bernard (Mansfield)
Gaitskell, Rt. Hon. HughMcLeavy, FrankTaylor, John (West Lothian)
Galpern, Sir MyerMacPherson, Malcolm (Stirling)Thomas, Iorwerth (Rhondda, W.)
George,LadyMeganLloyd(Crmrthn)Mallalieu, J.P.W.(Huddersfield,E.)Thompson, Dr. Alan (Dunfermline)
Ginsburg, DavidManuel, A. C.Thomson, G. M. (Dundee, E.)
Gordon Walker, Rt. Hon. P. C.Mapp, CharlesThornton, Ernest
Gourlay, HarryMarsh, RichardTimmons, John
Greenwood, AnthonyMendelson, J. J.Tomney, Frank
Grey, CharlesMilne, Edward J.Ungoed-Thomas, Sir Lynn
Griffiths, Rt. Hon. James (Llanelly)Mitchison, G. R.Warbey, William
Griffiths, W. (Exchange)Monslow, WalterWatkins, Tudor
Hale, Leslie (Oldham, W.)Moody, A. S.Weitzman, David
Hall, Rt. Hn. Glenvil (Colne Valley)Mort, D. L.Wells, William (Walsall, N.)
Hamilton, William (West Fife)Moyle, ArthurWhite, Mrs. Eirene
Hannan, WilliamMulley, FrederickWhitlock, William
Hart, Mrs. JudithNeal, HaroldWilkins, W. A.
Hayman, F. H.Noel-Baker, Francis (Swindon)Willey, Frederick
Healey, DenisOliver, G. H.Williams, D. J. (Neath)
Hilton, A. V.Oram, A. E.Williams, Ll. (Abertillery)
Holman, PercyOswald, ThomasWilliams, W. R. (Openshaw)
Houghton, DouglasPadley, W. E.Williams, W. T. (Warrington)
Howell, Charles A. (Perry Barr)Pannell, Charles (Leeds, W.)Willis, E. G. (Edinburgh, E.)
Howell, Denis (Small Heath)Parker, JohnWilson, Rt. Hon. Harold (Huyton)
Hoy, James H.Pavitt, LaurenceWinterbottom, R. E.
Hughes, Cledwyn (Anglesey)Pearson, Arthur (Pontypridd)Woodburn, Rt. Hon. A.
Hughes, Emrys (S. Ayrshire)Pentland, NormanWoof, Robert
Hunter, A. E.Popplewell, Ernest
Hynd, H. (Accrington)Prentice, R. E.TELLERS FOR THE AYES:
Hynd, John (Attercliffe)Price, J. T. (Westhoughton)Mr. Redhead and
Mr. G. H. R. Rogers.

NOES

Agnew, Sir PeterCarr, Robert (Mitcham)Emery, Peter
Aitken, W. T.Channon, H. P. G.Erroll, Rt. Hon. F. J.
Allason, JamesChataway, ChristopherFarey-Jones, F. W.
Arbuthnot, JohnChichester-Clark, R.Farr, John
Ashton, Sir HubertClark, William (Nottingham, S.)Finlay, Graeme
Barber, AnthonyClarke, Brig. Terence (Portsmth, W.)Fisher, Nigel
Barlow, Sir JohnCleaver, LeonardFletcher-Cooke, Charles
Barter, JohnCole, NormanFraser, Ian (Plymouth, Sutton)
Bell, RonaldCooper, A. E.Freeth, Denzil
Bennett, F. M. (Torquay)Cooper-Key, Sir NeillGammans, Lady
Berkeley, HumphryCordeaux, Lt.-Col. J. K.Gardner, Edward
Bidgood, John C.Cordle, JohnGlyn, Dr. Alan (Clapham)
Bingham, R. M.Corfield, F. V.Glyn, Sir Richard (Dorset, N.)
Birch, Rt. Hon. NigelCourtney, Cdr. AnthonyGodber, J. B.
Bishop, F. P.Craddock, Sir BeresfordGoodhart, Philip
Black, Sir CyrilCritchfey, JulianGower, Raymond
Bourne-Arton, A.Cunningham, KnoxGrant, Rt. Hon. William
Box, DonaldCurran, CharlesGreen, Alan
Boyd-Carpenter, Rt. Hon. JohnCurrie, G. B. H.Grimond, J.
Boyle, Sir EdwardDalkeith, Earl ofGrosvenor, Lt.-Col. R. G.
Brewis, JohnDeedes, W. F.Gurden, Harold
Brooman-White, R.Donaldson, Cmdr. C. E. M.Hall, John (Wycombe)
Bryan, PaulDoughty, CharlesHamilton, Michael (Wellingborough)
Buck, Antonydu Cann, EdwardHarris, Frederic (Croydon, N.W.)
Bullard, DenysDuncan, Sir JamesHarris, Reader (Heston)
Burden, F. A.Eden, JohnHarrison, Col. Sir Harwood (Eye)
Butler, Rt.Hn.R.A.(Saffron Walden)Elliot, Capt. Walter(Carshalton)Harvey, John (Walthamstow, E.)
Campbell, Gordon (Moray & Nairn)Elliott,R.W.(Nwcstle-upon-Tyne,N.)Harvie Anderson, Miss

Heald, Rt. Hon. Sir LionelMarkham, Major Sir FrankSkeet, T. H. H.
Henderson, John (Cathcart)Marshall, DouglasSmith, Dudley (Br'ntf'rd & Chiswick)
Henderson-Stewart. Sir JamesMarten, NeilSmithers, Peter
Hicks Beach, Maj. W.Mathew, Robert (Honiton)Spearman, Sir Alexander
Hiley, JosephMatthews, Cordon (Meriden)Speir, Rupert
Hill, Mrs. Eveline (Wythenehawe)Mawby, RayStevens, Geoffrey
Hill, J. E. B. (S. Norfolk)Maxwell-Hyslop, R. J.Storey, Sir Samuel
Hirst, GeoffreyMaydon, Lt.-Cmdr. S. L. C.Studholme, Sir Henry
Hobson, JohnMontgomery, FergusSummers, Sir Spencer (Aylesbury)
Hocking, Philip N.More, Jasper (Ludlow)Talbot, John E.
Holland, PhilipMorgan, WilliamTapsell, Peter
Hollingworth, JohnNabarro, GeraldTaylor, Sir Charles (Eastbourne)
Holt, ArthurNicholls, Sir HarmarTaylor, Edwin (Bolton, E.)
Hopkins, AlanNicholson, Sir GodfreyTeeling, William
Howard, John (Southampton, Test)Nugent, Sir RichardTemple, John M.
Hughes-Young, MichaelOakshott, Sir HendrieThatcher, Mrs. Margaret
Hulbert, Sir NormanOsborn, John (Hallam)Thomas, Leslie (Canterbury)
Hutchison, Michael ClarkOsborne, Sir Cyril (Louth)Thomas, Peter (Conway)
Iremonger, T. L.Page, John (Harrow, West)Thompson, Kenneth (Walton)
Irvine, Bryant Godman (Rye)Page, Graham (Crosby)Thornton-Kemsley, Sir Colin
Jackson, JohnPartridge, E.Tiley, Arthur (Bradford, W.)
James, DavidPearson, Frank (Clitneroe)Turner, Colin
Jenkins, Robert (Dulwich)Peel, JohnTurton, Rt. Hon. R. H.
Jennings, J. C.Tweedsmuir, Lady
Johnson, Dr. Donald (Carlisle)Peyton, Johnvan Straubenzee, W. R.
Johson, Eric (Buckley)Pickthorn, Sir KennethVaughan-Morgan, Rt. Hon. Sir John
Kaberry, Sir DonaldPikington, Sir RichardVosper, Rt. Hon. Dennis
Lagden, GodfreyPitman, Sir JamesWakefield, Sir Wavell (St. M'lebone)
Leather, E. H. C.Pitt, Miss EdithWalder, David
Leavey, J. A.Pott, PercivallWalker, Peter
Lewis, Kenneth (Rutland)Price, David (Eastleigh)Walker-Smith, Rt. Hon. Sir Derek
Lindsay, MartinPrior-Palmer, Brig. Sir OthoWall, Patrick
Litchfield, Capt. JohnProudfoot, WilfredWard, Dame Irene
Lloyd, Rt. Hon. Selwyn (Wirral)Quennell, Miss J. M.Webster, David
Loveys, Walter H.Redmayne, Rt. Hon. MartinWells, John (Maidstone)
Lucas, Sir JocelynRees, HughWhitelaw, William
Lucas-Tooth, Sir HughRees-Davis, W. R.Williams, Dudley (Exeter)
McAdden, StephenRenton, DavidWilliams, Paul (Sunderland, S.)
Mac Arthur, IanRidley, Hon. NicholasWills, Sir Gerald (Bridgwater)
McLaughlin, Mrs. PatriciaRidsdale, JulianWilson, Geoffrey (Truro)
Maclay, Rt. Hon. JohnRobson Brown, Sir WilliamWolrige-Gordon, Patrick
Maclean,SirFitroy (Bute&N.Ayrs.)Roots, WilliamWoodhouse, C M.
Macleod, Rt. Hn. Iain (Enfield, W.)Ropner, Col. Sir LeonardWoodnutt, Mark
MacLeod, John (Ross & Cromarty)Royle, Anthony (Richmond, Surrey)Woollam, John
McMaster, Stanley R.Russell, RonaldWorsley, Marcus
Maddan, MartinScott-Hopkins, James
Maginnis, John E.Seymour, LeslieTELLERS FOR THE NOES:
Maitland, Sir JohnShaw, M.Mr. Gibson-Watt and Mr. Noble