Skip to main content

Commons Chamber

Volume 75: debated on Tuesday 9 November 1915

House of Commons

Tuesday, November 9, 1915

New Writ

For the County of Surrey (Kingston Division), in the room of the Right hon. George Cave, King's Counsel, His Majesty's Solicitor General. — [ Lord Edmund Talbot. ]

Committee of Selection

Mr. Boland nominated a Member of the Committee of Selection.—[ Mr. Gulland. ]

Board of Agriculture and Fisheries

Copy presented of Annual Report on Sea Fisheries for the year 1914. Parts I. and II. [by Command]; to lie upon the Table.

Destructive Insects and Pests Acts, 1877 and 1907

Copies presented of Orders numbered D.I. P. 276 to 280, inclusive, declaring the respective areas described in the Schedules thereto to be infected with Wart Disease and infected areas for the purposes of the Wart Disease of Potatoes (Infected Areas) Order of 1914 [by Act]; to lie upon the Table.

Diseases of Animals Acts

Copy presented of Order No. 9553, dated 30th October, 1915, postponing the operation of the two Orders described in the Schedule thereto until the 11th November, 1915 [by Act]; to lie upon the Table.

Shops Act, 1912

Copies presented of two Orders made by the Council of the county of Anglesey and confirmed, with amendment, by the Secretary of State for the Home Department [by Act]; to lie upon the Table.

Trade Reports (Annual Series)

Copies presented of Diplomatic and Consular Reports, Annual Series, Nos. 5510 5518 [by Command]; to lie upon the Table.

National Insurance Act

Copy presented of First Annual Report of the Medical Research Committee, 1914–15 [by Command]; to lie upon the Table.

Copy presented of Order, dated 2nd November, 1915, made by the Insurance Commissioners, entitled the National Health Insurance. (Deposit Contributors' Benefits) Order, 1915 [by Command]; to lie upon the Table.

Mersey Docks and Harbour Board

Paper laid upon the Table by the Clerk of the House:—Copy of Accounts of the Mersey Docks and Harbour Board for the year ending 1st July, 1915 [by Act].

Oral Answers to Questions

War

China

asked the Secretary of State for Foreign Affairs whether the representative of His Majesty's Government in China has been instructed to associate himself with the recent friendly official advice by Japan to the Chinese Government to avoid any change in the form of government at the present time?

The answer is in the affirmative. The request was temporarily to postpone any change and was accompanied by a denial of any intention to interfere in purely domestic affairs. The reason for the communication was the fear that disturbances might be created in China, as to which I had had, at any rate, one representation from a British commercial interest.

Balkans

Sir Edward Grey's Statement

asked the Secretary of State for Foreign Affairs on what date it was decided by the Cabinet to send to the assistance of Serbia a larger Force than the remnant of the 10th Division, 13,000 strong, under the command of Sir Bryan Mahon?

asked the Secretary of State for Foreign Affairs whether the Government received a warning from the Roumanian Government in April, 1915, with regard to the attitude of the King of Bulgaria towards the Allies; whether the Serbian Government, about the same time or shortly afterwards, intimated that a new offensive against Serbia was in preparation by the Central Powers or by Bulgaria; and if he will say why no military preparations were immediately made by the Government to give support to Serbia if need should arise?

The German and Austrian sympathies of the King of the Bulgarians have always been known and reports of Bulgarian negotiations with Turkey under German influence came from various Balkan sources as early as April. I cannot divulge what those sources were. The Serbian Government were much perturbed in April by the raid by Bulgarian bands on the railway near Strumnitza at the beginning of the month and by rumours of further impending raids at the end of the month, and they stated their belief in the complicity between King Ferdinand and the Central Powers. Military preparations at any given moment must depend upon the Forces available and the extent to which those Forces can be spared from one place and used in another. I should doubt whether even the War Office would think it in the public interest to discuss that in public. I am neither willing nor competent to do so.

Serbia

British Forces

asked he Secretary of State for Foreign Affairs whether he explained to the Serbian Government, and, if so, on what date, that his promise to give to our friends in the Balkans all the help in our power in the way most welcome to them without qualification and without reserve was to be taken as meaning that we would assist Greece in fulfilling her treaty obligations, but not that we would assist Serbia in the event of Greece declining to fulfil her treaty obligations, and that the expression "without qualification and without reserve" had exclusive reference to previous suggestions of concessions to Bulgaria which were to be withdrawn in the event of Bulgarian hostility to Serbia?

I made to the Serbian Governments communications, some before and some after my statement on September 28th. In the course of these I stated definitely that the landing of our Forces at Salonika, and their movements after they had been landed, depended upon the consent and attitude of Greece, and on September 24th, when I first informed the Serbian Government, in answer to an appeal for help, of the dispatch of troops, I did so in the words that "we were offering to Greece to send Forces to Salonika to help her to fulfil her obligations towards Serbia." I said nothing as to what we could or could not do in the contingency of Greece refusing to help Serbia. We have throughout laboured to give Serbia all the assistance in our power, without reference to the terms of particular promises made to her.

As regards the last part of the question, I do not understand how the words "without qualification and without reserve" could bear any other construction than the political one I have placed on them— namely, that promises and concessions previously suggested to Bulgaria were at an end, and our troops would be used solely to help our friends and fight our and their enemies. It is surely obvious that the words could not bear a military construction, for no one has suggested that His Majesty's Government could send all the British Armies to the Balkan theatre of war, or that we could send troops to the Balkans without any reference to needs elsewhere, especially in France and Flanders.

The promise was to give to our friends all the assistance in our power, and that has in fact been done and is being done.

May I ask the right hon. Gentleman if we are to understand that after his declaration in this House on 28th September he never expressly explained to the Serbian Government the meaning which he attached to it in this House on a more recent date?

I never said anything to the Serbian Government at all about my declaration in the House of Commons. What I had to do was to reply to Serbian appeals for help, and that I could only do, of course, after consulting Lord Kitchener or the Cabinet, and in my replies to the Serbian appeals for help I stated that we were sending troops to Salonika and used the words I quote in my answer. I said that the sending of them to Salonika must depend upon the attitude of Greece, and when they had gone there and I was asked what their movements would be I said that must also depend upon the attitude of Greece. My communications to the Serbian Government were direct communications; they were not founded upon anything I said in this House.

Were the right hon. Gentleman's communications with the Serbian Government in this matter communicated to the Cabinet?

As far as my recollection is, they were circulated to the Cabinet. They appeared in telegrams in the ordinary way, and were circulated to the Cabinet.

Questions

Declaration of London

asked the Secretary of State for Foreign Affairs why, considering that no Article of the Declaration of London possesses any force or is in any way binding on anybody and the Declaration itself has never been ratified or adopted, he still hesitates to abandon it altogether; and whether, in the event of it being desired to retain certain of its provisions merely as a convenient expression of some generally accepted rules of international law, there is any objection to designating these provisions by some other name?

I will see if the hon. Member's suggestion can be adopted. I do not know any reason except convenience why it should not.

Captured German Field Guns

asked the Under-Secretary of State for War whether he will consider the question of loaning a captured German field gun to those towns or localities which have raised special batteries of Artillery in the cases where such special batteries are still in training in the localities in which they were raised?

Arrangements are being made to issue to Commands, on loan, the captured German guns. A proportion will be sent to each Command, and if any town or locality desires, for special reasons, to have one of the guns on loan, application should be made to the General Officer Commanding-in-Chief of the Command in question.

May I bring before the notice of the right hon. Gentleman a case where two batteries have been raised?

Oh, yes; but, as I say, the proper course for the hon. Gentleman would be to approach the General Officer Commanding-in-Chief of his own Command.

Second Line Yeomanry Regiments

asked the Under-Secretary of State for War whether it is still the policy and intention of the War Office to utilise second line Yeomanry regiments as fighting formations to go abroad in due course; if so, whether he has considered the effect of the present recruiting regulations that no direct recruiting for the second line Yeomanry regiments is permitted and that no men are accepted for the Yeomanry who are not between the heights of 5 ft. 3 in. and 5 ft. 6 in., and who are unwilling to join any other unit; and whether he will explain how this policy is likely to result in the formation of units fit for foreign service?

There is no immediate intention of sending second line Yeomanry abroad, and the recruiting conditions to which the hon. Gentleman refers in his question were framed with this in view, so as to divert as many recruits as possible to the third line Infantry depots whose needs are, at the moment, more urgent than those of the Yeomanry.

asked the Under-Secretary of State for War whether it is the intention of the War Office to raise Reserve units for second line Yeomanry regiments so as to supply drafts for these regiments when sent on foreign service; and, if so, whether he will take steps to alter the recruiting regulations so that these second line regiments may be promptly made up to full strength?

No, Sir. Reserve units will not be raised for the second line Yeomanry regiments. Drafts for such regiments would be found by the third line depots. This would, of course, involve raising the establishment of such a depot in any case where it was called upon to maintain two units in the field.

Arising out of the right hon. Gentleman's reply, I beg to give notice that I shall raise this question on the Motion for the Adjournment of the House to-morrow (Wednesday).

Women's Wages (Portsmouth)

asked the Under-Secretary of State for War whether he has received communications from the women in the employ of his Department at Portsmouth in reference to the wages paid; and whether any decision has been reached in the direction of increasing the wages of these women?

I have received a communication. The question is under consideration.

Munitions

Acetylene-Oxygen Welders, Farnborough

asked the Undersecretary for War whether he is aware of the wages paid to the men employed as acetylene-oxygen welders at Farnborough as compared with the wages paid to similar workmen by contract firms; and whether he will make inquiries so that the recognised rates of wages may be paid?

Christmas Holidays

asked the Prime Minister whether, with a view to saving delay and disorganisation in factories engaged on munitions work, he proposes to introduce legislation to curtail the usual Christmas holidays?

The question of the duration of Christmas holidays in munitions works is under consideration by the Departments concerned, and I understand that no special legislation will be required.

Gretna Green Factory

asked the terms of the contract for and the amount proposed to be expended in the construction; of the new munitions factory at Gretna Green?

It would not be desirable, in the public interest, to give information as to the terms of individual contracts. If they are given in one instance, it would be impossible to draw the line.

Questions

Crane Drivers, Gun Wharf, Portsmouth

asked the Undersecretary for War whether he is aware that the crane drivers employed at the Gun Wharf, Portsmouth, have not participated in the recent advance of wages granted to other grades of workers during the last few months; and whether he will make inquiry into the matter with a view to its rectification?

I am not quite sure to which of the advances of wages my hon. Friend is referring, but I am in communication with him on the subject.

Recruiting

British-Born Jews

asked the Under-Secretary for War whether a British-born Jew whose father is not a naturalised English subject is eligible for enlistment in the British Army?

I have previously stated, what is moreover obvious, that a British subject is eligible to enlist in the Army, but at the same time it is necessary that the military authorities should have the right of declining to accept a man if they consider it desirable to do so. Membership of a religious communion is not a relevant consideration.

Unstarred Men

asked the Under-Secretary of State for War whether, having regard to Lord Derby's statement at the Mansion House on 19th October, that there may also be cases where men although unstarred are really indispensable to their employments, the Government will consider the desirability of appointing a Central Committee or local committees, the membership of which shall consist of a substantial proportion of business men, to consider and investigate all cases of unstarred men who are regarded as essential to the conduct of business?

The constitution of these Committees is now being considered, and Lord Derby informs me that the suggestions of my hon. Friend are being kept in mind.

Pharmacists

asked the Undersecretary of State for War whether, in view of the limited number of persons qualified as pharmacists and of the difficulty of providing dispensed medicines for the civil population, including insured persons under the scheme of national health insurance, he can now state if pharmacists are to be enlisted for service in the Army except to perform duties for which their special technical qualification as pharmacists is needed?

If a pharmacist desires to enlist in a branch of the Army other than the Royal Army Medical Corps he cannot well be refused if a vacancy exists in the branch he wishes to join. A pharmacist who wishes to join the Royal Army Medical Corps will always be accepted for this arm if a vacancy is available.

Has Lord Lansdowne's Committee yet reported to the Government on this subject, and have the Government come to a decision upon those recommendations?

I should be obliged if my hon. Friend would give me notice of that question.

Ministerial Statements

asked the Prime Minister whether, in view of the fact that important statements on the military situation and the position of recruiting were recently made by him and the Secretary of State for War to a private conference on 28th September, he and the Secretary of State for War are now prepared to make similar statements to a private conference of Members of the House of Commons or to an open Session of Parliament?

I have made a very full statement to this House, and I am not aware that I have kept any information from it that can properly be disclosed.

Is it not a fact that definite figures have been published by members of the deputation claiming that there were specific statements made to them? Does my right hon. Friend not see that those members who address recruiting meetings are at a disadvantage compared with the others?

I do not know what the Secretary of State for War may have said, but I am quite sure what he did say is now public property.

Young Married Men (Insurance)

asked the Chancellor of the Exchequer, whether, in view of the fact that neither in Lord Derby's scheme nor in any other way is adequate protection afforded to young married men who enlist or offer to enlist against the risk of their businesses being damaged or even ruined, he will consider the practicability of bringing into existence a scheme of Government insurance whereby such a man, on payment of a reasonable single premium, could be assured of a fixed capital payment in the event of his being called up before a certain date?

I fear that an arrangement of the kind suggested in the question would not be practicable.

Royal Army Medical Corps (Red Cross Society Doctors)

asked the Under-Secretary for War whether, having regard to the fresh call for doctors for the Army, the War Office can see their way to recognise the services of those members of the Red Cross Society who have returned home after having spent some months in the discharge of medical duties at the seat of war; and whether, as an inducement to their offering a further term of service, the War Office will take into consideration the time already served toward the reduction of the six months now required before a lieutenant can be promoted to the rank of a captain?

The gentlemen in question, as is pointed out in the hon. Gentleman's question, undertook only a short spell of service and then returned to their civil practices. I do not pass any criticism on them for having limited their service in this way, but I hardly think that they can now claim to be treated exactly on the same lines as those who, when they joined the Royal Army Medical Corps of the Special Reserve or the Territorial Force, put themselves at the disposal of the country for the period of the War. I hope the gentlemen in question will respond to the appeal which has been made for more medical officers without asking as a condition for the full recognition of their previous service on the same footing as if the Government had been from the first put in a position to count upon benefiting by it continuously for the whole period of the War.

Members of Parliament (Dispatch Carriers)

asked the names of Members of both Houses of Parliament who are or have been serving their King and country as dispatch carriers to and from the Army at £400 a year?

I do not think any public advantage would be gained by publishing these names.

I would not go so far as to say I am unable to do it, but I do not think any public advantage would be gained by so doing.

Is it not the due of the House of Commons that it should know what salaries have been paid to its Members?

I can give the names to my hon. Friend, but I do not think they should be made public.

Are we to understand this£400 a year is over and above the£400 received as Members of Parliament?

I believe certainly one, if not both, hon. Gentleman in question have not taken the full£400.

asked the First Lord of the Treasury whether his attention has been drawn to the fact that Members of both Houses of Parliament have been engaged in carrying dispatches to and from the Army and the Fleet; whether he is aware that the physical discomfort between the two Services is accentuated in the case of those carrying dispatches to the Fleet; whether he is aware that Members engaged on the duties connected with the Fleet are unpaid, while those engaged on duties connected with the Army received£400 a year; whether he is aware that many Members would gladly do the work for nothing; and whether, in the interests of economy, he will make representations to the War Office to abolish the salary now paid to Members of both Houses carrying dispatches to and from the Army?

My attention had not previously been called to these facts, and I am giving the matter my personal attention.

asked the First Lord of the Admiralty whether he could give the names of Members of both Houses of Parliament who are or have been serving their King and country gratuitously in the capacity of dispatch carriers to the Fleet?

Whilst I should have been glad to have given the names of the hon. Members, I feel sure that my hon. Friend will agree that it is undesirable that the names of officers carrying important dispatches should be made public.

Army Officers (Pay)

asked the Undersecretary for War for what reason officers with temporary commissions and officers with permanent commissions in the Regular Army receive different rates of pay; whether there is any difference in the duties they are called upon to perform; and whether he will take steps to put an end to the inequality of pay as between the two classes of officers?

Generally speaking, the rates of pay are the same; but in the special case of officers promoted from the ranks there is a difference, the reason of which is that the rates of pay given to such officers holding permanent commissions are specially designed to meet the conditions of regimental life in peace, whereas temporary commissions end with the War.

Questions

Officer Prisoners of War (Pay and Treatment)

asked the Under-Secretary for War whether German prisoners of war in this country are supplied by the British Government with an adequate supply of warm clothing and other articles of dress; whether this supply is supplemented by articles of clothing sent by the German Government or from private sources in Germany or elsewhere; and whether any difficulties are placed on the delivery of these supplementary articles to the soldiers for whom they are intended?

The answer to the first part of the question is in the affirmative and to the second that gifts of clothing are occasionally received by individual German prisoners, but that none of these emanate as far as is known from German official sources. No hindrance is placed on the delivery of such articles.

asked whether, in cases where German officers prisoners of war in this country require new uniforms or other articles of clothing, such articles are supplied by the German Government; and, if not, by whom and at whose expense are they supplied; and whether, in cases where British officers prisoners of war in Germany require new uniforms or other articles of clothing, such articles are supplied by the British Government; and, if not, by whom and at whose expense are they supplied?

Both in this country and in Germany officer prisoners of war are expected to clothe themselves.

asked whether the Government have yet succeeded in inducing the German Government to pay our officers prisoners of war in Germany sums more nearly approaching the sums paid by our Government to German officers prisoners of war in this country; whether the sums now paid by the German Government to our officers prisoners of war in Germany are sufficient to enable them to secure adequate food and clothing without having to depend on the possibility of supplies reaching them from home; and whether, in order to induce the German Government to make reasonable payments to our prisoner officers, the Government will reconsider their previous decision, and will inform the German Government that the British Government will pay the same sums and no more to German prisoner officers as the German Government pay to British prisoner officers?

It is believed that as a general rule British officers in the hands of enemy Governments receive sufficient pay to meet their immediate requirements. The answer to the last part of the question is in the negative. The object of my hon. and learned Friend is, of course, to improve the lot of British officer prisoners, and we are striving for the same end.

Have the Government succeeded in inducing the German Government to pay our officer prisoners a sum more nearly approaching that paid by us to the German officer prisoners?

Winter Warfare (Precautions)

asked what measures have been taken, in view of the approach of winter, to guard against the recurrence of frost-bite and other preventable sufferings incident to the flooding of trenches among our troops in France and Flanders?

I can assure my hon. Friend that most careful and complete measures have been taken and minute instructions issued from the medical, the engineering and the clothing points of view, but it is hardly desirable to make public the exact methods of prevention of frost-bite which are being employed. If my hon. Friend desires I will communicate with him privately.

Ordnance College, Woolwich

asked the Under-Secretary for War whether he is aware that several officers acting as instructors in the Ordnance College, Woolwich, have not received the appointment of instructor, while other officers acting as instructors in the School of Gunnery have received such appointment; and whether he will take steps to have uniform administration in these two establishments so that questions of approved increases of pay or appointments shall be common to both?

I am informed that the work of the Ordnance College, and that of the School of Gunnery, are not quite analogous, and that it is therefore impossible to unify the conditions in the manner suggested by my hon. Friend. Each case has to be treated on its merits.

asked the Under-Secretary for War (1) whether he is aware that labourers and messengers employed in the Ordnance College, Woolwich, are not receiving a corresponding rate of pay to others of similar grade employed in the Ordnance factories; whether he will make inquiries into the matter with a view to the removal of this discrimination; and (2) the reason for the workmen employed in the Army Ordnance Department not having received the war bonus which has been conceded to the workmen in other Departments?

I will answer this question and No. 40 at the same time. Ordnance College employés will be dealt with under the temporary war increase of wages which has just been approved for War Department workmen in the London area. This temporary increase will be in general 4s. a week for adult workmen other than those who have received it in connection with the recent rise in the engineering trades, and 2s. a week for workwomen. This concession does not apply to the clerical and writing staff.

Aircraft (Manufacture)

asked the Under-Secretary for War whether, in view of the activity displayed by the Germans of late in the production of large and fast aeroplanes, the War Office is taking appropriate steps so that this country may successfully compete with them in regard to such aeroplanes?

Have the Government established factories for building aeroplanes, and are they doing anything to supervise the work of private firms?

We have Government factories and we also have models of aeroplanes submitted to us for our approval.

Yes, it produces a good deal which shows great superiority over the Germans.

asked whether any large aeroplanes of the Sikorski model are in course of construction in this country; and whether the War Office actively aids in the construction or simply reserves the right to accept or reject the aeroplanes when completed?

I am afraid that it is not desirable to give in public the answer to the first part of this question. As regards the second part, I may say that aeroplanes of private design, whether the building of them is or is not assisted by the Government, must fulfil certain stipulated tests before they can be accepted.

Would it not be possible to submit to the public and to the world an aeroplane manifestly superior to the German aeroplane?

Colonel Edmund Eaton

asked the Under-Secretary for War whether he has seen the observations made by Judge Mackarness on the conduct of Colonel Edmund Eaton in a recent case heard at Hayward's Heath County Court; and whether any action has been taken in respect of this officer?

Yes, Sir, my attention has been called to the observations made by the learned judge referred to. I may state that the judge himself wrote to the War Office. The case of Colonel Eaton is now under the consideration of the Army Council.

Ragging at Woolwich

asked the Under-Secretary for War whether he is aware that there has been of late a great increase of ragging at Woolwich, and that, in one case of recent date, the victim fell fainting and was subsequently in hospital for six days; and whether he proposes to take any action in the matter?

No, Sir; it is not the case that there has been a great increase in ragging at Woolwich. As regards the particular incident alleged to have occurred recently, I am still making inquiries, but I can assure my hon. Friend that drastic action will be taken if the result of the inquiries shows that it is necessary. As those implicated have left the Academy the inquiry must take a little time.

Army Council

asked the Under-Secretary for War to what extent the statutory powers and duties formerly exercised by the Commander-in-Chief or Adjutant-General, and transferred to the Army Council under the Army Council Act, 1904, are now being exercised personally by the Secretary of State for War?

The distribution of business between the different members of the Army Council is vested by the Order in Council of August, 1904, in the Secretary of State. The actual distribution of duties may be seen by reference to the King's Regulations, and no alteration in such distribution has been made since my Noble Friend became Secretary of State.

Inventions Committee

asked the Under-Secretary for War whether an Inventions Committee has been set up at the War Office by order of the Secretary of State for War; and, if so, what connection exists between this Committee and the Inventions Board presided over by Lord Moulton, and what measures have been taken to ensure full co-operation between the Board and the Committee and a proper co-ordination of their respective functions?

No change has been made in the method of dealing with inventions submitted to the War Office, except that a senior officer has recently been appointed as permanent chairman of the body dealing with them. I have no knowledge of any Inventions Board presided over by Lord Moulton, but the officials at the War Office responsible for dealing with inventions in regard to explosives are in touch with his Department and officers from the War Office attend from time to time at meetings presided over by Lord Moulton.

Is the right hon. Gentleman aware that notwithstanding the statement made in this House as to the Inventions Board by the Minister of Munitions, at present there is no guarantee that an inventor going to one Committee will not be referred to another?

I did not know my hon. and gallant Friend was alluding to the Inventions Board of the Ministry of Munitions. It is a distinct Department from that at the War Office, but the Prime Minister and the Minister of Munitions are in conference on the subject with a view to settling the relations between the two.

Captain Richard Lloyd George

asked the Under-Secretary for War if Mr. Richard Lloyd George has been appointed lieutenant-colonel of a service pioneer battalion of the Welsh Regiment; if so, whether he will state the age and military experience of this officer; and whether the appointment is due to a lack of competent officers of greater military experience?

The statement to which this question gives publicity is totally without foundation. No such promotion has either been recommended or made, and therefore the remaining parts of the question are irrelevant.

Army Council (Meetings)

asked the Under-Secretary of State for War how often, and at what intervals, the Army Council has been in the habit of meeting under the present Secretary of State for War?

Formal meetings of the Army Council have not been the rule since the outbreak of War, but conferences between various members of the Army Council have been matters of daily and almost hourly occurrence.

Are the meetings of the Army Council going to be suspended altogether, and is the Army Council Act, therefore, to remain nugatory?

No. Sir. My hon. and gallant Friend would be quite in error in supposing that the functions of the Army Council are nugatory. On the contrary, Army Council decisions are taken every day, as I said, in informal conference. Whether any change should be made in the form of its meetings in the near future I cannot say. Perhaps my hon. and gallant Friend will put a question down.

Why have not the reports been circulated to the Cabinet, as stated by the right hon. Gentleman the Member for Dublin University?

Veterinary Colleges (Edinburgh and Glasgow)

asked the Chancellor of the Exchequer whether the Treasury suggested, on 28th July, 1915, to the Veterinary Colleges in Edinburgh and Glasgow that amalgamation was desirable in the interests of economy; whether any estimate has been made of these possible economies looking to the staff, equipment, and size of these institutions; whether any action to secure such economies is being taken; and what Government Grants are given to either of them or to both?

The Board of Agriculture for Scotland were invited on the 3rd and 28th July last to consider the question of securing economies generally, whether by amalgamation of institutions or otherwise, at the various colleges aided by them. They have been in communication with the colleges, and the Treasury are now awaiting their final recommendations on the subject. The Grants to the Scottish veterinary colleges are limited to a maximum of£800 a year for the two colleges together.

May we assume that after this amalgamation it is the Edinburgh College that will go out of sight?

Currency Notes

asked the Chancellor of the Exchequer, whether he proposes to re-issue the new £1 and 10s. notes as they come in, or to replace them by new notes, in order that forged notes, if any, may the less easily escape detection and the public enjoy the advantage of handling clean paper?

Currency notes are immediately cancelled on their return to the Bank of England, and are not re-issued.

Treasury Bills

asked the Chancellor of the Exchequer whether discount received on Treasury bills is assessable to Income Tax?

Where Treasury Bills are taken up by banks, financial houses, etc., the profits would be included in the computation of the trade profits of those houses. Where such bills are taken up by a private person, liability is regarded as arising under Case III. Schedule D of the Income Tax Act, 1842, which specifically charges all discounts.

Bank Act (Suspension)

asked the Prime Minister (1) if in fact the Bank Act was suspended in August, 1914; if so, to what extent notes were issued beyond the limit fixed by Law; and (2) if the letter, dated 1st August, 1914, from the Prime Minister and the then Chancellor of the Exchequer to the Bank of England, authorising the suspension of the Bank Act, has now been cancelled; and, if so, on what date?

The authority of 1st August was never acted upon and was suspended by Section 3 of the Currency and Bank Notes Act, 1914, which received the Royal Assent on Thursday, 6th August. On 7th and 8th August, as adequate supplies of currency notes were not for the moment available, certain notes of the Bank of England were used at the request of the Treasury for the purpose of advances to bankers under the Currency and Bank Notes Act, the maximum excess involved being £3,043,000. By 10th August the position as regards the bank notes had become normal in all respects.

Will the right hon. Gentleman say why a statement was not made publicly in this House as has been the case previously when a letter of this kind has passed between the Chancellor and the Bank.

Is it within the discretion of the Governor of the Bank of England to omit to act immediately upon such a letter as that referred to?

British Soldier (Annual Cost)

asked the Undersecretary of State for War whether he will give a rough approximation of the items making up the cost of£250 to£300 a head per annum for the British soldier?

No, Sir. My right hon. Friend explicitly and, as I understood, purposely refrained from giving any details of this very rough estimate.

"Bond of Sacrifice."

asked the Financial Secretary to the War Office whether the publication entitled the "Bond of Sacrifice" is published with the cognisance of the War Office, or if the editor is officially recognised or offered any special facilities by the Army Council?

There has been correspondence with the publishers and editor of the publication referred to by my hon. and gallant Friend, but the War Office has been unable to confer upon it any official recognition or approval or to render any special facilities for its compilation.

Military Rations

asked the Financial Secretary to the War Office what steps have been taken in each of the commands in the United Kingdom to stop the waste of food issued to troops which in some places has taken place, and to limit the amount of rations issued to such amount as may meet the requirements of the troops?

asked the Financial Secretary to the War Office to what extent advantage has been taken by; commanding officers of the option given them some months ago of reducing rations where waste of food in camps is prevalent; and whether any further steps can be adopted to prevent waste?

A complete organisation is now in existence in each command to deal with this problem. Inspectors of quartermaster-general's services, instructors in catering, and auditors of messing accounts have been appointed, and numerous schools of army cookery have been established with the result that the messing has been improved, economy has been effected and waste reduced. Units have also been instructed that they are not to draw the full quantity of rations according to scale, but only such quantity as is actually required for consumption. In addition to previous instructions, by an Army Order of 23rd September last, General Officers Commanding-in-Chief have been empowered to curtail the meat ration within their commands when in their judgment the full issue is not required. In consequence of this Army Order a reduction has been made of 4 ozs. in the meat ration for all troops in the Guernsey and Alderney district and for the majority of the troops in the Western, Scottish, London District, Central Force, and Northern Commands. In these last-mentioned commands the full meat ration is continued for troops under canvas and for those in small detachments. In the Southern Command the ration has been reduced by 2 ozs. for the majority of the troops. No reduction has yet been made in the meat ration of troops in the Jersey District or the Irish, Aldershot or Eastern Commands.

How does it come about that the reduction in these rations is not uniform in the different commands; if it is unnecesary in one, is it not unnecesary in another to issue an excess amount?

No, Sir, that is not the case. The necessity for the full ration must, of course, depend to a large extent upon the actual duties the troops are carrying out and also upon the acommodation in which they are housed.

Is it or is it not a fact that the size of the tins has been reduced?

War Office Clerks (War Bonus)

asked the Financial Secretary to the War Office whether, in view of the discontent prevailing amongst the clerks employed in Woolwich Arsenal and other War Office Departments, he can promise an early reply to the appeal made for a war bonus such as has been given to other employés; and whether, in the event of the appeal being granted, the concession will be made retrospective?

Official History of War

asked the Prime Minister whether any arrangements have been made, and, if so, what, for the compilation of the history of the War, particularly since there is always a probability of men who can materially contribute to its proper understanding falling upon the field of battle before their statements can be recorded?

The collection and collation of material for the compilation of the Official History of the War is being carried out by the Historical Section of the Committee of Imperial Defence.

National Economy

asked the Prime Minister whether, in view of the need for national economy, the Government proposes to issue any official detailed advice to the nation as to how this can best be effected?

The duty of preparing publications of this character has been undertaken by the Parliamentary War Savings Committee, and I may perhaps refer my hon. Friend to the pamphlets which they have issued. I do not think that the question is one which could be effectively dealt with by means of a formal official pronouncement.

asked the Prime Minister whether, in view of the serious state of the nation's finances and of the thoughtless extravagance and unnecessary luxuries still indulged in by many persons to the annoyance of their neighbours, he will consider the advisability of passing forthwith through Parliament drastic sumptuary laws which will ensure the strictest domestic economy and put all classes upon a footing during the War of greater equality in their mode of living?

This subject is engaging the continuous attention of the Government. I shall be glad to consider any suggestions that the hon. Member may have to make.

Territorial Concessions

asked the Prime Minister whether he or the Secretary of State for Foreign Affairs has during the War offered British territory or territory of our Allies to any Foreign Power without first consulting the Cabinet?

The only instance in question is Cyprus, of which the offer was made in an emergency, after consultation with the heads of the Departments most concerned.

Civil Servants With Colours

asked the Prime Minister whether the cost of paying to Civil servants who have joined the Colours the difference between their military and civil pay has been included in estimating the annual cost per man to the State of £250 to£300?

The answer is in the negative, except in the case of Civil servants who have enlisted from the War Office. The charge for Civil servants is not large enough materially to affect the rough estimate which I have given to the House.

asked the Prime Minister what is the present cost of paying to Civil servants who have joined the Colours the difference between their Civil pay and 7s. a week plus the amount of separation allowance where this is paid?

The civil pay allowed to the Civil servants in the Civil and Revenue Departments who at 1st August last had joined His Majesty's Forces is at the rate of£2,500,000 a year.

Military and Naval War Pensions Act

asked the Prime Minister whether he is in a position to state the name of the paid vice-chairman under the Military and Naval War Pensions Act; how soon he anticipates the new Committee will be nominated; and to what address can claimants send their applications and how soon?

The Military and Naval War Pensions Bill has not yet received the Royal Assent. It is hoped that the information asked for by my hon. Friend may be available shortly.

Mr. Bonar Law's Memorandum

asked the Prime Minister if he will lay upon the Table of the House the Memorandum by the Secretary of State for the Colonies referred to by the right hon. Member for Dublin University in his letter resigning the office of Attorney-General?

Will it not be in accordance with precedent, the right hon. Gentleman having given permission for reference to this document in the House, that it should be laid on the Table?

No-Treating Order

asked the Prime Minister whether he will give the House an opportunity to vote upon the question, That it be an Instruction to the Kitchen Committee that the No-Treating Order now in force in other parts of London shall be observed in the House?

I am afraid it will not be possible to find an opportunity for this discussion.

Is my right hon. Friend aware that many hon. Members object to this House being the only place in London where the practice of treating still continues, and will he advise how those Members can bring home their views to the Kitchen Committee if no opportunity of voting is given to them?

Does my right hon. Friend realise that exhortations to economy from that bench sound somewhat hollow so long as the Government fail to take adequate measures to prevent the enormous waste of wealth for drink?

Finance (No. 3) Bill

Excess Profits Tax

asked the Chancellor of the Exchequer if he will state if any words in Clause 40 of the Finance (No. 3) Bill state if persons unable to pay sums due by them under the Excess Profits Duty are liable to imprisonment and to the seizure of their furniture or other effects; if so, which words contain such information; and, if not, will he say if such persons are or are not liable to imprisonment and (or) to the seizure of their furniture and (or) other effects?

Clause 40 (3) provides that the duty payable shall, like other revenue duties, be recoverable as a debt due to His Majesty. My hon. Friend is no doubt aware of the ordinary remedies for recovery of a Crown debt.

Farmers' Assessments

asked the Chancellor of the Exchequer if he will give directions to the Board of Inland Revenue to publish a specimen form of the statement of accounts which would be required from farmers electing to be assessed for Income Tax under Schedule D, so that they may be able to prepare their accounts in a manner acceptable to the Inland Revenue authorities?

The Inland Revenue are now considering whether they can assist farmers in this matter by providing a suitable form in which the accounts may be prepared.

Property of Alien Enemies

asked the Chancellor of the Exchequer if he can state the amount of money and the value of property belonging to alien enemies now in the hands of the Public Trustee; and to what purpose it is at present being put?

Money and property belonging to enemies reaching the hands of the Public Trustee falls into two separate categories:— a ) amounts to approximately£1,500,000, and is invested from time to time in securities approved by the Treasury, and the amount of cash received under ( b ) amounts to approximately£175,000, while the value of the property, apart from money, amounts to approximately£3,500,000.

All property falling within the second category is dealt with in accordance with the directions contained in the Orders of Court vesting the property, and is normally applied for the payment of the claims of British creditors of the respective enemy owners.

Military and Naval Services (Pensions and Grants)

asked the Chancellor of the Exchequer whether he is aware that the scheme for allowances to dependants of sailors and soldiers, dated the 25th October, 1915, will lay upon the British taxpayers very heavy financial obligations; whether the Government intends that this scheme shall be put into operation without the assent of the House of Commons; whether the proposals and regulations contained in the scheme have received detailed consideration by the Treasury; and whether he has approved the scheme and advised the Government to adopt it?

The answers to the first, third, and fourth parts of the question are in the affirmative. The scheme has been communicated to Parliament in accordance with the pledge given to that effect.

What power does the Government possess to enable my right hon. Friend to impose these obligations on the State without any Vote in this House?

Questions

Military Traffic (Damage to Roads)

asked the Chancellor of the Exchequer if he is aware that damage is being done to the roads near military camps by traction wehicles conveying war outfit; and, if no further Grants be made to local authorities by the Road Board as is proposed by Clause 41 of the Finance (No. 3) Bill, will he take steps to prevent the expense of repairing the damage from falling on the ratepayers?

Cases of damage done by military traffic to roads in the neighbourhood of camps are considered by the War Office, and steps have been taken to secure that proper contributions are made to the cost of repairs out of Army funds. Clause 41 of the Finance Bill will have no effect whatever on existing practice in this respect.

Does the undertaking of a proper proportion of expenditure by the War Office extend to the increased user of roads throughout the country owing to military operations?

Policemen Enlisted (Scotland)

asked the Secretary for Scotland the total number of police in Scotland, the number of those who have enlisted, and the number of men of military age who remain; how many of those willing to serve have not been allowed to do so; whether he intends to recommend that these men be liberated and that a larger number of special constables not of military age should be enrolled to permit the enlistment of those desiring to serve their country at the front; and, if so, whether he will arrange with the War Office that a special battalion of police officers should be formed?

The total authorised strength of county and burgh police forces in Scotland as at the 30th October, 1915, is 5,983, and of that number 1,320 have enlisted in the Army or Navy, while 175 have been called up as Reservists, making a total of approximately 25 per cent. of the Scottish police serving with the fighting Forces. In addition a number of men have been lent to the Army as drill instructors, and to the War Office and Admiralty for special duties. I have taken steps to encourage the enlistment of suitable men consistently with the maintenance of an efficient police service. In many of the forces, however, especially in the larger burghs, I am informed that further enlistment would be of doubtful expediency. I am glad to acknowledge the assistance rendered by the special constables, who have been enrolled in large numbers, but it will be understood that there is a limit to the extent to which they can act as substitutes for the regular police. As regards the formation of a special police battalion, I would refer my hon. Friend to the reply given to him by the Home Secretary on the 3rd November.

Has any other country in the United Kingdom reduced its police force one for every 100,000 of the population, as in Scotland?

I should require some notice for a calculation of that sort, but I believe the Scottish force has done at least its share.

Increased House Rents (Clyde Area)

asked the Secretary for Scotland whether Lord Hunter has concluded the inquiry with regard to the increase of house rents in the Clyde area; whether he has presented an interim Report; and, if so, whether the Government has decided to take any action?

asked the Secretary for Scotland if he has yet received a Report from Lord Hunter's Committee on increase of house rent; and if he can say when and what steps he proposes to take thereon?

I am informed that the Report into the facts underlying the rent agitaion in Glasgow and other industrial centres in Scotland is practically complete, and as soon as it can be circulated it will receive the careful attention of the Government.

Cultivable Land (State Purchase)

asked the Parliamentary Secretary to the Board of Agriculture the number of acres of cultivable land which is not at present being cultivated; and whether his Department is inquiring into the matter with a view to the purchase by the State of such land?

Of the 37,000,000 acres of land in England and Wales, nearly 31,000,000 acres come within the scope of the agricultural returns as being either under crops or stock, while woodlands occupy nearly 2,000,000 acres. Holdings and allotments of not more than one acre are included in the remainder, which also includes all land for residential and industrial purposes, mines, roads, railways, etc. It is impossible to state how much of this is available for cultivation. This is not a suitable time for State purchase of land on a large scale.

Can the right hon. Gentleman say whether his Department is making any special inquiries into this subject at the present time?

It is clearly impossible to put aside large sums for the purchase of land at the present time, and I think our inquiries are in a better direction in trying to increase productivity of land now in cultivation.

Is the right hon. Gentleman's Department making inquiries in regard to this matter at the present time?

Imperial Council in London

asked the Secretary of State for the Colonies if he proposes to convoke an Imperial Council in London at an early date; and in that case will he say to which parts of the Empire invitations have been issued?

asked what representatives, other than Mr. Massey and Sir J. Ward, of other overseas British possessions other than New Zealand are about to visit England in order to consult with His Majesty's Government?

I do not think that the assembling of such a conference is possible for the present, but as I have already told the House the Prime Ministers of the Dominions have been informed that His Majesty's Government would warmly welcome a visit from any or all of them, but I have no information that the representatives of any of the other Dominions have arranged to come.

Office of Works

asked the First Commissioner of Works whether an employéof the Office of Works, who was enrolled in the Royal Naval Air Service, has been dismissed from his post, and has been refused to have made good his civil pay as promised by the Prime Minister on 10th August, 1914; whether he is aware of the dissatisfaction caused among Civil servants by this action; and whether, in taking this course, the Office of Works has been acting at the instigation of the Retrenchment Committee?

The officer in question was an unestablished draughtsman, who was discharged in accordance with his agreement on a month's notice owing to reduction of work, and not at the instigation of the Retrenchment Committee. I am not aware that dissatisfaction has been caused by this action among Civil servants. The promise of the Prime Minister does not apply to such a case.

Is the right hon. Gentleman aware that up to the time of this gentleman being retired he was treated in all respects as other Civil servants, and he fully expected that he would have the benefit of the Prime Minister's promise?

( was understood to say ): If the hon. Member has got any further information I shall be glad to receive it.

Supplies (Mediterranean Expeditionary Force)

asked the First Lord of the Admiralty whether he is aware that, owing to the failure of the Admiralty transports to transmit supplies to certain regimental institutes established in connection with the Mediterranean Expeditionary Force, the troops using these institutes are entirely unsupplied; and whether orders will be issued to expedite supplies and to provide, if necessary, additional means of transport so that the men may not be exposed to unnecessary privation during the coming winter months?

I was not aware of the failure to transmit supplies as suggested in my hon. Friend's question. If there has been any such failure, its cause lies rather in the difficult conditions under which operations are carried out than in shortage of transports. But attention has been called to the matter both in the War Office and the Admiralty Transport, Department.

Can the right hon. Gentleman suggest some way in which we can-allocate the responsibility for this defect between the War Office, the Admiralty and the Post Office, all of whom have successfully repudiated it?

We are responsible for taking up the ships. The hon. Gentleman suggests that this alleged failure is due to shortage of transports. Attention has been called to the matter in the War Office and the Admiralty Transport Department, and if there is this shortage we will do what we can to alter it.

Anti-Aircraft Services

asked the First Lord of the Admiralty whether efficient rangefinders for Zeppelins have been provided in London for the use of the Anti-Aircraft Service?

I do not think it would be in the public interest to discuss details of the defences of London against Zeppelin attack.

Does the answer of the right hon. Gentleman mean his inability to reply or really masks grave incompetence in his Department?

Bonus (Naval Ordnance Department)

asked the Secretary to the Admiralty the reason for the workmen employed in the Naval Ordnance Department not having received the War bonus which has been conceded to the workmen in other departments?

The following temporary War increases in wages will be granted to employés in the Naval Ordnance Department at Woolwich as from the 12th September last:—

Shell Steel

asked the Secretary to the Admiralty the reason why the Admiralty refuse to take delivery of shell steel containing over .02 of phosphorus; whether France, Russia, and the British War Office use shell steel containing .06 of phosphorus, and the analysis of German shells collected on the battlefields shows 1 of phosphorus; whether he is aware that these Admiralty restrictions have created a monopoly and necessitate mainly the use of Cumberland ores, and that the price of hematite pigs has since the war advanced 60s. per ton; whether he is aware that the royalty on hematite stone is based on the price of iron, that a royalty of 8s. on stone is now being paid to royalty owners, and that over£150,000 per annum is being paid to one owner for royalties on stone used for Government work; and will he say the extra price paid by the Admiralty for shell steel compared to that paid before the War?

It is not considered in the public interest to make any statement respecting naval armament.

Will the right hon. Gentleman answer the last part of my question—what is the exact price paid by the Admiralty for shell steel?

If the hon. baronet will discuss the matter with me I will give him whatever information is possible.

Insurance Societies (Financial Burdens)

asked the Comptroller of the Household, as representing the National Health Insurance Commissioners, if he is aware that numbers of healthy lives are enlisting in the Army, and that the financial burdens of the approved societies are increasing by large bodies of female workers at the munition works coming under the Act; and whether he has consulted with the Advisory Committee upon the effect of the War upon the finance of the insurance scheme?

I am aware of the facts with regard to enlistment in the Army. As regards the remainder of the question, I have nothing to add to the statement which I made on the 12th July last, except that I may refer the hon. Member, on the last point which he raises, to the reply which I gave to a similar question on the 14th ultimo.

Is the hon. Member going to consider all these important things that come up without calling the Advisory Committee together?

It costs£600 to call the Advisory Committee together, and I do not think that I ought to extend its functions beyond those that are laid down in the Statute.

Mercantile Marine (Badges)

asked the President of the Board of Trade if he is aware that the recent announcement on the subject of the wearing of merchant service uniform by officers of British merchant ships while on leave affects rather less than 50 per cent. of the executive of the mercantile marine; and if he will again consider the desirability of the issue of a badge to the whole of the mercantile marine, as a logical corollary to the granting of one to those employed on transports, especially on the ground that a ship employed in conveying vital necessaries to our shores is doing the work of the nation and is subjected to the same risks and dangers?

I fear I cannot add anything to the reply which was given on 26th October to the hon. Member for the Devizes Division of Wiltshire on this subject.

Cargo for Enemy Subjects

asked the President of the Board of Trade whether his attention has been called to the fact that the Pacific Steam Navigation Company have issued orders, under date of 14th August, to their captains that they are to accept cargo as in the past without inquiry as to whether it is cargo belonging to enemy subjects, revoking the previous orders issued on the 25th May and 14th June that cargo belonging to enemy subjects was to be refused; and whether he intends to put in force the penal provisions of the Acts passed for the prevention of trading with the enemy in this case?

I understand that the Pacific Steam Navigation Company carry cargo between ports on the West Coast of South America and from those ports to this country without reference to the question who the shippers are. There is nothing in the law relating to trading with the enemy which prohibits this.

Can the right hon. Gentleman say whether the order to which I refer in the question is not directly contrary to the advice tendered by His Majesty's Consuls at Valparaiso and other places?

Coal Prices (Scotland)

asked the President of the Board of Trade if he is aware that house-coal prices in Scotland have been increased since September by 2s. 6d. per ton at the pit-head, and that further advances are threatened; and if he is aware that it is in consequence of such increases that the Glasgow Corporation ask for legislation, as local action cannot effectively control prices in view of such increase?

Pit-head prices of coal are restricted by the Price of Coal (Limitation) Act. Arrangements restricting merchants' charges have been made in several towns, and I do not appreciate the difficulty that appears to be felt by the Glasgow Corporation.

Bread (Price in London)

asked the President of the Board of Trade whether his, attention has been called to the statement made by the secretary to the London Master Bakers' Association that the selling price of a quartern loaf of bread will be increased to 8½d.; if he is aware that the extra cost will be in some working-class families at least 1s. per week; if he is aware that this is an advance of 3d. for a 4-lb. loaf to what it was in about the middle of July, 1914, which means an increase of at least 3s. per week in some working-class families; and if he can state-why the price of bread is being increased in London at the present time?

My attention was called to the statement to which my hon. Friend refers immediately after its publication. I understand it to mean that the price of a 4-lb. loaf is being advanced by½d. If that be so, the extra weekly cost of bread to an average working-class family will be increased by about 3d. I may point out to my hon. Friend that the increase in the price of flour, as compared with July, 1914, represents, to within a small fraction of a penny, 2½d. per loaf, and I am aware that increases have also occurred in the cost of fuel and in other items of outlay as well as in wages since that time.

Is the right hon. Gentleman aware that in many working-class families the amount of bread consumed is about 6 lbs. per head a week?

The amount consumed depends on the size of the family. For statistical purposes we can only take the average.

I think that perhaps my hon. Friend can work out the calculation when he gets a copy of the answer.

Freight Rates

asked the President of the Board of Trade whether he is aware that 45s. per ton has recently been paid for sea freights of coal from Cardiff to Genoa, as against 7s. per ton in July, 1914, Cardiff to Marseilles, 53 f., as against 8 f. 75 c. in July 1914; whether he proposes taking any steps to regulate charges made by shipowners; whether he has any information that some British shipowners have sent their ships to carry coal between North and South America and American and Italian ports; whether the Government have so far not commandeered British ships in foreign waters; and whether he has power to commandeer British ships whether they be in foreign waters or not?

The whole question of shipping freights has been carefully considered, and Orders in Council will be made to-morrow prohibiting British ships from carrying cargo from one foreign port to another foreign, port except under licence, and authorising the Government to requisition ships in case of emergency for the carriage of food-stuffs, etc. I understand from the Admiralty that there is power to requisition ships abroad, and ships have, in fact, been requisitioned abroad.

German Raw Steel

asked the President of the Board of Trade whether he is aware that Herr Muller, managing director of the firm of Gebruder Stumm, recently called a meeting of the owners of all German steel works and that an organisation, under the name of the Raw Steel Union, was formed; whether he is aware that at this meeting it was agreed that the Raw Steel Union should consider the advisability after the War of selling German semi-manufactured steel in Britain and Belgium instead of the German works turning this steel into finished export products; whether His Majesty's Government have any information on this subject; and, if not, will he endeavour to obtain particulars of this scheme to dump German goods in this country made during the War?

Several meetings of the German steel makers have been held and reports on the subject have been received at the Board of Trade. It would not be possible within the limits of an answer to a question to set out the effect of the discussion so far as it has proceeded, but I am taking steps to publish an account in an early issue of the "Board of Trade Journal," and will forward a copy of that issue to the hon. Member.

Volunteers' Training Corps

asked the Minister of Munitions whether he will take into consideration the utilisation of the services of local Volunteer Training Corps, affiliated to the Central Association of Volunteer Training Corps, for guarding factories and other buildings where munition work is being carried on?

The matter referred to in the hon. Member's question is now under discussion between the War Office and the Ministry of Munitions, and I hope a decision will be arrived at in a few days.

Miners (Special Badge)

asked the Minister of Munitions whether he will issue a special badge for miners who are unable to enlist?

I will consider my hon. Friend's suggestion, but there are considerable objections to the multiplication of special badges. As at present advised, I am inclined to think that the case is sufficiently met by the arrangements explained by my right' hon. Friend the Under-Secretary of State for War, in answer to my hon. Friend on 4th November, under which armlets can now be obtained by miners, who, after attestation, are returned to their civil employment.

Mining Instruction, Somersetshire

asked the President of the Board of Education whether he is aware that the Somerset Education Committee has not only reduced the grant for instruction in mining but threatens to entirely withdraw this instruction after May next; whether he is aware that many miners from Somerset have enlisted and many are now volunteering for special tunnelling work in France; and whether it is at the instigation of, or with the sanction of, the Board of Education that mining instruction in Somerset is now threatened with extinction?

My right hon. Friend has seen a newspaper report to the effect mentioned in the first part of the question. He has no reason to doubt the facts suggested in the second part of the question. The matter is within the discretion of the local education authority; their action was not taken at the instigation of the Board, and does not require the Board's sanction.

Will the Board look into this committee's work to see whether they are acting properly?

Aberdare District

asked the Secretary of State for the Home Department whether he has official information to the effect that in the Aberdare district there is a pro-German section; and, if so, whether any action is contemplated?

No, Sir, I have no such official information.

Optical Glass Work (Alien Enemies)

asked whether a number of alien enemies or persons of hostile origin or association have been released or exempted from internment in order to work in the manufacture of optical glass; and, if so, whether this indicates a dearth of British workmen skilled in such work?

Lighting Regulations, London

asked the Secretary of State for the Home Department whether, having regard to the Regulations now enforced in the matter of domestic lighting and with a view to diminishing the risk of street accidents, and to alleviating -the gloom of London after nightfall, he is now prepared to sanction an increase of lighting by public authorities?

The lighting of London, as I have already explained, is regulated in accordance with advice given by those responsible for the defence of London from air raids, and while full consideration is given to the desirability of maintaining reasonable lighting, I cannot disregard the advice under which I am acting. The matter is receiving close attention, and if any relaxation is found practicable it will be given effect to without delay.

The matter is not lost sight of. In some respects modifications have been made. Naturally I cannot depart from the advice given to me from time to time by the Admiralty.

Does the right hon. Gentleman give his sanction to the statement that there is gloom in London after nightfall? There is no gloom in London after nightfall.

War Risks

Insurance Fob Small Amounts

I beg to ask the Postmaster-General a question of which I have given him private notice: Whether he has any statement to make with respect to the use of post offices to enable members of the working-classes and others to effect insurances on properties of comparatively small value against air-raids and other war risks?

I have suggested to my right hon. Friend the President of the Board of Trade, that the machinery of the Post Office might usefully be employed to enable members of the working-classes and others to effect insurances on properties of comparatively small value against air-raids and other war risks. The proposal having received his cordial concurrence, a scheme has been framed by the two Departments. Any member of the public will be able to apply at the counter of any post office for a certificate of insurance, and on filling in his name and address on the certificate and counterfoil, and paying a sum of sixpence, his property will be insured by the Government to the amount of£25, for a period of twelve months, against destruction or damage directly or indirectly caused by attacks by aircraft, or by shells used against aircraft, or by bombardment from the sea. A payment of 1s. will effect an insurance of£50, and of 1s. 6d. an insurance of£75, which is the maximum amount. Insurances for£100 and over can be effected under the previous Government War Risks Insurance scheme. The Post Office insurance is not intended for property worth more than £100, nor does it apply to buildings, nor to loss of life or bodily injury. In the event of damage covered by the insurance, claims may be made through any post office, and will be dealt with by the Government War Risks Insurance Office. Certificates of insurance and explanatory leaflets will be obtainable at all post offices on and after Friday next.

Suppression of "Globe" Newspaper

I beg to ask the Prime Minister a question of which I have given him private notice: Whether he is acting temporarily at the War Office for the Secretary of State for War; whether he was cognisant of the raid made by the police under military warrant on the premises of the "Globe" newspaper; whether it was made with his cognisance; and what action he proposes to take in the matter?

The answer to all parts of the question, except the last, is in the affirmative. My right hon. Friend the Home Secretary will answer the last part of the question.

As regards the remainder of the question, the action taken in respect of the "Globe" newspaper was taken in the name of the whole Government, and the Government is confident that it will be generally approved.

Can my right hon. Friend the Prime Minister say whether he can provide an opportunity for discussing this matter?

Certainly no special opportunity, but if anybody thinks it worth while to raise the matter on the Vote of Credit, he can do so.

May I ask why, when the Courts are sitting, proceedings could not have been taken in the ordinary way? When this House gave these powers to the Government, they never gave them for this purpose.

The action of the Government was taken under powers conferred by Parliament upon it.

Is the right hon. Gentleman aware that another London evening newspaper committed exactly the same offence, and can he explain why that evening newspaper has not been proceeded against in a way similar to that in which the "Globe" has been proceeded against?

I can assure my hon. Friend that if any other paper acted as the "Globe" acted, it will be dealt with as the "Globe" was dealt with.

Is the right hon. Gentleman aware that the "Evening News" on Saturday night gave the lie direct to the Press Bureau, and has not been proceeded against? [HON. MEMBERS: "Answer!"]

Will the right hon. Gentleman say whether Major-General Sir Francis Lloyd stated the case accurately when he said that he took this action on his own authority; and do I understand from the Home Secretary's answer now that the Government threw over Major-General Lloyd?

I do not know why my hon. Friend supposes that. The Government does not throw over anybody by saying that it accepts responsibility as a Government for what was done.

Is the right hon. Gentleman aware that in the House of Commons and the country there would have been great dissatisfaction if the Government had not taken the step that they have taken?

Is there not some gentler way of making a newspaper amenable to the law other than arbitrary military action?

My hon. Friend will see that the right way depends on the circumstances of each case. The circumstances in this case required prompt and immediate action, and that was evidently the proper action.

Is the suspension of the "Globe" permanent, and will any proceedings be taken against the editor and publisher?

I cannot deal with those question finally now. The question as to when it will be proper to return to the proprietors of the "Globe" those portions of their machinery which were removed is a question which is under consideration.

Can the right hon. Gentleman say whether he and the Government are afraid of Lord Northeliffe?

Contractors' Prices

asked the Prime Minister whether, seeing this House is constantly asked to vote large sums of money without Members having any details whatsoever of the prices paid to contractors and others, he will say what business reasons necessitate such information being withheld from Members of the House of Commons; whether members of corporations and other elected bodies have full particulars of all prices paid to their contractors in order to enable them to check waste and extravagance; and whether, seeing that statutory duty is laid on public authorities to check their accounts, he will, in view of the expenditure in Government Departments, give Members of this House details of how the public money they vote is spent?

It would obviously not be (practicable to inform Members of this House of the details of every contract entered into on behalf of His Majesty's Government. The question whether such details can be given consistently with the national interests in the case of any particular contract is one to be determined by the head of the Department concerned.

Is my right hon. Friend aware that Ministers refuse to give any prices whatsoever for any contracts that they enter into, and that there are many business men in the House who are much better able to form an opinion than Ministers who have never done a day's business in their lives till they became Ministers?

Questions

American Beef Companies (Income Tax)

asked the Chancellor of the Exchequer (1) whether any course has yet been decided upon respecting the exemption of the American beef companies in this country from Income Tax; whether he is aware that for a number of years past the Morris Beef Company at several of their Smithfield shops and the Armour Company at one of their shops have carried on transactions in home-killed meat, and that, in spite of all difficulties respecting foreign agency, profits earned on goods actually bought and sold within these islands are assessable) under the various Finance Acts; whether his surveyors of taxes have ever made any attempt to assess these particular earnings, and, if so, in what year; whether he is aware that, in addition to the above transactions in home-killed meat, the various Chicago companies have for fourteen years been buyers of spot stocks and c.i.f. arrivals of frozen meat and chilled meat in London, and that these goods have almost wholly been resold in England, often with large profits; whether these transactions have ever been analysed by his surveyors of taxes, and, if so, in what year; whether he is aware that, as these transactions are wholly and solely conducted by the English offices of these companies, they are equally assessable to the Income Tax; whether he is aware that the City Corporation compel these companies to declare a certain person as the legal tenant of their market holdings; whether, as most of the above profits are earned in these holdings and as the holdings are valuable, he will, failing any other grip on the companies, make this person responsible for any Income Tax properly payable on the above transactions; and (2) whether the Compania Sansenina de Carnes Congeladas, of Long Lane, Smith-field, the Christchurch Meat Company, of 64, West Smithfield, the W. Angliss Proprietary of the same address, and the firm of Archer and Sulzberger, of Smithfield Market, have, during the last five years, been assessed to Income Tax in this country; and, if not, whether, in view of the economic effect of the special war taxation upon the British competitors of these companies, he will introduce legislation which will in some form equalise the taxation burdens on the two respective classes of companies?

In view of the Clause which I am introducing relative to the taxation of non-residents in respect of profits arising from transactions in this country, I would ask my hon. Friend not to expect me to discuss individual cases of any of the various classes of trade which may prove to be affected. I may, however, say that assessments to Income Tax have been made for each of the past five years on the concerns mentioned in my hon. Friend's second question.

Sugar Beet

asked the Parliamentary Secretary to the Board of Agriculture whether he will communicate to the House the results of the experimental cultivation of sugar beet in Montgomeryshire?

It would hardly be possible within the limits of a reply to a Parliamentary question to afford the hon. Member a full report on the subject to which he refers. I understand, however, that an exhibition of the roots grown in Montgomeryshire was recently held at Newtown with very satisfactory results. The judges stated that the exhibition far surpassed any they had seen after a single year's experiments, and that the roots were far superior to anything they had expected to find.

Foot-and-Mouth Disease

asked the Parliamentary Secretary to the Board of Agriculture if any fresh cases of foot-and-mouth disease have occurred in Somerset; and will he state the number of animals slaughtered and the steps being taken to prevent the further spread of the disease?

Since my reply to the hon. Member for Armagh, on the 3rd instant, eight fresh outbreaks have been confirmed, bringing the total up to thirty-four. The number of animals slaughtered up to and including the 8th instant, is as follows: Nine bulls, 223 cows, 42 calves, 117 other cattle, 13 sheep, 144 pigs, and I goat. The usual steps are being taken to prevent the spread of disease, and I would refer the hon. Member for particulars to the earlier reply to which I have already referred.

Insect Pests (Jamaica)

asked the Secretary for the Colonies whether he could give figures or other information showing the damage done to cattle in Jamaica by the grass louse or cattle tick; whether he is aware that the increasing damage due to these insect pests synchronises with the increased slaughter of birds for the plumage trade; and whether steps are now being taken, by the protection of birds or otherwise, to preserve the Imperial source of food supply found in the grazing districts of Jamaica?

I am not in possession of any figures on the subject, but the attention of the Governor of Jamaica was called to this matter in 1909 as a result of a deputation, received by the then Secretary of State in that year, and the proceedings at the meeting were laid before the House in Cd. Paper 5136. As regards the last part of the question, a law was passed in 1914, as elsewhere in the Empire, for the protection of plumage birds.

National Insurance Act

Domiciliary Visitation (Scotland)

asked the Comptroller of the Household, as representing the National Health Insurance Commissioners, whether his attention has been drawn to a resolution of the recent conference of the Scottish Association of Insurance Committees, moved by Bailie M'Kerrell, of Ayr, and seconded by Lady Carlaw Martin, of Edinburgh, to the effect that a year's expenditure in Scotland upon domiciliary visitation amounting to£36,000 could and should be reduced to under£3,000 if proper steps were taken to avoid what are described as unnecessary drains upon the funds, and to have the remuneration of practitioners made dependent upon actual attendances and treatment; whether the figure quoted, of £36,000, is approximately correct; and whether any estimate is available or is in course of preparation as to the possible economies in the particular direction indicated?

The reply to the first two parts of the question is in the affirmative. The existing arrangements for the remuneration of doctors on the panel in respect of the domiciliary treatment of tuberculous insured persons could not be reviewed apart from a general revision of the terms on which doctors on the panel are remunerated. Any such revision would present serious difficulties at a time when many of these doctors are serving with the Forces, while the remainder are working at exceptional pressure.

Government Grants

asked the Comptroller of the Household, as representing the National Health Insurance Commissioners, the total amounts of Government Grants and payments made up to date under the National Insurance Act since its coming into operation?

As regards the years ending on the 31st March, 1912, 1913, and 1914, I would refer the hon. Member to the figures shown in the Appropriation Accounts. The accounts for the year 1914–15 are now in preparation.

Bristol Chemists' Accounts

asked the Comptroller of the Household, as representing the National Health Insurance Commissioners, whether he is aware that the funds for payments due to the chemists of Bristol have been in the hands of the Bristol committee for about nine months; and will he say at what date the chemists may expect the payments of the emergency settlement due to them for drugs supplied in the year 1914?

I am informed that the final payments in respect of the settlement referred to are now in course of being made. The delay (which is less considerable than the hon. Member suggests) is due to difficulties which have been experienced locally in obtaining agreement as to the figures of certain of the accounts.

Questions

Frozen Meat Sales (Assessors)

asked the President of the Board of Trade whether the assessors employed under Regulation 6 of the rules for the sale of frozen meat are Messrs. Knowles and Wells, or persons employed by the firm of Perfect and Company; and, if not, will he give their names and the method and amount of their remuneration?

The answer to the first part of the question is in the negative. The assessors are unpaid, and I do not think that any good purpose would be served by giving their names.

Workmen's Fares (Scotland)

asked the President of the Board of Trade whether his attention has been drawn to the workmen's fares charged from Coatbridge and Airdrie to Glasgow as compared with other places outside the city; and whether he can make representations to the railway company with a view to these fares being reduced to a level with the others?

I have communicated with the railway companies concerned, and I am sending my hon. Friend copies of their replies.

Wool Blending (Anthrax Poison)

asked the Secretary of State for the Home Department if he has taken any steps to put a stop to the practice of blending unsorted wool in woolcombing establishments, having regard to the facts disclosed at the inquest held over a month ago on the death of Thomas Lawlor, a wool warehouseman, who died of anthrax contracted at the woolcombing establishment of Messrs. John Cure and Company, of Bradford, from which it appears that of sixty-four bales of poisonous blood-stained wool fifty-nine were blended, and that in the remaining five bales which were sorted 80 lbs. of wool clotted with poisonous blood was discovered; and if he has informed himself as to the number of previous fatal cases of anthrax poisoning concerning which the evidence has shown that the infected wool that transmitted the disease was blended directly after it was emptied from the bale?

The Woolcombing Regulations do not contain any provision forbidding the blending of unsorted wool, but the question of imposing this restriction is now under consideration by the Departmental Committee on Anthrax. One of the Regulations forbids the opening of certain wools, including alpaca, except after steeping in water or over an efficient opening screen. A few weeks before the case of anthrax referred to by my hon. Friend occurred, some alpaca had been manipulated by the firm mentioned contrary to this requirement, and proceedings are being taken for this offence. The Secretary of State is advised, however, that the evidence at the inquest did not establish any connection between the contravention of the Regulation and the fatality. There is no record of any fatal case of anthrax due to a similar contravention.

Publications and Debates (Committee)

Ordered, "That Mr. Godfrey Collins, Major Guest, Mr. Ingleby, Captain William Redmond, and Mr. Wheeler be discharged from the Select Committee:

"Ordered, "That Mr. Doris, Mr. Grant, Mr. Butler Lloyd, Mr. Roch, and Mr MacCallum Scott be added to the Committee."

Orders of the Day

Clubs (Temporary Provisions) Bill

Lords Amendments

Motion made, and Question proposed, "That the Lords Amendments be now considered."

Before the House proceeds with the consideration of those Amendments I think I am entitled to ask why they are on the Paper at all? In Committee upon the Bill in this House I raised the very points which are embodied in these three Amendments, and I was assured then by the Home Secretary that my Amendments were perfectly superfluous. If Members of the House raise legitimate points and put them on the Notice Paper in the form of Amendments some days previous to the Bill being taken in Committee, and then are put off by the Treasury Bench in this way, whereas in another place similar Amendments are accepted, I think it is a very serious and unfortunate affair. We are discouraged from doing the work we are trying to do, and which we ought to do, and at the same time the Government give no explanation of its action in the matter. I cannot, of course, oppose the question now before the House, but I think some explanation is required.

( indistinctly heard ): Is it in order to discuss in any way, on the Lords Amendments, the case of licensed premises?

It is whether on these Amendments we can raise any question regarding the fact that they would apply against licensed premises as well as against clubs?

My hon. Friend below the Gangway (Mr. King) has raised a point with which I will deal shortly. Let me say, in the first place, that the hon. Gentleman is mistaken in his recollection; he is mistaken in thinking that the three Amendments on the Paper are Amendments of which he was the original author. On the contrary, two out of the three he never thought of. The middle Amendment is a highly important Amendment changing the word "Commissioners" to "Commissioner." As regards that, also, the hon. Member's memory is in fault. I thought I was wrong, and I told him I would look into the matter. I have looked into it, and I find that he is right, and the change has been made.

I believe this is the last occasion on which this question can come before this House, and I want to know if it would be in order on these Amendments to raise the point that the military authorities have no power to deal with clubs in the same way and to the same extent as the civil authorities?

If it does not refer to any of the Amendments it cannot be discussed. The House can only discuss the Amendments.

Question put, and agreed to.

Lords Amendments considered.

CLAUSE 3.—(Inspection of Clubs.)

Sub-section (4). Where any police officer or person duly authorised by the competent naval or military authority has in pursuance of the powers conferred by this Act entered any premises which are or which he has reason to suspect are being used as a club, and it appears to the officer or person that the premises are being used for the purposes of unlawful gaming, the officer or person may exercise all such powers as are conferred by the provisions of the Gaming Act, 1845, or Section 48 of the Metropolitan Police Act, 1839, on an officer of police who has entered premises in pursuance of an authority or warrant granted thereunder by the Commissioners of Police for the metropolis, or a justice.

Lords Amendments:—

After "1839" ["Metropolitan Police Act, 1839"], insert the words, "or Section thirty-two of the City Police Act, 1839."

Leave out the word "Commissioners" ["Commissioners of Police"], and insert instead thereof the word "Commissioner."

After the word "metropolis" ["Police for the metropolis"], insert the words "or the Commissioner of City Police."

Amendments agreed to.

Finance (No. 3) Bill

Considered in Committee—[Progress, 4th November.]

[Mr. WHITLEY in the Chair.]

CLAUSE 36—(Determination of Profits and Pre-War Standard.)

(1) The profits arising from any trade or business to which this Part of this Act applies shall be separately determined for the purpose of this Part of this Act, but shall be so determined on the same principles as the profits and gains of the trade or business are or would be determined for the purpose of Income Tax, subject to the modifications set out in the First Part of the Fourth Schedule of this Act.

(2) The pre-war standard of profits for the purposes of this Part of this Act shall be taken to be the amount of the profits arising from the trade or business on the average of any two of the three last prewar trade years, to be selected by the taxpayer (in this Part of this Act referred to as the profits standard): Provided that if it is shown to the satisfaction of the Commissioners of Inland Revenue that that amount was less than 6 per cent. on the capital of the trade or business as existing at the end of the last pre-war trade year, the pre-war standard of profits shall be taken to be an amount equal to 6 per cent. on that capital in the case of a trade or business carried on or owned by a company or other body corporate, and 7 per cent. on that capital in the case of any other trade or business (in this Part of this Act referred to as the percentage standard).

The provisions contained in the Second Part of the Fourth Schedule to this Act shall have effect with respect to the computation of the profits of a pre-war trade year, and the provisions contained in the Third Part of the Fourth Schedule shall have effect with respect to the ascertainment of capital for the purposes of this Part of this Act.

"The last pre-war trade year" means the year ending at the end of the last accounting period before the first day of August, nineteen hundred and fourteen, and "the three last pre-war trade years" means the three years ending at the three corresponding times.

(3) Where it appears to the Commissioners of Inland Revenue, on the application of a taxpayer in any particular case, that any provisions of the Fourth Schedule to this Act should be modified in his case, owing to a change in the constitution of a partnership or to the postponement as a consequence of the present War, or renewals or repairs, or to exceptional depreciation or obsolescence of assets due to the present War, those Commissioners shall have power, if they think fit, to allow such modifications of any of the provisions of that schedule as they think necessary in order to meet the particular case.

If the Commissioners refuse, on any such application, to allow any modification, or if the applicant is dissatisfied with any modification allowed, the applicant may require the Commissioners to refer the case to a Board of Referees, to be appointed for the purposes of this Part of this Act by the Treasury, and that Board shall consider any case so referred and have the same powers with respect thereto as the Commissioners have.

The first five Amendments on the Paper deal with matters that have already been settled by decisions of the Committee, arrived at on Thursday.

I have an Amendment on the Paper to insert certain words, which I have handed in.

The hon. Member has handed in a manuscript Amendment in words which were accepted, on the Motion of the Government, at the close of the proceedings last Thursday. The Amendment is already in the Bill.

It was accepted by the Committee, and it has been made, subject to the Regulations of the Treasury.

I think there is a substantial difference between the Amendment which has been accepted and those which have been ruled out of order. The Government Amendment is limited by special regulations to be issued by the Treasury.

If the right hon. Gentleman will cast his mind back to last Thursday he will recollect that we had a long discussion on an Amendment which was moved by the hon. Member for Warwick and Leamington (Mr. Pollock) and that that discussion was allowed to cover the alternative proposals on the Paper. On the conclusion of that discussion, the Amendment of the hon. Member for Warwick and Leamington was negatived, and the Chancellor of the Exchequer moved an Amendment which was accepted by the Committee and added to the Bill, so that we cannot go back on that decision.

Amendment made: In Sub-section (3) leave out the words "if they think fit."— [ Mr. J. M. Henderson. ]

I think that the Amendments following on the Paper have already been disposed of, excepting those which belong rather to the Schedule than to this Clause.

May I ask if my Amendment proposing to add certain words at the end of Sub-section (3) is out of order here?

I beg to move, in Sub-section (3), after the word "of" ["to a Board of Referees"], to insert the word "three." This is really preliminary to other Amendments which I desire to move.

The hon. Member is entitled if this is part, as I thought it was, of a number of Amendments, to argue the whole case together.

The object of my proposal is that the Board of Referees instead of being nominated entirely by the Government should have one nominated by the Treasury, one by the Bankers' Clearing House, and one by the Institute of Chartered Accountants. There is a general desire on the part of the public that the tribunal to be set up should be to some extent independent of the Government. If the members are all nominees of the Government their decisions would not command the respect which they would receive if they were made partly by independent bodies. I do not think it very much matters which the bodies are, but that they should have universal respect. I should be perfectly willing if other bodies than those I have named, but of equal authority, should be given the power of nomination.

I think it would shorten the proceedings if the Chancellor of the Exchequer could give us the names of the three gentlemen he proposes to ap- point to this important office. He has told us already that he intended to give the names.

I quite agreed that the discussion would necessarily be shortened forthwith if I gave the names of the gentlemen we propose to appoint, but I am sure my hon. Friend will appreciate the difficulty in which I am placed. I do not yet know for certain what duties this Committee will call upon the Referees to perform. Until we get through the Committee stage I am uncertain as to the size and formation of the Board of Referees. I had already in mind a number of gentlemen whom I proposed to ask, and every one of whose names, I am sure, would be thoroughly acceptable to this House. But in the course of the Committee discussions it has been proposed to throw upon the Board of Referees considerably more duties than would have belonged to them as the Bill was originally framed. In consequence of that the Board of Referees, will have to be enlarged, and until I know what the final will of the Committee of Parliament is upon the subject I am not in a position to determine the precise size of the Board. I should, therefore, ask the Committee to allow me to postpone until the Report stage the giving to the House of the names of the gentlemen who will be willing to accept office. The Committee will lose nothing by that because the House will still have full control of the Bill, but I shall be in a position after Committee to know precisely what the duties are. As regards the present Amendment to limit the numbers to three,. I cannot venture for a moment to recommend its acceptance to the Committee. I had in mind originally seven, but I know now that certainly not less than fifteen will be necessary. We shall have a great many cases to go before the Board, and I very much doubt whether a single Board will be able to deal with the whole of them. Although they may sit on different panels, we shall, through the operation of a single Board, ensure uniformity of decision. We could not have one class of case treated differently in one part of the country from a similar case heard in another part of the country; it may be very likely that the Board will have to sit in panels and have to discuss together what the decisions should be in order to get uniformity for the whole country. I will undertake that the House shall be fully informed, when we get to the Report stage, of the composition of the Board and the method of procedure which we propose to adopt, and I hope that the Committee will allow us to get this Clause on that undertaking, and leave us in the position of stating the whole of the facts in further Debate.

Although it may not be desirable to limit the Board of Referees to three persons, I cannot help saying that, personally, I am very glad that the Chancellor of the Exchequer has not acceded to the request of the hon. Member for one of the Divisions of Sheffield (Mr. S. Roberts), to state now who it is the Treasury propose to appoint. I am confident that the commercial community of the country look for the satisfactory working of these new taxes to the possibility that the Board of Referees should have ample power to deal with the cases they are called upon to consider. Almost more important than that is that the Board should be appointed in some manner which will allow of full confidence in them far more than in any Board nominated entirely by the Treasury. Therefore I cannot allow this Clause to pass without some Debate upon the question of who is to have the power of nominating these Referees. I have myself an Amendment suggesting one method, namely, that one of the Referees should be a judge of the High Court, and that one should be selected entirely independently of the Treasury by the Chambers of Commerce, and another assessor appointed by the Institute of Chartered Accountants. If it is necessary to have fifteen Referees—and I think very possibly the Chancellor is quite right in that respect, as it would not be desirable to waste the time of fifteen men of experience in considering a single case, since panels of three should be ample to do so and to give a decision which would be authoritative and final—I should like to move that one-third should be judges of the High Court, one-third nominated by the Associated Chambers of Commerce, and one-third selected by the Institute of Chartered Accountants. Whatever method is adopted, I feel satisfied that the appointment of these Referees must not be left entirely in the hands of the Treasury, but they must be in large part men of experience in whom the Associated Chambers of Commerce would have confidence, and they must in large part also be competent chartered accountants capable of dealing with all the intricate Accounts which will have to be submitted to the Referees. Perhaps the hon. Member would withdraw the present Amendment, and you, Sir, then could call on one of the subsequent Amendments raising the general principle as to who is to appoint a Referee.

I think it would be best to dispose of this Amendment now. There are several Amendments on the Paper which deal with the constitution of the Board, and if this Amendment were not proceeded with further it would, I think, be more effective to have the Debate on the other Amendments.

Amendment negatived.

:I beg to move, in Sub-section (3), after the word "Referee" ["Board of Referees"], to insert the words "composed chiefly of persons experienced in trade and business."

In moving this Amendment I am falling in line with the views of the Council of the Associated Chambers of Commerce, who naturally take a very keen interest in the composition of this Board of Referees. There can only be reference to the Board of Referees after the Commissioners have refused to accept an appeal from the taxpayer asking for certain modifications of the provisions of the Fourth Schedule. Amongst the conditions we find the postponement of repairs and renewals. Each case must be a case that will have to be dealt with on its own merits, and no case will prove a precedent for the following cases. If the Board of Referees should be composed of permanent officials—

May I interrupt my hon. Friend? I can assure him that on the Board of Referees will be bankers, chartered accountants, manufacturers, men engaged in commerce—men who will be able to deal with every particular class of trade that comes before the Board. I can assure my hon. Friend that his Amendment is absolutely unnecessary. If we go on to define in this way we shall have interminable discussion.

If the Chancellor of the Exchequer will say that the majority of the Referees shall be men experienced in trade or business I shall have nothing further to say.

There is one matter of anxiety, and it would shorten the discussion if the right hon. Gentleman could give us an assurance in regard to it. If there is to be an official element on the Board or panel, will that official element be in a majority?

As at present advised I have not in mind any official representatives at all. I will not state that as a definite opinion, as I may perhaps require one or two official representatives; but it is no part of the scheme. The Board of Referees should be composed of men experienced in the great varieties of trade and business which will come before them. We want bankers, accountants, manufacturers, men engaged in commerce, and, of course, a certain number of experienced lawyers familiar with every kind of trade, and with inquiries of this kind. The predominant element will be the business element.

I do not think we can discuss this question to advantage until we are given the names of the gentlemen whom the Chancellor of the Exchequer intends to appoint. I understand that he will give us the names before we get to Clause 36 on the Report stage. That, I think, meets everything we desire. I do not see in the Bill whether there is any power to the Chancellor of the Exchequer or the Treasury to dismiss these men after they are once appointed. The right hon. Gentleman sees what I am driving at. He might give the House names which were satisfactory, but he might then take up another position in the Government, and some other Chancellor of the Exchequer might dismiss the men whom he had appointed, and put in other people of whom the House might not approve. I think that is rather an important point. If he would give us some assurance that, except for bad conduct or anything of that kind, there is no power to dismiss, I think we might proceed to the next Clause.

I think the statement of the Chancellor of the Exchequer will greatly shorten the Debate, and if he is prepared to reassure us on a point discovered by an Amendment of mine, I shall support his appeal. What I want is—and there will be plenty of room for it in a panel of the size to which he has referred— that an effort should be made to put on each separate panel a man experienced in the class of business to be dealt with. It is just possible that the Government may not realise how vast the interests are in some one class of business which owing to the great variety of business in the country might be excluded from the head panel in Whitehall. I agree with what the Chancellor of the Exchequer has said about limiting the number of the Board. We could not do at all with three, but the indication which we have had that the Board will be a large body, large enough to include men of experience in the great staple industries of the country, ought to be very reassuring to the Committee.

I quite agree as to the desirability of passing the Clause after the statement of the Chancellor of the Exchequer, but I promised to mention the Amendment of the hon. Member for South Aberdeen. I would be quite satisfied if my right hon. Friend would state that before appointing any banker he would consult the Clearing House Committee, or some body of that kind, and the Institute of Chartered Accountants, or some body of that kind, for nominations. If he promises to go outside, I am prepared not to press that Amendment.

What we should do is, in the first place, to consider amongst ourselves the names of representative men whom we know and consult the Board of Trade. In fact, we have already done so. Then when we had a long list of names, we should in every case consult eminent persons in trade as to whether they thought that a particular person would be the best. That will apply also to bankers and accountants. But I would not ask them to nominate anybody. We must keep the responsibility ourselves. I cannot understand this desire on the part of Members of the House of Commons to get rid of the responsibility. When the Government nominates, the House of Commons retains its control. If persons are nominated by authorities outside, the House of Commons abandons its control. I cannot appreciate the value of getting outside authorities to nominate persons over whom the House still wants to retain a certain Parliamentary control.

I know one firm of chartered accountants who are so constantly and eternally employed by the Board of Trade as practically to become their officials. I will not mention names, but they are practically officials of the Government. If companies are to be controlled or anything is to be done the same people always have the work to do. What the Department would do without them I do not know, as the Government seem to have thrown work to them as if there were not hundreds quite as good, and some better. I want the Government to go a little outside.

I hope after the satisfactory assurance we have had my hon. Friend will not proceed with his Amendment. The assurance of the Chancellor of the Exchequer really covers all the Amendments on this Clause, and I think Members who have Amendments on the Paper might feel satisfied to leave those Amendments until the Report stage.

I cannot see my way to withdraw the Amendment unless the Chancellor of the Exchequer will accept the principle that the majority shall consist of men experienced in trade. We know that the Chancellor of the Exchequer will appoint good men at present, but we have no assurance that those men are going to live, or that they may not be dismissed, or that before the work comes to an end there may not be another Chancellor of the Exchequer. I think the principle should be settled now that the class of people who will form the Board of Referees will not be the same class as the Commissioners, and will not have to make up their minds upon the evidence which has been submitted to the Commissioners?

Can the right hon. Gentleman say anything about the power of dismissal?

The power of dismissal is, I assume, inherent in the power of appointment. But I do not think the Committee need have any anxiety on the subject. I should myself regard it as a breach of faith if, having obtained the Bill on the faith of certain names, we took an early opportunity of dismissing the holders of those names and substituting others.

I am quite content that the other Amendments, one of which stands in my name, should go. I hope, however, that the right hon. Gentleman will not confine himself to the Institute of Chartered Accountants. Should there be any such provision in his mind, the sweep of the operation of this Clause should be sufficiently democratic to take in the Incorporated as well as the Chartered accountants.

I am quite willing to wait until the Report stage for the names of these gentlemen. I also approve of the principle of selection which the right hon. Gentleman has indicated. The right hon. Member for West Islington (Mr. Lough) has not put before the Chancellor of the Exchequer what is really intended by the Amendment which stands in my name as well as in his. Under Clause 38 they will have to deal with classes of trade or business, and what we suggest is that there should be panels of people belonging to each class of trade or business, in order that when the Referees sat, they could call in as an assessor one of the persons from a particular panel, so that the particular applicant might be sure of having on the Board somebody who understood the particular class of trade or business which was being inquired into. If the Chancellor of the Exchequer will consider that point I shall be satisfied.

The proposal just made is one of the most objectionable I have ever heard. There are many trades in which there are only a few men engaged, and it would be very objectionable where there were only four or five rivals for a man to have one of his rivals brought in to sit in judgment upon him. As a business man, I would very much rather go before a Board which did not consist of my own particular rivals. Take a woollen manufacturer. Surely a cotton manufacturer can understand his business sufficiently for this purpose. Many business men object very much to having their rivals sitting in judgment upon them. I am quite content to leave it to the Chancellor of the Exchequer. I have no doubt he will stick to what he has said, and give us practical men. That is what we want. We want practical business men, men who understand the matter. The Chancellor of the Exchequer has promised us that, and I think we may be content.

I entirely dissent from my hon. Friend. I would much rather myself be brought before a coal owner in a case of the kind than before a cotton merchant or a woollen manufacturer. I do not know what the experience of my hon. Friend is in his own trade, but my experience of my trade is that I would be quite willing to allow a brother coal owner to sit in judgment in a case of the kind. I therefore trust that men will be employed who understand the question at issue.

I do not think the Chancellor of the Exchequer has met the outstanding point referred to by the hon. Baronet the Member for the City of London and my hon. Friend the hon. Member for Plymouth—that is, that so long as the Treasury has the power of appointment in this business, the Committee and the country have absolutely no guarantee that during the operation of this tax the composition of this Board of Referees will not be entirely changed. We do not want to impute any mala fides to the right hon. Gentleman. No doubt he intends to appoint a Board which will give general satisfaction, but there is no certainty at all that these men of business and others whom we want to see sitting in judgment on these technical questions will always be able to devote their time to it. They may want to be relieved of their duties. Bit by bit we may find a Board gradually composed of the ordinary official class. Could not the Chancellor of the Exchequer, between now and the Report stage, insert some such words as these:—

"That this Board of Referees shall at all times during the duration of this tax consist of a majority of men experienced in business, and accounting and banking."

Some words of that kind would do. Better still, I would suggest that the Board should consist of at least a two-thirds majority of such people. It is not very difficult to find appropriate words. The Chancellor himself seems to have admitted the principle. Hon. Members who have spoken on this question are all agreed that we want practical men for this purpose, and the Chancellor of the Exchequer agrees that he is going to give us them. Therefore cannot he relieve the very grave doubts felt in leaving this power of appointment and dismissal entirely in the hands of the Treasury, and assure us that, so long as this tax is in force, there shall be a Board of Referees on which the business community will have proper representation? That is what I ask the Chancellor of the Exchequer to do. If he does not do that, which I think is a reasonable thing, I shall certainly press my hon. Friend to divide on this principle as a protest as to whether the appointment and dismissal of these gentlemen should be left entirely in the bands of the Treasury.

I hope my hon. Friends will not proceed to these extremes. What is the situation? I propose to give to the Committee the names of the members of the Board. This Bill lasts only for one year. Is it suggested that I or any other Chancellor of the Exchequer will act fraudulently—because that is the charge? [HON. MEMBERS: "NO!"]

An assurance is given to the Committee that the Board of Referees shall consist of no Treasury representatives, but of independent business men. This Bill must be reimposed in a new Parliament. Do hon. Members really suggest that any of the evils which they outlined are possible? In view of the facts, is it worth while to continue a discussion like the present?

I have listened to this discussion, and I venture to say to the Committee that I do not think I ever knew a Chancellor of the Exchequer say or do more than the right hon. Gentleman has said or done during this Debate to meet the general feeling in all quarters of the House. I do not think that the Amendment ought to be pressed.

I entirely accept the assurance that has been given to us by the Chancellor of the Exchequer, and I hope that this Amendment will not be pressed.

I am quite willing to accept the assurance given by the Chancellor of the Exchequer in regard to this point, and I do not want to cover the whole ground. I do venture to ask, however, whether there is not a very important point in connection with this Board of Referees which has been overlooked? We have always spoken of "a Board of Referees" in the singular. Will it not be far better, in the interests of the Government as well as in the interests of the taxpayer, that the Government should insert words in the Clause, before it comes up on the Report stage, enabling them, if they so desire, to appoint more than one Board of Referees? May I point out the inconvenience it would cause to a taxpayer to come from Scotland—

The hon. Gentleman is now proceeding to argue an Amendment which I called when he was not here. He cannot have it again.

I have an Amendment on the Paper dealing with this subject, but after what I have learnt the Chancellor of the Exchequer has promised, I think I can draw out entirely, thoroughly satisfied with the right hon. Gentleman's assurance.

In view of the promise of the Chancellor of the Exchequer, I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

I understand that that disposes of all these subsequent Amendments which deal with other parts of the same point.

On a point of Order, Mr. Whitley. My subsequent Amendment deals with a different point. There I refer to "one member of each such board to be nominated by the Association of Chambers of Commerce and another by the Institute of Chartered Accountants." That is exactly the point I was trying to get in just now.

The hon. Gentleman is too late. His Amendment would not read. He was not here when I called his first Amendment, and he cannot now move another between that will not read.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

CLAUSE 37.—(Special Provisions us to Pre-War Standard of Profits.)

(1) Where new capital has been employed in the accounting period which was not so employed at the end of the last prewar trade year, a deduction shall be made from the profits of the accounting period at the rate of six per cent. per annum on the capital so employed, for the whole accounting period if the capital has been employed for the whole accounting period, and if the capital has been employed for part only of the accounting period, for that part of the accounting period.

(2) Where capital which was employed at the end of the last pre-war trade year has been withdrawn during the accounting period, an addition shall be made to the profits of the accounting period at the rate of six per cent. per annum on the capital so withdrawn, for the whole accounting period, if the capital has been withdrawn for the whole accounting period, and if the capital has been withdrawn for part only of the accounting period, for that part of the accounting period.

(3) Where any capital employed in a trade or business which was so employed for the first time within three years before the first day of August, nineteen hundred and fourteen, has only commenced to be remunerative or fully remunerative in the accounting period, an amount equal to six per cent., or an amount which would bring the interest earned on the capital up to six per cent., as the case may be, shall be added to the profits standard.

The first Amendment is in the name of the hon. Member for the Exchange Division of Liverpool. As this double Amendment stands on the Paper, it is rather difficult to know whether its parts are to be taken together, or to stand alone.

Then I beg to move, in Subsection (1), to leave out the words, "new capital has been employed in the accounting period, which was not so employed at the end of the last pre-war trade year," and to insert instead thereof the words, "more capital has been employed in the accounting period than the average amount of capital employed during the pre-war trade years selected for arriving at the pre-war standard of profits"; also to leave out the words, "a deduction shall be made from the profits of the accounting period at the rate of 6 per cent. per annum on the capital so employed, for the whole accounting period, if the capital has been employed for the whole accounting period, and if the capital has been employed for part only of the accounting period, for that part of the accounting period," and to insert instead thereof the words, "such deduction shall be made from the profits of the accounting period as, in the opinion of the Commissioners, shall be fairly attributable to the employment of such additional capital." The first Sub-section deals with additional new capital, and the second Sub-section with capital withdrawn.

The second Amendment is put down in rather a wrong form. No doubt the first two stand by themselves, but they should be really moved as one.

If the Committee treat the Amendments in the way you have described, that will express my intention. In my view, this is an Amendment of very considerable practical importance. Perhaps the right hon. Gentleman the Chancellor of the Exchequer would be so kind as to follow me, and to say whether he is in agreement in appreciating what is intended by the Clause. As I understand it, it is intended, roughly speaking, that where new capital is employed during the accounting period, and by reason of that capital the profits of the accounting period are made higher than they would have been if new capital had not been so employed, then the tax is to be met from the profits in the accounting period, because it is not fair to regard those as excess profits within the general meaning of this part of the Clause. They are due to the accident of new capital having been brought in. The scheme of the Clause, therefore, is to take from the profits earned during the taxable period a deduction which is supposed, more or less, to represent the addition to the profits due to the new capital, and not due to the increase of business by reason of, or during the War, which is the basis of the tax under the part of the Bill.

That being the proposal for the addition of capital, in order to appreciate the general scope of the provision it is desirable to limit also, from the point of view of withdrawal, in Sub-section (2). In Subsection (2) there is a comparable provision, that if capital is withdrawn during the accounting period, a deduction should then be made from the profits earned during the pre-war period of the same amount, or a comparable amount, namely, because it would not be fair to the Government to allow that loss of income during the accounting period for which taxation is payable to be attributed to the falling off of business, seeing it is due to this purely extraneous cause of the withdrawal of capital. Sub-section (2) is only necessary in the Bill because of a provision in Clause 34 that in future, in relation to the tax, if any comparison with the standard adopted for the taxing of business falls off, and a loss, so to speak, is incurred by the Government, the suggested standard of the previous year shall be taken.

In order to criticise the Government's proposals it is essential, as I think, to take the two corresponding parts of their scheme together. The criticisms I have to make upon the Clause are these: If you look first at the wording of Clause 37, and take Sub-section (1), you will find that the deduction is to be made at the arbitrary rate of 6 per cent.; whatever the. rate of profits, in fact, made in the business upon the capital so brought in. Take the particular case of a steamship company owning two steamers which have cost £50,000 each. Out of these two steamers the company makes before the War an annual profit of £10,000 per steamer, or £20,000 in all. At the commencement of the War a third steamer is brought in with the same capital of £50,000, and another £10,000 is earned by that steamer. The Clause proposes that in respect of that new steamer only 6 per cent. deduction should be allowed from the profits of that accounting period. That is to say, although the new capital has in fact earned £10,000, the deduction which is allowed in the Clause is only £3,000. My first criticism is that that disparity between the fixed rate taken in the Clause and the actual profits earned is too great in such a case as that. I do not say more than that. Primâ facie the deduction ought to correspond approximately to the facts. Take the converse case of withdrawal, and the Committee will see how it works. Before the War the steamship company owned three steamers, costing £50,000 each, bringing in £10,000 profit. The Government proposal in Sub-section (2) only allows 6 per cent. deduction, and consequently, instead of deducting £10,000 from the profits of the company, only £3,000 is deducted, and upon the difference between the two no excess profits are paid. The Government is in a position under Clause 34 to average up, and from that, so to speak, his loss, to be brought in to the creditor and debtor account of the various successive accounting periods in which the tax conceivably may be paid. Both proposals are illogical. The concession by the Government to the taxpayer in Sub-section (1) would be counterbalanced by the concession by the taxpayer to the Government in Sub-section (2) relating to withdrawals. Therefore the Government cannot say that the proposal to alter the rate of 6 per cent. into a fair rate necessarily makes against them.

The other criticism I have to make on Sub-section (1) is this: Hon. Members will notice it provides as follows:—

"Where new capital has been employed in the accounting period which was not so employed at the end of the last pre-war trade year, a deduction should be made from the profit of the accounting period."

The end of the last pre-war trade year is the end of the year immediately preceding the War. Under Clause 34 the taxpayer has the option of ascertaining his pre-war rate of profit by taking any two out of the preceding three pre-war years. The taxpayer, therefore, may, ex hypothesi, take the first and second of the three years for the purpose of excess pre-war proceeds. The Government put in the proposal, which I think must be accidental—probably the Secretary to the Treasury will agree it was accidental and alter it—that if the additional capital is employed during the third year, even although it has not been taken as one of the years for computing the pre-war trade profits, and even in the last week, or the last day, of that year, so that no single penny of return could have been received by the taxpayer in the way provided during this pre-war trade period, that then the arbitrary hammer is to fall, so to speak, and it is to be said that new capital is to be a source of deduction, and consequently result in the payment of Excess Profits Tax even although the capital in question had never yielded one single penny of profits during the pre-war trade year. I propose, in substance, to ascertain what was the average amount of capital used in the business during the period taken by the taxpayer for the assessment of his pre-war rate of profits, to take that as representing the amount of capital which was the cause of profits, and then to say, where additional capital over and beyond that is employed in the accounting period, a fair deduction shall be made from the profits of the accounting period; and by fair I mean a deduction which fairly represents the additional profits really attributable to the additional capital.

The only objection I can see which could be made to this proposal is one based on expediency rather than justice. As a matter of justice, I think the Amendment speaks for itself. As a matter of expediency, I suspect the Secretary to the Treasury will say two things: first, that to average capital during the pre-war period is to involve a calculation of some complexity. I do not believe the calculation is one of any great complexity, and, perhaps, members of the Committee who have experience as chartered accountants will be able to help the Committee on that point. I do not believe there is any practical difficulty on that point at all. Secondly, the objection will be made that, instead of a rule-of-thumb rate of deduc- tion of 6 per cent., a calculation is to be made in each individual case. I do not for a moment think that the calculation will be in the least difficult for this reason: the return that is to be made by the taxpayer is a return which must necessarily— if it is to be a complete return satisfactory to the authorities to whom it is made— contain all the figures necessary for making the calculation as to what is a fair rate of profit or interest to contribute to the employment of capital, and consequently that calculation cannot, I submit, be in the least a difficult calculation; and, even if some slight difficulty is involved in it, I submit it ought to be put up with rather than have the anomaly of a rate of deduction or addition under the two Sub-clauses which has no relation whatever to the actual rate of profits made. Take an instance which is in favour of the Government. Take the case of a man in an agency business, we will say, where the man has a small capital, but out of that small capital, because of his personal qualifications, he makes a very high rate of profit. In a case like that it is obviously absurd for even one purpose or the other to tie the hand of the taxpayer down to any fixed ratio. You must form a judgment in the individual case as to what is a fair addition or deduction to make, as the case may be. Those are the general observations I have to submit to the Committee on the Amendments which stand in my name on Sub-section (1). I have alternative Amendments, and I am in your hands, Mr. Whitley, as to whether I should point out now the difference between the Amendment now before the House and the other ones and have done with them, or whether I should let them stand over.

There are other hon. Members who have other proposals on the Paper, and I think it would be as well to keep to this first.

I am very much obliged to the hon. and learned Member, and I have done my best to follow the very complicated and technical case, but I can assure him I am not going to take the argument he thought I was going to take, that of a complete refusal to accept his proposals merely on the ground of their complexity. I think they are more complex than the scheme in the Bill, and I do not think his drafting will quite do, because he will see that he does not make an allowance, when he refers to the three years of the pre-war standard of profits, for a firm which prefers to have the percentage rate instead of by calculation of the average rate of three years, so that I would recommend to the Committee, if I understand his proposals aright, to accept those proposals in principle and to allow the Government to draft words which we think will meet the hon. and learned Member's views, and perhaps he will assist us in that performance.

The proposal, as I understand it, is that, instead of looking to the specific sums introduced or withdrawn, an average is struck, and, if the capital is increased in the accounting period, an allowance is made, and, if decreased, an addition is made proportionate to the increase or decrease. I should be very glad to substitute that for the existing provision of the Bill.

I would suggest that the words "in the opinion of the Commissioners" are unnecessary. I think it would be quite sufficient to say, "as shall be fairly attributable," without any qualifying words as to the opinion of the Commissioners.

I understand we are discussing the first Amendment, and it was to that Amendment rather than the subsequent one that I was addressing myself.

If you take these Amendments of the hon. and learned Member together you have the words "such deduction" in the subsequent Amendment, and there has been no mention of such deduction.

If the hon. Member reads it carefully he will see I have put it in the right form.

Before there are any more comments on the wording of my Amendment, I should like to accept the Government's offer. The Secretary to the Treasury has completely appreciated the object of my Amendment, and I shall be very glad to assist him in any way I can in drafting. If I may add, for the convenience of the Committee, the principle is involved in Sub-clause (2) just as much as in Sub-clause (1), and it is also involved in Sub-clause (3), which deals with a case of capital that has been dormant becoming remunerative. In principle, it is the same thing. I am not sure whether the Secretary to the Treasury intended just now to limit his concessions to the first of my Amendments and to exclude the second when they are, in fact, one.

If I can arrive at words which will meet the hon. and learned Member, I do not want to accept the second Amendment, because he seeks in that Amendment to distinguish between the profits which are earned by the employment of fresh capital and the profits arising from some other source. I do not think that is possible. My suggestion is that, having struck his average, and there having been an increase in capital, we should make an allowance for the increase of capital. I think the Amendments had better be treated separately.

I have listened with all my might to what was said by the hon. and learned Member, and a more complex mode of arriving at profits was never submitted to an assembly of business men. The only thing I gathered was a subtle attempt on the part of the Mover to withdraw from taxation a certain proportion of profits. Profits are the subject of this taxation. We do not want all this differentiation. All the profits made, whether by carrying on ordinary business or war business, should go into the common pot now for delivering us from our troubles, and I protest against all these Amendments, and any interpretation the Secretary to the Treasury would put upon them to accept either of them.

I accept the offer which been made by the right hon. Gentleman, and I ask leave to withdraw my first Amendment.

5.0 P.M.

There are two points involved, the first one deals with the capital on the basis of an average instead of the sum at the end of a certain period, while the second is the question of the percentage due to that capital. These are two separate points. I understand that the hon. and learned Member, on the assurance given by the Government, is willing to withdraw that Amendment. The second point is also raised in the Amendment down in the name of the hon. and learned Member for Hexham (Mr. Holt).

Amendment, by leave, withdrawn.

I beg to move, in Subsection (1), to leave out the words "a deduction shall be made from the profits of the accounting period at the rate of 6 per cent. per annum on the capital so employed, for the whole accounting period if the capital has been employed for the whole accounting period, end if the capital has been employed for part only of the accounting period, for that part of the accounting period," and to insert instead thereof the words "such deduction shall be made from the profits of the accounting period as, in the opinion of the Commissioners, shall be fairly attributable to the employment of such additional capital."

In this Amendment I suggest taking what is, as far as you can get it, the true profits attributable to that capital, and get it as near as you can. The Financial Secretary to the Treasury says you cannot get near to it, therefore do not attempt to do it, but take the actual rate of profit earned during the pre-war period and deduct that. The objection is that that pre-supposes a substantial difference in the rate of profit earned before the War and during the War, because it is on the Excess profits during the War that this duty is going to be paid. Therefore, I think that the right hon. Gentleman's proposal is necessarily unjust, and it is not equitable, because it is a pre-war rate, and it is applied during the War period.

I am sure that when we get the draft of the Clause which I have promised, on behalf of the Government, the hon. and learned Member will see that I cannot leave these words as they stand, or anything like them. We want to secure what is the normal expectation for that trade, but we do not want to secure what he can earn during the War. It might be that by employing fresh capital a man might make 150 per cent. during the War, and that is the very thing we want to tax, and under the hon. and learned Member's proposal that would be excluded. I think it would be better to leave this matter until we reach the Report stage, and then we can find a better solution,

I ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Amendment made: In Sub-section (1), leave out the words "rate of 6 per cent.," and insert instead thereof the words "statutory percentage."—[ Mr. Montagu. ]

I beg to move, at the end of Sub-section (1), to add the words,

"Provided that the profits of the accounting period may be charged with any new expenditure of a capital nature for the purpose of the extension and development of the trade or business, where there is a probability that such expenditure will cease to be remunerative at the close of the War."

The object of this proposal is to deal with a case like that of a cycle factory or any other factory which has practically become a munitions factory under existing circumstances. In a case like that it is necessary to expend a great deal of capital upon new plant and probably to scrap a great deal of the old plant. It is not only necessary to replace wear and tear, but also damage and deterioration of plant which results from employing a lot of new hands on work about which they know nothing. I believe an Amendment of this character is necessary. I confess to the Committee that when my hon. and learned Friend was moving his Amendment that I hardly understood my own, and I had a little difficulty in understanding whether mine was covered by his Amendment or not. I now gather that his Amendment does not cover mine, and so I move the addition of these words.

My doubt was whether it was not covered by what we had done last week on Clause 36, but I will hear what the Government has to say.

I was going to suggest to the hon. Member that everything he seeks to do by his proposal is really already done in Clause 36, Sub-section (3). The sound principle that we should adopt in this Clause is to give a reasonable return on the investments, and that is provided for. It takes the profits of each accounting period as it arises in the light of the facts and the immediate prospects, making all allowance for exceptional depreciation for obsolescence. This is a problem which cannot now be tested or assessed in regard to expenditure which will cease to be remunerative at the termination of the War.

I think it is quite clear that there is no difficulty in stating that in certain cases such expenditure will cease to be remunerative at the close of the War. It is self-evident. Take a plant used for making shells. The right hon. Gentleman has perhaps not been over such a factory. There is no probability whatever that that plant will be remunerative at the end of the period of the War. I have not put this Amendment down without having gone over factories of this description and satisfied myself that what I intend will be just, and at least that there is not only a probability but a certainty that the expenditure to which I refer will cease to be remunerative at the end of the War, because the factory will go back to its original purpose and cease to make shells for which it has now laid down this additional capital.

I agree that there is great force in the hon. Member's arguments, but is there not too much being claimed? Take the case which the hon. Member mentioned. The Government's reply is that this is provided for under Sub-section (3) of a previous Clause, but I think the hon. Member is claiming under his Amendment more than he intends to claim. Take the case of a munitions works in connection with which they erected a very large shed. That will have some capital value at the close of the War, and it cannot be remunerative for the purpose for which it was built. That shed might be equipped with lathes and drilling machines, and although it might not be so remunerative after the War as it was before, it certainly would have a capital value, and to charge all that against the profits is going further than the hon. Member intends. What he intends is to charge a reasonable sum to cover the firm against any loss they would sustain at the close of the War upon a transaction of that kind, but the only sum that should be charged is the amount by which the capital would be lessened at the end of the War.

I think that Clauses 36 and 37 cover this case. I cannot conceive that such an instance as the obsolescence of assets can refer to buildings. I do not think that there will be any difficulty in the matter.

I hope my hon. Friend will not press his proposal, because it seems to me impossible to work it. His Amendment seems to be a very speculative question to put to any business at all; in fact, I do not think it would be possible to come to a decision upon it. Although I appreciate the point which the hon. Member is trying to get at by putting in these words, in my opinion you would impose a vast amount of work upon those who had to carry out this proposal without them being able to come to a satisfactory decision. A great deal of the hon. Member's point is covered by Clause 36, and if he requires any further Amendments I think it would be possible to have it made in Part III. or Part IV. of the Schedule which deals with capital. On the ground that this proposal seems to me to be unworkable, I hope the hon. Member will not press it.

If I substituted "practical certainty" for "probability," and accepted the suggestion of the hon. Member for the Radcliffe Division (Mr. Theodore Taylor), would the right hon. Gentleman consider it in that light?

Question, "That those words be there inserted," put, and negatived.

Amendment made: In Sub-section (2), leave out the words "rate of six per cent.," and insert instead thereof the words "statutory percentage."—[ Mr. McKenna. ]

I beg to move, in Subsection (2), at the end, to add the words,

"Provided that such capital has not been withdrawn for the payment of dividend, creation of reserve fund, or any, other purpose beneficial to the business."

The Clause deals with the withdrawal of capital from a business, and provides that where capital has been withdrawn during the accounting period interest on account of that capital shall be added. There are some cases in which that could not be done in accordance with the intention of the Government. Such a case would arise where the capital was withdrawn for the payment of a dividend, say the payment of debenture interest, which can be paid out of capital although no profit has been made, or for the purpose of the creation of a reserve fund. If such capital has not been really and clearly withdrawn, but has been used for the purpose of strengthening the business, then some provision ought to be made to meet the case.

The right hon. Gentleman has three Amendments, and, perhaps, he will allow me to deal with them separately. The first case which he suggests is that where capital is withdrawn for the payment of a dividend. I cannot conceive by any ordinary interpretation of the words that "capital employed in a business" could in any case include capital used for the purpose of paying a dividend.

Yes, but there is an Amendment already proposed to Section 2 of the last Schedule which would deal with that.

Yes; it makes clear that capital does not include money which is held for division or for dividends. Therefore such money, if held for such a purpose, would not be regarded as withdrawal of capital.

That does not cover the case of debenture interest, which must be paid even although there have been no profits, but a great loss. If capital were withdrawn for that purpose, it would be a serious thing that it should have to be added.

Would there be any excess profits if you are reduced to such a state that you have to take your capital to pay your debenture interest?

That answer does not cover it at all. We are dealing with the case where there have been no profits in the pre-war period. If there have been no profits in the pre-war period the Government allow 6 per cent., and a large share of the profit of the first year is taken under the principle of the Bill. The Government then say that if capital has been withdrawn from the business the interest on that capital should be added, the effect of which would be that it would be a further burden on the business. It would increase the amount that might be divided, and I do not think that in such circumstances it would be at all fair. The money might be withdrawn for the purpose of paying debenture interest, and that ought to be considered.

We do not intend to treat as capital money withdrawn for the purpose of paying dividends or money held for the purpose of a reserve. We will examine the matter further and, if we find that my right hon. Friend's point is not met, we will see that it is met; but I am not prepared to go the length of the last words of his Amendment, "or any other purpose beneficial to the business." Those words are so vague that I am not at all sure how far they might carry us. If the other points are not met, I will see that they are met.

I want to be quite clear as to this last intimation from the Front Bench. There is a reference here to the creation of a reserve fund. I have had some difficulty in understanding the Amendment, because if a reserve fund is created insurance companies do not as a rule in any sense withdraw it. It appears in the balance sheet, and it is not done at any part of the accounting period, but at the end of the financial year. The directors are advised as to what they should distribute and what they should put to the reserve. I do not see why these points should be gone into. It seems to me that it would be simple if you took the balance sheet. I do not gather that the Government are going to give way and treat insurance companies' reserve funds in any way other than customary.

If I understand the right hon. Gentleman's point, it is this. At the close of the year the balance sheet includes in the capital income earned during the year. That income may be set aside in part for dividends and in part for the reserve fund. It was never intended to treat any part of that income earned during the year as capital. If it is withdrawn, he does not want it included as so much capital withdrawn from the business. I think the point is clear as the Bill stands, but if it is not, I will see that it is made clear.

Question, "That those words be there inserted," put, and negatived.

I beg to move, in Sub-section (3), to leave out the words "which was so employed for the first time within three years before the first day of August, nineteen hundred and fourteen."

I think probably that, generally speaking, three years will be sufficient, but there are trades and businesses which take longer than three years to develop, as, for instance, the laying out of a colliery. It is very rarely indeed that you can lay out a colliery to begin to be remunerative within three years. I know a good many cases where it has taken at least ten years to develop a large colliery before it has become remunerative. It therefore seems rather unfair when people have been standing out for their money all that period that they should be only entitled to take three years. There does not seem any reason for it. The Amendment, perhaps, is not one which will make much difference to the tax, because only very few cases would come under it; but, still, there will be cases, and they will be cases of great hardship. I therefore hope that the right hon. Gentleman will see his way to make this small concession.

I think my hon. Friend slightly misapprehends the purpose in view in this paragraph. It was never intended to apply it to the case of a colliery company, or the case of a developing business whose special circumstances ought to be met by giving a higher rate of interest than 6 per cent. on the capital. We intended to deal, not with a class of business in which there is always an undeveloped, unremunerative use of capital, as in the case of a colliery or of a rubber business, but with an ordinary trade or business which necessarily in the circumstances does not get a full return in the first year or two. When you come to a class of trade in which there cannot be a return in the early years, I do not think that this would be the proper remedy. We think that the proper remedy is to give a higher rate of interest than 6 per cent. I would therefore suggest that the hon. Gentleman should allow us to leave this Clause applying to the ordinary trade in which, owing to the circumstances of the case, there has not been a remunerative return on capital, and let the special case in which there could not have been any return be dealt with under Clause 40.

It seems to me, if the words are left in, that it would be impossible to take into account any capital expended previous to the three years before the 1st August, 1914.

It is proposed here that interest earned on the capital up to 6 per cent. shall be added to the profits standard. That is something quite different from giving a higher rate of interest than 6 per cent. We are only dealing in this Sub-section with what might be termed the isolated case, where we want to bring the rate of interest for the prewar standard up to 6 per cent. The class of case which my hon. Friend has in view is that where more than 6 per cent. ought to be allowed, and this would not help him.

I know of a colliery company which in a period of seven years spent over £200,000 and never made a penny piece until the end of the seven years. I really think my right hon. Friend, on consideration, will find it is necessary to have these words.

There are two questions ore this Sub-clause, and I think they ought to be kept separate. I am speaking for the convenience of the Committee on this Amendment, because I have one down of a similar character, although it is different in terms. There is a certain provision made here for capital that was so employed for the first time which becomes remunerative within the three years. Will my right hon. Friend tell me why capital is to be better treated if employed for the first time in the three years than if it had been so employed for four years? I will not discuss the question whether the provision made is adequate or not, but it is a provision with the object of treating with some fairness capital employed for the first time in the three years, and which has not proved remunerative. Why, if you do it with capital within the period of three years, should not the concession be extended to capital employed for the first time during four, five, or seven years? Why, if that has not been remunerative, should this provision not apply to it? If my right hon. Friend will deal with that point, and keep it separate from the other point— what ought to be done with it—we would be able to discuss it. My hon. Friend has moved that no matter when the capital was employed, if it only becomes remunerative in the accounting period, there should be the same provision made for it. The Government's answer is that they will make three years a sacred period, and if the period is four, five, or seven years, they will not do anything at all. That does not appear to me to be consonant with the spirit of fairness in which my right hon. Friend is looking at the Amendments. I would ask him to point out what is the difference between three years and four or five years, and why the provision which is made in one case should not apply equally to the long period?

I think the right hon. Gentleman (Mr. Lough) has made out something of a case. As I understand it, the effect will be, if these words are not inserted, that if I employed capital for the first time in 1910, and it was not remunerative, I should not get the advantage of this Clause, whereas if I first employed it in 1911, that being within the three years, I should get the advantage. That does not seem to me to be fair, and I do not think the right hon. Gentleman can mean it. In my opinion no period should be inserted at all. There is no magic in a period. If it is right to give a certain concession to people whose capital has been unremunerative for three years it cannot be right to deny it to people whose capital has been unremunerative for a longer period.

I am sorry I did not make myself clear. I will try to do so now. We are dealing now only with the profit standard—the datum line. For the purpose of the datum line a business man or trader has a right to take any two out of three years. Supposing he says, "I will take the first and third year," but when he looks at the account for the first year he finds he then brought in new capital which has never become properly remunerative. In taking that datum line you must allow him something for the capital which has never become remunerative. It may be that the capital cannot become remunerative in that short period of time. We say the remedy for that is not to add to the profits standard, but to get a new basis of interest determined by the Referees to govern a longer period than three years.

If capital is introduced into the business and has not become remunerative it is not our fault; it is the fault of the business, and we deal with that, I think, quite effectively, both in this Clause and in Clause 38.

I quite understand the explanation of the right hon. Gentleman, but I do not think the words quite carry out his meaning. They seem to bear a different interpretation. I do not know whether there is any lawyer present who can enlighten us on that point.

There is one thing I would like to know. Does the right hon. Gentleman mean that this addition of 6 per cent. will be added to the two years? You base your profit standard on two out of three years. Then you say, "I have so much capital during that time unremunerative." I want to know, can you add 6 per cent. on that capital to the profit standard? Is that what the right hon. Gentleman means?

If you say that during the accounting period this capital had no chance of becoming properly remunerative and only earned 4 per cent., you may add 2 per cent. for the unremunerative capital brought into the business.

Yes. Clause 3 provides that you may add to the profit standard an amount equal to 6 per cent.—or an amount which would bring the interest earned on the capital up to 6 per cent. in cases where the capital has only commenced to be remunerative in the accounting period.

I should like to cite a case to the right hon. Gentleman. It is the case of a business interested in a proprietary article on which £10,000 is spent every year in order to advertise and push it. At the end of the fifth year the debit balance was £36,000, but within ten years the business showed £60,000 clear profit. There might have been great profits in the last year, and it does not seem to be quite fair to base the standard on that.

May I draw attention to the words, "where any capital employed in a trade or business which was so employed for the first time." Those last words seem to me to govern the whole Clause. If you have capital so employed before the three years it will not come under this Clause unless these words are omitted, and capital expenditure before the three years will be excluded entirely.

I quite understand the Chancellor of the Exchequer. Perhaps my hon. Friend will look at the marginal note, "Special provisions as to pre-war standard of profit." That may be read in, although legally it cannot be perhaps. Sub-section (3) is clear, and what the Chancellor of the Exchequer has said is perfectly right.

I think ray right hon. Friend the Chancellor of the Exchequer has met our point, and therefore we need not proceed any further with this Amendment. There is one little point that arises on the three years in connection with the pre-war period. It was three years when the Clause was first drawn, but it has now practically been extended to six years, and therefore some Amendment may be wanted on that point. Subject to that, I suggest we may accept the right hon. Gentleman's answer.

I am afraid you will not be able to deal with this point in Clause 38 if these words remain in.

I think after the explanation of the right hon. Gentleman, and his statement that my point will be met in Clause 38, I may ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendments made: In Sub-section (3), leave out the words "six per cent." ["equal to six per cent.], and insert instead thereof the words "the statutory percentage."

Leave out the words "six per cent." ["capital up to six per cent."], and insert instead thereof the words "the statutory percentage."

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."—[ Mr. McKenna. ]

My right hon. Friend will reconsider the point I raised as to whether the Clause requires amending?

We have been talking about percentages, but we are labouring in the dark as to what "capital" means. The consequence is that our discussion has been very vague indeed. There is to be 6 per cent. on something which is undefined. Before agreeing that the Clause stand part of the Bill I should like to make a reservation and to say that we are anxious to know what "capital" means.

Question put, and agreed to.

CLAUSE 38.—(Reference to the Board of Referees of Questions as to Increase of Percentages.)

Where a primâ facie case is made out to the Commissioners of Inland Revenue:—

(1) For an increase of the percentage standard as respects any class of trade or business; or

(2) For an alteration of the pre-war standard of profits as respects capital employed for the purpose of the manufacture of war materials or for munitions work and which could not be expected to be remunerative or wholly remunerative, except in time of war, in a business which has been wholly or mainly carried on for those purposes;

the Commissioners shall refer the case to a Board of Referees to be appointed for the purpose of this Part of this Act by the Treasury, and that Board shall deal with the case, and may, by order, if they think necessary, substitute a higher percentage standard for a class of trade or business, or alter the pre-war standard of profits, as the case requires.

On any such order being made, this Part of this Act shall have effect as from the date named in the order as if the percentage or standard named in the order was substituted for the percentage or standard fixed by this Act; and where, in pursuance of any such order, the percentage standard is raised as respects any class of trade or business, the percentage on capital under this Part of this Act in respect of new or withdrawn capital, or un-remunerative capital, or in respect of a recently commenced trade or business, shall, as respects any trade or business belonging to that class, be correspondingly increased.

I beg to move to leave out the words "a primâ facie case is made out," and to insert instead thereof the words, "an application is made."

I move this Amendment at the request of the Chamber of Commerce of the City of London, who have gone very carefully through the Clauses of the Bill. They think that the words "where a primâ facie case is made out" are very vague and wide. How can any business man tell that he will be able to make out a primâ facie case to the satisfaction of the Commissioners of Inland Revenue? Very often they are a difficult body with whom to deal. They are very exacting indeed. They do not stand in the position of a Court of Law, but are a very independent authority. Their business is to get as much revenue as they can, to get it by any means possible, and not to allow any question to be raised which might have the effect of diminishing the amount they will receive. I thought it was the intention of this Clause to allow reference to be made to a Board of Referees which is to be set up, therefore we ought not to create a barrier like this in the very first words of the Clause, and we ought to substitute for the words in the Clause the words "where an application is made." If the Committee wish to define the nature of the application, that could be done afterwards; but I think that where an application is made to the Commissioners of Inland Revenue the remedy provided should take effect.

I have an Amendment upon the Paper somewhat to the same effect. I must say that I prefer my own words to those proposed by the right hon. Gentleman, but I am afraid I must discuss my Amendment here.

My Amendment is to leave out the words " primâ facie case is made out," and to insert "taxpayer is dissatisfied with the decision of the Commissioners he may submit his case." The right hon. Gentleman said that it is very difficult to know what is a primâ facie case. That may be so, but in my opinion, and in that of many other people, it will be very difficult indeed to say what a primâ facie case will be under such a complicated Bill as this. It ought to be sufficient, if the taxpayer is dissatisfied with the decision of the Commissioners, that it should be open to him, by whatever class he may be designated, to submit a case for consideration to the Referees, and that he should not be bound down to make out anything in the nature of a primâ facie case, because nobody knows what that may be. It may be entirely what the Commissioners of Inland Revenue choose to construe it to be. I do not think this is a very great concession. I do not believe there will be many people who will try, out of pure wickedness, to get before the Referees. It will not be an easy thing at any time. After a little while, when the Referees have decided some cases, the taxpayers will know that a specific point has already been decided, and that it is useless for them to go before the Referees. I beg to support the Amendment.

Can the right hon. Gentleman tell us whether there will be an appeal from the decision of the Inland Revenue Commissioners as to whether or not there is a primâ facie case? I do not say it is likely that there will be any cases at all, because the Commissioners might say in every case that they do not consider a primâ facie case has been made out. Therefore one of two things must be done: either the words suggested by the right hon. Gentleman the Member for West Islington (Mr. Lough) must be accepted, or an appeal from the decision of the Commissioners must be given. If the desire of the right hon. Gentleman is not to have too many cases that are not genuine, it might be better to have the words put in, and no appeal given from the decision of the Inland Revenue Commissioners. I am glad to see there is an hon. and learned Member present, because we laymen require enlightenment upon a point of law.

This is a very important Amendment. I would ask the Secretary to the Treasury to bear in mind the awful result of these same words in another Act. The Foreign Patents Act, which was brought in by the late Chancellor of the Exchequer, who is now Minister of Munitions, has become entirely a dead letter through the inclusion of the words, "a primâ facie case being made out." The right hon. Gentleman will see in Clause 36, Sub-section (3), that anybody may apply for certain modifications of the Fourth Schedule—that is to say, as so arriving at the pre-war standard, or the computation of profits, or the standard of profits—and without any primâ facie case being made out, the individual has an appeal from the Commissioners to the Board of Referees. When we come to Clause 38, why should you require a primâ facie case to be made out, when application is for an increase in the percentage standard as respects any class of trade or business? The two Clauses deal with the same class of grievances, and they are judged by the same Commissioners of Inland Revenue. In the one case the appeal is given as a right, but in the other it is only given if a primâ facie case is made out. It is always very difficult to make out a primâ facie case. It is very easy to do an injustice by saying that no primâ facie case has been made out. So far as my experience as a lawyer goes, there is nothing in this Clause or in the Bill to give any appeal from the refusal of the Commissioners to say that a primâ facie case is made out. This Clause 38 gives an absolute discretion to the Commissioners of Inland Revenue to reject every case, by saying that no primâ facie case has been made out. It would be possible for them to give a decision before they had heard a case, or before arguments had been put before them. That is most objectionable. The Secretary to the Treasury should give us a good reason why a trader should be treated differently in Clause 36, Sub-section (3), namely, in regard to the computation of profits and the pre-war standard, from the way in which he is treated in this Clause, namely, when he makes application in regard to the increase of the percentage standard in any class of trade or business. The subject matters are to be decided on in the first instance by the Commissioners of Inland Revenue. In the first case the Bill gives an appeal as a right, but in the second case the appeal is only given if a primâ facie case has been made out. That leaves it at the absolute discretion of the Commissioners not to give any appeal at all. The Foreign Patents Act has become a dead letter in consequence of such words as these.

The two Amendments which we seem to be discussing together are widely different in their effects. The right hon. Gentleman opposite (Mr. Lough) wants to put in an Amendment which would allow an application to be made to the Board of Referees, whereas my hon. Friend the Member for West Aberdeen-shire (Mr. J. M. Henderson) says that the taxpayer should only go to the Board of Referees if he is dissatisfied with the decision of the Commissioners of Inland Revenue, thereupon making it necessary for the Commissioners of Inland Revenue to act. That is the difference between the two Amendments. I would most earnestly appeal to the Committee to leave the Bill as it is. I will tell them why. If this Bill is to work with any reasonable number of reputable Referees, it is quite impossible, at the start, to render them liable to be snowed under by all sorts of applications. It is bad for the trader. It is clearly undesirable that the Board of Referees should investigate all the concerns of a whole trade, or of a class of trade, on the possibly perfectly frivolous application of one particular trader, who may not be a very influential member of the trade and who may not be able to produce to the Referees all the evidence that is necessary to enable them to arrive at a decision. I venture to suggest to the Committee that the whole discussion of this temporary tax has gone to show that the desire of those who wish to impose it and of those who have to work it is to work it in a reasonable spirit. We do not need to insist upon a legal definition of a primâ facie case. If there is a grievance in practice and in working, the Commissioners of Inland Revenue, through the Chancellor of the Exchequer, are responsible to this House; and if there is a case of substance which the Commissioners of Inland Revenue have refused to allow to go before the Board of Referees, with the House in constant Session, as it is during the War, I venture to suggest that unless the Commissioners of Inland Revenue can make out a good case the Chancellor of the Exchequer will have a bad time in the House of Commons.

The hon. Gentleman opposite (Mr. Denniss) points to the difference between Clause 36 and Clause 38. I will tell him why there is a difference. In Clause 36 we are dealing with the exceptional case of an individual taxpayer. A man wants to claim a particular allowance from his profit for the obsolescence of machinery, or causes of that kind. Such cases can be dealt with by the Commissioners of Inland Revenue as a Court of First Instance. They will go into the smallest minutiae of the case and give a decision. That is what we do in regard to individuals. Clause 38 is wholly designed to meet, except in the few cases of particular munitions works, classes of trade. In that matter I venture to suggest that the Commissioners of Inland Revenue are not a fit body to investigate the whole case. They might say, "Here is a class of case which requires expert attention, and the Board of Referees is specially constituted for that purpose." To say, as the hon. Member for West Aberdeen-shire suggests, that we should ask a trader to go to the Commissioners in the first instance to have a decision given in his case by this body of permanent officials whose presence upon the Board of Referees is so much deprecated in some quarters, is surely a mistake. Surely the far better machinery is to allow the Commissioners of Inland Revenue to send direct to the Board of Referees these complicated questions of the proper normal percentage to be allowed in a particular case—

Certainly they will send it. They are reasonable people, subject to the control of Parliament. The hon. Baronet the Member for the City of London (Sir F. Banbury) asks me if there is any appeal from their decision. I speak with great hesitancy on a point of law, but I believe there are processes, familiar to lawyers, by which these cases can be brought before a Court of Law. I venture to hope and to believe most confidently that they will never have to be applied, because if there is any stupidity, I will call it, on the part of the Commissioners, or any reluctance to allow cases to go before a Board of Referees designed by Parliament to meet such cases, I venture to think that the House of Commons has sufficient control over the Board of Inland Revenue to see that they act properly.

6.0 P.M.

I have no desire to make even a suggestion which would do otherwise than facilitate the proper operation of this Clause, but speaking with a desire to be helpful, I really think that this Clause as it stands will not work. A primâ facie case is always a very hard thing to ascertain. What happens is that you have a judge and jury as a rule, and it sometimes happens that at the end of a case stated by the plantiff no primâ facie case has been established, which means there is nothing to answer, and the judge consequently withdraws it from the jury. But the people here, who are to decide whether or not there is a case of importance, are the people themselves whose decision it is desired to review. Surely that is a wrong principle. No one desires that there should be any undue number of these cases sent to the Board of Referees, but the right hon. Gentleman must not forget that these complainants only desire to go when they are complaining of the decision that has already been given.

No, I do not think that is the case. The Inland Revenue has no power whatever to fix the percentage standard that affects any class. It is fixed in the Statute. So it is not an appeal from their decision. There is no appeal.

Then is the suggestion that the application is to be made to the Commissioners of Inland Revenue by the applicant stating his case, and that they are to decide whether or no he is to go before the Board of Referees?

Then I think they are not a proper tribunal. They are interested themselves and cannot be expected to take a totally independent view. Surely an application of this kind might be made to a judge of the High Court or a County Court judge, or some Government official who is not directly interested in getting as much out of the Treasury as he can. It is putting an undue strain upon the impartiality of these people that they should be asked to determine a question in which they are so vitally interested in their official capacity. I do not think it is wise to entrust them with a discretion of that kind. As to what the hon. Baronet (Sir F. Banbury) says, it is quite true that there is no appeal provided in this Act. There might be some cumbersome machinery of certiorari or mandamus, or something of that kind, by which you might apply to the High Court to force them to send a case to the Board of Referees. But that surely is not desirable. No one wants that to be done. What you want is to get a simple and quick decision on the point, and not put anyone to the expense of going to the High Court with all the expensive and long delaying machinery of certiorari. Let someone be appointed under the Act to give a really impartial decision, and then I think the Clause will be an admirable one.

I think the appeal is a good one, that we must protect certain classes of business against the issue being decided by anyone, even an insignificant or hare-brained individual but I should rather think that what we have to fear is that the Inland Revenue people will let too many people go to the Board of Referees rather than too few. What is easier for them, in order to avoid conflict, storm, pressure, deputations to the Chancellor of the Exchequer, questions in the House, than to say, "Go along to the Board of Referees"? Human nature being what it is, if we have to find fault with it at all it will be that they will send too many cases. Take our case of marine insurance. We are to be a sub-class. If these Amendments are carried the thing will be much less satisfactory to us. As far as I can see the working of the Clause now, they would ask the underwriters at Lloyd's and the marine companies to confer together and state a case, and the leading underwriters of both the companies and Lloyd's would have a very carefully prepared statement gone into and would accept the decision. But if any individual underwriter or company, however small, can forestall us and claim a right to set the machinery in motion, not stating the case properly but prejudging it, I see nothing but infinite mischief. Of course it all depends on the spirit in which it is worked. I quite agree that if we think the Inland Revenue is going to work it in a spirit which will meet with general contempt almost as well as dissatisfaction, we had better not have the Clause at all, but if we are to be protected against an eccentric and perhaps very persistent individual rushing away and only half stating our case, the only way I see is to pass this Clause, whereby the recognised trades or sub-trades can prepare a properly defined and concise statement and have it settled with all the facts before them. I can see my hon. Friends are trying to guard against a danger and my sympathy is with them, but I am pointing out that they are, I think, introducing far graver dangers which will undoubtedly come into practical operation, therefore I heartily support the Government.

( indistinctly heard ): I am sure the general feeling of the Committee is that they are at the mercy of the Inland Revenue officials and they will give their decision and it will practically amount to there being no appeal against it. Perhaps some insignificant trader in a remote district during war time —he may be at the Front—may find it difficult to get his case brought before Parliament and have it gone into. With regard to what my right hon. Friend said as to the Board of Referees being snowed under, in the first place I do not for a moment believe that so many cases will be brought forward. Business men do not want to go through a long investigation. If there was such a chance, it seems to me that the remedy is to increase the number on the Board of Referees. There is no reason why the panel should not be much greater than fifteen. I hope my right hon. Friend will give a more sympathetic hearing to this appeal and that these words will be left out. Even if you have the words of the hon. Member (Mr. J. M. Henderson) in, it seems to me that if they have to go before the Commissioners before they can go to the Board of Referees that will occupy a certain amount of time and they will not want to take the trouble and the time of going before both these tribunals before the matter can be settled. I trust my right hon. Friend will accept the Amendment.

I think the Secretary to the Treasury will feel that the Committee trusts that he will meet this matter in some way or other. I should like to make a suggestion. The right hon. Gentleman used an expression which seemed to me to meet the difficulties much better than the words " primâ facie case." He used the words "where a case of substance is made out." I think that would be a better expression. The other objection which was raised is that it is felt that the Commissioners of Inland Revenue would not be the right party to appeal to. Could he not see his way to meet the Committee and put there, instead of the Commissioners of Inland Revenue, "an authority to be set up"? I think it would be an easy thing for him to set up some authority before which those of us who are taxpayers would be satisfied that we should be allowed to state our case with a right to go through to this Court of Appeal. The Committee feels the difficulty that, as the Clause is worded, we shall not have a right as taxpayers to get through to have our case heard by the tribunal that has been set up. If the right hon. Gentleman could see his way to simplify that, it would meet the difficulty.

I do not go so far as my hon. Friend (Mr. Denniss), and I think the Committee is a little unreasonable in what they are asking the Government. I think the Committee is asking for a great deal more than they have enjoyed under the Income Tax Acts for the last thirty-five years. It is all very well to talk about appeals and to say that you are afraid of the method by which this tax would be imposed, but let us see what the position is under the Income Tax Acts at present. Of course you might go before the Commissioners and you can plead your case and have the Surveyor of Taxes appear against you. Supposing you are dissatisfied, what right have you? You have only the right which is given you under the Taxes Management Act, 1830, whereby you can appeal upon what is called a case stated to the High Court. The facts are then stated by the Commissioners, and upon the statement of the case so made you can raise what points you like when the matter comes before the High Court. At present you have an appeal really, in effect, upon a point of law. When you ask for a much wider right of appeal than you have, is it not fair to remember that for certainly the last thirty-five years there has been a very limited power of appeal, and on the whole it has not worked very badly? What is asked here is that in every case—because that is what the effect of the Amendment is—whether there is a primâ facie case or not, a person who is dissatisfied on any ground, because he dislikes the tax or something else, is to have a right of appeal. I understand the demand that is being made is to have that particular right. The same right of appeal is given, if I read Clause 40, Sub-section (4), aright: "Any person who is dissatisfied with the amount of any assessment made upon him by the Commissioners of Inland Revenue may appeal to the General Commissioners' and those Commissioners shall have power on any appeal to summon witnesses, and Section 59 of the Taxes Management Act shall apply with the necessary modifications in the case of any appeal." So you are given specially by this Bill precisely the same powers and Tights of appeal that you have under the Income Tax Acts.

At any rate, we can make it abundantly plain when we come to Clause 40. What you are asking for here is, as I understand the Amendment, a far wider right of appeal and giving the right of appeal to any person at all, whether he has got a primâ facie case or not, who desires that he should have the unlimited right of appeal which is given in ordinary civil actions. I do not believe that is a workable suggestion, and on these grounds, inasmuch as I desire very much to see this tax brought into operation, and believe on the whole it will work all right, I think my hon. Friends are going too far, and I hope they will not press the Amendment or ask the Financial Secretary to go to the length which they ask in their speeches, even if they do not ask it in the Amendment.

I confess that I do not appreciate the objections of the Financial Secretary to the Treasury to meeting this point. As he himself has pointed out, in the cases which come under this Section for the fixing of the new percentage, the Commissioners of Inland Revenue themselves have no power to fix it; that can only be fixed by the Board of Referees which is appointed. I think that is a point which has great force, and with which the right hon. Gentleman did not deal. In cases where a company or undertaking has not been remunerative for a period of years, the Commissioners cannot fix this new percentage; it must be fixed by the Board of Referees. So that in practice every such case, if it is to have a percentage fixed at all, must go to the Board of Referees and not to the Inland Revenue Commissioners. Therefore, the right hon. Gentleman's point about the Board of Referees being snowed under does not apply. What would be the best workable way for this Section? Let all persons who have a case, and who want this extra percentage fixed, go automatically before the Board of Referees. If the machinery of the Section applies as it now stands, they have to state their case before the Inland Revenue Commissioners, and the case will have to be gone into to some extent. While the Commissioners have the power to carry on the investigation they have not the power to fix the percentage, but they have to pass it on to the Board of Referees. In effect there would be two processes of investigation instead of one. I agree with what one hon. Member said, that the number of cases would not be very great which would come under this Section. Under those circumstances, why not let the case go at once automatically to the Board of Referees, and thus avoid that process of double investigation which the right hon. Gentleman pointed out with some force?

I am a convinced supporter of the principle of the extra profits tax, and I am also desirous that it should be worked in as fair a manner as possible, and from that point of view I support the Amendment of the right hon. Member for Islington. The essential thing in order to get the extra profits tax rightly assessed is to get the pre-war standard of profits properly fixed. Unless you get that, you are certain to do injustice. In order to get that pre-war standard of profits fixed this Clause is designed to give, in certain cases, an appeal to the Board of Referees. I think, however, that that appeal is unduly hampered. As the Clause stands, no one can get the benefit of the Clause and go to the Board of Referees, unless he satisfies, in the first instance, the Board of Inland Revenue, who, after all, are, as the hon. Member for Bassettlaw (Mr. Hume-Williams) says, not quite an impartial body in this matter. Of course, their duties are to get as much as possible out of this tax and out of the subject generally. If you are to bring a primâ facie case before any body I would select some other body rather than the persons most interested in deciding against you. I think the reasonable course is, if a man thinks that his prewar standard profits ought to be varied under the provisions of this Bill he ought to be allowed to go straight to the Board of Referees. Let me examine the reasons which the right hon. Gentleman gave in opposing this Amendment. He said, in the first instance, that there would be so many applications that the Board of Referees would be snowed under. Would not that equally apply to the Board of Inland Revenue? If there are to be the large numbers of applications made which the right hon. Gentleman presumes are going to be frivolous, then they would have to be made, according to his proposal, in the first instance, to the Commissioners of Inland Revenue, and they would be snowed under.

I do not know whether the right hon. Gentleman and his supporter (Mr. Booth) proposes that the Board of Inland Revenue should be snowed under rather than the Board of Referees. For my own part, I do not think that either of them would have to submit to that, and I have come to that opinion for good reasons. In the first place, I do not suppose anyone would make an application under this Clause unless he thought he had a fairly good case. The expense would be considerable. He would have to bring witnesses and collect evidence before his application had a chance of success. Therefore, the mere fact that he would be involved in considerable expense would be a deterrent against his making a frivolous application. May I suggest another protection against frivolous applications, if any such protection is needed? Would it not be possible to provide that before he applies under this Clause to the Board of Referees the applicant should be called upon to lodge a certain sum of money, say £25 or £50, or whatever sum might be considered right, and if the Board of Referees come to the conclusion that the application is frivolous then let that sum of money be forfeited. I think that would be adequate protection against frivolous applications. Another objection which the right hon. Gentleman put forward calls for notice. He said, the Inland Revenue will generally decide right, but if they do not you can apply to the House of Commons. At the present time the House of Commons is used for a good many purposes which I think it ought not to be used for, and if we are to bring forward legal cases of this sort as to what ought to be the proper percentage standard, or the proper prewar standard of profits, in individual cases, and support them by legal argument for the purpose of satisfying the House of Commons that the Board of Inland Revenue is wrong, I think we shall have gone a very long way to destroy the efficiency of the House of Commons. It seems to me that an appeal to the House of Commons in matters of that sort is quite out of the question.

The other reason which the right hon. Gentleman used for opposing the Amendment was, that if the Commissioners of Inland Revenue said a primâ facie case was not made out it might be possible to apply to the Law Courts. It seems to me under this Clause that it is extremely doubtful and more than doubtful whether any such right is conferred. What would happen if the Clause as it now stands goes into the Act of Parliament? The Act of Parliament would then say that the Commissioners of Inland Revenue are to be satisfied that a primâ facie case for appeal has been made out. They are given a discretion in this matter and the Court of Law would say, and very properly say, "How are we going to say that the Board of Inland Revenue have wrongly exercised the discretion which is expressly given to them by Act of Parliament?" I imagine that the Court of Law would dismiss the case on those grounds. What a prospect of litigation opens out, assuming that the right hon. Gentleman is right. The unfortunate subject who is about to be taxed has to go, first of all, before the Board of Inland Revenue, with his retinue of witnesses, and with all his documents. He may try to establish a primâ facie case there, the Board of Inland Revenue may say, "You are quite wrong; there is no such case." Then, armed with his documents, his evidence, and everything else, including counsel, he would have to go, at enormous expense, to the Law Courts and ask them to say the Board of Inland Revenue was wrong in refusing to grant him this right of appeal. In order to avoid all this very unnecessary expense, and in order to avoid this unnecessarily roundabout way of doing the thing, it would be much simpler to allow a man, if he thinks he has a grievance under this particular tax, to go and state his case before the Board of Referees and to make out his case before them.

I do not wish the Committee to be under a misapprehension as to the effect of the application to the Inland Revenue Commissioners. The hon. Member for York (Mr. Butcher) has spoken of the right of appeal. I do not read this Section as giving the right of appeal to the individual. It does not give that right to the individual. The individual may apply, but it has got to be "as respects any class or trade or business." There is no appeal for the individual in the way that the hon. Member suggests. It is a misapprehension. You must appeal for a class of trade or business, and Sub-section (2) defines that class of trade or business. It is a very limited class of business. I think the Committee are labouring under a misapprehension if they think that this Clause is going to give a very widespread protection. It is not.

There is an Amendment later on which stands in the name of the Chancellor of the Exchequer which widens this Clause a good deal. After the provision in Sub-section (1), which provides

"For an increase of the percentage standard as respects any class of trade or business,"

the Chancellor of the Exchequer proposes to insert the words,

"or for a calculation of the percentage standard by reference to some factor other than the capital of the trade or business or some additional factor in the case of any class of trade or business in which the amount of capital actually employed in the trade or business is, owing to the nature of the trade or business, small compared with the capital necessarily at stake for that trade or business."

That widens this Clause a good deal.

I do not think that the hon. and learned Member for Warwick (Mr. Pollock) has improved what he said in his previous speech. The Amendment is to provide for a special trade or business, for an influential trade or business. The point made by my hon. Friend (Mr. S. Roberts) is that this Clause 38 is intended for trades or businesses.

The right hon. Gentleman accepts that. Yet, in his previous speech, he said that the Board of Referees might be "snowed under" by frivolous applications of individuals.

How can an individual Member of a trade or business act under this Clause unless he has the support of that whole trade or business? Surely the Commissioners would say, "You do not represent the trade or business; we have had that trade before us. Application has been made to us by the recognised organ of that trade, and we are going to accept the application from them." That would be the answer they would make to any frivolous busybody such as the hon. Member for Pontefract (Mr. Booth) suggests would be active.

That is what I do not want to do. I want to improve the Clause. The hon. Member (Mr. Booth) says that we must guard against the frivolous busybody coming forward and stating cases which the whole trade would not accept. If the hon. Member can devise any way to put a stop to busybodies I will support him. I do not want to encourage busybodies any more than he does. I only wish to deal with this matter of appeal satisfactorily. This Clause 38 has been pointed out to us again and again as the Clause which will deal with difficulties. Yet, when we come to this Clause, it seems that the door is shut against us. If it is not to be shut against us I would suggest that the right hon. Gentleman should accept the Amendment, which has been supported from every part of the House. The discussion has shown that there is some necessity for ensuring that free access shall be given to the tribunal in all proper cases. That is all that the Amendment asks for. If the Amendment is drawn in too broad a spirit —of course we are laymen, and may not have drawn it up in the exact form—and if the right hon. Gentleman will accept an Amendment that the application must be supported by the trade generally, or that there must be a certain definite amount of support from the trade, I will accept it in that way. I think the right hon. Gentleman might accept the Amendment in the broad sense in which it is down upon the Paper, because I do not think it would open the door to all the frivolous cases which he suggests. It would only result in important matters which are brought forward by certain trades being dealt with. I do make another appeal to the right hon. Gentleman. I think we might get on a little quicker if, within the limits of safety, he would be a little more conciliatory.

I do not think the Committee have a right to complain that we have not tried to meet them upon every point. On this particular point if the right hon. Gentleman (Mr. Lough) will accept the suggestion made by the hon. Member for Birkenhead (Mr. Bigland) who suggested other words for " primâ facie case," because these words convey unpleasant reminiscences of former Acts of Parliament, I will try to draft some words which the Committee would like better. I want most earnestly to appeal to the Committee to keep the machinery whereby it is provided that all cases of substance should come before the Board of Inland Revenue before they go to the Board of Referees.

The hon. and learned Member for York (Mr. Butcher) saw the weakness of cases being made out when he admitted that if you abandon this safeguard in the Clause it may be necessary to provide that there shall be penalties for any frivolous appeal to the Board of Referees. That would be another way, but I am anxious to avoid doing anything that would operate in many cases to bar access and put a premium upon sections of a trade with a large capital. After all it must happen by force of circumstances over which we have no control that another Finance Bill must be introduced before the 5th of May next. By that time it will be found that the Inland Revenue has not barred proper applications, or if there are any such cases then there will be plenty of time to amend this Bill. I should be glad to consider the words primâ facie, but except for that, though I wish I could see my way to meet my right hon. Friend, who is always so persuasive, I cannot do so.

I do not know whether the Secretary to the Treasury is really justified in thinking that the Court of Referees is likely to be snowed under by a great number of applications. I think that the considerations alleged by the hon. Member for York and others show that that is improbable. There is, first of all, the expense, and there is secondly, the fact that no one wants to waste time in raising frivolous objections. The principles on which the Board of Referees will decide will very soon become known, and I do not believe myself that, after a very few weeks, you are likely to have a very large number of applications. Trades will settle themselves down under particular sets of decisions, and I am convinced that there is not very much danger. I do not believe that fifteen Referees will be necessary. I believe that the thing will settle itself down quickly, and that before very long you will find very few applications, and that of these few applications you will find very few which are frivolous.

I gather from the right hon. Gentleman that what he proposes to do is to consider between now and the Report stage whether he could find any other words instead of primâ facie which would put some limit on the number of applications made but which would still leave to the Inland Revenue Commissioners the right of saying whether or not the case should go forward. But that is what we all object to. We say that the Inland Revenue Commissioners are interested parties, and that you ought not to be compelled to go before any person who is interested in giving a decision. The hon. Member for Pontefract (Mr. Booth) says: "Take the case of the insurance companies. They have committed, and so on." No doubt that is quite true, but he is dealing with large and powerful interests. What I am thinking of is the small manufacturer and the small trader, who has not got a Committee, or has only a small Committee, which has no particular influence, and will be entirely in the hands of the Inland Revenue Commission. But the hon. Gentleman says that such persons can get a question asked in this House. We all know what is the effect of asking a question in the House of Commons. Unless you can get the Press to take it up, and unless it is a question in which the public are greatly interested, you might just as well not ask the question. You merely get the official answer, and the whole thing is forgotten.

I quite recognise that both the right hon. Gentleman and the Chancellor of the Exchequer have done their beet to meet criticism, but I am afraid that in this case they have not done so, and I cannot understand why, because it is a very simple case. I would reverse the argument put just now by the right hon. Gentleman. There must be a new Finance Bill before the 5th of May. If this Amendment did not work well, then additions could be made before then. I would therefore say, accept our words, and, if we find before the 5th of May that there is an enormous number of foolish applications, then it is open to the right hon. Gentleman to come here and in his new Finance Bill show that we have been wrong and apply a remedy. This is a very serious question. You are putting an enormous tax on people. It is a new tax. Nobody quite knows how it is going to work, and if there is a little concession to the man who is going to pay the tax, I think that the right hon. Gentleman might make it. I am no longer in business, and I am not interested one way or another, and it is only because I think that it is fair that I support this Amendment.

I would ask the hon. Baronet to make a suggestion as to how we should get over one particular difficulty. Suppose that he was concerned for the bankers of London and that they wished to apply to the Board of Referees for an alteration, and suppose that, before the bankers as a whole had applied, some small concern had taken their appeal to the Board of Referees in reference to the banking trade in London, and got an adverse decision on their application, then the hon. Baronet comes along with his application when no decision can be given about it, and he says to the Board of Referees, "We have marshalled our case; we have got all our facts; and now we want you to give a different percentage rate," and the Board of Referees answer, "We have already made our decision, which applies to banks." That is one of the class of things which we want to prevent. We want to see that the case is fairly stated. The Inland Revenue have made plans already to get cases fairly stated, and that is why I would far rather meet this matter, if it is required, in the next Budget, than get a decision before the next Budget on a bad basis which it is impossible to reverse.

I agree with much of what my right hon. Friend says, but at the same time I would point out that it is not the banker and not the insurance company who is going to suffer. It is the small man, who will have to pay say, from £200 to £500. He is the person who will suffer. In reference to the general question of appeals with regard to Income Tax, I have been before the Commissioners many times, and what do we find? They will look up various decisions, and then, when you ask them to state a case, and they state their case, the case is so crammed with decided cases that you feel that you have no chance, and you drop the matter. But this is a very serious tax. We are now legislating ad hoc for this tax, and we ought to make it as clear as we can. Surely if we are going to take 50 per cent. of a man's extra profits, which is a different thing from taking 2s. 6d. in the £, you ought to see that no man is shut out from appealing from what he believes to be a wrongful decision. Of course, I quite agree with my right hon. Friend that the tribunal should not be snowed under, but I do not like to have it established that the individual who is suffering should be liable to be turned down unless he has the support of the whole of his trade. I cannot conceive that it is in the spirit of justice to say to a man, "Go home; bring in your chamber of commerce, or your society; let it state the case and we will hear it." I do not think that that ought to be part of this Bill. A man who believes himself to be unjustly dealt with should have the opportunity of appealing.

Look at what it is. The thing is limited. It is only for those who are engaged on certain work. That limits the class. After all we have only got some 1,500 controlled establishments, and I cannot conceive that principles will not be laid down for the general working of this. Therefore the cases of appeals must be limited. It is not like as if you had 300,000 or 400,000 in a particular trade. My right hon. Friend also said that the Inland Revenue Commissioners could not decide these cases, and that it is not their province. If it is not their province to decide these cases, how is it their province to decide what are primâ facie cases? They are not going to be asked to go into the case at all, but to refer it to the Referees. Surely the Referees should say what is a primâ facie case. I do not believe that there will be this great number of people appealing against the decision. The Section is limited to certain trades. They are not so very numerous. I think that there will not be found to be more than 1,400 or 1,500 businesses. The most of these businesses are controlled, and your period of account is limited and—

Yes, but most of them would be in that particular line. In any case the Munitions Act has taken a great number of them up to the present time. After the date of control the Minister of Munitions claims 80 per cent. of the profit, and your 50 per cent. stops. Controlled firms only come up to the period of control. The accounting period cannot go beyond that. After the date of control the Minister of Munitions deals with the percentage. I am quite willing to leave it to my right hon. Friend to see if, before the Report stage, he can frame some words which would give a little confidence to this Committee, and confidence to people outside, that such cases as I have in mind will not be turned down by the Inland Revenue Commissioners when their case is put forward.

I have a suggestion to make to my right hon. Friend which would, perhaps, get rid of the point. I should be glad to withdraw my Amendment and move an Amendment like this: Leave out the words " primâ facie, " and insert instead thereof some such words as "where a case supported by a trade or sub-trade is laid before the Commissioners of Inland Revenue." That seems to me to meet the case which the right hon. Gentleman has put forward. It would show that there was some support apart from the mere wish of a cantankerous individual who wanted to insist on taking advantage of the Clause and going before the Referees and getting a decision on the trade. These words are not terms of art which ought to be put into the Bill immediately, but if it would help the Committee I would withdraw the Amendment and move some such Amendment as this without asking the Committee absolutely to accept the words. On the understanding that the right hon. Gentleman will consider these words before the Report stage, and leave out primâ facie and bring forward something in this direction, I should be willing to adopt this course.

I do not think it really much matters what words are presented for consideration, the question is whether the Government will accept the spirit of the proposal submitted by the right hon. Gentleman. As regards the precise words, that, of course, must be left to the Government to consider. The right hon. Gentleman told us that there pos- sibly might be a case in which a certain class of traders submitted inadequate facts to the Commissioners, and the Commissioners would form an opinion on those inadequate facts. Subsequently they might be approached by some responsible body representing the same trade, having greater knowledge and more adequate facts on which to found their case, and he told us that the Commissioners would then say, in spite of these better facts, that they were powerless to rule, because they had already passed their opinion on the inadequate facts which had previously been laid before them. If that is the position, and if they are so stupid as to refuse on a fuller disclosure of facts to change their opinion already given on inadequate facts, I think that would be a great defect, and I submit that some form of words should be adopted by which traders, and particularly the smaller traders, may be protected.

As a strong advocate of the Excess Profits Tax, I hope the Government will so alter Clause 38 that each individual taxpayer, should he be dissatisfied with the decision of the Commissioners, should have a right to appeal to an independent tribunal, such as the Board of Referees. But according to the Clause as it now stands, and in view of the explanation given by the Financial Secretary to the Treasury, it would appear that the scope of Clause 38 is much narrower than we were led to expect by previous references to it. If it is limited to an application from one class of trade or business only, the persons who make the application will have to get the backing of the class of trade or business, or a large sub-section of it, before they could make any appeal whatsoever. I really do not think that the Chancellor of the Exchequer wishes to do an injustice to any individual taxpayer, and I would urge him to reconsider Clause 38 with a view to giving each individual taxpayer a right of appeal to an independent tribunal, in order that there may be no feeling whatever left that he is not being fairly treated in regard to his class of trade or business. I believe that were this given, so far from leading to a multiplication of frivolous applications, it would tend to diminish the number of applications. By all means, if it is desired, let the applicant deposit even £100 into Court in respect of the application, in order to safeguard the Board of Referees from a multiplication of frivolous applications.

The Committee will notice on what dangerous ground the Government is likely to tread if it accepted this Amendment. First of all, there is the suggestion that anybody may go to the Board of Referees, without making out a primâ facie case, to have his class of trade or business or sub-class of trade or business considered. If that Amendment were put in the Bill my hon. Friend who has just spoken would have it extended to every individual of a class of trade or business. So far as I can understand the case it is that the Clause as it now stands does not give sufficient opportunity for proper cases to be allowed to come before the Board of Referees, and that the words, "where a primâ facie case is made out," do not give a sufficient guarantee. If the Committee are in agreement with me that there should be some safeguard for the prevention of immature or improper cases being brought before the Board of Referees, I shall endeavour to find a form of words that may prove more in harmony with the views of the Committee, and we shall be in a better position after what hon. Members have said to find a form of words.

I am very pleased that the Secretary to the Treasury is going to consider a form of words to be adopted. May I suggest to him that, instead of having the words "prim facie case," he should say that unless the Commissioners are of opinion that the case is frivolous or Vexatious, or for some other good reason it ought not to go before the Board of Referees, then all cases could go before the Board of Referees. In that case the Commissioners would have the discretion to say when cases were frivolous or vexatious. It is merely turning the provision round.

I quite appreciate the point of the hon. and learned Member, that the Clause is turned round so that the matter may go before the Board of Referees. What we want is liberty, but we do not want vexation.

After the discussion which has taken place, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move, in paragraph (1), after the word "business" ["trade or business;"], to insert the words, "or for a calculation of the percentage standard by reference to some factor other than the capital of the trade or business or some additional factor in the case of any class of trade or business in which the amount of capital actually employed in the trade or business is, owing to the nature of the trade or business, small compared with the capital necessarily at stake for that trade or business."

When this question was discussed in Committee before, marine insurance was alluded to, and the Chancellor of the Exchequer said that the case of those engaged in marine insurance was certainly one in which there should be given some relief. This Amendment, which we have not had an opportunity of seeing before, when we come to consider it, seems to be raised in connection with Clause 36, which talks about a percentage of 6 per cent., and there is provision that it will have to be applied in relation to the pre-war standard of profits. But with regard to marine insurance it is known that a very large capital is not employed, although all the property of the underwriters may be really at stake. The capital employed is not large, and therefore the 6 per cent. standard under Clause 36 does not come in at all, and it does not apply to underwriters. I want to know whether the Chancellor of the Exchequer can inform us on that point, and tell us whether it is to be applied to marine insurance?

I do not think that there is any difficulty about it. My hon. Friend seems to assume that the percentage standard means 6 per cent. It does not. This is an empowering provision enabling the Referees to fix a percentage other than 6 per cent. If the percentage were to remain at 6 per cent. on the capital employed, it is recognised that the standard of profits would be unfair. Where the capital at stake is very much larger than the capital employed, the Board of Referees may fix a different rate of percentage, the very thing for which my hon. Friend asks. My hon. Friend seems to assume that the percentage means 6 per cent.

By this provision we say that the Referees shall fix what the percentage is to be.

What we want to get at is a certain resultant. That resultant is obtained by taking a certain percentage upon a certain capital. If you increase the percentage you may diminish the capital in order to get the same result. We recognise in one case that the capital employed is not really the true capital; therefore we say, when you come to estimate what is the percentage to be given on the capital employed, you must take a rate of percentage sufficiently high to make the resultant fair in all the circumstances of the case. When you have got probably two factors it does not matter which you alter, provided you get the same profit. You may either alter the capital or alter the percentage, if you still get the same result.

I submit that no ordinary percentage rate would really meet the case. How much capital is really employed by the underwriter? The underwriter has to make a deposit to the committee of Lloyd's before he is admitted. I believe that that deposit can only be used in the event of failure, or some such contingency. That, I think, cannot be considered as capital employed in the business. I Relieve I am right in saying that.

The underwriter may put £500 into the business when he starts, but there is at the back of that all he possesses in the world, and the deposit on which the Committee can fall back if everything else is gone. The actual amount employed is a few hundred pounds, and therefore I say that no ordinary percentage would really meet the case. We cannot accept this as a remedy; we have to submit to it, but it provides no remedy.

I am much obliged to the Chancellor for his explanation. This provision does not apply only to underwriters. There are a great many businesses where the amount of capital employed is only small, while the man gets big credit from his banker because his credit is good. The senior partner of the firm may have £100,000 outside his business, but may have only £2,000 or £3,000 in the business, but the bank advances money to him. To give a percentage on the small amount would not meet the case, unless you gave a very big percentage, and therefore I think this Clause only goes a very small way to relieve the difficulty. It does not enable the man to have another sum taken, based on the amount he has as capital in his business, owing to his outside resources.

If my hon. Friend had really studied this Clause, he would see that there are two parts.

I should have thought if my hon. Friend had studied it he would have understood it as well as anybody else. First of all, they are allowed to determine the calculation of the percentage standard by reference to some factor, other than the capital, of the trade or business. My hon. Friend says what is to happen when they have no capital. When the capital is wholly insignificant, as in the case of marine insurance, what would they do? The Amendment provides for calculation of the percentage standard, by reference to some factor, other than the capital employed. The Referees can take any factor. Perhaps they might take the amount of the premiums, or perhaps they might take the turnover. Any other business fact is a factor upon relation to which the percentage standard may be calculated. The Amendment also says some "additional factor in the case of any class of trade or business in which the amount of capital actually employed in the trade or business is, owing to the nature of the trade or business, small compared with the capital necessarily at stake for that trade or business." That is the last class of case which is referred to by the Amendment, and this cases are absolutely dealt with, and in relation to the particular trade. I do not think the matter could possibly be put better.

I think that the Chancellor has made that perfectly plain, but I venture to submit that there is great substance in the point put forward by the hon. Member for Lowestoft (Sir E. Beauchamp). The underwriters employed at Lloyd's would be somewhat at a disadvantage compared with the marine insurance societies, for whom I more particularly speak. It is somewhat easy in the case of the insurance companies to take the capital, the uncalled capital, the reserve funds, and so on, but in the case of the underwriter at Lloyd's you have a man who pays a few hundred pounds into a banking account to finance the first few weeks. Is that to be taken as the capital to which this percentage is to apply? If it is, then in many cases you would want to have two or three thousand per cent. Take an actual case. An underwriter at Lloyd's may put £100 into a banking account, and, as the hon. Member for Lowestoft has pointed out, he may be worth a quarter or half a million of money. He is, of course, liable for the whole of that estate, for what is underwritten in his name. The difficulty in that case is the percentage. How can you say that by allowing an ordinary percentage on the £100 or £500, you are meeting the case? I am perfectly convinced that the Chancellor wants to deal perfectly fairly with both Lloyd's underwriters and the marine insurance companies, and therefore I have not to make any appeal to his sense of justice. If you are going to relieve Lloyd's underwriters by a percentage on the small amount of capital, then it will have to be a freak percentage. The marine companies have a large capital, uncalled capital, and reserve funds, and the percentage in their case would probably meet the difficulty. I venture to appeal for Lloyd's underwriters, not being one of them, and feeling that this Clause does meet the position of the company much more than that put by the hon. Member for Lowestoft, I support his case.

I have an Amendment on the Paper dealing practically with the same point. If the Chancellor's Amendments carries out what I want, then I am quite satisfied. I think with a little alteration the Chancellor's Amendment, which now meets a great many cases, would practically meet all. Underwriters are not solitary cases. I have known, and know now, cases where considerable sums of money are made with no capital at all, and other cases where large profit is made, such as in proprietary articles, upon a very small capital. I suggest that the right hon. Gentleman, instead of percentage, might insert some words as "such other substituted amounts."

There is one point in this, which rather alarms me, and that is that it seems to shut out individuals, and speaks only of classes. If, for instance, an individual underwriter wants something dealt with, he has got to get the whole class of underwriters with him, in order to put his case.

If the hon. Gentleman will look at the Amendment we propose to add at the end of line 5, he will see "This Section shall apply to any subdivision of a trade or business based either on any special feature of the trade or business, or on locality, as it applies to a class of trade or business, in any case where the Referees are of opinion that the subdivision can properly be dealt with separately."

I think that the Chancellor, in that proposal, has gone a very long way to meet the point, and I repeat my suggestion as to substituting some words for percentage.

If the Chancellor is right as to the Board being able to take into account the amount of the premium income, or other factors brought before them, then I am satisfied with that position.

It seems to me that instead of increasing the percentage, the right hon. Gentleman proposes to take an assumed capital.

The Amendment of the hon. Member for St. Ives—after the word "business" ["as respects any class of trade or business"] to insert the words "whether generally or in any particular district"—will not read now that the Government words have gone in.

I beg to move, after the word "or" ["as respects any class of trade or business; or"] to insert, "(2) For an alteration in the rate of deduction in respect of new capital employed in the accounting period, or in the rate of addition in respect of capital withdrawn during the accounting period under Section thirty-seven."

The object of this Amendment is to make it certain that the percentage fixed under Clause 37 is subject to the like appeal as the percentage fixed under Clause 36. As the Bill stands, the appeal apparently applies only to the increased percentage standard as respects any class of trade or business, and does not necessarily cover the percentage standard for the purposes of Clause 37. I may be wrong, and these words may be unnecessary. If it is quite clear that the percentage standard, both in Clause 36 and in Clause 37, is included in the appeal I shall be satisfied.

I can assure my hon. Friend that the percentage standard will be the rate for all capital, whether new or old. Therefore new capital coming in for the first time under Clause 37 will be entitled to the percentage standard fixed by the Board of Referees in relation to the business or the sub-class of business. Hence I do not think any Amendment is needed.

Amendment, by leave, withdrawn.

I have handed in a manuscript Amendment proposing, after the word "business" ["as respects any class of trade or business;"], to insert the words "or in the case where it can be proved that any particular trade or business is carried on under conditions involving special risks."

The words of the Clause are "any class of trade or business." Therefore it must include the particular class to which the hon. Member refers. "Any class" is wider than "any particular" class.

The point I wish to raise is with regard to businesses that are particularly risky.

I submit that when we have passed the words "any class of trade" you cannot limit them by bringing in "any particular class."

No; we have already determined what shall be done where the ordinary percentage standard does not apply. The hon. Member for Oldham now proposes to put in words which would really be a limitation of what the Committee has done.

I beg to move, after the word "materials" ["the manufacture of war materials"], to insert the words "war equipment or provisions."

A great deal of profit has been made in all sorts of things which might be considered to be war materials or provisions. I do not know whether—

Perhaps I may explain that this Clause was intended to meet the case of a small number of firms who for many years have been carrying on business in the supply of war materials without profit simply in the expectation that some day or other there would be a war when they would be recouped. To give them the ordinary return would not be fair.

I do not include any, except this limited number of firms who have been engaged in making war materials. They have lived only in the expectation of there being a war at some time or other.

There are provision firms which have made no profit since the South African war, but are now making a profit.

But they were not carrying on a provision dealer's business in the expectation that one day or other there would be a war; they were hoping to make profit in time of peace. The three or four firms to which I refer had no expectation of making profit in time of peace, but they have been carrying on business, and, in some cases, I believe, were rather encouraged by the Government to do so, in order that there might be a supply of war material. It would be unfair to apply to them the ordinary rule.

In the cases which I have in mind the firms came into life in the South African war. They have made little or no profit since, but they have now begun to make a profit. They were kept alive for the purpose of provisioning some day.

Amendment negatived.

The Amendment standing in the name of the hon. Member for West Cumberland—after the words "the Commissioners shall," to insert the words "and in the case of a company carrying on a statutory undertaking the Commissioners shall, upon the request, in writing, of any such company"—does not read. It seems to be in the wrong place.

The object of the Amendment is to get special treatment for statutory companies which work under very exceptional circumstances. In no place in the Bill is the case of these companies dealt with. I asked a question on the point the other day, and the Financial Secretary rather gave me to understand that it would be dealt with under Clause 38. I am in some difficulty as to the point at which such an Amendment should be inserted.

The hon. Member will see that the Amendment does not read at the point where it is now proposed.

This is really the same kind of point as that raised by the hon. Member for Oldham. I quite appreciate the object of the hon. Member. He wishes to draw particular attention to the case of these companies. In doing so, however, he would really add nothing to the value of the Clause for the companies he has in mind, whereas he might withdraw some of the value of the Clause from other companies. He cannot have anything better than the words "any class." It is clear that statutory companies come under the heading of "any class" of traders; therefore they are included in the privilege of Clause 38. I cannot conceive any Board of Referees, as a body of business men, not considering that, the statutory life of these companies being in most cases short, they ought to have a special rate of interest.

There being no question before the Committee, I cannot allow any discussion. The hon. Member can repeat his question when the Clause as a whole is put.

I beg to move, to leave out the word "necessary" ["if they think necessary"], and insert instead thereof the word "fit."

It is desirable that the powers of the Board of Referees should be as general as possible, and that the Board should have as wide a discretion as possible. My only suggestion is that the word "necessary" is narrower than the word "fit."

I am much obliged to the hon. Member for his suggestion. I shall be happy to accept the Amendment.

Is it better than the word "equitable," which I suggest in the next Amendment?

I think the word "necessary" will do everything that is required. If the hon. Member prefers the word "fit," I am willing to take "fit." If the right hon Member prefers the word "equitable," I am ready to take "equitable." Could not the right hon. Member confer with his hon. Friend as to which word should be inserted?

Amendment agreed to.

Further Amendments made: After the word "for" ["higher percentage standard for a class of trade"], leave out the word "a," and insert instead thereof the word "the;"

After the word "business" ["higher percentage for a class of trade or business"], insert the words "the subject of the order."—[ Sir J. Harmood-Banner. ]

I beg to move, at the end of Sub-section (2), to add,

"This Section shall apply to any subdivision of a trade or business based either on any special feature of the trade or business or on locality, as it applies to a class of trade or business, in any case where the Board of Referees are of opinion that the sub-division can properly be dealt with separately."

Are we given to understand that this includes the individual as well as a class or sub-class?

I think the Clause is clear. It is quite understood, and I am sure the Committee agree, that it is undesirable to allow each person to come and argue the same question over and over again. We do not want the individual to go to the Board of Referees in that way, but the Board of Referees, if such an individual goes, can say that his case comes under a certain heading or a subclass, and that that question had been decided in that particular class.

How if a particular trade does not come forward at all, but one individual of that trade?

Who is to decide whether an individual is a sub-class or whether a sub-class has already been disposed of? What is the tribunal?

The individual who takes up a primâ facie case, or whose case is not a frivolous one, can apply to the Board of Referees. The Board of Referees can determine that that case comes under a certain class or is a new sub-class. If they determine that it is in a certain class which has already been dealt with and a decision given, they will say so.

We all agree that if the Board of Referees were obliged to answer the appeal of each individual the proceedings would be indefinitely prolonged, and nobody would ever be able to get a proper judgment. At the same time I think it will be agreed that the individual shall not be arbitrarily and entirely shut out, with no right to go to anybody at all to ask that his case should be considered. I should like to hear from the right hon. Gentleman some suggestion of the way in which it is proposed to deal with such cases. For instance, suppose there is a company or a firm carrying on a certain business, are they to have no idea, knowledge, or notice that their interests are going to be dealt with by somebody else with whom they have no possible connection, and who possibly are competitors? It would be very hard upon firms and undertakings of all sorts and descriptions to find that they really have no remedy, either because they were not a class or because their class had already been disposed of, it might be, in an unsatisfactory manner on the application of somebody else.

In most trades there is an organisation. That makes the complaint. Having done so, the case is put into a class, or it may be a sub-class. A person can go to the Board of Referees, provided his application is not frivolous, and they will tell him where he stands, and whether in that class or sub-class a decision has been given, and whether the instance applies to his own. I think the machinery will be quite satisfactory.

I gather that everybody or any firm will have the right to go to the Board of Referees and say, "I am in a class or sub-class." The Referees would then be able summarily to dispose of that point, and having disposed of it, the case would not be heard on its merits. At all events an applicant would have the right to go and make the claim that he was a sub-class?

Yes, he would have the same right as he has in an earlier part of the Clause. The words there are to be amended in order to place the onus the other way about: for the Board of Referees to say that a primâ facie case is not made out, instead of the applicant showing that a fair case is made out.

The right hon. Gentleman seems to think that every trade has its organisation. I assure him it is not so. A great bulk of trades have no organisation. They avoid organisation because there is so much jealousy between them. You will not find any unanimity in the bulk of the trades of the country, and in drafting similar words in subsequent Amendments I trust my right hon. Friend will bear that in mind.

How will traders who are not in an association know whether the association has taken action? After all, at present we are assuming that all traders are in an association. They are not—

Will the independent traders know that this application has been made by other sections of the trade?

Where the individual trader applies he will, after having made his return, be assessed. He will go to the Commissioners of Inland Revenue and say he has been unfairly assessed, and that there are special circumstances in his case. The Commissioners will tell him that his particular trade was dealt with by the Board of Referees at such a time and that such a decision was given. He may say to the Commissioners, "That is all very well, but my circumstances are quite special." They will reply to him, "If that in so, go yourself before the Board of Referees." There is no difficulty about it.

Question, "That those words be there inserted," put, and agreed to.

I beg to move, in Sub-section (2), after the words, "or after the pre-war standard of profits as the case requires," to insert the words,

"If any trade, business, or person in Ireland shall be aggrieved by the decision or determination of the Board of Referees appointed for the purpose of this part of this Act, it shall be lawful for such trade, business, or person, on giving notice in writing to the Commissioners of Inland Revenue within ten days after such decision or determination, to require the case to be reheard by the Assistant Barrister or County Court judge for the County or Riding where such trade, business, or person shall have been assessed, or in case such trade, business, or person shall have been assessed in the County of Dublin by the Chairman of the Sessions of the Peace for that county, or in case such trade, business, or person shall have been assessed in the cities of Dublin, Belfast or Cork by the respective Recorders of the aforesaid cities, and such Assistant Barrister, County Court judge, Chairman, or Recorder shall rehear and determine such appeal and his determination thereon shall be final and conclusive."

The effect of the Amendment which I propose is to give in Ireland the right of appeal from the Board of Referees to the County Court judge of the counties, or the Recorders of the cities, that now exists under the Income Tax Acts. This Excess Profits Duty is a far more serious and important matter than the Income Tax. At the time people were assessable to Income Tax in Ireland and got this right of appeal from the Commissioners to the County Court judge, the Income Tax was about 9d. and 1s. in the £. This Excess War Profits Tax means 50 per cent. The present procedure of appeal to County Court judge works very satisfactory, for the people are more satisfied if they go to an independent tribunal like the County Court judge. They believe by the present means they obtain a fair hearing, and get justice. The Commissioners are interested parties so far as the Board of Referees is concerned. In Ireland we look with suspicion on all these Boards which are appointed by the Treasury. May I suggest to the right hon. Gentleman that he might see his way between now and the Report stage to draft an Amendment something on the lines I suggest.

I am not quite sure that this is the right place for this Amendment. If, as I take from his speech, the hon. Gentleman wishes to provide for a certain appeal in Ireland covering the whole question of assessment for the Excess Profits Tax, the words, if inserted where he suggests, will limit the operation to the small question dealt with by the Clause. I am quite clear on the matter, but I shall put the question to the Committee.

I should like my right hon. Friend opposite to consider the case which has been brought forward from Ireland. The Amendment is rather long, but the idea of my hon. Friend is really a very good one. For instance, in Ireland there are large export businesses. There are cattle and horse-dealing businesses, and there are many cases where it will be very difficult to appeal to the Board of Referees. The Chancellor of the Exchequer might, I think, give the peculiar state of Ireland the consideration asked for.

My hon. Friend in his Amendment has overlooked the fact that the reason for the difference in practice in Ireland from the practice here is that there are no General Commissioners in Ireland. There are only Special Commissioners, and it is quite probable that the appeal will be to the County Court judge. In this country there is no such appeal, because the appeal is to the General Commissioners. In this new Excess Profits Tax we are proposing a new appeal alike for England, Scotland and Ireland, and there is really no reason why the authority should not be precisely the same in Ireland. We are going to give a Board large enough to enable panels to be constituted, and we shall see there are representatives on the Board of persons familiar with the special circumstances of Irish trade and industry as of English and Scottish, and I presume the Board of Referees will take care that on the panels which deal with Irish appeals Irish representatives—one or more—will certainly be members. I do not think we could have a better Court of Appeal, and I would suggest that the hon. Member should not be misled by the Income Tax analogy, which really does not apply.

The system of Income Tax appeal works out very well. If a person or trader in Ireland has his case referred to these Referees, and he has to go before the Road, where would the hearing be held I Would it be held in Ireland?

I assume so. Of course it is for the Board of Referees to decide, but I assume they would decide for the panel to sit in Dublin or Belfast, or wherever it may be, to hear the appeal. I cannot make any pledge as to that, because I shall not have control of the Referees.

The difficulty is that otherwise it would be impossible for them to prosecute an appeal, and the County Court judge in such cases provides a very simple and efficacious manner in which this appeal could be carried on.

Question, "That those words be there inserted," put, and negatived.

Clause, as amended, ordered to stand part of the Bill.

The Chancellor of the Exchequer has, I think, met the Committee very fairly indeed with regard to this Clause. But there is one point as to the question of statutory companies. My only desire is to ask the right hon. Gentleman if he will state in what place in the Bill such companies are dealt with. Undoubtedly they stand in a very different relation from other companies. They have limitations by Provisional Order and Act of Parliament, and in every way their actions are limited. I should like to hear from the Chancellor of the Exchequer that any provision has been made for appeal under the Bill.

They come, of course, under the title of "any class of trade or business." Statutory companies are a class of trade or business, and they are entitled, of course, to the rights conferred on any class of trade or business. The objection to naming a particular trade or business is that by naming one there arises the implication that other classes of trade or business have not the same privilege, and, therefore, if we name one we should have to name every one.

They are a peculiarly easy class to deal with, because they all have capital, and it is quite easy to fix a percentage standard appropriate to them. I do not know any statutory companies that have not a substantial capital, and, therefore, they are quite easily dealt with.

I am interested in this, and I should like to be quite sure that statutory companies do come under this Clause. Of course, what we naturally ask, in addition to the percentage, is that the percentage should include some amount which could be set aside of which they claim a right to deal with as a capitalisation fund. Of course, if my right hon. Friend assures me that would be so—

Hon. Members will see that this is a very important matter. For instance, in London the county council have the right of buying up nearly all the electric companies in 1931. The London County Council are not particularly generous buyers, and a considerable amount of that capital will be lost unless a capitalisation fund is put aside. However, if the right hon. Gentleman is assured on the point, I will say nothing more.

I would like to ask the right hon. Gentleman whether it is clear that in this Clause, "as respects any class of trade or business, the percentage on capital under this Part of this Act," and so on, is the same percentage as the standard percentage that is fixed? It is a little bit difficult, having regard to the Amendments which the Government have introduced into this Clause, to follow the two different percentages referred to. First of all, we have the percentage standard which is to be taken into account under certain circumstances, and then we have another percentage, namely, that on capital. My point is, is it clear that under the Clause as now amended that percentage is to be the same percentage exactly as is applicable to the standard? Or is it the intention of the Government that in any particular case there are to be two distinct percentages arrived at, one for the purpose of arriving at a standard and the other for the purpose of making an allowance on capital? Is it the intention in each particular class that that percentage shall be the same figure applied to both other instances—I do not think the Clause at present says that—or is it intended that they should be two separate percentages?

I think the course of proceedings will be this. The ordinary percentage tax is 6 per cent. On appeal, it is fixed, we will say, at 9 per cent. for the standard. In the words of the Clause,

"On any such order being made, this Part of this Act shall have effect as from the date named in the order as if the percentage or standard named in the order was substituted for the percentage or standard fixed by this Act; and where, in pursuance of any such order, the percentage standard is raised as respects any class of trade or business, the percentage on capital under this Part of this Act in respect of new or withdrawn capital, or unremunerative capital, or in respect of a recently commenced trade or business."

That goes back to Clause 37, "shall, as respects any trade or business belonging to that class, be correspondingly increased." That means to say that, once a percentage standard is fixed for a class of trade or business, that runs right through that trade or business, including the new capital brought in.

Would it not be better, instead of "correspondingly increased," to say "the same percentage"? It is very difficult to follow the Clause now as amended, and it is not at all clear that the words "be correspondingly increased" mean it to be increased the same percentage figure as the standard.

I am sorry to interpose so often, but I am desirous that this magnum opus of the Chancellor of the Exchequer should be as perfect as possible. Might I suggest that statutory companies are called "undertakings," and that the expression "trade, business, or undertaking" should be inserted between now and Report?

I will consider that.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

CLAUSE 39.—(Returns for Purpose of Part III. and Penalty for Fictitious Transactions.)

(1) The Commissioners of Inland Revenue may, for the purposes of this Part of this Act, require any person engaged in any trade or business to which this Part of this Act applies, or who was so engaged during any accounting period or pre-war trade year, to furnish them within two months after the requirement for the return is made, with returns of the profits of the trade or business during the accounting period or pre-war trade years and such other particulars in connection with the trade or business as the Commissioners may require and the Commissioners shall have power also for that purpose to require any such person to allow them to examine and make copies of any books of account or other documents relating to> the trade or business.

(2) It shall be the duty of every person chargeable to Excess Profits Duty under this Part of this Act to give notice that he is chargeable to the Commissioners of Inland Revenue before the thirty-first day of December, nineteen hundred and fifteen.

If any person fails to furnish a proper return in accordance with this Section or to comply with any requirement of the Commissioners under this Section, or to give any notice required by this Section, he shall be liable on summary conviction to a fine not exceeding one hundred pounds and to a further fine not exceeding ten pounds a day for every day during which the offence continues after conviction therefor.

(3) A person shall not, for the purpose of avoiding the payment of Excess Profits Duty, enter into any fictitious or artificial transaction or carry out any fictitious or artificial operation, and if he has entered into any such transaction or carried out any such operation before the commencement of this Act shall inform the Commissioners of Inland Revenue of the nature of the transaction or operation.

If any person acts in contravention of, or fails to comply with, this provision, he shall be liable on summary conviction to a fine not exceeding one hundred pounds.

I beg to move, in Sub-section (1), to leave out the words "and such other particulars in connection with the trade or business as the Commissioners may require and the Commissioners shall have power also for that purpose to require any such person to allow them to examine and make copies of any books of account or other documents relating to the trade or business."

I think these are better words than those in the Bill as it now stands, but my particular objection is to the power that is given to the Commissioners to require any such person to allow them "to examine and make copies of any books of account or other documents relating to the trade or business." I think I am right in saying at the present time the Commissioners of Inland Revenue have not that power. It is quite true that when you appeal from their decision and you go to the General or Special Commissioners they adhere to the assessment unless you give them the opportunity to look at your books, and most firms, whilst they object to it, have to do it at times. To give the Commissioners the wide power asked for in this Sub-section is an entirely new power, and I think the Committee will agree with me it is most undesirable. Banks, business firms, and everybody have objected to the power from time immemorial, and the House has never granted it to the Commissioners of Inland Revenue. Whilst I do not want to say anything against the Commissioners which they might consider too critical, I cannot help thinking that the idea of inserting this little Clause is that we will slip it through without noticing it, and that they will get something they never had before, and which we intend they never shall have. I do hope the Chancellor of the Exchequer will adhere to the present position and will not support this, which I call an attempt by the Inland Revenue Commissioners to obtain a power which they have not hitherto had.

8.0 P.M.

The concluding words of this Sub-section are extremely objectionable. They give the Commissioners power to examine and make copies of any books of account or other documents relating to the trade or business, and these are powers which are not enjoyed with regard to the Income Tax, because in reference to that tax the Commissioners have no power to examine books or make copies of other documents. It should not be forgotten that these powers may be exercised, not by the Commissioners of Inland Revenue, but by local surveyors. I trust that we shall decide to leave out these words.

The Inland Revenue has never had the right of examining books. They have tried it many times, and the decisions of the Court on this point have been quite conclusive that they have no right to examine them. They have a right to call for a statement with regard to profit and loss, and they may put questions and demand particulars of items in the profit and loss account, but they have no right to demand the production of books. I think it would be a most disastrous thing to allow this innovation. Professionally it would be an excellent thing, but I do not look upon it in that light. I think the Committee should guard against this innovation, and it would be a pity to allow it to go in. I would give the Commissioners every other power of asking for a statement and details, and particulars of any items such as they have now, and leave them the remedies they have under the present Income Tax. This is an innovation which the whole public will resist very strongly, and I appeal to the Government to strike out those words. I have an Amendment on the Paper to leave out all the words from the word "require," and that gives them all the powers they have now, which are very admirable. As a matter of fact, I have seen appellants take a cart-load of books before the Commissioners, and they have declined to look at them, although they are entitled to ask for a statement of profit or loss. The great bulk of manufacturers are limited companies, and they all file-balance sheets at Somerset House. They see a balance sheet, and then the Commissioners say, "Give us the particulars, of your profit and loss, or your trading account. Here is an item you give under trading expenses, and we want some details of it." They have already very strong powers which enable them to get this information, but this is a most invidious power of examining a man's books, and I hope the proposal will not be insisted upon.

I can assure my hon. Friends that this is no subtle device to give the Inland Revenue powers which they have never had before. The Government would not have suggested these words but for the fact that this is a temporary tax during a time of war, and it would be quite unjustifiable in time of peace. We were very anxious to see that this tax was not paid by honest men only, and evaded and avoided by those who were not so honest. I recognise that we have asked for very severe powers, but we will accept as a compromise the leaving out of the words from "require" to the end of Sub-section (1).

I will accept that suggestion, and ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

I beg to move, in Sub-section (1), to leave out the words "and the Commissioners shall have power also for that purpose to require any such person to allow them to examine and make copies of any books of account or other documents relating to the trade or business."

I do not know whether hon. Members who have addressed the Committee quite appreciate the fact that although the Inland Revenue Commissioners have never had the power to examine books and do several of these other things as a matter of law, nevertheless as a matter of practice they have this power. Anybody who has done any business before them knows that the Commissioners have only got to double a man's assessment, which they frequently have done when the man has refused to supply particulars, and then the man is obliged to produce his books. I notice that the very first words of Clause 40 provide that the Excess Profits Duty shall be assessed by the Commissioners of Inland Revenue. Therefore they can make an assessment and get all the particulars they want.

Amendment agreed to.

I beg to move, to leave out Sub-section (2).

This is a terrible Sub-section. It provides that it shall be the duty of every person chargeable to Excess Profits Duty under this part of this Act to give notice that he is chargeable, and he has to furnish a proper return in accordance with this Section. There may be people who quite unintentionally commit a breach of this Section, and they will be liable on summary conviction to a fine not exceeding £100, and to a further fine not exceeding £10 a day for every day during which the offence continues. This does not seem to me to be necessary, because the Commissioners of Inland Revenue who are to enforce the tax will be familiar with the cases under the Income Tax assessment. Therefore, is it necessary to put in this onerous Sub-section full of heavy penalties, which may press very hardly on people who may commit some offence quite unintentionally.

I desire to point out to my right hon. Friend that the procedure we have suggested in this Sub-clause Is precisely the procedure which has worked so well, and so equitably, and has produced so large a revenue under the provisions of the Super-tax. The only difference is that I think the penalty under the Super-tax provision is £50, and under this Clause is only £10. It should be remembered that there will be a considerable number of persons liable to excess profits who are not liable to Income Tax, and there will be a considerable number of people who have made a considerable sum of money during the War who have not done so before. I think we should have these additional powers simply in order to have fair play between one taxpayer and another. The people who are liable ought to be made to pay, and I hope my right hon. Friend will allow this Subsection to remain.

Amendment negatived.

I beg to move, at the end of Sub-section (3), to insert the words, "Increased expenditure under any head shall be submitted for the consideration of the Commissioners, and such portion of it as appears to them either likely or intended to reduce profits temporarily and increase them ultimately shall be allowed by them only in so far as appears equitable notwithstanding that no element of the fictitious or artificial is involved."

There appears to be something which is not quite satisfactory about the language of the Clause as it stands in regard to the words "fictitious or artificial transaction." I think transactions might be objectionable from the point of view of the Chancellor of the Exchequer, not because they were fictitious, but because they were exceptional, which is quite a different thing. One could imagine a man spending a very large sum amounting to as much as £5,000 or £10,000 quite easily in advertising a thing not solely or even mainly to add to the expenditure escaping the tax, but in pursuance of some business policy; it might be in order to capture German trade. While there will be nothing immoral or open to fair question in his doing that, the result would be that the Chancellor of the Exchequer would lose the tax. That is my object in calling attention to the matter, and I hope that something will be done to meet that point of view.

It may seem very ungrateful of a Chancellor of the Exchequer to recommend the Committee not to accept an Amendment which is moved to aid the collection of revenue, but we have come to the conclusion that this Amendment would involve the taxpayer in a very great deal of trouble without adequate result. A great many businesses which are enjoying excess profits are doing so in spite of increased expenditure under many heads, which is perfectly proper, and to require an examination under each head would, I think, be throwing a burden on the taxpayer which I do not think we are entitled to do. It is, to use an old expression, expenditure that is ad hoc —that is, for the purpose of avoiding paying the tax—that we want to see is not included for the purpose of reducing profits.

Yes, I think it is quite clear.

Amendment, by leave, withdrawn.

Question proposed, "That the Clause, as amended, stand part of the Bill."

I would like to ask the Chancellor of the Exchequer whether he can see his way to let us have a copy of this Clause and of the two preceeding Clauses as amended, because it will be very difficult indeed when we come to the Schedules and find that points have already been dealt with?

I particularly want it when we have finished the Clauses for the purpose of the consideration of the Schedules, because the Schedules explain so many of these points which have now been altered. I am sure it would be a great convenience to the whole of the Committee if the Chancellor of the Exchequer could see his way to let us have a reprint of these Clauses.

I really do not know what my powers are, but I will consult with the Clerks at the Table and inquire whether we could get the Bill reprinted when we have finished the Clauses. I quite appreciate the hon. Member's point; it may have a serious bearing upon the Schedules.

Question put, and agreed to.

CLAUSE 40.—(Supplemental Provisions as to Excess Profits Duty.)

(1) The Excess Profits Duty shall be assessed by the Commissioners of Inland Revenue, and shall be payable at any time, not being less than two months, after it is assessed.

The Commissioners may, in any case where they think fit, allow the duty to be paid in instalments of such amount payable at such times as the Commissioners direct.

(2) The duty may be assessed on any person for the time being owning or carrying on the trade or business or act ing as agent for that person, or where a trade or business has ceased, on the person who owned or carried on the trade or business or acted as agent immediately before the time at which the trade or business ceased, and where there has been a change of ownership of the trade or business, the Commissioners of Inland Revenue may, if they think fit, take the accounting period as the period ending on the date on which the ownership has so changed and assess the duty on the person who owned or carried on the trade or business or acted as agent for the person carrying on the trade or business at that date.

(3) The amount of duty payable shall be recoverable as a debt due to His Majesty from the person on whom it is assessed, and shall be a first charge on the assets of that person in priority to all other charges, whether secured or not.

Any such amount shall if it is less than fifty pounds be recoverable also summarily as a civil debt.

(4) Any person who is dissatisfied with the amount of any assessment made upon him by the Commissioners of Inland Revenue under this Part of this Act may appeal to the General Commissioners for the division in which he is assessed, or to the Special Commissioners, and those Commissioners shall have power on any appeal, if they think fit, to summon witnesses and examine them upon oath.

Section fifty-nine of the Taxes Management Act, 1880 (which relates to the statement of a case on a point of law), shall apply with the necessary modifications in the case of any appeal to the General or Special Commissioners under this Section as it applies in the case of appeals to those Commissioners under the Income Tax Acts.

(5) The duty assessed by the Commissioners of Inland Revenue shall be payable notwithstanding any appeal under this Section except in cases where the Commissioners of Inland Revenue direct to the contrary, but the Commissioners shall make such repayments, if any, as are necessary to give effect to any decision on appeal.

(6) The Commissioners of Inland Revenue may make regulations with respect to the assessment and collection of the Excess Profits Duty and the hearing of appeals under this Section, and may by those regulations apply and adapt any enactments relating to the assessment and collection of Income Tax, or the hearing of appeals as to Income Tax by the general or special Commissioners which do not otherwise apply.

(7) All Commissioners and other persons employed for any purpose in connection with the assessment or collection of Excess Profits Duty shall be subject to the same obligations as to secrecy with respect to Excess Profits Duty as those persons are subject to with respect to Income Tax, and any oath taken by any such person as to secrecy with respect to Income Tax shall be deemed to extend also to secrecy with respect to Excess Profits Duty.

Amendments made: In Sub-section (2), after the word "person" [acted as agent for that person"], to insert the words "in carrying on the trade or business."

After the word "agent" ["acted as agent immediately before the time"], to insert the words, "in carrying on the trade or business."—[ Mr. McKenna. ]

I beg to move, in Sub-section (3), to leave out the words "and shall be a first charge on the assets of that person in priority to all other charges, whether secured or not."

The Clause as it stands makes the Excess Profits Tax come in front of a mortgage or any prior charge. Supposing, some years ago, a limited company with a not very large amount of capital had borrowed from the bank, say, £10,000, on the security of its capital, and the excess profits were large, and they had been spent in dividends for the shareholders, then the Government could come in and take the security which had been pledged years ago to the bank and sell it in order to recover the Excess Profits Tax. That seems to me a very dangerous precedent to put into an Act of Parliament. I have looked up the Income Tax Act, and I find the Income Tax is only recoverable as a debt of the Crown. I have consulted a learned Member of this House, and he tells me—I have also looked it up in the recognised authorities—that a debt of the Crown does not come before a mortgage, and that all the old privileges of the Crown have been swept away with the exception that they have still privileges with regard to bankruptcy. I feel almost certain that the right hon. Gentleman must accept this Amendment. It is not so many months ago that the right hon. Gentleman's predecessor was extremely anxious that facilities should be given to traders to borrow money from the bank. If you are going to say that the security which has been pledged for the safety of that advance is to be taken away and the Government are to come in with a prior charge you will naturally prevent the circulation of money among traders with only a small capital who are desirous of borrowing money to conduct their business. I am not quite certain, but I do not think that there is such a Clause, even in the case of the Death Duties. I am rather confirmed in that view, because if there were a power in a previous Act of Parliament it would not have been necessary to have put it in this Bill. The case of the Death Duties, however, is very different from the case of this Excess Profits Tax. This is really, to my mind, such a very serious innovation, and the right hon. Gentleman, who I understand has had representations made to him from various people, knows that I am not standing alone, that I hope he will accept the Amendment.

The Amendment, which in principle I am prepared to accept, goes a little too far. We do not wish to claim priority in a new tax of this kind, particularly where profits may have been distributed over debenture interest or mortgage interest, but I think that to leave out the whole of these words would go a little too far. If the hon. Baronet will allow it to stand over till the Report stage, we will see that we do not take priority over debenture or mortgage interest. There may be something else, but at the moment I have nothing else in my mind.

If the right hon. Gentleman gives me the assurance that he would deal with this matter, I ask leave to withdraw the Amendment.

I was going to suggest on this Amendment that the Chancellor of the Exchequer might agree to insert, after the word "charges, "the words "created after the passing of this Act." I think it is quite clear the revenue ought to have priority over any charges thus created, but with regard to all sorts of charges originating before the Act, I think the Amendment is clearly one which the Chancellor of the Exchequer should agree to. There are cases where debentures are already in existence, and it would be absurd that the holders who had rights in respect of them should, because the Inland Revenue were entitled to claim certain profits, be deprived of those prior rights. If the Chancellor of the Exchequer will carefully consider this matter before the Report stage, he will find there are serious difficulties in regard to it.

I do not think there is a very great deal in it, because if the company pays up the interest there will be no excess profit.

To get excess profits a man or firm would most likely require more capital, and might have to go to the bank or to friends to get it. If you make a charge in front of it, it will not be possible to get that capital. I therefore think my right hon. Friend would do well to omit the words, and I shall be prepared to leave it to him to frame words that will reserve the rights of debenture holders or mortgagees. Under the Companies Acts certain debts do come before the debenture holders, and I am sure the right hon. Gentleman will not want to modify that.

I hope there will not be any misunderstanding as to what I said. I did not commit myself to giving priority to interest on future mortgages or debentures. I only committed myself to the exclusion of this particular class of securities, and, on reflection, I may add others.

I should like to draw the attention of the Chancellor of the Exchequer to a point which specially affects Scotland. In England debentures issued by industrial companies have, I understand, a floating charge over the assets. In Scotland that is not so, and if the right hon. Gentleman is protecting the debenture holders in England, I ask that the same protection be given to Scottish debenture holders.

:I will look into that.

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

I beg to move, in Subsection (4), after the word "Section" ["Section as it applies"], to insert the words "and in the case of a reference to the Board of Referees under Section thirty-eight, Sub-section (2), hereof."

If this Amendment be accepted it will find its place in that part which provides Section 59 of the Taxes Management Act shall apply to the case of any appeal to the General or Special Commissioners. The reason for applying Section 59 is to enable an appeal to be taken by means of a case stated to the High Court. This power of appeal would be substantially on points of law, and on points of law there should be a power of appeal to the Board of Referees in proper cases, because it might very well be that an important point of law might emerge, when a case was before the Board of Referees. If there was such a point there is no possible appeal, because the Referees are the final body. There are cases in which the Board of Referees, who, be it remembered, are dealing with matters affecting large bodies of persons, and industry as a whole, might reasonably desire themselves to have the authority of a judgment of the High Court. At the present moment there is no appeal from the Board of Referees, and if it is given in cases that come within Clause 38, added confidence would be given to that Board, if it were known that in proper cases it would be possible to have points of law taken for judgment to the High Court. The point is a little technical, but at the same time it involves an important principle. There would not be very many cases, but under Section 59 of the Taxes Management Act such cases are clearly limited, and I think, particularly after the discussion we have had to-day, added confidence would be given to the decisions of the Board of Referees, if it were known that it was possible, in a proper case, and subject to the safeguards provided by the Taxes Management Acts, to have this limited form of appeal. I should like to hear what response the Financial Secretary has to make to my appeal.

I should very much like to meet the point which the hon. and learned Gentleman has raised. The Board of Referees will be concerned with facts, and not with law, as a general rule. The assessment is not made by them. They merely have certain well-defined duties, which I should have thought were wholly concerned with questions of fact. But the hon. and learned Member having moved his Amendment, not in its original form, which would perhaps have gone too far, but in a limited form, and having told us, with the great knowledge of law he possesses, that there may be cases in which points of law would arise, it seems to me quite right and proper that the amount he suggests should be accepted, and therefore I gladly accept it.

Question, "That those words be there inserted," put, and agreed to.

I beg to move, at the end of Sub-section (5), to add the words "as soon as possible after such decision has been given." I hope there will be no objection to this on the part of the Treasury. The object is to prevent the taxpayer's money being locked up for an unduly long period, in cases where he has been unfairly assessed. I take it the Chancellor of the Exchequer will agree to that.

I think it is a very reasonable proposal, and I am glad to accept it.

Question, "That those words be there inserted," put. and agreed to.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

Part IV.—General

CLAUSE 41.—(Suspension of Road Improvement Grant.)

Until Parliament otherwise decides, the charge on the Consolidated Fund under Section ninety of the Finance (1909–10) Act, 1910, for the road improvement grant shall cease, and without prejudice to any payments already made, no further payments shall be made out of the Consolidated Fund on account of that Grant.

I beg to move, to leave out the words "cease, and without prejudice to any payments already made, no further payments shall be made out of the Consolidated Fund on account of that Grant," and to insert instead thereof the words "be reduced to the sum of £300,000 per annum, and this shall be without prejudice to any payments already made."

This Amendment provides that, instead of entirely destroying the Grant to the Road Board, a reduced Grant of very moderate amount should be substituted for the full amount which has been received by the Road Board in past years. The Clause in the Bill absolutely destroys the whole of that Grant. It will be within the recollection of the Committee that the Petrol Tax and the Motor Car Taxes were instituted for the definite purpose of improving existing roads, making new roads, widen- ing and strengthening existing roads, and generally bringing the roads of the country up to date, so that they might discharge their proper function of enabling the very much increased traffic of modern times to pass along them with safety and without damage. Those taxes were agreed to willingly by motorists and others because they felt they were reasonable and sensible taxes and that they would have a very good effect generally upon the condition of our roads. I am very glad to say that the effect which was anticipated has been experienced, and that the roads of the country, under the administration of the Road Board, have been improved enormously. While I recognise that during a war we have to do many things we do not like, and that it may be necessary to surrender a portion of this sum, still I do not think it is quite fair for the Chancellor of the Exchequer to suggest that the whole of this sum should be taken. The amount received has been from £1,500,000 to £1,750,000 a year. I know that the Committee on Retrenchment has proposed that the whole Grant should disappear. I venture to urge very strongly that the whole of it should not disappear, but that only a limited portion should be retained for the purposes of the Road Board.

I do not know whether the right hon. Gentleman is aware, as I am aware, of the very important service rendered by the roads of this country in connection with the War. It would have been quite impossible to erect the numerous camps all over the country in the time they were erected had it not been for the use of the roads by motor transport. There has been an enormous use of such transport in bringing the necessary timber, stores and supplies for the erection and maintenance of these camps. If the right hon. Gentleman had been, as I have been, in the proximity of some of these camps, he would have realised the enormous strain thrown upon the roads and how much the roads that have not been specially prepared have not been able to endure the strain and have become almost impassable. The right hon. Gentleman will tell me that the military authorities will grant some sum for the repair of roads in the immediate neighbourhood of military camps. If that be so—I am not sure that it is so—that would not really meet the case. It is not merely in the proximity of military camps that the wear and tear of the roads has been enormously increased by reason of the military requirements. The roads for many miles— indeed, hundreds of miles around them—are used by motor transport very largely for the purposes of these camps, and it would be impossible, as I am sure the right hon. Gentleman will agree, to go to the military authorities and ask them for a grant to maintain all the roads used by the military. I have been all over the country and have seen what is going on. I know that it has been indispensable for these purposes to have quite good roads.

A new situation has now arisen, because we find that the railways of the country are quite unable to meet the War traffic as well as the ordinary commercial traffic of the country. We are really threatened with a serious paralysis of the ordinary life of this country by reason of the inability of the railways to carry the necessary traffic. I hold in my hand letters from great manufacturers, farmers' associations, and others, pointing out that it is impossible to get the necessary supplies of fertilisers and feeding-stuffs in time to be available for the use of their crops. That state of things would be very much relieved if motor transport could be utilised to aid and supplement the railways. Therefore the importance of maintaining the roads in a good state of repair becomes evident. I do not suggest that we should make any new roads, or widen old roads, or cut off corners, or do any of those things which rather partake, in a time like this, of the nature of luxuries, but I do urge that existing roads should be well maintained, and that their surface crust should be kept in order. The Committee will realise that in the case of roads the old adage that "a stitch in time saves nine" is of immense importance. If we once allow our roads to get into disrepair there is very little hope that we shall get them into a proper state of repair again in anything like a reasonable time. It is quite clear that after the War we shall find ourselves in a position of extreme financial straits, and it will be impossible then to obtain any considerable sum or any sufficient or adequate sum to put the roads into a condition of proper repair.

I would like to suggest to the right hon. Gentleman, if he will think for one moment of the damage done to vehicles using motor transport by bad roads, how enormously greater that damage becomes in a very short (time to those vehicles and, looking to the enormous number and importance of those vehicles, how very quickly that damage will become far in excess of the sum I have suggested, namely, £250,000 per annum for the purposes of the Road Board. There is a very sinister suggestion, as I think, made in the Report of the Retrenchment Committee, namely, that the whole of the functions of the Road Board should be suspended. It would be a disaster to the roads and the life of this country if that were carried out. I hope to have an assurance from the right hon. Gentleman that such is not the purpose of his action in proposing this Clause. I know that he will tell me there is a very considerable surplus, and that there is a balance in hand which has been secured by the prudence of the Board in not entering upon too many undertakings at once and reserving something in hand to meet exceptional and great difficulties. At the same time, we are aware that there is the suggestion that the Road Board should disappear. That means that, once having killed the Road Board, we should have this balance appropriated and certainly not used for the purposes for which it was originally intended, which money the taxpayers of this country were perfectly ready to pay at the time the taxes were imposed. I hope I have made out a case for leaving us a small share of the original Grant. I do not like to say it is quite a breach of faith, but it is going very near it, because the tax was imposed for the purpose of maintaining and improving our roads. I only ask my right hon. Friend now, while taking the greater portion of that Grant, to leave us some small, almost symbolic sum for the original purpose for which the tax was imposed.

I cannot help thinking that my hon. Friend is under a misapprehension as to what this Clause does. Let me explain the facts to him. The Road Board Fund at this moment amounts to upwards of £3,000,000. The average expenditure out of the Road Board Fund in Grants has been about £300,000 a year. The existing funds, therefore, on the previous rate of expenditure, would last for ten years.

I am not inventing figures. I am giving what the expenditure has been since the start, and the average has been £300,000 a year. The amount in hand now is £3,000,000. There is a statutory obligation which creates a charge on the Consolidated Fund of an amount equal to the production of certain taxes. No one suggests, nor did my hon. Friend, that we should increase our expenditure out of the Road Board Fund at present. If we do not increase our expenditure the fund is already large enough to last for many years. Is it conceivable that, at the present time, we should allow any charge to continue on the Consolidated Fund which necessitates the payment out of that fund of the produce of certain taxes into a Road Board Fund which we are not going to use? It appears to me to be so indefensible that I am sure my hon. Friend cannot have appreciated the precise purpose of the Clause. It says, "Until Parliament otherwise decides the charge on the Consolidated Fund shall cease." Hereafter, if Parliament thinks the time has come again to spend more money on roads or to replenish the existing fund of £3,000,000, Parliament will say so, but no prudent man would go on allowing this charge on the Consolidated Fund to continue when we have not got a shilling to spare.

I did not accuse my right hon. Friend of inventing figures. I merely admired, to the point of despair, the skill with which he uses those with which he is supplied. The first part of his speech appears to me to be impliedly contradictory to the latter part. We are told in the first place that we ought not to oppose this Clause or support this Amendment because there are £3,000,000 in hand. We were told in the latter part of his speech that it was no good giving any more money because the Road Board is not to be allowed to spend that which we have.

There was certainly an indication in my right hon. Friend's speech that the £3,000,000 would not be spent on roads. I certainly understood him to say that it is to be kept.

I hope I did not say anything of the sort. I said it was wholly irrelevant to this Clause. There is nothing in the Clause about the expenditure of the existing £3,000,000, and any argument or any Amendment founded on that assumption would be out of order. All we are dealing with is whether we shall continue this year this charge on the Consolidated Fund for a purpose which is already supplied to the extent of £3,000,000 sterling, and a purpose which ordinarily, on the average, has only required £300,000.

The information which I have received is that, so far from it being £300,000 last year, the expenditure was £800,000; and anyone whose duty it is to know the condition of the roads in this country, which are being used to an ever-increasing degree for war purposes, and are having their surfaces to an increasing degree broken down, will know that if they are to be kept up to their proper efficiency the sum which would naturally come from the Road Board would be far nearer £800,000 than any lower sum. My right hon. Friend says it is irrelevant to refer to whether or not the sum in hand can be, or is or is not to be, spent during war time. This is a Clause intended to cut off the source of supply. When we are invited to cut off the source of supply it is rather harsh to tell us it is irrelevant to ask whether that which is already stored is to be used or not. If we know that that which is in the existing reservoir is to be used adequately during the War we may well consent to cut off for the time being a source of supply which would otherwise have made it greater; but if we are told—and I am afraid that idea was certainly conveyed to me by the speech of the Chancellor of the Exchequer — that that which is already accumulated is not to be spent in any way on roads, I do not think it is a sound argument to refer to that amount as a reason for not accepting this Amendment and for pressing the Clause. The matter which lies behind this Amendment with which the Board is concerned is a matter of the most urgent importance, and the only opportunity we have under this Bill of calling the attention of the Committee or the public to the matter is to oppose this particular Clause which cuts off the source of supply. Cannot my right hon. Friend give some indication, first, that his use of the money in hand will depend not on any report of any Committee already made, but on the consideration which he, as Chancellor of the Exchequer, and in this matter head of the Treasury, will give to the representations made to him; and, in the next place, can he give the Committee and the public some indication that when the War is over, if he is in his present position—and we all hope he will be—he will himself go back to the practice under which the roads of England have been, on the whole, kept fit for the increasing work put upon them? If he would give us some assurance on these two points—I am asking very little—it would certainly shorten the Debate and relieve some of us from the duty which we believe to be put upon us to make clear the fact that the taking away of this money, and the passing of this Clause, which secures that no more shall go to that purpose, will really cripple one of the great war users, namely, the user of the roads of England in war time predominantly for war traffic.

It appears to me that if it is clear that there is ample money in hand, it really cannot matter one brass farthing whether the supply is supposed to be cut off in the meantime or not. I would, however, ask if the right hon. Gentleman would be good enough, for the benefit of the Scottish members of the Committee, to say whether the Scottish road authorities are in the same position and whether they also have enough money in hand to be going on with.

My hon. Friends who moved and supported this Amendment have forgotten the inception of this fluid, and they have forgotten the condition attached to the fund and the reason why it has accumulated. It is that it is to be used principally in times of great unemployment. That was the inception of the fund. Over and over again the Chairman of the Road Board has spoken to me and used that very argument. He has said, "I must keep this money for the time when there will be great unemployment, and then I can let it loose." During this War you will have great difficulty in getting labour on the roads. I am afraid that the Chancellor of the Exchequer has no power over the Chairman of the Road Board. It is one of my great objections not only to the Road Board but to the Development Commissioners that they have no representatives in this House to whom we can apply. The real object of this fund being created was to do the roads up and to give great employment during the time of slack trade, and so forth. There has been no such period for the last two or three years, fortunately. With respect to the remarks of the hon. Member (Mr. Currie), I may say there is no Scottish Road Board; it is all done by the English Road Board. I hope the Fund will be protected, because we shall be certain to want every shilling of that money when the unemployment comes after the War.

Amendment negatived.

had on the Paper an Amendment—at the end of the Clause to add the words "and during the continuation of the War no further payment shall be made out of the Consolidated Fund to the Development Commissioners."

On a point of Order. Before the hon. Member moves his Amendment, may I say that there is no charge on the Consolidated Fund for the Development Commission at the present time?

I beg to move, after the word "Grant," at the end of the Clause, to add the words "provided that nothing in this Clause shall affect the power of the Road Board to make Grants for road improvements, with the approval of the Treasury, from funds now in its hands, and that such approval shall not be withheld save on particular grounds in particular cases."

9.0 P.M.

On a point of Order. I submit that the Amendment is not in order. It is a proviso which, on the face of it, allows something to be done which in this Clause is not forbidden. The Amendment goes on to enact something new which is not relevant to this Clause, and which will have to be the subject of a new Clause. I do not think that even with his ingenuity the hon. and learned Gentleman can bring into this Clause a proviso which ought to be in the form of a new Clause.

I submit that it is in order. The enactment in the Clause is that until Parliament otherwise decides a certain charge on the Consolidated Fund for a particular purpose shall cease. Surely it is open for the Committee to put conditions upon that enactment. My Amendment provides that nothing in the Clause which causes the charge to cease shall interfere with the existing power of the Road Board. My submission is that as it is. intended to prevent or to stop a certain charge on the Consolidated Fund for a certain purpose it is in order to make conditions under which that is done, the conditions being that if this charge ceases from now the Road Board shall still continue to be able to dispense Grants to the road authorities from funds now in its hands, and that the Treasury power of stopping that shall only be in particular cases. I submit that where the Committee is asked to stop a charge upon the Consolidated Fund it is open to the Committee to put conditions upon which that shall be allowed.

It seems to me that the first part of the Amendment is unnecessary, and I also think that that portion of it which proposes to give directions to the Road Board is outside the scope of the Clause.

As I understand it, it is the Road Board which is the executive body.

It is perfectly true that the Road Board is the executive authority, but with the approval of the Treasury. My object is to define the conditions of that approval, and to make it perfectly clear on what terms the cessation of this charge in future should take place.

I still think that the direction to the Road Board in this Clause of the Finance Act is outside the scope.

Amendment negatived.

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

I would like to remind my hon. Friend (Mr. Henderson) that the continued adequate upkeep of the road is more necessary in war time than in peace. Whether it costs much or costs little it would be most injurious to the country if we gave the roads the go-by, as he suggests. It behoves all those who are concerned in that Department with this necessary national expenditure to see that it is not prejudiced by proposals in this Bill. In the hope that I might get an assurance from the Chancellor of the Exchequer, I have been asked to move the rejection of Clause 41 by the hon. Member for Brentford (Mr. Joynson-Hicks), who cannot be here to-night, and who speaks on behalf of the motor authorities in this country. Those who are interested in motor development and those who are responsible for the upkeep of roads happen to be agreed on this matter. I would ask my right hon. Friend whether he can give us any indication that when the War is over it will be his desire, if possible, to allow the old methods to be resumed, deciding for the time being, on the evidence before him, what he may think right to allow to be done with what there is already accumulated. It is not correct to say that this fund has been accumulated solely or mainly against times of unemployment. We are really only asking for less than that which has naturally been given in this way. I hope the right hon. Gentleman will be able to tell us that he would encourage the resumption of the old practice in time of peace, and that he does not close the door to moderate expenditure when that object has been sanctioned.

I think it is very unfair to press for some pledge to be given as to the future. Not one of us knows exactly what will be the position of the fund after peace is declared, and I think it is totally unreasonable to ask for a pledge of that kind from the Government. Let the House be free, and let the Government be free. Ever since I came into this House I have heard Members trying to get behind their own decisions. The House set up the Road Board and legislated so that it might be independent, and so that Members, from interested motives, should not bring undue pressure to bear. The House did that before I came here, and I have loyally accepted it, but some Members try every year to give directions to this Road Board as if it were answerable to this House. I do hope that the Chancellor of the Exchequer will be firm and not commit himself.

There is one question which I should like to ask the Chancellor of the Exchequer. Was he not misled in regard to the figures as to the expenditure of the Road Board? The Road Board has, in the interests of economy, reduced the amount spent this year, but the amount expended in previous years has been very much greater.

Yes, looking back once again, I see that over the whole period the amount has been greater. It is only within the last year that it has been £300,000. But the average expenditure over the whole period has been more like £400,000. I am glad of the opportunity of making this correction.

I think that the House probably realises that there is nothing whatever in this Clause that interferes with the maintenance of the roads. In every county the roads are practically maintained by the ratepayer. There may be certain adventitious aids from time to time, but this proposal of the Government will not interfere in any way with the maintenance of the roads, which always have been and always will be maintained by the ratepayers. I am really distressed that, at a time like this, this House, or some portion of it, should be prepared to increase unnecessarily for the moment the expenditure of the country. I am the representative of a county which has a poorer and longer mileage of roads than any county in the United Kingdom. But the county is quite prepared to do its duty in maintaining the roads. We do not ask, as we should like to ask, for a great many more thousands of pounds to improve their direction and laying out—all these things which the Road Board have been prepared to undertake. We do not ask for it because—and I think every Member of this House will agree—we want not only every man, but very shilling that we have. I do not understand how this House could be prepared to spend, I might almost say squander, money which we all know will certainly be required. When the War is over the funds accumulated by the Road Board are certain to be required for a great many things which will not only be advantageous to the country, but will enable a large section of the population to find employment. Meantime we want every man and every shilling.

Question put, and agreed to.

CLAUSE 42.—( Rules and Regulations to be Laid before Parliament ) and

CLAUSE 43 ( Construction, Repeal, and Short Title ) ordered to stand part of the Bill.

Committee report Progress; to sit again To-morrow.

The remaining Orders were read and postponed.

Notices of Amendments

Motion made, and Question proposed, "That for the remainder of the Session, whenever the House adjourns from Thursday to the following Tuesday, Members desiring to give notice of new Clauses and Amendments to Bills may send such Notices to the Clerks at the Table, and any such Notices received by them before Five of the clock on a Friday or Monday shall be printed and circulated with the Votes."—[ The Prime Minister. ]

Why does not this Motion include Resolutions as well as Bills? It gives an opportunity for Members to put down Amendments to Bills, but occasionally we find Resolutions, general Resolutions and the appointments of Committees standing over. I do not know whether the point has been considered. I should have thought that when settling the dates for Amendments being received the proposal might apply to Resolutions as well as Bills.

This is simply carrying out a pledge given by the Prime Minister. I cannot afford any other information on the subject.

I should like to know why there are two dates mentioned in this Resolution. If Amendments and new Clauses are in the hands of the Clerks at the Table before five o'clock on Friday, and presumably by the same hour on Monday, they are to appear on the Paper. In relation to questions, of course every Member knows that it is very advantageous that we should have two days specified, because if there is a question in the hands of the Clerk by Friday it would appear in the Paper on the following Tuesday, and those in the hands of the Clerk by Monday would appear on the Paper for Wednesday. But in other cases, in respect of Amendments to Bills, if Amendments are in the hands of the Clerk by Monday, presumably they will appear on the Paper for Tuesday's business of the House. Therefore I think that it is by an oversight that two different dates have been mentioned in relations to Amendments to Bills. In the alternative it appears possible that it would be a waste of money in printing. If the Resolution simply gave one date, and stated that an Amendment or a new Clause which was in the hands of the Clerk by Monday at five o'clock would appear on the Paper, it seems to me that it would be a simpler form, and I would like to know what was the object of having the double date?

The hon. Member will find that Amendments have been settled in exactly the same way as the Questions. The two things go together.

In that case would there be a possible amount of waste of money in printing saved by having the one date, Monday, and the whole of the Amendments collected, and all of them on the Paper for Tuesday's business?

I would like to support my hon. Friend's suggestion. The Noble Lord said that he is carrying out the pledge of the Prime Minister. I was present at the time, and as far as I remember it was not very definite. It was simply in reply to a question. It seems to me that there can be no great objection to enlarging this new rule in the way suggested by my hon. Friend. Would it not be possible to defer the whole thing until to-morrow night and then get it put straight? It is a pity to do a thing in a half way when it might be done altogether.

There is no reason why it should be done to-night.

Motion made, and Question, "That the Debate be now adjourned"—( Mr. James Hope )—put, and agreed to.

Debate to be resumed To-morrow.

Finance (No. 3) Bill

Copy ordered "of Part III. of the Finance (No. 3) Bill, as amended in Committee."— [ Mr. Chancellor of the Exchequer. ]

Copy presented accordingly; to lie upon the Table, and to be printed. [No. 379.]

Whereupon Mr. DEPUTY-SPEAKER, pursuant to the Order of the House of the 3rd February, proposed the Question, "That this House do now adjourn."

Question put, and agreed to.

Adjourned accordingly at Fourteen minutes after Nine o'clock.