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Commons Chamber

Volume 410: debated on Tuesday 15 May 1945

House of Commons

Tuesday, May 15, 1945

The House met at a Quarter past Two o'Clock

Prayers

[Mr. SPEAKER in the Chair ]

Private Business

PRIVATE BILLS [Lords] (STANDING ORDERS NOT PREVIOUSLY INQUIRED INTO COMPLIED WITH)

MR. SPEAKER laid upon the Table,—Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:

South Shields Corporation Bill [ Lords ],

Bill to be read a Second time.

MERSEY DOCKS AND HARBOUR BOARD BILL [Lords]

As amended, considered; to be read the Third time.

PONTYPOOL GAS AND WATER BILL [Lords]

As amended, considered; to be read the Third time.

Newcastle - Upon - Tyne Corporation (Trolley Vehicles) Provisional Order Bill,

"to confirm a Provisional Order made by the Minister of War Transport under the Newcastle-upon-Tyne (General Powers) Act, 1935, relating to Newcastle-upon-Tyne Trolley Vehicles," presented by Mr. Noel-Baker; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed.

Oral Answers to Questions

Eire

Mr. de Valera (Condolences to German Minister)

asked the Under-Secretary of State for Dominion Affairs whether he has protested in Dublin against the action of Mr. de Valera in paying an official call on the German Minister in Dublin to express the condolence of the Government of Eire on the death of Hitler.

:I would refer to the reply which I gave on Tuesday, 8th May, to my hon. Friends the Members for South Bristol (Mr. A. Walkden) and South Croydon (Sir H. Williams)

:Is the Minister aware that it would be very difficult for a person like de Valera to realise anything that was of an advantageous nature to this country or to the United Nations, and that the men and women of my division are furious at the attitude adopted towards the German Minister? Will he not take some steps whereby a protest of the strongest possible character can be made to these people?

:I think I made it quite clear, in my reply to my hon. Friends on 8th May, what was the attitude of His Majesty's Government, and, I believe, of the whole House.

:Is the Minister aware that the de Valera broadcast might be very interesting to this country?

VE Day (Union Jack)

asked the Under-Secretary of State for Dominion Affairs whether the Union Jack was flown over the offices of the United Kingdom Representative in Dublin on either of the two Victory-in-Europe commemoration days.

Disturbances, Dublin (Official Apology)

asked the Under-Secretary of State for Dominion Affairs the terms of the apology received from Mr. de Valera on account of the breaking of the windows of the offices of the United Kingdom Representative by the Dublin mob.

:Yes, Sir. The following is the statement which was issued on 8th May by the Eire Government:

"Windows in the British Representative's Office and the American Consulate-General were broken last night by stones thrown by a member or members of a disorderly crowd which paraded the streets after the disturbances at Trinity College. The Secretary of the Department of External Affairs called this afternoon on the British Representative, Sir John Maffey, and on the American Consul General, Mr. McEnelly, to express the regrets of the Minister for External Affairs at the occurrence which he greatly deplored."

:Why did not the Minister for External Affairs call in person to express regret, in view of the fact that he found time to call in person at the German Legation to express sympathy on the death of Hitler?

:Will the hon. Gentleman be good enough to answer that question, because others of us are very interested in it?

:I am afraid I am not in a position to give an answer as to why the Minister for External Affairs did not call on His Majesty's Representative.

:Will the hon. Gentleman instruct the British Representative in Dublin to refuse to accept apologies in future from minor officials of the Eire Government?

German Representatives

asked the Under-Secretary of State for Dominion Affairs what information he has as to steps being taken to arrest the Germans in their Embassy and elsewhere in Eire, with a view to their trial in due course as war criminals.

:The general question of the position of German Missions in neutral countries is under consideration. His Majesty's Government at present have no evidence of the complicity in war crimes of Germans either in the German Legation in Dublin or elsewhere in Eire.

:Are the Government aware that the German Minister has purchased a house in Dublin, in which he has stored a large amount of valuables? Will they be available to the British Government for reparations?

:Does my hon. Friend not think that our Representative in Dublin ought to inquire, if he is any use at all?

Trade and Commerce

Ex-Service Personnel (Re-Settlement)

asked the President of the Board of Trade what assistance is being given to men returned from the Forces in the way of fitting up premises, obtaining equipment, tools and initial stock; and whether they receive priority and to whom they should apply.

:I would refer my hon. Friend to the statement on business grants to ex-Servicemen made by my right hon. Friend the Minister of Labour on 15th February last. As regards the other matters referred to by my hon. Friend, ex-Servicemen may obtain the information they require on application either to my Controller for their region or to the nearest resettlement advice office of the Ministry of Labour.

:How many applications have the Board of Trade received up to date for such assistance?

:I could not say without notice, but we are very anxious to provide the most effective assistance we can for these men. I hope that the publicity given to my answer will enable any who are in doubt to apply at one or other of the places I have mentioned.

:Is my right hon. Friend aware that after requests have been made these ex-soldiers, before they know where they are, find themselves involved with five or six Government Departments? Will he do his best to expedite the procedure?

:Yes, Sir. My hon. Friend put down a Question covering a very wide field, and I do not desire to give an unduly lengthy answer. It is our desire, where there is a priority system in operation, that ex-Service men should get a due priority.

:Will the right hon. Gentleman expedite the procedure for the wives of men who had small businesses before the war, and who joined up, when the wives wish to re-establish businesses before the return of their husbands?

:That will be the case if they have joined the Register of Traders, which I instituted some time ago to enable ex-Servicemen who returned from the war to get licences as a matter of course to resume their businesses.

asked the President of the Board of Trade what arrangements are made to make available beds, house-hold utensils, and other goods necessary for the establishment of separate house-holds for members of the Forces as they are demobilised and find accommodation.

:Married members of the Forces are entitled, in such circumstances, to utility furniture and to priority dockets for bedding, curtain materials and linoleum.

:Will my right hon. Friend look into the question of whether, even with priority dockets, these things are going to be available? If not, will he consult with the other Departments about the surplus stores that have become available in other forms of war service, and see whether they could not be provided for demobilised members of the Forces?

:We are watching the matter very carefully. I have tried to arrange that there shall not be so many priority dockets issued as to absorb an undue proportion of the available supplies. So far we have succeeded in that, but I am constantly in touch with other Departments regarding all these surplus stores.

Scientific Instruments

asked the President of the Board of Trade the present plans of his Department to ensure an immediate release in the output of scientific instruments in this country to provide for the research work essential to the productivity of post war industry.

:The scientific instruments industry has been greatly expanded during the war, and, as war contracts are reduced, ample capacity should become available for the manufacture of apparatus for peace-time production. I shall do my utmost, in conjunction with my right hon. Friend the Minister of Supply, to see that this industry is maintained at the highest possible level of efficiency.

:Is my right hon. Friend satisfied that the Minister of Labour is finding sufficient men?

:My right hon. Friend has an extremely difficult and complex task in the unwinding of this great war mobilisation which has been carried out, and I am confident that he is doing as well as any man on earth could do.

Clothing Coupons (Women's Land Army)

asked the President of the Board of Trade what clothing coupons are given women of the W.L.A. to provide themselves with new clothing on relinquishing their uniform.

:Women released from the Women's Land Army are given back some of the coupons they have surrendered for uniform in the current rationing period. The number returned depends on the date of release and the length of service.

:How is it that a woman who has worked for over three and a half years on the land, and has given up all her uniform, is given only four coupons? Is it right to turn her naked on the world like this?

:I think she will have had sufficient coupons to prevent that extremity. The Women's Land Army receive, first of all, certain clothing, which is issued in connection with their work. They receive, in the second place, the ordinary civilian clothing ration which everybody else gets. In the third place, they get the industrial ten. In the fourth place, they get a special allowance of 26 coupons, on entering, which is particularly designed to enable them to obtain suitable underwear. On the whole, I think they are treated not ungenerously as compared with the general body of the population.

Enamelware Supplies, London

asked the President of the Board of Trade if he is aware that there is a great shortage of enamelware in London shops and a large surplus in many provincial towns; and will he see that the supply to the London area is increased.

:There has been some shortage of enamelware in London owing largely to transport difficulties, but there are plentiful supplies of tinware. Improved transport facilities have now been arranged, and I hope that deliveries of enamelware to London will soon improve.

Cotton Industry

asked the President of the Board of Trade if he has considered the advisability of calling for a survey of the cotton industry similar to that recently made in regard to the coal industry.

:A number of surveys of the cotton industry have been made in recent years, including the reports issued last year by the Cotton Board's Post-War Committee and by the Piatt Mission to America. I see no reason to set on foot any further inquiry.

:Is the right hon. Gentleman aware that all these reports conflict to a considerable extent; and would it not be as well to get an impartial body, apart from both employers and employees, to undertake a complete survey of the capacity of the industry?

:The Cotton Board contains, and very properly contains, representatives of all sections of the cotton industry including the trade unions, and the Piatt Mission also contained representatives of both employers and trade unions, and if these people do not know how to deal with the cotton industry I do not think anybody else does.

:May I ask the Minister whether all these reports were on the technical side, or whether any were on the production and distribution side?

:Will the right hon. Gentleman consider leaving the cotton and other industries alone for quite a long period to get on with their job?

asked the President of the Board of Trade what further steps he is taking to reopen spinning mills which have been closed under the Concentration Order.

:Six spinning mills have recently been re-opened and further mills will be re-opened, as and when labour becomes available.

:Can the Minister say how soon the next group of mills are likely to be re-opened?

:It all depends on the rate of return of operatives from other work to the cotton industry, and, as I have said before, operatives who have been working on munitions during the war are very disinclined to return to the cotton industry. That is one of our great troubles in this connection. I am doing everything I can to encourage the return of cotton operatives to the production of cotton, but it is an uphill process.

:Would it not help the Minister to open some of these mills if other Departments would take their stores out?

:No, Sir; that is a very minor consideration. We have at present a large number of mills in Lancashire only partly manned, and until we get sufficient operatives back to run a full complement in these mills, it would be very wasteful to open any others. They had much better be kept for stores.

Bedding Supplies (Reception Areas)

asked the President of the Board of Trade if he will now extend the granting of priority dockets for the purchase of bedding to householders in reception areas who have received evacuees in their homes for long periods with consequently heavy wear and tear on their bedding.

:No, Sir. I regret that, while supplies of bedding are so short, I cannot see my way at present to extend the priority docket scheme.

:Is the Minister aware that many of these people rendered really long and loyal service in receiving evacuees into their homes willingly and not ungenerously; and cannot he see his way, now that more goods are coming on the market, to meet the case of these people and to replace bedding which has been so heavily worn during this period?

:I am extremely sympathetic to the suggestion of my hon. and gallant Friend, but we celebrated VE Day only a few days ago, and the increase in supplies between then and now is not yet sufficient to enable me to extend this priority docket scheme. When supplies have increased, as I hope they will in the course of a few months, I shall be most happy to consider possible extensions.

:In order that his sympathy may not wane, will the right hon. Gentleman keep in mind the fact that many evacuees have been billeted in the homes of quite poor people, who cannot possibly compete, financially, for the limited supplies that are on the market?

Dental Floss

asked the President of the Board of Trade whether in view of the useless quality of dental floss now being made in this country, silk can now be released for manufacturing dental floss of pre-war quality in view of the fact that throughout the war a similar article made in America has been of pre-war standard.

The Joint Parliamentary Secretary to the Ministry of Supply
(Mr. James de Rothschild)

:I have been asked to reply. Raw silk is now available to manufacturers of dental floss, if they so desire it.

Raincoats (Coupons)

asked the President of the Board of Trade whether in view of the urgent public need for raincoats and mackintoshes and the difficulty of purchasing them on the present coupon allocation, he will consider allowing them to be purchased without coupons.

:I regret that, as supplies are at present very limited, I cannot see my way to adopt my hon. and gallant Friend's suggestion.

British Army

Overseas Service (Home Leave)

asked the Secretary of State for War, on what date it was explained by, or on behalf of, Field-Marshal Montgomery to a battalion of the Essex Regiment, of whose identity he has been informed, why men who had served for a number of years in more distant theatres of war were eligible, on transfer to the B.L.A., for only seven days' home leave.

:I have now had an opportunity of referring to Field-Marshal Montgomery, and, as a result, I wish to vary in one particular the answer which I gave on 10th April. The Field-Marshal visited all the formations who had been transferred from Italy to Germany and spoke to a great many of the men. He did not, however, formally address the units concerned as my answer perhaps suggested. On the other band, he did address all the officers of the formations in question, and, in particular; explained to them the leave arrangements which had been made. They would naturally be expected to explain the position to their men. In addition to the considerations which I mentioned in my previous answer, the Field-Marshal reminds me of the fact that, with any longer period of leave, the formations would not have been ready in time to take part in the decisive battles.

asked the Secretary of State for War whether he will now speed up the repatriation of all men with more than three years' overseas service.

asked the Secretary of State for War approximately how many officers and men there are with the B.L.A. who have had over four years' overseas service without leave to this country apart from seven days' leave from the B.L.A.; and if he will make arrangements for the immediate posting to this country of these officers and men.

:There are about 3,600 officers and men with the B.L.A. who have served overseas for over four years without home leave apart from the seven days' leave from North West Europe. I have emphasised repeatedly that we shall spare no effort to reduce as soon as we can the present long tours of service overseas. As I indicated in my speech introducing Army Estimates, in the period of re-deployment after the defeat of Germany it will, I hope, be possible gradually to reduce the tour considerably. But the process will necessarily not be as fast as we should like it to be. It will depend largely on the reductions which can be made in our forces in Germany and on the amount of shipping available after we have provided for the deployment of our forces against Japan and for the return to this country of men due for release from the Army.

:Is the right hon. Gentleman aware of the dissatisfaction amongst these men who have been posted to the B.L.A. from North Africa, and will he give them priority in repatriation to this country?

:The ordinary rules will apply which I have announced in this House repeatedly. As I have explained in this House, by and large, the men carry their repatriation rights with them to a new theatre.

:Will the right hon. Gentleman keep in mind the anxiety of those who have been out in North Africa during the whole of the period and have not even been home for seven days and try to shorten their time by way of a start?

:Certainly, and I think my answer covers the point if my hon. Friend will be good enough to read it.

:May I ask my right hon. Friend whether he has any power to secure the return home of those who are suffering from serious illness?

:I do not think that arises out of this Question, and if the hon. Member has a specific case in mind perhaps he had better write to me about it.

Court-martial Convictions (Appeals)

asked the Secretary of State for War by what means legal advice is made available to soldiers and officers convicted by court-martial so that they can prepare appeals against the conviction and if this legal advice is given free in cases where the soldier or officer has not the means to pay for it.

:If an officer or soldier convicted by court-martial desires to have legal assistance in the preparation of a petition against his conviction, and is unable himself to pay for civilian counsel or solicitor, the services of his defending officer—assuming he had been represented by one at his trial—would normally be made available to advise and assist him in the preparation of his petition. If meanwhile he has been removed to a military prison or detention barrack, every opportunity is given to enable him to prepare his petition. The welfare officer, chaplain and commandant are available to assist him. Any legal advice or assistance from military sources is given free to the officer or soldier, but the payment from public funds of fees of civilian counsel or solicitor for this purpose is not authorised.

:Will the right hon. Gentleman make sure that this procedure is made known to soldiers and officers who may be court-martialled?

:I will consider that. I would not like to give a definite answer offhand, but I will certainly consider it.

:Is it possible to appeal against a conviction, once the sentence has been confirmed?

:Should not every soldier who is charged be informed of his rights, and of the fact that he has the right to be represented, or aided by somebody else?

:I have not the slightest doubt that he is informed. This is a question of informing him of the availability of advice in connection with a petition.

Victory Processions (East London)

asked the Secretary of State for War if, when Victory marches are being arranged, he will give an assurance that there shall be such a march through the East End of London Boroughs, so that their much-bombed citizens may have an opportunity of acclaiming the Forces who have avenged their sufferings.

:My hon. Friend's suggestion will certainly be borne in mind, but I cannot say now what the ultimate arrangements about Victory processions will be.

Requisitioned Premises (Release)

asked the Secretary of State for War when he expects to inform the House of the result of his inquiries as to the possibility of releasing schools which have been requisitioned for various military purposes; and whether he is aware that pupils of London schools who were evacuated to the country are in many cases returning with their parents, their country billets being no longer available, and are receiving no education by reason of the occupation by his Department of their schools.

:I expect to have a complete return of phased requirements by the end of the month. It will then take say a fortnight to draw up a programme of derequisitions. Under this, as I have repeatedly said, priority will be given to small dwelling houses and schools. I should, however, make it clear that a considerable number of these classes of property have been derequisitioned already and the process is continuing even in advance of the general review. If my hon. Friend will repeat his Question after Whitsun, I will let him know when I shall be able to make a more detailed statement.

:Does not my right hon. Friend agree that the education of our children is a first priority in post-war reconstruction; and that it is no good having elaborate paper schemes in connection with education when schools are not available for the children by reason of War Office occupation?

:I do not think that I could possibly have said more. I have said time after time in this House that, after small dwelling houses, schools are the first priority. I have also just said—I do not know whether my hon. Friend could have heard what I said—that, even in advance of the general review and what he so contemptuously called "paper schemes," schools and small dwelling houses are being de-requisitioned all the time.

:Does my right hon. Friend mean schools in the provinces as well as in London?

:On a point of Order, Mr. Speaker. The right hon. Gentleman said that I referred to education schemes contemptuously. I merely said that we had a number of proposals and it was no good if we could not put them into operation—

:Can my right hon. Friend say whether the decision he has announced with regard to the de-requisition of schools is a decision relating to the three Services or is only peculiar to the War Office?

:It is not a new announcement. It represents, so to speak, the continuing practice of the War Department, and in this matter I take upon myself only my own sins and not other people's.

:May I ask my right hon. Friend whether he is making a serious effort to use empty camps, especially those particularly well built, for the purpose of schools, and has he looked into the question of the empty camps, the names of which I have given him?

:Certainly, all that will be looked into in connection with the general review. One of the difficulties in this matter, of course, is that sometimes the empty accommodation available is not in the right place in the changed conditions.

asked the Secretary of State for War whether in view of the cessation of hostilities in Europe, the Government will expedite the return of requisitioned houses, halls and buildings to their owners throughout the country at the earliest possible opportunity; and whether he will specially bear in mind the applications that have been made to him previously in the Evesham Division.

:The Army will continue to need much requisitioned accommodation. I will, however, release from Army use any which can be spared and in doing so priority will be given to small dwelling houses and schools. I regret that I cannot give a special preference to Evesham.

:Why is it that the War Office have done nothing, are doing nothing, and continue to do nothing in the Vale of Evesham over de-requisitioning?

:I would like time for research into the assertion that we are doing nothing in the Vale of Evesham. We are not doing anything in regard to the particular building in which my hon. Friend is interested—that is quite true—but in this as in so many matters, one swallow does not make a summer.

:Is my right hon. Friend aware of the big wide-open houses with nothing in them?

:Will my right hon. Friend pay special attention to a case in my constituency where 50 houses have been requisitioned for Italian prisoners of war, on a housing estate?

:Italian prisoners of war are working in this country to help to increase the productivity of the land, and hon. Members really cannot have it both ways. If the Italian prisoners are to work to help to produce food for us, they have to be accommodated.

:When will the general review of this whole position, which I understand is being conducted, be completed?

:My Noble Friend will find that only three minutes ago I answered a long Question on that.

Occupying Troops (Sightseeing Facilities)

asked the Secretary of State for War if he is aware that officers and men in the armies in liberated countries who have been engaged in severe fighting would now appreciate any opportunity during off-duty hours or periods of inactivity to visit surrounding places of interest; and if he will, within the available transport resources, arrange for day and half-day trips exclusively for sightseeing purposes for all ranks in all the liberated countries where soldiers are now stationed.

:This is a matter for the Commander-in-Chief who I am sure will do what is possible in this direction. But my hon. Friend will appreciate that the troops will continue to be busy and the calls on transport very heavy.

:As we spend something like £4,000,000 a year on indoor entertainment which is not very popular in the summer months, and 70,000 Americans are to come over here sightseeing, cannot we switch over some of the N.A.A.F.I. profits and adopt sightseeing instead of organised entertainments?

:That raises a larger question and perhaps the hon. Member will give me time to look at it.

India Command (Leave Arrangements)

asked the Secretary of State for War why officers serving under the India Command are being allowed 28 days' leave under private arrangements whereas other ranks are compelled to spend their 28 days' leave in Army leave camps; whether he is aware that this lack of freedom to make private leave arrangements is resented by other ranks serving in the Command; and whether, in future, he will grant the same facilities in this respect for both officers and other ranks.

:I am making inquiries into the matter and will communicate with my right hon. Friend in due course.

Red Cross Organisation

asked the Secretary of State for War to what extent the cessation of hostilities in Europe will affect the work of the Red Cross.

:I understand that the British Red Cross War Organisation has this under consideration and they will no doubt make a public announcement in due course.

Building Technicians (Release)

asked the Secretary of State for War whether, in order to facilitate the rehabilitation of the building industry and expedite the building and repair of houses, he will release redundant members of the staffs, civil and military, of D.C.R.Es. and Garrison Engineers in this country whose specialised training and experience are urgently needed for the purposes indicated.

:A number of housing experts will be released under the normal rules and I am sure that of those who remain none will be redundant.

:May I ask the right hon. Gentleman if he will look again into this question of redundancy if I send him a letter from a garrison engineer in this country who says, that there is redundancy and a lot of it?

:I will certainly look into it again, but I am bound to give notice in advance that redundancy may mix itself up in a man's mind with a great desire to get back to civil life.

:Is my right hon. Friend aware that the building industry is saturated with experts and too few workmen?

Transfers from Other Services

asked the Secretary of State for War whether he can state the number of R.N. and R.A.F. personnel who had completed four years' service on 1st January, 1945, who have been transferred to the Army since that date.

:Three thousand four hundred and fifty men have been transferred from the Royal Navy and 8,000 from the R.A.F. I regret that I do not know how many of these had completed four years' service by 1st January.

Offenders (Psychiatry)

asked the Secretary of State for War whether soldiers are examined by a psychiatrist before being tried by field general courts-martial.

:Before such a trial a man is always examined by a medical officer but not necessarily by a psychiatrist.

asked the Secretary of State for War in respect of how many soldiers serving sentences in Category C detention barracks was a certificate of a psychiatrist issued in the years 1942, 1943, 1944 and the first quarter of 1945, respectively.

:Arising out of that reply, will my right hon. Friend keep a careful watch on these psychiatrists, bearing in mind that it would be highly improper if men got relief quicker through the "glass house" than by any other means?

:I have been doing what my hon. Friend exhorts me to do, for some years past.

German Prisoners of War

Rations

asked the Secretary of State for War whether he has any further statement to make on the subject of rations allowed to German prisoners.

asked the Secretary of State for War whether, in view of the shortage of food, he will consult with the Allied Powers with a view to a reduction of the rations issued to German prisoners of war in Allied hands in Europe.

:I have nothing at present to add to the reply I gave several hon. Members on 8th May. Non-workers never have received more of the nationally rationed items than civilians in this country. Working prisoners are being brought into line, so far as nationally rationed foods are concerned, though it may be necessary to give the workers rather more bread and potatoes than the non-workers.

:Is the Minister aware of the very great indignation felt by the people of this country about the way these prisoners are being fed, in view of the fact that our own prisoners have stated that, but for the Red Cross parcels, they would have been allowed to starve?

:Most of the indignation to which my hon. and gallant Friend refers is, judging from the correspondence coming to me, based on a complete misapprehension of the facts.

:I should have thought that, having said that non-workers never have received more of the nationally rationed items than visitors to this country, and that working prisoners are being brought into line, the answer to my hon. Friend's question must be clear.

:Does the Minister's answer mean that working German prisoners will receive more than working British civilians?

:Since the right hon. Gentleman says that there is widespread misapprehension, could not he make an authoritative statement?

:That is precisely what I have done and have been trying to do. If the hon. and learned Member, with his legal acumen, will read what I have said, he will see how clear it is. Let me add one other thing. With the food situation in the world as it is, there can be no finality in this matter, and, quite obviously it will have to be reviewed from time to time.

Nazis and Anti-Nazis

asked the Secretary of State for War whether he is aware that a Nazi court at a prisoner-of-war camp, particulars of which have been given to him, recently sentenced a prisoner of war to death by hanging for anti-Nazi propaganda, for membership of the Free German Movement and for leading a working party; and that the man narrowly escaped being hanged accordingly by S.S. men; whether any other such courts are or have been operating and what steps are being taken to deal with the men involved in this incident.

:A court of inquiry has been held. Two prisoners in No. 22 Camp complained that they had been threatened with hanging for participating in anti-Nazi propaganda. Their statements are, however, uncorroborated. One of these prisoners was assaulted and received minor superficial injuries. Another prisoner in this camp was assaulted because he was the foreman of a working gang. He received wounds in the head caused by kicks and blows. Three prisoners concerned in one assault were sentenced to 168 hours detention and transferred to a Nazi camp, and five prisoners concerned in the other assault are being tried by military court. Protection was at once given to the victims and to any other prisoner who felt he was threatened. In addition all prisoners considered likely to cause trouble were segregated in a newly constructed compound at the camp. Over 500 less ardent Nazis were transferred to other camps. I have no definite evidence that Nazi courts have been operating.

I am sorry I did not have this information when the hon. and learned Member originally put down his Question. The only information then available at the War Office related to Camp 21 and it was assumed that the hon. and learned Member was referring to this camp.

:Is not that very unsatisfactory? When a Member puts down a Question about Camp No. 22, and all this had in fact been happening in Camp No. 22, could not the right hon. Gentleman even have asked Camp No. 22 whether anything had been happening?

:Camp No. 22 has been asked and that matter is being pursued, I can assure the hon. and learned Member.

Questions

Orkney and Shetland (Restrictions on Entry)

asked the Secretary of State for War if he will abolish the restrictions on entry into Orkney and Shetland.

:These restrictions were imposed primarily in the interests of the Navy. I am informed that they will be removed as soon as circumstances permit.

:Does my right hon. Friend realise that this restriction has pressed extremely heavily on the people of the Orkneys and Shetlands during the war, that a very large number live on the mainland, and there is always a big traffic either way, and will he undertake to have the whole position re-examined?

:My position in this matter is that I only sign the order which the Admiralty want. I have seen correspondence between my hon. and gallant Friend and the Admiralty and I suggest that he goes on attacking the hand and not the pen.

Italian Prisoners of War (Guards)

asked the Secretary of State for War whether, in order to prevent the recurrence of assaults on the public, he will give instructions that, in future, non-co-operating Italian prisoners of war are at all times to be controlled by adequate armed guards.

:My noble and gallant Friends suggestion would involve a great increase in the number of guards. I am as anxious as he is to prevent such cases as he raised on 8th May but I do not consider that the circumstances warrant the increase. The cases are very rare and to increase the guards would mean retaining in the Army men due for release.

:Can my right hon. Friend say how he proposes to prevent occurrences of that kind?

:I should have thought that exemplary punishment of offenders would discourage others.

British Prisoners of War

Released Men (Reception and Distribution)

asked the Secretary of State for War what are the arrangements for the reception and distribution to their homes of our own returned prisoners of war; and what further number of returnees are to be covered by these arrangements.

asked the Secretary of State for War what number of British prisoners of war from Germany are now in Allied hands; what number are still unaccounted for; and what number are still awaiting evacuation from the western and eastern fronts, respectively.

:I will, with permission, answer this Question and No. 33 together. It was estimated at the beginning of this year that 180,000 British Commonwealth prisoners were in German hands. By 14th May 116,000 had been evacuated from the areas controlled by S.H.A.E.F. and about 1,000 from Italy and about 4,000 through Odessa. We are awaiting reports of the number of prisoners liberated by the Soviet Forces. I am circulating in the OFFICIAL REPORT details of the arrangements made for ex-prisoners when they arrive in this country.

:Can the right hon. Gentleman give some account of the camps in Eastern Austria of which we have heard nothing?

:Perhaps the hon. and gallant Gentleman will put that question down.

Following are the details:

Most ex-prisoners of war are brought to this country by air, and on arrival at the airfield are sent by road or special trains to Reception Camps.

At the camps each repatriate is given a free telegram to enable him to notify his next-of-kin of his safe arrival. In addition, full postal facilities are available. Whilst in the camp a medical in- spection is carried out of each repatriate, and any who are not fit to proceed on leave are sent to hospital. If any man feels he would like a more thorough medical examination, he may ask for this and arrangements are made for a full medical inspection before he goes on leave.

An Advice Bureau has been set up at each of the British Army Reception Camps, staffed by an Army Welfare officer assisted by members of the various voluntary organisations. Pay personnel interview each repatriate and assist him to complete the necessary forms to straighten out his account. Advances of pay are made and clothing coupons and ration cards, etc., are issued.

When the processing has been completed, the repatriates are taken to the nearest railway station by road where, if necessary, special trains are formed to take the men on leave.

Similar arrangements have been made by the other Services. Dominions, Indian and Colonial ex-prisoners of war are sent to reception centres where they are accommodated while arrangements are being made to repatriate them to their own countries.

Oflag VIIB (Bombing Casualties)

asked the Secretary of State for War if he can now make any statement on the liberation of Oflag VIIB.

:The prisoners of war from Oflag VIIB were warned to move by the Germans on 14th April leaving behind 100 sick. When the column was just outside the camp it was fired on by Allied aircraft with the result that 11 officers were killed and 42 were wounded. This is one of the hazards to which prisoners are unfortunately but unavoidably exposed in operational areas and I should like to take this opportunity to express my deep sympathy with the victims of this most distressing accident and with their relatives. They have been informed in all cases. The column returned to camp and the wounded were transferred to German hospitals in Eichstadt where they and the sick were ultimately recovered. The prisoners of war left on the night of the 15th for Moosburg. They moved by night and rested by day. They were liberated at Moosburg on 28th April. We know that half of them are in this country. The rest should arrive soon.

:When the right hon. Gentleman says that the relatives have all been informed, does he mean the relatives of those who, most unfortunately, were killed or injured; or does he mean that all the relatives of the survivors as well have now been informed?

:I mean the former. The hon. Gentleman was good enough to send me a letter from a friend of his on the subject. I have written to him in answer to it, but I have said in this House over and over again that as these camps are invariably liberated in conjunction with warlike operations, it is not possible, in spite of all our efforts, to get lists of prisoners back, and the prisoners themselves arrive in most cases before the notification of their release, but I am quite sure that the relatives generally would prefer that we and the Americans should concentrate on getting the men back rather than their names.

:But as the prisoners come back one by one, are steps being taken to pool all the available information from the prisoners themselves, so as to obtain particulars?

:I do not know what the hon. Gentleman means by pooling. Each prisoner is taken to a camp. Immediately he is given an opportunity of sending a telegram to his relatives and he is medically examined. Statements are taken from some of them, but all this is conditioned by the fact that we want to get them home for their six weeks' leave at the earliest possible moment.

Questions

German Surrender, Rheims (British Representatives)

asked the Secretary of State for War who was the British representative at the signing of the unconditional surrender instrument at Rheims.

:I have called the next Question; the hon. and gallant Member cannot ask a supplementary question now. I gave him quite a long time before calling the next.

German Army Casualties

asked the Secretary of State for War if he can state the total number of German prisoners captured by the Anglo-American armies since and including the battle of El Alamein; whether an estimate has been made of the number of German divisions wholly or partially destroyed by the Western Allies; and the number of German divisions engaged or tied down by the Western Allies during this period.

:The answer to the first part of the Question is over 4,000,000. From November, 1942, to April, 1945, some 100 German divisions were totally destroyed. The number of divisions engaged or tied down during this period varied considerably. In January of this year it was 120 plus.

German Jewish Refugees (Repatriation)

asked the Prime Minister whether in view of the destruction of National Socialism, arrangements can be made for the immediate repatriation of all Jewish refugees who had been the victims of persecution in their country of origin.

:No, Sir. Quite apart from other considerations there would be very considerable practical difficulties in carrying out this suggestion.

:Are we to take it that the frequent assurance given by Home Secretaries in previous days that these men were to be repatriated at the earliest possible moment still remains the policy of the Government?

:It still remains the desire, but Europe is in a state of frightful confusion at the moment. Many things are not cleared up there, and I think we had better try to give vent to our policy and good intentions with due regard to what is practical.

:Would the right hon. Gentleman bear in mind that it would be difficult to conceive of a more cruel procedure than to take people who have lost everything they have—their homes, their relatives, their children, all the things that made life decent and possible—and compel them, against their will, to go back to the scene of those crimes?

:Can my right hon. Friend given an assurance that it is not the intention of His Majesty's Government to differentiate between Jews and other people?

:Having regard to the altogether exceptional brutality and horrible inflictions imposed upon the Jewish people, I should not go so far as to say that special efforts will not be made to meet hard cases.

:Will my right hon. Friend make it clear that, in general, it is the policy of His Majesty's Government, in dealing with refugees, not to differentiate between Jewish and non-Jewish refugees, because to do so might encourage anti-Semitism?

:I think that is a very sensible comment an any looseness in my supplementary replies.

Government Requisitioned Houses

asked the Prime Minister what is the policy of His Majesty's Government in regard to requisitioned further houses, not previously requisitioned, of private individuals after VE-Day; and whether, in view of the distress caused, he will issue a directive that such action by the War Office or any other Department of State shall not be carried out.

:The policy of His Majesty's Government is that further houses should not be requisitioned except for urgent housing or other essential needs. The Government Departments have been fully instructed in these matters and a further special directive in the matter is unnecessary.

:Can my right hon. Friend give an undertaking that Government Departments will not remain in occupation of private houses beyond the termination of the Japanese war?

:The public interest must rule, but every effort will be made to meet private needs.

Victory Celebrations

asked the Prime Minister if it is proposed to hold formal victory parades and celebrations before the end of the Japanese war.

:No, Sir. Our brief rejoicings and celebrations are over, and we must now turn again to many difficult and unpleasant tasks including, especially, the defeat of Japan.

:Does not my right hon. Friend think that we ought to have more celebrations, on account of Japan's complete surrender between now and Christmas?

Armed Forces

Overseas Service (Home Leave)

asked the Prime Minister whether, now that the war situation is so improved in Italy, Germany and other European countries, he will take early steps materially to increase the monthly quota of officers and men allowed leave to this country.

asked the Prime Minister what arrangements are being made for giving a period of home leave to those who have been serving in the Forces in Europe and Africa before they are posted to India or the Far East.

:We have to meet all demands for the needs of the war against Japan. Apart from this it is hoped that we shall be able to bring home all those due for release under their appropriate groups to continue the Python scheme of repatriation with its present qualifying periods and to give leave in this country to all men now serving overseas who have to be posted to the Far East. If resources of shipping and man-power permit the next object will be to reduce the Python qualifying periods. Whether it will be possible, on top of all this, to increase the leave quotas I cannot yet say.

:Does the right hon. Gentleman realise that on the present quota it would take years before some men, who went out on D-Day, ever got home again?

:All things are moving at the same time, and it does not follow that the present arrangements would be suitable to a world in which all our enemies had submitted.

:Will the right hon. Gentleman bear in mind that the tour of service for many of these men in the Far East is now much too long and that he will have to take steps to reduce the period, taking into account the Japanese war, otherwise it may affect considerably the health of many of our troops out there?

:My right hon. Friend the Secretary of State for War tells me that he has already answered a question on that subject to-day and as, naturally, we are of the same mind I should hesitate, by making a separate verbal effort of my own, to reveal any possible discrepancy.

Compulsory Transfers to Army

asked the Prime Minister whether, in view of the new situation created by the defeat of Germany, he will arrange for all those who have been compulsorily transferred to the Army from the Navy or the R.A.F., to be given the opportunity of re-transferring to their former Services, except in cases where there are strong operational reasons which make this undesirable.

:These matters have been carefully considered, but now that the date of the defeat of Germany is an established fact, the Army, Navy and Air Force strengths to be maintained must be the subject of a drastic and comprehensive review in the light of existing circumstances and prospects. One would hope that, in the near future, reductions far larger than the numbers involved in this Question will be made in all the Fighting Services, but I have no statement to make on this at the present time.

:Is my right hon. Friend aware that there is considerable feeling among some of these men who, very rightly, have great pride in the Service in which they originally served; and in view of that will he examine the matter again, in the light of the small number involved, to see whether those who have served three or four years in the Navy and Air Force cannot be given an opportunty of re-transferring to their original Service?

:Pending the review which the Prime Minister spoke of, would it be possible temporarily to suspend the process of transfer?

:I do not desire to make any statement on that point at the moment but, naturally, if there are large reductions in the total of all the Armed Forces, some of the transfers may not become necessary.

Court-Martial Sentences (Revision)

asked the Prime Minister if he proposes to take steps to secure that Servicemen who are undergoing sentences of imprisonment for offences committed while serving with British Forces abroad shall have their sentences reviewed and remitted in whole or in part.

:Under existing instructions all sentences awarded by courts-martial are reviewed automatically at periods of not more than six months by a superior military authority. At each review such superior military authority has power to remit, suspend or commute the sentence of the court at his discretion without reference to anyone. No general remission of sentences is, however, intended and I would refer my hon. Friend in this connection to the reply I gave my hon. and gallant Friend the Member for Petersfield (Sir G. Jeffreys) on 14th December.

:Would it not be a very gracious thing if, at this time, the right hon. Gentleman could review sympathetically some of the long sentences, which bear hardly upon relatives at home?

:No, Sir, I do not think this is the time to reconsider punishments inflicted upon people who deserted their comrades and forced their places to be taken in battle, and danger and losses to be sustained, by gallant men who did not flinch.

Demobilisation (Release Groups)

asked the Prime Minister whether he will give a detailed statement in HANSARD showing the number of officers and other ranks in the various age-plus-service groups in each of the three Fighting Services.

:Will the right hon. Gentleman give any reasons for withholding information from Parliament now that the war with Germany is over, and the same security reasons cannot be advanced, considering that Parliament has always been very jealous of its control over the Armed Forces of the Crown?

:The war with Japan is not over, and the figures asked for would disclose the entire structure, in considerable detail, of our Armed Forces. The matter would also imply a great deal of labour, more than I think would be justified to meet the particular needs.

:Is the right hon. Gentleman aware that the Minister of Labour will shortly be forced to come to this House and say what he is going to do about the demobilisation of some groups? If he is going to give figures in that connection, why cannot we have them for the whole?

:I am sure that when the Minister of Labour comes to this House, he will not have to be forced on any matter that is his duty. On the contrary, it will be a pleasure to him to give a full account of all the complex and admirable measures he has taken in a field so difficult.

Questions

Hitler (Reported Death)

asked the Prime Minister whether the Government are satisfied that the death of Hitler has now been established beyond all shadow of doubt.

:I know no more than any other Member of the House who reads the newspapers. I have only my own opinion to go by.

:I really do not feel that any particular duty lies upon me to make guesses. When we have anything particular I should be quite ready to announce it but, in the meanwhile, I must say that I incline to the general opinion.

:Is it not a fact that he is being harboured by de Valera at the moment?

Great Powers (Conference)

asked the Prime Minister whether a conference between himself, President Truman and Marshal Stalin is contemplated in the near future.

:I devoutly hope so. It would be very odd to have such a long war without any settlement, even among the victors.

:Does not my right hon. Friend realise how delighted the country would be if the venue for such a conference were to be London?

Service Leaders (Recognition)

asked the Prime Minister whether it is intended to invite Parliament in the near future to express the nation's gratitude to our principal Service leaders and make a monetary grant.

:So far as the "near future" is concerned the answer is in the negative.

Liberated Countries (Parliamentary Delegations)

asked the Prime Minister if arrangements can be made for a Parliamentary delegation to visit Norway, Denmark, Holland and other liberated countries at an early date.

:I should think this was a very agreeable plan, but as operations have only just ended in these countries I cannot say when it will be possible to carry it out.

Penicillin

asked the Lord President of the Council whether he is aware that penicillin is now on sale at every drug store in the U.S.A. and is advertised for sale there as freely as cosmetics; and what steps it is proposed to take to ensure that in the early future facilities are provided in Great Britain for at least the partial development of British discoveries and inventions such as penicillin.

:I have been asked to reply. It will be part of the responsibilities of the Department of Scientific and Industrial Research in the future to keep watch, with the help of other Departments in specialised fields such as medicine, for promising results of British research which merit development in the national interest, and where such development appears to be lagging behind appropriate steps will be taken for its encouragement.

Russia (Lend-Lease and Mutual Aid Supplies)

asked the Chancellor of the Exchequer if he can give the approximate annual value of goods supplied on Lend-Lease to Russia by this country and the U.S.A. since the system was introduced.

:The approximate value of goods provided by His Majesty's Government to the U.S.S.R. under Mutual Aid up to 30th June, 1943, was £179,000,000, and £90,000,000 during the year ending 30th June, 1944, making a total of £269,000,000. These figures, which do not of course include such indirect contributions as the loss of ships on convoy, have been published, with certain further details, in the two reports on Mutual Aid issued as Cmd. 6483 and 6570.

Figures of Lend-Lease aid by the Government of the U.S.A. to the U.S.S.R. have been given in the President's 18th Report to Congress on Lend-Lease operations, dated 20th February, 1945. This shows that supplies valued at about £606,000,000 were exported to the U.S.S.R. under Lend-Lease up to the end of June, 1943, and supplies valued at about £863,000,000 during the ensuing year, making a total of £1,474,000,000.

:Will the huge sums of money mentioned by the right hon. Gentleman be part of the indemnity to be paid by Germany?

:Will my right hon. Friend make it clear that there is no real comparison between the figures as between one country and another because of the very great difference in prices, on the basis of which the figures are calculated?

:My right hon. Friend is perfectly right. There are also other differences in regard to the terms of supply which have to be taken into account in forming a true estimate of the respective contributions.

University Grants (Research Activities)

asked the Chancellor of the Exchequer whether, in view of the increased grants to universities promised by the Government, he can give any indication of what increases in research activities and the output of qualified scientific personnel may be expected in the immediate post-war period; and whether he will provide a White Paper setting out the precise plans of each university.

:No, Sir. I am afraid it is not possible for me to make the forecasts asked for in the first part of the Question. As regards the second part, the University Grants Committee have asked the universities for estimates of their financial needs for the next academic year, but it seems to me that the publication of information supplied to the University Grants Committee by individual universities as to their plans or needs might be attended by serious disadvantages.

Government Departments (Requisitioned Premises)

asked the Chancellor of the Exchequer what decisions the Government have reached upon the recommendations made by the Select Committee on National Expenditure in their Second Report for 1944–45 that a central and independent review of the use of premises and of storage requirements should be instituted and pressed forward with all practical speed; and that an independent review should be made by the Government of the practice of Departments in the retention of stores.

:Arrangements have been made for such a review by a small body of Ministers not Departmentally interested.

:Will my right hon. Friend bear in mind that this question of the retention of stores is creating a vicious circle, and will he therefore see that this Committee does operate very quickly?

Civil Service Staffs (Reduction)

:With permission I wish to make a statement about a Measure proposed by the Government for the better regulation of the employment of civil servants both temporary and permanent during the period, upon which we have already entered, when reductions of staffs should be possible in many Departments but when on the other hand an uncontrolled and sudden loss of staff might gravely prejudice the performance of essential services.

An additional Defence Regulation No. 58AAA, has been made and is available in the Vote Office. It provides that, with certain exceptions, no whole-time civil servant who is under the age of 60 years may leave his employment except in accordance with provisions to be prescribed by Order. My right hon. Friend the Minister of Labour and National Service, will make an Order accordingly, which will come into force very shortly, and will provide that non-industrial civil servants may not leave their employment except with the consent of the employing Department or, failing that, the permission of a National Service Officer. Either the civil servant or the employing Department will be able to appeal against the decision of the National Service Officer to one of the Local Appeal Boards set up by the Minister of Labour and National Service under the Essential Work (General Provisions) Order. The Order in Council containing the Defence Regulation can, in accordance with Section 8 (2) of the Emergency Powers (Defence) Act, 1939, be annulled by a Resolution of either House within the next 28 Sitting days. In that event, the Order which is to be made by the Minister of Labour and National Service will, of course, cease to have effect.

The new Regulation and the Order to be made under it will bring the non-industrial Civil Service generally into line with undertakings scheduled under Essential Work Orders made under Defence Regulation 58A. Hitherto non-industrial employees of Government Departments have not, for the most part, been subject to the control which has been exercised in the various forms of war industry, although such control has applied to a large number of industrial civil servants. The Government will for its part accept obligations in relation to the discharge of civil servants similar to those imposed on private employers by the Essential Work Order. The necessary instructions to Departments will be embodied in a Treasury Circular. It must be emphasised that nothing in this Regulation and Order is intended to interfere with the reduction of the Civil Service now that the war in Europe has ended. Every effort will be made both by the Treasury and by the Departments to reduce the number of civil servants as quickly as is consistent with the many heavy tasks which Departments must continue to carry out. The object of the Regulation and Order is to ensure that the reduction of the Civil Service takes place in an orderly manner, and that staffs on which the community is depending for vital services are not suddenly reduced to the point at which these services cannot be maintained.

A further important point is that it would not be right for persons employed in the Government Service to be completely free to leave essential work, and to take up other work, while persons in the Fighting Services or in scheduled civilian undertakings are still tied. The Government consider that in this respect civil servants should be put into the same position as other persons engaged on essential work. The control of employment in the Civil Service will be no more stringent than in other essential undertakings. The proposals in the White Paper presented to Parliament by the Minister of Labour and National Service on the Re-allocation of Man-power (Cmd. 6568), and the arrangements there described for releasing members of priority classes, will apply in the Civil Service as in other employments. The intention is simply to ensure that man-power in the Civil Service is re-allocated on the same principles as man-power elsewhere.

It is the intention of the Government that, in relation to individuals, these powers should be exercised in a reasonable manner. Those who have joined the Civil Service in a temporary capacity during the war have contributed in no small measure to the successful planning and execution of Government policy and, subject to the preservation of the basic safeguards to which I have referred, Departments will be instructed to deal as sympathetically as possible with individual applications for release.

:Has this proposed Order been discussed between the Treasury and the Civil Service trade unions? If not, why not? If so, was it agreed or disagreed? Further, could the right hon. Gentleman indicate that action will not be taken under this proposed Order until the House has an opportunity of considering the proposition?

:There have been discussions from time to time, as the hon. Member is no doubt aware, with the staff side of the Civil Service on the matter, but in regard to this particular Regulation which has just been made there was not that prior consultation. In regard to the application of the Order, the fullest opportunity for consultation will be afforded. I have explained the reasons for making it and I hope they will commend themselves to the House.

:In view of the general instruction issued by the Prime Minister in May, 1940, that these issues which affect trade union rights and trade union representative capacity ought not to be decided without prior consultation with the unions, can the right hon. Gentleman indicate why that was not done here?

:When this Order is introduced, will it be applied throughout the whole Service, so that big business will not be allowed to take off the cream of the Civil Service at high prices?

:The whole purpose of the Regulation is to ensure that the process of reduction shall take place in an orderly manner.

:Is my right hon. Friend aware that some Departments have engaged more people, in order that they shall not be under-staffed when these reductions are made?

:Is the House to understand that it is the intention of the Government to continue the Essential Work Order for an unlimited period?

:If a person appeals to an appeal tribunal against a decision of the National Service Officer, will the National Service Officer have to accept the decision of the appeal committee?

Law Reform (Contributory Negligence) Bill [Lords]

Reported, with Amendments, from Standing Committee B.

Bill, as amended (in the Standing Committee), to be considered upon Tuesday, 29th May; and to be printed. [Bill 53.]

Minutes of Proceedings to be printed. [No. 87.]

Statutory Rules and Orders, Etc

Tenth Report from the Select Committee, brought up, and read, as follows:

Your Committee have considered the Purchase Tax (Suspension of Registration Limit) Order, 1945 (S.R. & O. 1945, No. 482), a copy of which was presented on 10th May, and are of the opinion that there are no reasons for drawing the special attention of the House to it on any of the grounds set out in the Order of Reference to the Committee.

They have also considered the Acquisition of Land (Valuation for Supplemental Compensation) Regulations, 1945 (S.R. & O., 1945, No. 370), a copy of which was presented on 10th April and are of the opinion that the attention of the House should be drawn to them on the ground that their form or purport calls for elucidation.

Report to lie upon the Table

Selection (Standing Committees)

Colonel Sir CHARLES MACANDREW reported from the Committee of Selection, That they had discharged the following Member from Standing Committee B: Brigadier-General Sir Ernest Makins; and had appointed in substitution Major York.

Message from the Lords

That they give leave to Charles Travis Clay, Librarian to the House of Lords, to attend in order to his being examined as a witness before the Select Committee appointed by this House on the Library (House of Commons).

New Member Sworn

Air Vice-Marshal Donald Clifford Tyndall Bennett, C.B., C.B.E., D.S.O., for the Borough of Middlesbrough (West Division).

Victory in Europe

Address to His Majesty

3.27 p.m.

:I beg to move, The King is also, since the Statute of Westminster, in a very special sense the constitutional link which joins us to the self-governing Dominions. He embodies a multiple Kingship unique in the world of to-day and, so far as I know, in the history of the past.

Of this multiple Kingship, we in these Islands, the Mother country, are but a single member, namely, the United Kingdom of Great Britain and Northern Ireland, but it is a Kingship to which all the other Governments of the Empire feel an equal allegiance and an equal right. Governments so proud and independent that they would not brook the slightest sign of interference from this House, vie with each other, and with us, in their respect for the ancient and glorious institution of the British Monarchy. It is the golden circle of the Crown which alone embraces the loyalties of so many States and races all over the world. It is the symbol which gathers together and expresses those deep emotions and stirrings of the human heart which make men travel far to fight and die together, and cheerfully abandon material possessions and enjoyments for the sake of abstract ideas.

Woeful would it be in this modern age, were such forces to be used in a wrongful cause of greedy aggression, in a lust for conquest or in a vain conceit of earthly grandeur. Glorious is it when all the mysterious powers of the British Commonwealth and Empire come together by a spontaneous impulse to face unmeasured and immeasurable dangers when they fight for honour and win the fight. That is glorious indeed. It is at such moments that the House expresses its respect and its loyalty by formal and reasoned Resolution, not only for the institution of the Monarchy but for the person of the Sovereign who occupies the Throne. We are fortunate indeed that an office of such extraordinary significance should be filled by one who combines with an intense love of our country and of all his people a thorough comprehension of our Parliamentary and democratic Constitution. Well may it be said, well was it said, that the prerogatives of the Crown have become the privileges of the people.

Sincere affection, quite apart from constitutional respect, is given to King George VI from all parts of his Empire and Commonwealth. He is well beloved because of his courage, of his simple way of living, and of his tireless attention to duty. I will give just one instance of many, but one which has been brought much before my eyes in my daily work. In all, 92,000 decorations have been awarded to those who have done brave or arduous service in this war. Of this great number of 92,000, over 37,000 have been personally presented to the recipients by the hands of His Majesty the King. The continuous discharge of every function helpful to the peace and happiness of the country and to the prosecution of the war by the King and by the Royal Family has been long remarked and admired by people in all parts of the country engaged in all kinds of functions, and most especially those in the areas which have been shattered by the bombing of the enemy. His Majesty's visits to the battle-fronts have involved his Royal person in that element of danger which cannot be divorced from travel by air, but we must also remember him as a sailor King who fought as a young officer in the greatest of all naval battles, the Battle of Jutland. It would be altogether unfitting if I mentioned these personal aspects of His Majesty's work without referring also to his gracious Consort the Queen, who has been everywhere with him to scenes of suffering and disaster, to hospitals, to places shattered the day before by some devastating explosion, to see the bereaved, the sufferers and the wounded, and I am sure that many an aching heart has found some solace in her gracious smile.

I do not think that any Prime Minister has ever received so much personal kindness and encouragement from his Sovereign as I have. Every week I have my audience, the greater part of which occurs most agreeably at luncheon, and I have seen the King at close quarters in every phase of our formidable experiences. I remember well how in the first months of this Administration the King would come in from practising with his rifle and his tommy-gun in the garden at Buckingham Palace, and if it had come to a last stand in London, a matter which had to be considered at one time, I have no doubt that His Majesty would have come very near departing from his usual constitutional rectitude by disregarding the advice of his Ministers. It is in no perfunctory sense that we sing the National Anthem. We have a King and Queen well fitted to sit at the summit of all that the British nation stands for, and has largely achieved in these tremendous times.

I have only one more observation to make. If it be true, as has been said, that every country gets the form of government it deserves, we may certainly flatter ourselves. The wisdom of our ancestors has led us to an envied and enviable situation. We have the strongest Parliament in the world. We have the oldest, the most famous, the most honoured, the most secure and the most serviceable Monarchy in the world. King and Parliament both rest safely and solidly upon the will of the people expressed by free and fair election on the basis of universal suffrage. Thus this system has long worked harmoniously both in peace and war, and I think that this is indeed a fitting occasion when we should give wholehearted thanks to the Sovereign in the Resolution which has appeared upon the Paper and which I now, Mr. Speaker, have the honour to move.

3.40 p.m.

:I wish to associate myself with the words which have fallen from the lips of my right hon. Friend. It is a little unfortunate that he should seek to introduce a discordant note towards the end of his speech, but on this occasion I ignore it. We are all agreed, I think, that on this very historic occasion it is right that this House, which is part of the institution of the King in Parliament, should express its views and its thanks to His Majesty and his gracious Consort for the part that they have played, a very generous, heavy and responsible part, in this war. If only for the inspiration that they have given to our people, it is right that we should express our thanks to them, and through this House express our thanks to the Supreme Commander of all our Forces, on behalf of the people of this country, for the great victory we have achieved. We hope the day may not be far distant when my right hon. Friend will come to the House with a similar Motion expressing our satisfaction and our thanks to His Majesty for the final termination of the war. I hope that day may be soon, but whether soon or late, we can rely upon His Majesty, at the helm, to perform his duty with distinction and with courage and in the knowledge that there is love for him in the hearts of our people.

3.43 p.m.

:I make no apology for rising to support this Motion, because I do think it is right and proper that the whole House should be associated with it. It is no mere formality to say that His Majesty has not only won the respect but the deep affection of our people by his quiet dignity and devotion to duty, which has been an inspiration to all of us in the last five and a half difficult and troubled years. That applies particularly to the people of London. He visited them time and again to see their bombed homes and damaged houses, and inspired and cheered them by his presence and kindness; and it applies equally to all the areas in the country, including Bristol, Coventry—

:And Plymouth—that have suffered from the attacks of the Nazi enemy. His Majesty has not only visited the people in their distress but he has shared their dangers. All through the dark and difficult months of 1940 and 1941 he lived at Buckingham Palace, which did not escape the attack of the enemy. I am revealing no secret when I say that when I had the privilege on one occasion to attend a Privy Council every window was damaged and the Council had to be held under more or less wintry conditions. This affection for the Sovereign, which is deep down in the hearts of the people of this country, is by no means confined to Great Britain and the homeland. As the Prime Minister rightly said, it is the Crown which binds together the people who make up the British Commonwealth of Nations. In Australia, Canada, New Zealand and South Africa the King and Queen are part of the common life equally, in those far-flung Dominions, with us in the Motherland. The same applies to the Crown Colonies and to His Majesty's coloured subjects, who revere the Crown and love the present holders of the Office. We hope that for many years His Majesty and his gracious Consort will be spared to occupy the Throne, and that in the difficult years ahead he will be able to help us, by his dignity and by his devotion to duty, to weather whatever storms we may have to face.

3.46 p.m.

:Rarely has the Prime Minister expressed the deep-seated views of the nation more eloquently than he has done to-day. We are grateful indeed to have such a Sovereign and such a gracious Consort. Fate has appointed that His Majesty should be to-day at the head of an Empire which has fought for freedom in the past. There was Napoleon 130 years ago; then there was the Kaiser who, during the reign of His Majesty's father, fled to Holland; and now there has been this emissary of Satan, Hitler, who has presumably perished amid the rubble and ruin of Berlin. When I think of the years I have been in the House, and remember that of the last 30 years nearly 10 have been passed under the horrible cruelty of war, due entirely to German greed and domination, I am proud to be a member of the British public reigned over by his Gracious Majesty and his Consort. We are celebrating a victory, but great difficulties are yet to come. The victory on the battlefield is but half-way; it is, however, a blessed half-way house along the very precipitous road to the goal of lasting and healing peace. May I here interpolate the hope that the Prime Minister, with his colleagues, the heads of the great Allied Governments, may be able to ensure a peace which, in the last words of the Resolution, will enable His Majesty's reign long to "continue in a world at peace."

3.48 p.m.

:Perhaps someone who is not a leader of a party might say a word on this occasion. It is very proper that leaders of the parties, with all the great support they have in the country, should speak to the House on these occasions, but perhaps the humble Members who are not in such positions might also offer some remarks. If I might respectfully say so, the right hon. Centlernan's moving of this Resolution was a model of what should be said on such a very historic occasion. As the Prime Minister said, the continuity of King and Parliament—and the present is an occasion for emphasising that continuity—has lasted almost as long as this House. I know it may be regarded by some as a very jingoistic remark, but I would like to say that, such a Resolution coming from the greatest deliberative and legislative Assembly in the world, as it has shown itself to be throughout this war and every other war in which we have been engaged, emphasises the stability and the solid qualities of our country. As an old Member of the House, I must say that in all the long period of our history and in all the crises with which we have been faced, we have never been better led in this House than we have been led by the present Prime Minister.

Question put, and agreed to.

Resolved,

"That an humble Address be presented to His Majesty as followeth:

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to convey to Your Majesty our heartfelt congratulations on the victorious conclusion of the war in Europe and to assure Your Majesty of our resolute support in the continuing war against Japan.

We rejoice with Your Majesty in the deliverance brought both to this Nation and to the enslaved peoples of Europe by the success of Your Majesty's Forces fighting in comradeship with those of Your Majesty's Allies.

We would acknowledge the powerful help given without hesitation and without stint to the common cause by the peoples of Your Empire and Commonwealth of Nations overseas.

We would wish to express the deep feeling which exists throughout the whole country that Your Majesty and Your Gracious Consort have from the beginning contributed in a wonderful manner to the courage andd constancy of the people by your inspiring example, by the extreme personal exertions you have made year after year, by your willingness to share all their trials, and your constant sympathy with them in the losses which they have endured.

It is our earnest prayer that, under God's grace, the glorious victory won in Europe may be followed by a speedy and successful conclusion of the struggle against Japan and that Your Majesty's reign, so many years of which have been darkened by war and the threats of war, may long continue in a world at peace."

To be presented by the whole House.

Privy Councillors humbly to know His Majesty's pleasure when He will be attended.

Orders of the Day

Income Tax Bill

Considered in Committee. [ Progress, 27th April. ]

[Mr. CHARLES WILLIAMS in the Chair]

CLAUSE 8.—(Definition of "industrial building or structure.")

3.53 p.m.

:It will perhaps be for the convenience of the Committee if I offer a word of explanation first on the Amendments. The first Amendment in the name of the hon. Member for Walsall (Sir G. Schuster) is, I think, nearly the same as the Amendment in his name at the bottom of the page. I therefore propose to call the second Amendment standing in the hon. Member's name.

:Does that mean that the next three Amendments have not been selected?

:That means that the three Amendments in the names of the hon. and gallant Member for South Cardiff (Colonel Sir Arthur Evans), the hon. Member for Chippenham (Mr. Eccles) and the hon. Member for Oldham (Mr. Dodd) have not been selected.

:I beg to move, in page 10, line 9, at end, insert: in the form of factories, warehouses, repair shops, garages and so on which, if they stood alone, would qualify for the benefits of this Bill but which may yet be disqualified from that benefit because, according to the wording of the Bill, they might be regarded as ancillary to a retail undertaking. The point I wish to submit to the Committee is that if there is a warehouse, factory, garage or repair shop which on its merits is considered to be worthy of this form of treatment, then it should not be excluded from that benefit merely because it is working in connection with a retail shop undertaking.

My right hon. Friend the Financial Secretary, speaking on the last occasion when we were discussing this Bill, said that the line of division between buildings qualifying for the benefit of the Bill and those which did not so qualify had already been clearly fixed in the De-rating Act. I submit that that was not a strictly accurate statement; that in fact the present Measure goes very much further in its range of disqualification than the Derating Act did. If I might put the matter in the simplest possible language, I understand that the position would be that under the De-rating Act a building qualified for the benefit if the purpose for which it was used was primarily an industrial purpose, but that building would not qualify for benefit if it could be said that that purpose was not the primary purpose for which the structure was used. In this Bill we get a totally different position. As I read it, it may be interpreted in this way: there may be a separate structure the primary purpose of which clearly is an industrial purpose within the meaning of this Bill, and yet it might be excluded from benefit if it were held to be ancillary to a retail trade undertaking. The use of this word "ancillary" does not, as far as I have been able to ascertain, occur in the Derating Act at all. It was first used, I think, in the judgment given in another place in the case of Finn v. Kerslake. The argument in that case concerned a building which was used as a baker's ship, but in which the manufacturing process of baking bread was also carried on, and the question was whether the primary purpose was the baking of bread or the retailing of bread. It was held that the baking done was ancillary to the business of the ship. The draftsmen seem to have picked up that word "ancillary" and, by bringing it into this Bill, have greatly extended the range of disqualification.

4.0 p.m.

My right hon. Friend the Financial Secretary said there would be no difficulty in the interpretation of this Measure because all the questions have been settled in connection with the interpretation of the De-rating Act. I submit that is not the case. Supposing a large manufacturing undertaking—one of the large chocolate making undertakings, for instance—decide that for the purpose of carrying on their business they would like to acquire a certain number of retail shops so that they might have a yardstick to test out the way in which the process of the distribution of their products went on. It might then be argued that the retail distribution was ancillary to their main business of manufacturing chocolate. On the other hand, an undertaking with a large number of retail ships might think it would be advantageous to go into the manufacturing business so that, by ownership of factories, they might have a yardstick of what ought to be the proper cost of manufacture. In that case, it might be said that the manufacturing business was ancillary to the retail distribution. I submit that there may be a lot of cases in which it is extremely difficult to decide which process is ancillary to which. Therefore, I make the point that there is room for a great deal of argument and confusion on this aspect of the matter.

I want further to submit to the Committee that to make this distinction is both inequitable and contrary to public policy—if we can take it that public policy is rightly interpreted in the Bill. If it is desirable that everybody who owns a warehouse or a factory should be encouraged to keep that building up-to-date, I do not see why that encouragement should be removed merely because the owner is also interested in retail business. The case is really clear, and I do not think I need say any more. I raise this issue with complete confidence in the justice of the case that I am arguing. And I am not deterred by any fear of asking the Chancellor to go further than he might think safe because in the case that I am discussing there can be no danger of his being drawn into all those administrative difficulties of which the Financial Secretary to the Treasury made so much in our earlier discussions.

As I have mentioned that point, perhaps I might also be permitted to mention that the administrative difficulties which have been paraded with such emphasis by the Chancellor and the Financial Secretary do not seem to have deterred our good friends in the United States from giving to retail distribution all those benefits which we claimed in our earlier Debates should be given to retail distribution. Too much has been made of those administrative difficulties, but in any case if they have any reality in regard to the wider claim they could not arise in the cases which I am now discussing.

:My hon. Friend put his case for the Amendment, as he invariably does, in a very clear and persuasive manner. I therefore regret all the more that I do not find myself in a position to accept his proposal. It no doubt is the case, as he indicated, that the structure of the Bill in regard to the classes of buildings which will qualify for benefit on the one hand, and those which will not qualify on the other hand, does not run precisely on all fours with the Act of 1929 dealing with de-rating; but the principle which is applied for the purposes of this Bill is, I think, in substance the same as in the case of de-rating. What my hon. Friend urges is that whenever you find a building in which what anyone would normally regard as a factory process is carried on—taking that particular case for the purposes of illustration—you should allow that building to qualify for relief.

On the other hand, the Bill provides, and I hope to persuade the Committee that it is a reasonable provision, that where we find a factory building, a garage or storage premises, or whatever it may be which, if it could be treated by itself and looked upon as an entirely separate entity, might come into the category of buildings with which Clause 8 is concerned but which, in fact, is subsidiary or—to use the words of the Bill—ancillary to an undertaking which is outside the scope of the Clause, it should not qualify. That distinction is, in my submission, quite inescapable and inevitable once we accept—and I know the distinction is unacceptable to certain of my hon. Friends—the broad distinction which the Bill draws between industrial and non-industrial undertakings. I can make my point clear if I say that what we are concerned with in the Bill is the essential character of the undertaking and not the scale of the undertaking.

When you come to look at the position of a retail business, you will find that, in connection with that business, there may have to be a certain amount of machinery, as in a bakery or a grocery business there may be minor machinery. You will find that there may be a building in which vans and cars are garaged. If the business is on a small scale, the processes of retail distribution and minor manufacture may be carried on under the same roof and for all practical purposes be inseparable. When the business comes to be on a somewhat larger scale, it may be practical and convenient to segregate certain subsidiary processes in buildings of their own.

Clearly, it would not be equitable to make a distinction in this matter according to the scale of the undertaking, and therefore the test which the Bill applies is: Is the process an independent process which justifies separate treatment, or is it purely ancillary to what is, in the main and substantially, not a manufacturing business? I submit that that is an equitable and a reasonable test, and one that we can in practice apply without getting into great confusion. Therefore, I have to ask the Committee to reject the Amendment, and to accept the broad division which underlies the structure of Clause 8.

Amendment negatived.

:I beg to move, in page 10, line 27, leave out from "structure," to "which," in line 28.

It may be for the convenience of the Committee if I deal at the same time with all the various Amendments proposed to this Clause, and also in passing refer to an Amendment in the name of my hon. Friend the Member for Chippenham (Mr. Eccles), in line 29, after "constructed," insert "for use as an office or."

Those Amendments and the proviso would effect three changes. In the original Clause there was an exception from the exception, the primary exception being of dwellinghouses. There were then excepted from the dwellinghouses miners' dwellinghouses. The words in the original proviso were that those houses must be "at or near" the mine. It was suggested that there might well be houses and welfare buildings which came within the principle of the proviso but might be at some distance from the mine, particularly having regard to modern methods of transport. Therefore, the first purpose of re-drafting the Clause is to get rid of the words "at or near."

Then, we have altered the proviso to bring in, under the same principle as that which applies to miners' dwellinghouses, the dwellinghouses of those employed in working a foreign plantation. We make the consequential changes in the proviso. There is a third change, which is little more than a drafting alteration, to meet the point that when you deal with foreign concessions, the concession might become valueless to the person who owns it, not because, as with a mine, it is worked out and there is no more coal or mineral in it, but because of the terms of the concession. It may be for a limited period and therefore come to an end without compensation. We have, therefore, made one or two drafting Amendments to cover that point. So far as the second Amendment in the name of my hon. Friend the Member for Chippenham is concerned—in line 30, after "at," insert "or in connection with,"—we look upon it, subject to the will of the Committee, with a favourable eye so that we need not expend our eloquence in dealing with it.

:On a point of Order, Mr. Williams. May I ask whether you propose to call the Amendment in my name, in page 10, line 27, leave out "at or near," and insert "used in connection with"?

:In that case, may I ask whether the Amendment we are discussing will include any kind of building between the source of supply and the source of distribution? A case in point is that of oil. It may be that there would be some buildings, or even a house, occupied by a man in charge of valve controls. There are many places erected along a pipe line. I want to know whether separate houses, no matter what they are, so long as they are related to the operation, will be brought within the scope of the Amendment.

:Further to the same point, if it is not your intention, Mr. Williams, to call the Amendment in my name to insert the words "in connection with," may I be allowed to speak on that Amendment now?

:I am not so sure about that. If the hon. Member says he does not want to press the Amendment but wishes to raise a point which is very closely connected with the Amendment we are discussing, it might be convenient for the Committee to allow him to do so.

4.15 p.m.

:I would reinforce the point made by my hon. Friend the Member for Southampton (Mr. Craven-Ellis). I could give the Committee another example of a mineral undertaking which might not be able to get a supply of power in its neighbourhood, and therefore has to build an electric station of its own, it may be at some distance from the deposit. Round that station there would have to be accommodation for the workers who operated it.

These buildings are in connection with the mine itself, and would become of little or no value when the source is worked out. That being the case, I feel sure it is his intention to bring them in here in this proviso. But leaving out the words which the Attorney-General has just moved, we are still left with the phrase "at …. the mine", and I am not sure that buildings such as buildings for workers on a boosting station on a pipe-line between an oil field and the refinery, and a hydro-electric plant some distance from a mine, could properly be described as at a mine. Therefore, I had intended to move the same words as the hon. Member for Southampton had intended to move in his Amendment for the addition of "in connection with."

:We think the words "in connection with" go too far. To take a perfectly simple example, there might be an oil well, and not far away a refinery where the oil was refined. It is not intended to bring that refinery within the Clause, and the words "in connection with" might be difficult to construe, might give rise to dispute and might include what it is wished to exclude. I will look into the point which the hon. Member for Southampton (Mr. Craven-Ellis) raised. I quite see that it might be that the dwelling houses in connection with a pipe-line from an oil well should be included under the principle we have got here, namely dwelling houses which are related to work at the source, and which admittedly have a limited life. I will look into that point and see whether our words cover that point. With regard to the hydro-electric plant mentioned by my hon. Friend the Member for Chippenham (Mr. Eccles) I will look into that also. That may be a little more suspicious, because it may be that a hydro-electric plant some distance from the mine might well have a profitable life after the mine had come to an end, but if it really was part of the source it should fall within the principle.

:If the Attorney-General will read the last two lines of this proviso he will see that all the buildings or structures to which he refers are limited by the words

"likely to become valueless when the mine, oil well or other source is no longer worked."

Therefore, he should not have cast at me a hydro-electric works which had value after then. I was thinking of buildings which had no more value when the source was worked out.

Amendment agreed to.

:I beg to move, in page 10, line 29, after "constructed," insert "for use as an office or."

This proviso would bring into the scope of the Bill certain buildings connected with mines and oil companies. In general, offices are excluded, for much the same reason as shops were excluded, namely, that their priority is not of the same level as that of the instruments of production. But there are offices attached to a mine or an oil field which are of a different nature. They have no value when the source is worked out. I am sure the Committee will recall a mine office somewhere in a remote valley or on the side of a hill, where a manager gives one a cup of tea when one goes down the mine, and three cups when one comes up again. Those buildings have no value whatever when the last ton of ore has been wound up the shaft. The principle on which mining and oil companies seek to be treated under this Bill, and that principle is in the Bill, is that all capital expenditure which becomes valueless when the source is worked out should be completely written off during the life of the undertaking. It is only reasonable to include mine offices in this exception, limited as they are by the words that to rank for the allowance they have to become valueless when the source has been exhausted.

:I hope that the Chancellor will see his way to accept this Amendment. As my hon. Friend the Member for Chippenham (Mr. Eccles) has pointed out, these offices cannot simply be offices in London in connection with a company. They must be offices that are at or near the mine itself. Furthermore, they are not the offices of what I would call a commercial character, where commercial transactions will be carried out. They are the administrative offices of the mine, built ad hoc at the same time as the whole capital plant of the mine or oil well was laid down, and used solely for the purpose of carrying on the day to day running routine of the undertaking. It would seem only equitable, if this Bill is to be made thoroughly comprehensive of all the capital expenditure incurred in connection with these enterprises, that an allowance should be granted on these offices and that they should thus be brought within the scope of the Bill.

:My right hon. Friend does not feel that he could advise the Committee to accept this Amendment. Offices are excluded under the ordinary provisions of the Bill, and it will be very difficult to bring them in here for a special allowance. My right hon. Friend has made concessions, which have had the general support of the Committee, on a fairly wide scale for welfare buildings and houses, but he does not feel he could extend this special concession to offices at the mines. I should have thought that in a good many cases the office was, in fact, in part of a building which would pass as a factory, and would very likely scrape in in that way. But if there was a separate block of buildings constructed as an office there would be great objections from other people to their getting special treatment because they happened to be built near a mine.

:What will be the position in the case I am about to outline? Some time ago a Government Department demanded that there should be fresh office accommodation for a factory which was on war work. Later another Government Department demanded that there should be a canteen, and as there was difficulty in getting labour and materials the company converted the office block into a canteen. Under this Clause there is provision for buildings "for the welfare of." Here what was originally an office was used as a canteen. It was used "for the welfare of" the workers. What would be the position in that case?

:That is one of those difficult cases. I think it would be regarded as being used for its purpose at the time it came to be considered. Buildings in war-time might be used for exceptional war purposes, but I do not think that that would stamp them for all time with a character which would prevent them from ranking for allowance under the Bill, if by the time of the assessment they have gone back to their original use, which might take them within the Bill or out of it.

:If a building has not been erected for office purposes, will it get a concession under the Bill?

:I ask the Chancellor to look at this point again. While I am not a mining expert myself I understand that it is quite common, when a mine is to be put down at some outlandish spot, for the assessors to plot out the extent of the ore body, and then to determine at what rate it is to be worked, and to provide for a life of, say, 30 years for the mine. Then every building which is built at that mine is built to last exactly 30 years. If a building has no value at the end of that time I think it is reasonable that offices or any other buildings should be written off entirely. Surely that is the whole of the purpose of this Bill, and I would ask the Chancellor to give a little more sympathetic consideration to the matter.

:I am disappointed with the reply. It seems to me that the only reasonable principle to apply to mining enterprises is that whatever money they spend on these physical assets, whether winding-engine houses, welfare buildings, whatever they are, all that is tied up strictly to the duration of the deposit, that money is lost when the mine closes down, and there cannot be any valid reason for drawing a distinction between one building and another. I had hoped that the Chancellor would have rounded this matter off in accordance with the principle that all expenditure which becomes valueless is treated equally.

:I hope the Committee will believe that I have tried to look sympathetically on every proposal which has been put forward in connection with this Bill, which is, in its essence, a relieving Bill. But I think my hon. Friends are construing rather too narrowly the wording of this particular proviso, and I think that the exclusion from the scope of the proviso of buildings which are constructed for use as offices is reasonable. If a particular part of the premises was constructed for use as offices, I think that as my right hon. and learned Friend has said, that should come into the general category of office buildings, to which relief is not given. But I should expect to find that parts of a building which are not to be regarded as a separate construction, which are in fact used as the rooms in which managers and people of that kind conduct their ordinary business, would be treated as part of the mining undertaking. I therefore do not think that a case has been made out, but as this is a technical and difficult matter and we may find in practice a great variety of conditions, I will look at it again and see whether I am wrong in thinking, as I do think at the moment, that the Bill is all right as it is.

Amendment, by leave, withdrawn.

4.30 p.m.

Amendments made: In page 10, line 30, leave out the first "the," and insert "a."

In line 30, after "source," insert:

"of mineral deposits or for occupation by, or for the welfare of, persons employed on or in connection with the growing and harvesting of the crops on a foreign plantation.".—[ Sir J. Anderson. ]

:I beg to move, in page 10, line 31, leave out "become valueless," and insert:

"have little or no value to the person carrying on the trade."

I move this Amendment because I think that the proposed words are clearer than those in the Bill.

:It has been suggested—and that is the reason behind this Amendment—that the words "become valueless," if rigidly applied, might exclude from the benefit of the proviso cases of which one could not say that what was left was worth nothing, for it might have a certain scrap value of a few pounds. Therefore, we agree that to say "little or no value" more correctly carries out my right hon. Friend's intentions.

:The line will be drawn in administration, and there will be no trouble about it. When a mine runs out, you cannot say that there is absolutely no value left. You may be able to get something for the bricks that are taken away, and there may be bits of machinery and so on which have a certain value. If the word "valueless" were kept in, it might be contended that there was some value which had to be taken into account. In the administration of the Income Tax law, we have to apply a practical commercial or industrial test, and, on the whole, it is done with as much satisfaction as the imposition of taxation can afford to those affected. This will be administered in a way that will carry out the intentions of the Committee.

:May I express the hope that in all other cases the same leniency in interpretation will be shown? If I get £2 or £3 interest on a very little sum of money that I may have, I do not find that, because the interest I get has little or no value to me, I have not to return it for Income Tax purposes.

:It is very remote.

Amendment agreed to.

Further Amendment made: In page 10, line 32, after "source," insert "or the plantation."—[ Sir J. Anderson. ]

Further Amendment proposed: In page 10, line 32, at end, insert:

"or will cease to belong to the person carrying on the trade on the coming to an end of a foreign concession under which the mine, oil well or other source, or the plantation, is worked."—[ Sir J. Anderson. ]

Amendments made to the proposed Amendment: In line 1, leave out "the," and insert "such."

In line 2, leave out "carrying on the trade."—[ Mr. Eccles. ]

Proposed words, as amended, there inserted.

:I beg to move, in page 11, line 9, leave out "or."

This and the next Amendment deal with the electricity industry, and they are proposed to make clear that undertakings for the transmission or distribution of electrical energy are included.

Amendment agreed to.

Further Amendment made: In page 11, line 9, after "conversion," insert "transmission or distribution."—[ The Attorney-General. ]

:I beg to move, in page 11, line 14, at end, add:

"'foreign plantation' means any land outside the United Kingdom used for the growing and harvesting of crops.

'crops' includes any form of vegetable produce and 'harvesting' includes the collection thereof, however effected."

These are definition Amendments in order to set out what we mean in the Amendments which have already been inserted in regard to "plantation."

Amendment agreed to.

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

:I want to call attention to a grievance which is commonly felt by those engaged in the motor repair industry in regard to the differential treatment between their garages and workshops and those belonging to factories. Those belonging to factories doing the same kind of work, that of repairing cars and all that goes with it, get the advantage of the Bill, but those that are not connected with a factory, but are performing the same valuable services for the public, have no such advantage. It is felt that that is a source of grievance and an anomaly for which there is no justification. I would like the Chancellor to explain why there should be this differential treatment, which seems most unfair and is felt to be so by those who are differentiated against in this way. I would also like to call attention to a point referred to by my hon. Friend the Member for Walsall (Sir G. Schuster) as to the treatment of fac- tories according to whether or not they are connected with a particular type of undertaking. It seems to me that it depends upon the form of the company and the particular type and structure of the shareholding whether it gets the advantage of the Bill or not. Surely if a concession is given which benefits a factory, should be given to all factories, whatever the form of the company.

:In reply to the last point, what I tried to point out when I was dealing with an earlier Amendment in the name of my hon. Friend the Member for Walsall (Sir G. Schuster), was that it would be unfair if the differentiation for which this Bill provides were to be dependant on the mere accident as to whether the concern was on a large scale or a small scale. That argument goes to the point that my hon. Friend has just made. It is not contemplated that the treatment of particular buildings should be dependant on the structure of the company. It is contemplated that their treatment should be according to their actual character, and if buildings are ancillary to buildings which, on the main principles of the Bill, will be excluded from benefit, they will be excluded. In reply to my hon. Friend's first point, that people who are carrying on the business of garage proprietors and doing repairs, no doubt valuable and necessary repairs—and we hope they will be a little busier in the near future—have a grievance because they are not included in the benefit of the Bill, that again is the consequence of the broad distinction that is made in this Bill between concerns which are in the nature of manufacturing concerns and those which are in the nature of retail businesses. It would be futile and foolish to deny that there may be border-line cases and that it may not always be absolutely easy to justify to the satisfaction of those concerned that the distinction that is made is logical. Nevertheless, that is the basis on which this Bill is submitted for the approval of Parliament, and I cannot do anything which will interfere with that broad distinction.

:I observe that water and electricity undertakings are brought within the definition of "industrial building or structure," but there is no mention of gas undertakings. Am I right in assuming that they are covered by the expression "a mill, factory or other similar premises"?

:Yes, that is the position. They always have been so treated for tax purposes, and, therefore, we thought it better not to put in special words for them.

:I intervene after having listened to my hon. Friend the Member for Walsall (Sir G. Schuster) doing as much as he could to include the distributive trades in the Bill. A statement was made by the Chancellor of the Exchequer which gave the distributive trades hopes that something would be conceded. In that statement, which was made on 27th April, the Chancellor said:

My advice, after 40 years' experience—and I must say that I am interested in this matter—is that that is not the interpretation that the inspectors of taxes put on this part of the Bill. They say that if any improvement is made when the shop front is being put in, they will not allow that for taxation. If you can prove that there is no improvement effected by putting in this new front—and how that is to be done, heaven knows—they will allow it. Where in this Bill is it said that when a new shop front is put in, to improve the property, the expense will be allowed? Thousands of shopkeepers are asking that question. It interests me, as a retailer, and it interests many others.

:I was not aware that this question was going to be raised. Of course, I adhere to what I said on the earlier occasion, but I shall have to inquire into the matter, and if there is any doubt we will attend to it between now and Report stage. My hon. and gallant Friend will perhaps have noticed a provision later in the Bill about expenses in relation to new equipment. Perhaps it would be better to deal with that before we give further consideration to the point that my hon. and gallant Friend has just raised.

:What does the right hon. Gentleman mean when he speaks about dealing with this point between now and Report stage? Does he mean that if a new shop front cannot now be set against profits he will do something on Report to enable his interpretation of the law to be carried out?

:My hon. and gallant Friend quoted something that I had said on the previous occasion. He said that his inquiries led him to suppose that that did not represent existing practice. I said that I adhered to what I had said, but that I would look into the matter, and if there was any doubt steps would be taken to deal with it between now and Report.

:I may be under a misapprehension, but I assume that the right hon. Gentleman was referring to the practice by which structural repairs, which are undertaken for the maintenance of the existing rent, but not for an increase of rent, are allowed to be included, in certain circumstances, in the quinquennial adjustment of Schedule A. I wonder if he is going to the extent of making a special exception for shop fronts, or widening the interpretation of the existing custom.

:I do not intend to go beyond what I said on the previous occasion; but if I find that there is any doubt about the accuracy of what I said, I will see that the matter is brought up upon Report.

:I am very glad to have heard that assurance, because those of us who are concerned in this matter know that in practice there is a difference in the way that individual inspectors of taxes deal with this matter, and it is most important that the position should be cleared up. So far as concerns the Clause itself, I should like to add a few words before we leave it. I was as little convinced as I believe my right hon. Friend himself was by the argument which he used in answer to the case which I made earlier to-day. I am sure that he recognises that there really is an injustice in the discrimination which arises under this Clause. I therefore appeal to him earnestly to take this matter into account in considering the general effects on the national economy of our present system of taxing business profits. With taxation at its present high rate, this is an extremely serious matter. I have not argued this case with any desire to get advantages for particular companies—I am sure my right hon. Friend will accept that from me. I have argued it because I believe that the efficiency of distribution is very important in the national interest, and that it is a great error that these concessions, to encourage efficiency in industry, are denied to the whole business of distribution. I also want to emphasise once more a point that I made earlier, that now we are entering into these double Income Tax arrangements with the United States it is most important that our system of Income Tax should be in accord with theirs. In this matter there will be a most confusing difference. I hope that my right hon. Friend will regard this as a question of public interest which demands further consideration, not now but in the years to come.

:I want to support the plea which has been put forward by my hon. Friend the Member for Walsall (Sir G. Schuster). I have no connection whatever with the distributive trades, but in the production industries we receive considerable advantages under this Bill, and we feel that the plea which has been put forward, which we supported on an earlier Amendment, that the distributive trades should not be shut out, has considerable weight behind it. The Chancellor practically said that this was not a matter of principle but a matter of expediency, and that they could not go all the way now. We believe that it is necessary for the distributive trades to be made efficient. The country would benefit materially. If the Chancellor cannot see his way to meet the point under this Bill, because, as he says, he feels himself limited by the objective he has set himself, we ask him to do something at the next opportunity to put an injustice right, in the national interest.

:I want to support the argument which was put forward, and to which I thought the Attorney-General did not make a very effective reply, on the question of offices of mines. The Chancellor has promised to look into this matter between now and the Report stage, and has admitted that there are technicalities which perhaps justify second thoughts. Having myself worked on tin properties and rubber estates, I can speak from experience. At the working properties you must have offices, where you weigh the products, test and assay the values of ore, pay your employees, and so on. Your principal offices are more often than not in an adjacent town. I think that, when the matter is looked into further, the Chancellor will have no difficulty in meeting the point.

Question put, and agreed to.

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

Clause 9 ordered to stand part of the Bill.

CLAUSE 10.—(Exclusion of double allowances, etc.)

Amendment made: In page 11, line 32, leave out "do," and insert "does."—[ The Attorney-General. ]

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

CLAUSE 11.—(Interpretation of Part I.)

:I beg to move, in page 12, line 6, at end, insert:

"and not being work which consists of cutting or tunnelling."

This is a complicated matter, but I will state it as shortly as I can. We intend under this Clause to cut out from allowances the expenses of cutting, tunnelling, and levelling land, except where those processes are for the purpose of foundation, and become part of the building, and are, of course, valueless apart from the building. The reason why we think it right to cut out cutting, tunnelling and levelling is that, once done, such work does not depreciate: it is done, broadly speaking, for all time. But we realise that the words which we use, which we thought took out of that principle the cutting and tunnelling done in connection with buildings or structures have in some cases a very wide meaning, and might include a road or a way or a railway, or something of that sort. That was not our intention. We want to add these words at the end of the paragraph. The effect will be that the expenses of cutting and tunnelling will be excluded; but that will not exclude from the allowances under the Bill, say, a brickwork or concrete tunnel inside the tunnelling. All that is cut out is the actual expense of the tunnelling which is done once for all; any brickwork or concrete inside will rank like other forms of bricks and mortar. The Amendment is rather complicated, and I will see if we can get it into simpler form before the Report stage; but it is a rather complicated piece of definition.

Amendment agreed to.

Further Amendments made:

In page 12, line 9, after "this," insert "Part of this."

In line 10, leave out "that date," and insert "the time when the expenditure was incurred."

In line 12, leave out "the time when the expenditure as incurred," and insert "that time."—[ The Attorney-General. ]

5.0 p.m.

:I beg to move, in page 12, line 12, at end, insert:

"(3)Without prejudice to any of the other provisions of this Act relating to the apportionment of sale, insurance, salvage or compensation moneys, the sum paid on the sale of the relevant interest in a building or structure, or any other sale, insurance salvage or compensation moneys payable in respect of any building or structure, shall, for the purposes of this Part of this Act, be deemed to be reduced by an amount equal to so much thereof, as, on a just apportionment, is attributable to assets representing expenditure other than expenditure in respect of which an allowance can be made under this Part of this Act."

This Amendment covers a simple point, and I am sure will commend itself to the Committee. As the Committee knows, if there is a sale of the assets of a business, then the balancing charge or allowance may fall to be made, but, of course, the sum received in respect of the sale may, and, indeed, in normal cases, will, cover items which have not ranked for the allowances in the Bill. The simplest example of that is the cost of the site of a factory. You do not get an initial allowance on the cost of the site, whereas, if you sell the factory, the price you get will contain that.

:That is another point. The purpose of this new Subsection is to see that the sale price is reduced by the proper proportion which should be allocated to items, which have not ranked for allowances under the Bill.

Amendment agreed to.

:I beg to move, in page 12, line 13, leave out Sub-section (3).

This Amendment is necessary because we are putting in a new Clause relating to what is meant by the expression "the relevant interest."

Amendment agreed to.

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

:May I revert to that part of the Clause which deals with the cutting of a tunnel? I take it that the Clause means that the actual cutting of a foundation trench would not be included, but that the foundations within the trench would. May I ask whether it would include the various kinds of pipes which may be laid within the trench—pipes for carrying electricity cables or water, or pipes for carrying sewage? Would the right hon. and learned Gentleman give consideration to the actual wording on this point? He has said there is some doubt as to the wording and has promised to endeavour to get some more simple wording between now and the Report stage. Perhaps, in considering that, he could give some clear definition of what is to be included and what excluded in regard to a trench and what comes within a trench. The right hon. Gentleman will see that, in the case of a large building, it might be a matter of considerable magnitude, because, the trenches might contain work of great value. The inclusion or exclusion of these conduits or pipes within the trench might make considerable difference.

:I will look into what the hon. Gentleman has said, but I am not sure that he has appreciated that, under a proviso on page 12, work of this kind which could broadly be described as preparing, cutting, tunnelling or levelling on any land, does rank for the allowance if it is done and is to be covered by a building or structure, so that the foundation work does rank for the allowance. The work that we do not intend to rank, is work done on a large area of land around the factory. We will, however, look into what the hon. Gentleman has said.

:The foundations would undoubtedly be covered, because they are to be covered by the building, but the trenches made for the purpose of sewerage pipes, apparently would not.

Question put, and agreed to.

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

CLAUSE 12.—(Initial allowances.)

:I beg to move, in page 12, line 24, after "incurs," insert "or incurs liability for."

:There are three or four Amendments on this point, which it might be convenient to consider together.

:The purpose of this Amendment, and of the consequential Amendments to line 27, and the additional Sub-section which I propose in page 13, line 11, at end, add: persons, and certainly those whom the promoters of the Bill desire to help, will not have, actually in their pockets or bank balances, the cash to enable them to pay cash over the counter for the plant and machinery they want to acquire.

In those circumstances, there are, broadly speaking, two alternatives open to them. A manufacturer, in the first place, if his credit with his bank is good, and if he has a pretty ample margin of collateral security, and if he does not mind being lectured by the bank manager on prudence in managing his affairs, can go to the bank, and probably arrange for an overdraft. It is my experience, and that of other hon. Members, that he is unlikely to get that overdraft without some stipulation as to repayment of the sum he is to borrow. When he proceeds to get that overdraft, he will pay what appears to be cash for the plant, and will be entitled to claim the allowance provided under this Bill. There is another case where he either has not the free credit with his bank, or wishes to use it for another legitimate purpose of his business, and where, instead of going to his bank to borrow the money, and entering into an arrangement which is not open to the Treasury to study, he goes to his supplier and enters into a formal agreement to pay for that plant by instalments over a fixed period.

I submit that, in that case, he has carried out exactly the same transaction, though in slightly different legal form, as in the former case. If he enters into an agreement to pay by instalments, he is not entitled to the benefits immediately, but only, year by year, in respect of such sums as are covered by the instalments which he has contracted to pay. I know there is not very much difference in the actual amount of allowance which he is likely to get, but there is, or may be, a substantial difference in the value of these allowances if these payments are spread over a period during which the rate of tax fluctuates. I suggest to my right hon. and learned Friend that he must find it difficult to give a logical reason why the man who borrows from his bank and pays back by instalments, should receive an allowance on one basis, whereas the man who, in fact, though not in legal form, borrows from his manufacturer or supplier, and pays him by instalments, should receive an allowance on a different basis. I submit that this is an anomaly which could be cured by accepting the Amendments which I have put upon the Paper.

:Under the Clause as drafted, a person who has capital expenditure financed on deferred purchase terms will only be allowed on allowance of one-fifth of the principle paid off in the basic period. For example, if the capital exenditure so financed is, say, £250, and he pays off £50 in the basic period, his initial allowance will be one-fifth of £50, namely £10; whereas the man who can pay cash will be allowed an initial allowance of £50 on the £250. This would be a great hardship to a poor man or a small trader as against a wealthier man or large trader who could borrow from the bank and so pay cash for the asset at the time of acquisition. It will also discriminate most unfairly as against hire purchase finance houses in favour of banks and similar institutions. For that reason, I beg to support the Amendment.

:Under a hire-purchase transaction, as I have no doubt my hon. Friends know, though it may not be known to every Member of the Committee, the interest is, of course, allowed in deduction in a trading account, and, so far as the wear and tear parallel is concerned, the article bought on hire-purchase terms, comes within the purpose of wear and tear, at its value at the time of the purchase. So far as annual allowances are concerned, there is no differentiation between the one method and the other. The question arises under the Bill mainly in relation to initial allowances. The general principle laid down in Clause 60 (2) is that references in the Act to the date on which the expenditure is incurred, shall be construed as reference to the date when the sums in question became payable. Broadly speaking, as I think my right hon. Friend said, the idea of this initial allowance is to give an inducement to the man to put his hand in his pocket and spend money. He says, "This machine will cost so much. I will spend £1,000 out of the reserves of the company, and we shall get an immediate 20 per cent. allowance, or whatever it may be."

That, of course, does not apply where, by the terms of the contract, the capital payment is spread out for the period of the hire-purchase agreement. Therefore, when it is realised that, for the purpose of the annual allowance the article is taken in at its value, and there is no complaint about that, the only question arises on the initial allowance. It would be somewhat inconsistent with the policy laid down regarding the incurring of expenditure—and there is an important argument for the initial allowance as an inducement to part with your capital reserves—if we were to accede to my hon. Friend's suggestion. I agree—and my right hon. Friend does—that in the way it is put one may feel there is an inequality, but once it is realised that the initial allowance is given mainly because of the capital expenditure the reason for the distinction which is drawn will be appreciated.

5.15 p.m.

:I am obliged to my right hon. and learned Friend the Attorney-General for the information, which is news to me, that the interest under a hire-purchase agreement is liable to Income Tax. People who did not know that will be very pleased to hear it. But that is not the main point I sought to make. The intention of the Bill is that relief should be given to encourage people to put their hands into their own pockets and make capital expenditure, and the relief is to be made in connection with the capital expenditure when it is incurred. But where a man does not put his hand into his own pocket or that of his banker or supplier—

if he puts his hand into the other man's pocket to provide the capital and he repays the loan, then in that case he gets a large initial allowance, and in the other case he gets a different allowance.

:I hope that the Chancellor of the Exchequer or the learned Attorney-General will give further consideration to the point. The object of the Bill is to induce a person to part with his capital resources for reconstruction purposes. In the case mentioned by my hon. Friend the Member for the Abbey Division (Sir H. Webbe) he incurs the liability to part with those capital resources and an unfair discrimination arises between the wealthy man who can go to the bank for the money because he has the necessary security, and the poor man who goes to a finance house to obtain hire-purchase terms. I am afraid I must press this point, and I earnestly appeal to the Chancellor to give it further consideration in order that there shall not be this unfair discrimination.

:I was interested in what the hon. Member—who spoke about his Friends opposite putting their hands into other people's pockets—said about the concession made by the Chancellor of the Exchequer. We understand the desirability of getting our industries re-organised and into first-class condition at the earliest possible moment. The hon. Member told us that the men who want to re-organise have to go before the bankers and their managements before they can get an overdraft and make an agreement with the bankers to pay so much interest, whereas somebody who has been more careful with his resources, cannot go to the bank. The bank will not have anything to do with him and he has to go to moneylenders or seek the aid of hire-purchase and try to have a deal with them. It is utterly impossible to re-organise our industries under such a mad system as that.

:I want to add only a brief word to what has been said by my right hon. and learned Friend the Attorney-General. The Revenue authorities have to perform a very difficult task. They have to go into all the ramifications of business transactions of all kinds and follow up everything in the practical application of the Income Tax law, so as to avoid all anomalies and anything that can be described as discrimination. It must always be remembered in this connection, that it is not the authorities that are responsible for the complexities of the affairs with which they have to deal. Here we make a broad distinction, not a complicated one but a simple one, which takes account of facts. Where an industrialist expends money which he has at his disposal on the purchase of plant, we give him an initial allowance on the money so spent. When he acquires the plant, on the other hand, in circumstances which enable him to defer the expenditure of part of the money, we give him an allowance pari passu step by step with his actual expenditure.

That is not unfair; it carries out the principle of the Bill. When you spend money we recognise the burden of your expenditure and make you an allowance. If you are so circumstanced that you can meet your liability by finding the money in instalments as time goes on, we separate the payments you will have to make, as my right hon. Friend said, into the capital element and the interest element. The interest element is allowed as a business expense and the capital element under this Bill will attract initial allowance as and when it is incurred. I do not think that we can possibly depart from those principles in this Bill. There is, in fact, a difference between the position of a man who has the money or who can find the money with which to purchase the plant he requires outright and that of the man who has to avail himself of the facilities available in the form of hire-purchase agreements. But that is a difficulty for which the Revenue authority are in no way responsible. They have to apply the principles of the Bill as best they can to the facts of the case as they find them. That is the explanation and I think it is a good explanation of the provisions of the Bill.

:In view of the sympathy expressed by the Chancellor of the Exchequer—although I am still not very happy about it—and as I appreciate the difficulty of the Chancellor and his desire, which we all share, to keep the matter as simple as possible, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

:I beg to move, in page 13, line 11, at end, add: of April, 1944. The Amendment deals solely with shipping and it is divided into two parts. The first part deals with the case in which, under the terms of a contract, the purchase price of the ship has been paid before 6th April, 1944, but the ship did not fall to be delivered until after that date. It is reasonable that where the vessel is delivered under the terms of a contract after 6th April, 1944, it should be subject to the full initial allowance.

The second part of the Amendment deals with the case, which is a very common one, of the purchase of ships which are paid for by instalments. One instalment is paid generally when the keel is laid, another when it has advanced so far, the third perhaps on the date of launching, and the fourth when the ship is turned over to the owners and accepted. The second part of the Amendment asks that, where some of the instalments have been paid before 6th April, 1944, and some of them afterwards, the whole of the instalments shall come in for the initial allowance. I hope that my right hon. Friend may see the justice of the Amendment and will accept it.

:My hon. and gallant Friend has explained very clearly the purpose of his Amendment, and if it is clearly understood that the Government cannot hold themselves committed to the precise words of the Amendment, I am ready to accept it in principle. It can go into the Bill, and if any change is necessary, it can be made on the Report stage.

:I wish to thank my right hon. Friend for that concession.

Amendment agreed to.

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

:I appreciate what has been done under this Clause in giving the 20 per cent. allowance. There is no doubt that the rate of the wear of machinery, particularly in agriculture, has gone up in recent years, partly because of the extra rate at which the machinery has worked and partly because the same workmanship cannot be put into it, or the same materials supplied, as in peace time. I have taken out a few figures of the last few years in my own case, and I find that the expenditure on repair of agricultural implements has gone up 20 per cent. over the last five years and the cost of agricultural tractors has gone up by 40 per cent. In view of that fact the initial allowance of 20 per cent. is a little sugar for which we can certainly thank the Chancellor. I do not know, even now, whether he has met the whole position, but possibly when we come to the next Clause there may be another piece of sugar for us. But undoubtedly there is increased wear-and-tear of machinery, particularly of tractors, which should be met and is met to some extent in this Clause.

Question put, and agreed to.

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

CLAUSE 13.—(Amendment of allowances under Rule 6 of Rules applicable to Cases I and II of Schedule D.)

:I beg to move, in page 13, line 12, to leave our Sub-section (1).

I move this Amendment in order to obtain an explanation. My own view, on reading the Sub-section, was that it would, on balance and over a period of time, work out to the advantage of the taxpayers concerned, but doubts have been expressed, by people who are very much interested, whether that was the correct view. Therefore, I am asking my right hon. Friend to give an explanation of the intention and effect of this Subsection.

5.30 p.m.

:As the Committee know, the tax for a particular year is measured by the profits of the preceding year, but, under the law as it is at present, the words which refer to wear and tear have been construed—and I daresay could only be construed—as referring to plant and machinery in existence, not in the year on which the profits are being calculated for the purpose of measuring the tax, but in the actual year of assessment. Take year one and year two. Broadly speaking, in year two you pay on the profit of year one, but so far as wear and tear is concerned under the present law, you look at the machinery which you have in year two—that is the year of assessment. That has led to complications and it is much simpler for accountants and everybody else if for both purposes—namely, the ordinary assessments of profits, losses and so on, and the wear and tear—you can take the state of the business as it was in the year previous to assessment. I am glad my hon. Friend put down this Amendment because it is a matter that does not leap to the eye. I can tell the Committee that it has been discussed with those interested and, so far as I can understand, it undoubtedly makes no difference in the long run, the trader gets all his allowances; but those who are affected by this matter, we believe, welcome this as a simplification of the code which will avoid complexities without imposing any greater liability on the taxpayer in the long run than exists at present. It is true that in some cases under the present system he might get his allowance sooner than he will under this system, but the advantages of simplification are thought to out-weigh that.

:I am grateful to my right hon. and learned Friend for the explanation, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

:I beg to move, in page 13, line 21, leave out Sub-section (2), and insert:

"(2)Section eighteen (Additional deductions in case of machinery and plant) of the Finance Act, 1932, as amended by Section twenty-two (Increase of additional allowance in case of machinery and plant) of the Finance Act, 1938, shall have effect as if the word 'one-fourth' were substituted for the word 'one fifth.'"

I move this only because it seems to me that the words on the Order Paper achieve the same object with greater simplicity of language than the words that my right hon. Friend has inserted in the Bill. I suggest that naturally with great diffidence, knowing that he would have endeavoured to make the language of the Clause as simple as possible, but I am afraid that I have, failed to see the necessity for such a long Sub-section and I should be grateful if he would tell me whether the words I have put down are adequate for the purpose or, if not, in what respect they fail to achieve the object.

:This is really a rather desperately complicated matter. It is a question whether the old increase of the additional fifth is deducted with the main 10 per cent. or only deducted after you have deducted the 10 per cent. Our intention was to increase it to one-quarter by this Clause and then deduct that, making all your deductions from the initial figure and making all your percentages operate on the resulting figure. It has been discussed with the Joint Committee representing industry, commerce and accountancy, and they have agreed that this secures greater simplicity in wear and tear computations. I think that the effect of my hon. Friend's Amendment—we will look at the wording, of course—would be to turn one-fifth into one-quarter without making the consequential alterations in the calculation which have led us to substitute one-quarter for one-fifth. I think it is all right, but if my hon. Friend would like to take it up with the revenue authorities they will explain more fully. Without a blackboard and chalk and a somewhat complicated table, it would be very difficult to explain this to the Committee.

:I am much obliged to my right hon. and learned Friend. I shall study what he has said with great attention and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

:I beg to move, in page 13, line 34, at end, insert:

"Provided that if, in the case of a trade which consists of or includes the working of a mine, oil-well or other source of mineral deposits of a wasting nature, the person carrying on the trade so elects, the deduction to be allowed in respect of machinery or plant used in connection with the working of the source shall, instead of being five-fourths of the amount aforesaid, be such sum as is considered by the Commissioners to be just and reasonable having regard to the date when the source is likely to cease to be worked and the probable value of the machinery or plant at that date to the person carrying on the trade."

This is designed to meet a point with regard to the special case of machinery or plant which is provided for a short-lived mine or a mine getting near the end of its life. In general, of course, as the Committee knows, the allowances made in respect of wear and tear of machinery or plant are measured by reference to the life of the plant. You get here the same sort of point which we were discussing over buildings in connection with mines; you may get machinery which is bound up with the mine as being of no use when the mine comes to an end, but the life of the mine is shorter than would be the normal life of the machine. This Amendment is designed to meet that point.

:Would the Attorney-General explain the point about the five-fourths? It seems to be a new form of fraction. I should be glad if he would explain what he means by five-fourths.

:The normal fraction which would apply is five-fourths. It is an addition to an original ten per cent. It is the normal fraction which would apply if the machine is going to live out its normal life, and this Subsection enables the Commissioners, instead of taking the normal five-fourths which is regarded as the over-all fraction applicable to machinery in general, to substitute another fraction if the machinery is being used in a mine which will come to an end before the machine has lived out its natural life.

:I want to thank the Government for this very useful Amendment, which recognises the peculiar character of the short-lived mine. I was glad my right hon. and learned Friend mentioned buildings in the course of his remarks, because I hope that he will put down a similar Amendment to cover buildings which we discussed on Part I.

:I notice in this Amendment that the person conducting his trade has two alternatives; either he accepts the five-fourths as an automatic imposition upon him, or he can leave the matter to the Commissioners to decide as between himself and them. Is this a new principle in taxation, or has it been done before?

:I do not think it is a new principle. You have cases where there is a general fraction, or whatever it may be, which applies to the normal case, and then you have a position under which, if a man can satisfy the Commissioners that his case is an exceptional one and is covered by a provision dealing with such exceptional cases, he may say, "Instead of applying the normal rate to me I can bring myself within this, that, or the other exceptional provision and I ought to get this allowance."

Amendment agreed to.

:I beg to move, in page 13, line 37, leave out paragraph ( a ).

This paragraph seems quite harmless on the face of it, but in point of fact, it seeks to upset a decision reached in the House of Lords, and one of the objections I have to legislation of this sort is that the Government Department concerned, generally the Treasury, seeks to introduce certain recondite proposals which really have very little to do with the actual matters with which the Bill is concerned. The case in point was that of the Birmingham Corporation versus Barnes, in which it was held that the taxpayer was entitled to receive wear and tear allowances upon the whole of his undertaking, irrespective of whether or not the cost of certain assets had been contributed by another party, in order to induce that taxpayer to provide the assets to meet the convenience of the contributor. The result of this decision, reached in 1935, has been, I am informed, of the greatest value in enabling public utilities to be carried, amongst other things, to isolated places. Earlier this afternoon the Chancellor of the Exchequer proudly claimed that this was a relieving Bill and in a number of respects that is true, though when we come to Part V and discuss the question of inventors, it will be for the Committee to say whether they entirely agree with that definition. However, he could not possibly say that Sub-section 3 ( a ), which I am seeking to omit, falls into the qualification, because it will upset that decision and not allow the relief on the part of an asset which is contributed by another party.

I want to give one instance of how this works. I will take the case of railway sidings where the railway company provides a siding to a factory and the factory owner makes a contribution towards the expenditure, but the railway company agrees to maintain this siding so long as the factory-owner is passing his traffic over it. The siding, of course, will depreciate and require renewal over exactly the same period as any other siding in respect of which the company may not have received a contribution. The company requires, naturally, to set aside depreciation in this case in exactly the same proportion as in any other, so that at the end of its life it may be renewed. Then, of course, the question of replacement will arise, and the factory owner cannot be asked for a second contribution then. The proposals of my right hon. Friend would deprive the railway company of the benefits of this case, and neither the factory owner nor the railway company would receive wear and tear allowances on that portion of the cost of the siding which had been borne by the factory owner. Thus the arrangement made between the factory owner and the railway would accrue to nobody else's benefit but the Treasury's. I do not really know why it is that this particular Sub-section has been inserted in the Bill. Generally speaking the Bill has been welcomed as providing relief where it is most wanted, but I am afraid it is the fact that when we get these decisions of the Courts—in this case the House of Lords—which are inconvenient to the Departments concerned, they seek an opportunity for rectifying the matter from their point of view. I want to omit the Subsection, partly because, as I say, it does not appear to me to have direct connection with the objects of the Bill, and partly because it interferes with a principle, now 10 years old, which has been of the greatest value in carrying public utilities to isolated places.

:I gather that this Amendment is related to the next one on the Order Paper—in page 13, line 43, leave out "or public or local"—and that being so they might be discussed together.

5.45 p.m.

:This is a complicated and important Amendment, and I must ask the indulgence of the Committee in taking a few minutes to make the position clear as I see it. My hon. Friend the Member for South-East St. Pancras (Sir A. Beit) showed how this proposed change in the well-established law and practice of allowances would affect railway companies. On the Second Reading I raised the same point in connection with agriculture. Part IV of the Bill, in a generous way, recognises that the farmer needs help of this kind, but the Clause we are now considering has the effect of taking back some of the help which he is offered under Clause 29. We find that in certain cases the Chancellor is not going to give the farmer an allowance; he is only going to transfer money which, until now, has belonged to the utility company from that company to the farmer, and in the process he is going to make inevitable an increase in the cost of the water, electricity, or whatever the service may be. It comes about in this way: the cost of connecting a farm to one of these services varies in proportion to the distance of the farm from the nearest point of connection. Unless the general body of consumers are to carry the special costs of linking up remote farms those farms must continue, as in the past, to make a contribution towards the necessary capital expenditure.

I do not think that the draftsmen of this Bill appreciated the extent or the importance of this problem. May I explain it shortly to the Committee? The largest power company, serving one quarter of the rural areas of England and Wales, recently surveyed all the farms in their area which were not yet connected for electricity. They found that there were 60,000 such farms, and that of this number one-third were within one mile of the nearest point of connection, that another third were between one and two miles and the remaining third over two miles. The company calculated that the cost of connecting the average farm in each of these three groups was £166, £580 and £1,180. The Committee will see that we have a vast programme of capital expenditure in front of us if we are to bring electricity to our farms, and, also, how widely the costs differ between one farm and another. Up to the present, in whatever proportion the landowner, farmer or utility company contributes to the capital expenditure, the utility company has been able to claim wear and tear allowance on the gross capital outlay. If Clause 13 goes through unamended the result will be that the utility company will be able to claim wear and tear allowance only on that proportion of the capital expenditure which it has contributed out of its own funds. Although it has a statutory obligation to maintain the service once it has been installed it will be able to accumulate only a proportion, perhaps quite small, of the funds necessary to renew the apparatus when it is worn out. That means, inevitably, that the charges for electricity, water or whatever the service is, will have to be raised to the farmer to compensate for the loss of the allowance which has been transferred by this Bill from the utility company to the farmer.

That is not the intention of the Bill. Looked at from the point of view of the utility company, the result will be chaotic. The company might, for example, have six sets of apparatus, all of which cost the same number of pounds to instal, and all of which will cost the same number of pounds to renew. But it will be drawing six different allowances on these separate installations, according to the bargain it has struck with the consumer about the proportion of the capital which it was to contribute itself. That will mean that the rate structure of all utility companies, to which this practice of sharing capital costs applies, will be in confusion. They will not know what is the appropriate amount of their charges to set aside for their different installations. That cannot be the intention of the Bill, and I would, therefore, ask the Chancellor to look at this matter again and come down on the generous side of not taking back under Clause 13 what we are very grateful to him for having promised us under Clause 29.

:I cannot attempt to better the arguments which have been most admirably put by my hon. Friends the Members for South-East St. Pan eras (Sir A. Beit) and Chippenham. (Mr. Eccles), but I want to add a further point, which I do not think has been developed. All of us here and in the country realise the enormous importance of a prosperous agriculture and, rightly, are most anxious that farms should be supplied with water, gas or electricity, where that has not already been done. The undertakings which are responsible for the supply of electricity over large areas have been thwarted during the war in carrying out extensions into rural areas which they would otherwise have done, and they now have ready plans to carry lines into those areas at a cost of millions of pounds. In some cases the farmer is perfectly willing to pay a contribution towards connecting his farm to the mains system. Instead of putting down his own plant he is using that money to make a contribution towards the cost of the work which is done by a utility company. Supposing a company wants to put up a line costing £1,000, and the farmer contributes the whole of that amount. The utility company has to renew that line, in spite of the fact that it may be destroyed by trees or aeroplanes or cables falling on it. We have had many lines damaged in recent years from those causes, especially from trailing cables. In fact, it is said that the barrage balloons would never have been safe but for the existence of the grid, which trapped them when they broke loose from their moorings.

If it is the desire of the Treasury and the Government to assist agriculture and public utilities, and to provide agricultural districts with facilities they lack at present, then this is the wrong way to go about it. To deny to those who put the original capital the equipment which they have to maintain at 100 per cent. efficiency—and everything connected with electricty has to be maintained at that level—will make it more difficult for public utilities to carry out the programmes they want to carry out, and, further, it will not satisfy the National Farmers' Union, who are exercising every pressure they can bring upon all who can come to their assistance to make agriculture prosper and the countryside a place fit to live in, with all the modern conveniences which up-to-date invention and ingenuity can provide.

:My hon. Friend took the instance of a service which might cost £1,000 towards which the farmer might contribute the whole of the capital. He suggested that the electricity company should receive depreciation allowances on that £1,000, and that when the plant is renewed the company should accumulate depreciation allowances on the expenditure of £1,000. Does he suggest that the company should continue to receive depreciation allowances on the renewed plant? Does he suggest that there should be one allowance only for a particular line?

:If the line was damaged the company would have to replace it at their own cost.

:Yes, but then they get depreciation allowances on their own expenditure, having already had it on somebody's else's expenditure. Is not that the proposal?

:It might be an advantage if I took a hand at this stage. I will endeavour to explain, as briefly and as simply as I can, the purpose of the Government in putting forward the proposals in this Clause. Let me say at the outset, that I do not claim that the Clause, as originally drawn, was perfect. It was open to criticism, somewhat on the lines of the criticisms of my hon. Friends. I do not know whether they have noticed that there is on the Order Paper a Government Amendment which modifies the original proposals. I do not know whether they have taken that into account. I do not criticise them, because it is a fact that that new provision was put on the Order Paper only a very short time ago.

6.0 p.m.

I will try to explain simply what the Government's view is on the question of capital expenditure to which two or more parties have contributed. It will not do to argue as if the only case we have to deal with is the interesting and important case, cited by my hon. Friends, of electricity undertakings, or public utility undertakings in general, towards which a contribution is made by the party which is going to benefit by the expenditure incurred. We have to consider every sort of capital equipment provided with the assistance of a grant, a subsidy or a contribution from someone other than the person, undertaking, or authority which is installing the capital equipment. What we propose is this. First of all, where a contribution by way of subsidy is made by the Government or by a public authority, the value upon which the initial allowance and the subsequent allowances are to be calculated will be taken as the net cost. According to the proposals which are now before the Committee, taking not only this Clause but the Amendments which are on the Paper later, we will not give to an undertaker who receives assistance from public funds more than the appropriate allowances, initially and annually, calculated on the basis of that undertaker's actual net outgoings. That is the first case.

Let me now take the second case, which is quite well illustrated by the example of a railway company providing a siding or an electricity undertaking providing a cable to connect a farm. What we say there is that where a contribution is made by an undertaker who himself would qualify for relief under this Bill, we give to the person or authority providing the work relief calculated on his net outgoings, and we give to the person or authority who makes a contribution the appropriate relief on the contribution he makes. That, we think, is a fair and equitable way of dealing with the matter. The farmer who pays in order to have electricity connected with his farm is given the appropriate allowance on the capital expenditure that he incurs in that way, and the electricity undertaker gets the allowance on his net expenditure. There is no duplication or overlapping. We apply the principles of the Bill quite consistently, and we give to any person who would be entitled to relief under the general scheme of the Bill, the appropriate relief on the expenditure incurred by him. On the other hand, where a contribution is made by some person who would not be entitled to any relief under the Bill, we say that that is a contribution which may be properly ignored for the purposes of the Bill, and the full cost to the undertaker will rank for allowance. That is the principle which, on full consideration and after taking account of the practical matters to which attention has been called by my hon. Friends, the Government think is the best suited to carry out the purpose of the Bill.

It is, of course, not the case, as was suggested by my hon. Friend the Member for South-East St. Pancras (Sir A. Beit), I hope not seriously, that the Government are taking the opportunity afforded by this relieving Bill to get back something which they lost some time ago by a decision in the House of Lords. That decision was related to a state of affairs which this Bill will get rid of. It was not concerned with the kind of structure of allowances which we are providing in this Bill. We shall find at various points in the consideration of the Bill that the introduction of new principles which have the effect of relieving the taxpayer, and are generally welcome, does involve consequential adjustments which here and there, if they are regarded in isolation, may be held to operate to the disadvantage of some taxpayer in some particular circumstances; but we cannot introduce new principles without adapting the old structure to those new principles. As we go through the Bill, although certain provisions may be, taken by themselves, unpalatable, and may seem to involve the withdrawal of some concession granted under different circumstances, I maintain we shall find that the scheme as a whole is consistent with itself and grants relief in a properly balanced way to those classes of taxpayers which the Bill is designed to assist.

:I am sure the Committee appreciates the extremely clear manner in which my right hon. Friend has dealt with this most complicated matter, but I must admit that I am still a little puzzled, although the new Amendment which my right hon. Friend is to move in connection with Clause 62 clearly does cover a very large part of the ground which the Amendments now under discussion seek to cover. We are grateful to the Chancellor for having met us to that extent. There is, however, still one point which I think is obscure. My right hon. Friend said, first of all, that the Government must hold as a main principle that grants in aid of or contributions towards capital expenditure made by a public authority clearly must be ignored for the purpose of the calculation of allowances. That is understood.

But my right hon. Friend then went on to say that where the contribution is made by a person or persons who in other circumstances, if they had made the expenditure direct, would themselves be entitled to an allowance, the allowance would be given to them, and the allowance to the provider of the service would be based on the net amount which the provider had himself furnished by way of capital. That also is understood, although I fear I must point out to my right hon. Friend, as I am sure he knows, that in fact the obligation to maintain and renew the whole of the service remains with the original provider of the service, and does not at any subsequent stage fall on the recipient of the service. Therefore, the provider of the service is, in fact, worse off than he would be if he had paid for the whole expenditure. There is just a possibility that in this case the provider of the service might quite well determine, instead of asking for a capital contribution from his customer, to pay the whole amount of the expenditure, and ask his customer to pay a higher rate for the service, in which case he would, as provider of the service, receive full relief, because he would spend the whole of the money, and the recipient of the service would be able to charge the extra cost of that service for purposes of Income Tax as an expense of his business. By the adoption of that means a public utility company could get all it requires, but I am afraid the Treasury would suffer. That is a position which I am sure my right hon. Friend is prepared to meet.

Finally, I come to the case which leaves me a little puzzled. My right hon. Friend said that where a contribution is made by a person who would not be entitled in his own right to obtain relief, the relief granted to the provider of the service would be based on the whole of the cost, including that contribution. I cannot see how that can be so under Sub-section (3) as it is at present, because it excludes any portion covered by any contribution made by any person other than the person providing the machinery. If the contribution is made by the recipient of a service who is not entitled of his own right to receive relief, that contribution is made by a person other than the one providing the machinery or plant. If those words remain in the Sub-section, that amount would have to be left out of account in calculating the figure upon which allowances are to be made. I hope I have made clear my difficulty in understanding what I took to be my right hon. Friend's view of the effect of the Clause, plus the addition proposed to Clause 62.

:If my hon. Friend will look at the Amendment on the Order Paper to line 36 of Clause 62, he will see that in Sub-section (2) ( b ) of the proposed addition, provision is made to cover the point I referred to, that the person who is not entitled, under the scheme of the Bill, to receive an allowance will be making a contribution which will not be deducted in calculating the allowance due to the provider of the service. I want in a few sentences to deal with the first part of my hon. Friend's argument. I put the matter to the Committee in this way. In comparing the solution presented by the Government with the solution suggested by my hon. Friend, let us take the case, which I believe is not unknown, where the contribution made to the provider of the service represents practically the whole capital expenditure involved; would it be reasonable, I ask, to give the provider of the service full allowances on that expenditure, which is non-existent so far as the provider of the service is concerned, and not to give the allowances in respect of the contribution made by the person for whose benefit the service is provided? Finally, one last word, in order to convince those of my hon. Friends who think that the approach of the Government is perhaps not as sympathetic as it might be. There was one very simple method of dealing with this matter which naturally came up for consideration. It was to treat the payment made for the provision of the service as a receipt in the hands of the provider of the service and to take it into account as a receipt in levying tax. It would be delightfully simple but I do not think public utility undertakers and others concerned would have been grateful to the Government if they had adopted that solution.

6.15 p.m.

:I apologise to my right hon. Friend. I had not seen his Amendment to Clause 62. I think he has offered a sensible solution of the matter as a whole. I do not quarrel with the decision that, where the Treasury or a public authority have made a contribution, the provider of the service could not claim wear and tear allowance. I put down my Amendment with the object of raising a discussion on the Sub-section generally. As far as the new suggestion which is going to be adopted by the Amendment of Clause 62 is concerned, it must mean that in the future there will have to be a new sort of relationship between the provider of a public service and the recipient. Clearly, if the recipient is to get his share of the wear and tear allowance he will, contrary to what I said before, be called upon, as I see it, to make a second contribution when the asset is worn out and has to be replaced. It is a reasonable solution and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

:I beg to move, in page 14, line 1, after "6," insert "for any year of assessment."

This and the next two Amendments are drafting Amendments. Under the Clause, as drafted, we might have got ourselves into a mathematical knot under which the wear-and-tear allowance could not be deducted from the original capital figure.

Amendment agreed to.

Further Amendments made: In page 14, line 2, after "exceed," insert:

"what, apart from any deduction which falls to be made under the said Rule for that year, would be."

In line 4, leave out "of assessment."—[ The Attorney-General. ]

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

:I should like to add one more word on the Clause before we let it go. The Chancellor of the Exchequer, when rebutting the contention of the hon. Member for Walsall (Sir G. Schuster) that shops should not be excluded from the scope of the Bill, gave his reasons why transport and electricity distribution should be brought within its scope. Looking at this from an agricultural point of view, we hoped that the Bill would give wide help in bringing electricity into rural areas, because we are faced with an enormous capital problem, the essence of which is that the remote consumer costs so much more to link up, than one near the present point of distribution. As the Clause stands, it does not really bring very much help to this part of the farmers' re-equipment. It only has the effect of transferring the allowance from the utility company to the farmer, and the utility company has to get it back again. I am sorry that that is so, and I hope that on a future occasion the Chancellor will consider again what can be done to bring electricity to the more remote farms.

Question put, and agreed to.

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

CLAUSE 14.—(Balancing allowances and balancing charges.)

:I beg to move, in page 14, line 21, at end, insert:

"( b ) the machinery or plant, whether still in use or not, ceases to belong to the person carrying on the trade by reason of the coming to an end of a foreign concession; or."

This is consequential on a provision already introduced covering a case where a foreign concession has come to an end.

Amendment agreed to.

:I beg to move, in page 14, line 32, at end, insert:

"Provided that where either—

Normally there are no balancing charges or allowances when the trade is permanently discontinued, but we have provided now, by Amendment, for the case of wear and tear of machinery, and we also make this provision with regard to foreign concessions coming to an end. But for this, it might be said that this amounted to a discontinuance and that there could be no balancing charge or allowance. It is obviously right that there should be a balancing allowance in these cases.

Amendment agreed to.

Further Amendment made: In page 14, line 33, leave out "The," and insert "Any."—[ The Attorney-General. ]

:I beg to move, in page 15, line 6, at end, insert:

"Provided that where the loss of a ship is due to a war risk connected with any war in which His Majesty is engaged at the date of the passing of this Act, or to the carriage, in connection with any such war, of explosives or other dangerous cargo in a manner which would be abnormal in time of peace, then, whether the loss occurs before or after the conclusion of, or of hostilities in, that war, no balancing charge shall be made by reason of the loss in respect of expenditure on the ship.

In this Sub-section, the expression 'war risk' means any risk falling within the definition of 'war risks' contained in the form of policy set out in the First Schedule to an agreement for re-insurance of British ships made by the Minister of War Transport on the sixteenth day of September, nineteen hundred and forty-three, a copy of which was laid before each House of Parliament on the fourth day of November, nineteen hundred and forty-three, in pursuance of Sub-section (2) of Section one of the War Risks Insurance Act, 1939."

This Amendment deals with the shipping industry and losses of ships due to war risks. The provisions of the Bill relating to balancing charges apply only to losses occurring after the appointed day. Therefore, if a shipowner lost a ship through enemy action before the appointed day, there would be no question of his having to disgorge as the result of a balancing charge. My right hon. Friend submits this Amendment, which provides that if after the appointed day, in the war with Japan, a shipowner loses a ship through war risks, as defined in the Clause, by enemy action he should not be in a worse position than if he lost it by similar action before the appointed day.

:I am sure the Government would not wish to discriminate unfairly between one industry and another. Would they consider an Amendment on Report to extend this admirable Amendment to other industries?

:This deals with losses due to enemy action. We hope there will not be such losses in this country. I do not think there is a parallel.

:Supposing that a ship is lost by war risk not in connection with an enemy with whom His Majesty is then at war, but, let us say, due to running into a German mine after we have ceased to be at war with Germany, will that be covered?

:I think so. The exact connotation of war risks has been a matter of considerable dispute and litigation.

:Will the right hon. and learned Gentleman explain how this proposal ties up with the provisions for insurance of ships against war risks?

:The question here is whether a balancing charge should apply. Normally, in the case of ships there would be a balancing charge and the owner would have to repay allowances that had been paid in the past. He does not have to do that if the ships are lost before the appointed day. The Amendment says that if the ship is lost through enemy action after the appointed day, he shall be in the same position as if it had been lost before the appointed day and the provisions of the Act will not apply. War risk does not come into it. All we are saying is that this shall be treated as it would have been before that part of the Bill became an Act.

:I understand that the arrangement with regard to insurance of shipping against war risks is that a shipowner will get a payment which represents not merely compensation for loss on the ordinary basis of what the ship cost but that it will be based on an allowance for replacement. If that is so, why should there be any allowance at all under this to shipowners?

:Shipowners who lose ships during the remainder of the war through enemy action should be in the same position from an Income Tax point of view as though the loss had occurred before the appointed day. That is the principle of the Amendment, and it seems fair that they should be so treated.

Amendment agreed to.

Further Amendment made: In page 15, line 8, leave out "of a balancing charge," and insert "on which a balancing charge is made."—[ The Attorney-General. ]

:I beg to move, in page 15, line 13, after "him," insert:

"for the year of assessment in which the appointed day falls and for any subsequent years of assessment."

:I think this and the next Amendment in the name of the hon Member—in page 15, line 18—might be taken together.

:We have put the Amendment down because there is not at present any provision in the Clause which corresponds to Clause 3 (4) whereby the balancing charge might be reduced to a fraction. The full balancing charge will be claimed where the undertaking was sold, and it would be possible for this amount to be such as would take back every allowance for wear and tear given under the Act of 1918 right back to the first year. There are very strong arguments against retrospective legislation and they seem to apply here with full force. May I remind the Chancellor of the Exchequer of what he said a fortnight ago:

"Is there in the Bill any provision under which a balancing charge can exceed allowances which have been granted for the first time under the Bill?"—[OFFICIAL REPORT, 27th April, 1945; Vol. 410, c. 1231.]

Answering his own question—

:It was not my question. The hon. Member for Walsall (Sir G. Schuster) asked it. I only repeated it.

6.30 p.m.

:My right hon. Friend adopted the question and answered it in the way of which I was attempting to remind him. The Chancellor of the Exchequer said the answer was "No." With great respect to the Chancellor, I would ask him to think again, because I think the answer ought to have been "Yes." It will be "Yes" unless the Amendment is accepted. I grant to the Chancellor that what he had in his mind was the subject of buildings, but here the same point arises with regard to plant and machinery. Therefore, I think if the question were put again it would have to be answered here in another way unless the Chancellor were prepared to accept this Amendment, which I hope he will do.

:There is in Clause 3, Subsection (4), to which reference was made, a delightful piece of arithmetic which was passed over earlier on as there were no Amendments on that Sub-section. It refers to

"the fraction, the numerator of which is the number of the relevant years of assessment for which an annual allowance…has been made…and the denominator of which is the total number of the relevant years of assessment."

This fraction must always be less than unity, and as it is used in multiplication of the balancing charge, it has the effect of reducing it, in the case of buildings, and therefore, in Part I of this Bill, an individual can never be called upon to pay a balancing charge which is more than the allowance that he has received since the appointed day. Unless we amend Clause 14, which we now seek to do, he will get no protection, and I find it difficult to understand why there should be this difference in treatment as between a building and plant and machinery.

:When I answered a question put to me by my hon. Friend the Member for Walsall (Sir G. Schuster) at an earlier stage in the proceedings on this Bill, for the sake of clearness I repeated the terms of the question. The answer I gave was clearly related to the matter under discussion, namely, allowances on buildings under Part I of the Bill. The whole context shows that nothing else was in the mind either of my hon. Friend who put three specific questions to me or in my own mind. My hon. Friend asks, why should not the same principle be applied in this Bill to the case of plant and machinery as to buildings. The answer is simple—because the circumstances are different. In the case of buildings we were giving certain allowances for the first time: broadly speaking, there were no similar allowances before. Secondly, plant and machinery, unlike buildings, is movable. Thirdly, we are providing in this Bill for the payment of an obsolescence allowance on plant and machinery when it is scrapped, irrespective of whether it is replaced. That is a provision which has no precise counterpart in the provisions relating to buildings.

This proposal with regard to a balancing charge in respect of plant and machinery is the logical result of giving the full allowance for obsolescence where the plant and machinery is not renewed. If you give the full obsolescence allowance where the plant and machinery is not renewed, it seems right that where it is disposed of at a profit—that is to say at a price in excess of the written down value—the excess should be treated for Income Tax purposes as what it in fact is, a profit. I would point out this very material fact, that under the Bill there would be no question of a balancing charge where any sum realised by the disposal of written-down plant or machinery, whatever it may be, is applied to the renewal of that plant or machinery. In every case the undertaker has that alternative open, and this provision for a balancing charge only operates where the undertaker elects to take his profit and not apply it to the renewal of the plant or machinery.

It has been suggested by my hon. Friend the Member for Stockport (Sir A. Gridley) that this proposal involves retrospective legislation. I absolutely deny that, because it is no more retrospective than any provision in any Finance Bill for the levying of taxation at some different rate or under some different conditions from those provided in previous Finance Bills on items of profit arising for the first time in the year to which the new legislative provisions are to apply. There is nothing retrospective in that. It is true that a calculation is made by reference to things which have happened in the past, but the profit, or the income if you like—for the purposes of taxation it is to be treated as income—is income which has arisen for the first time in the year to which the provisions of this Bill apply. It is important that we should be clear about that, because I share to the full the objections which have been felt to retrospective taxation. Nothing of the kind is involved here.

Amendment negatived.

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

CLAUSE 15.—(Replacement of machinery or plant.)

Amendment made: In page 16, line 39, after "replacement," insert "on or."—[ Sir J. Anderson. ]

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

Clause 16 ordered to stand part of the Bill.

CLAUSE 17.—(Application to lessors.)

:I beg to move, in page 17, line 41, leave out from "let," to "there," in line 43.

The point of this Amendment is this. When machinery is leased, the lessee is allowed to claim a depreciation allowance if he has to maintain and repair the machinery. At the end of the lease an obligation to renew it is placed upon him. The lessor is allowed to claim, depreciation allowance if these obligations are undertaken by him, but there are cases where the obligation is partly on the lessor and partly on the lessee, and in some of these cases no allowance can be claimed by either, because neither the lessor nor the lessee fulfils all the necessary conditions. The object of this Amendment, therefore, is to make certain that in the case of leased machinery and plant either the lessor or the lessee shall get the depreciation allowances, and the proposal is that this should be done by granting the allowances to whichever of the parties bears the capital outlay necessary to provide the machinery. That, in brief, is the object of this Amendment and I hope in this case the Chancellor will be prepared to meet us.

:If the Committee would be agreeable, with your permission Mr. Williams, it would be convenient if I discussed with the Amendment which my hon. Friend has just moved, the next Amendment in the name of my right hon. Friend: In line 42, leave out "maintaining and restoring it falls," and insert "the wear and tear thereof falls directly."

Under the Clause as originally drafted, and under the existing law, I agree there may be cases where neither lessee nor lessor can claim the allowance. Through some oversight which we are now putting right, the tests were different. The lessee could only claim if he bore the burden of the wear and tear. We are deleting the words, "maintaining and restoring it falls" and putting in "the wear and tear thereof falls directly upon the lessor." Those are the words which apply to the lessor, and therefore you have the same formula to apply to both. You have to see that where the wear and tear falls upon the lessee he can claim it, and if wear and tear falls upon the lessor he can claim it. The maintenance and restoration is then taken out of the picture. I hope this meets my right hon. Friend's point. His Amendment as drafted would go too far, because he would give wear and tear allowances to all lessors who applied. I am sure his intention was the one which we proposed, whereby the man who has the liability for wear and tear gets the allowance.

:As the learned Attorney-General has pointed out, the Amendment put down by the Chancellor of the Exchequer meets the substance of my Amendment, and I therefore beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 17, line 42, leave out "maintaining and restoring it falls," and insert, "the wear and tear thereof falls directly."—[ Sir J. Anderson. ]

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

Clauses 18 to 20 ordered to stand part of the Bill.

CLAUSE 21.—(Expenditure to which Part III applies.)

6.45 p.m.

:I beg to move, in page 19, line 26, after "for," insert "or on."

The object of this Amendment, and two others which follow, can be easily explained. Sometimes the whole process of searching for, discovering, and testing deposits may not be completed. Very often it is the case, a mining company being a speculative enterprise, that you may search without discovering, or having discovered you may find that the deposits are so meagre that it is not worth your while to test them—to take the most lugubrious instance that I can think of. Under the Bill, unless you were able to complete all three processes, no allowance would be credited. The Amendments are designed to secure that if you incur expenditure on any one of those three stages in the process of looking for minerals, an allowance will be able to be credited.

:I do not think that the danger to which my hon. and gallant Friend referred would, in fact, arise. My advisers think that the Bill as it stands would probably work out quite satisfactorily from the point of view that my hon. and gallant Friend has put; but if it will make the matter more clear and certain in the minds of those affected, I have no objection to accepting this small group of verbal Amendments.

Amendment agreed to.

Consequential Amendments made.

:I beg to move, in page 19, line 27, at end, insert:

"( b )on the acquisition of the site of the source or on the acquisition of the deposits or of rights in or over the deposits; or:"

The Amendment is to deal with expenditure incurred on the acquisition of the site of any mine or oil well that is to be worked under the Bill. Although heavy expenditure may be incurred on purchasing the rights to work the site, no allowances are allowed against it. It is felt that this expenditure ought to rank for allowance just as much as any other category of expenditure to which Part III applies. It is true that in this country in many cases, and perhaps in the majority of cases, the expenditure on the actual capital acquisition of the site will be little or nothing. It will not, in fact, occur and there will be instead an annual royalty, or some other arrangement, payable to whomsoever the mineral owner may be. The Amendment would cover the cases where this capital expenditure falls to be met. I think it will do something to encourage the development of mining enterprises under British registry and ownership wherever they may be. I hope that my right hon. Friend can see his way to allow what I submit to the Committee is a very proper expenditure to qualify to receive this allowance.

:The proposal embodied in the Amendment would, if adopted, carry us right outside the scope of the purposes of the Bill, but that is not to say that the point which my hon. and gallant Friend has put is not important. I think it is. It is important from the point of view of competition between this country and other countries where the incidence of taxation may be different; but we have not sought in the Bill to deal with the exhaustion of the capital expenditure incurred in the acquisition of sites of mineral deposits or in the acquisition of property in the deposits themselves. The absence of any provision for what I believe is sometimes known as a depletion allowance in our Income Tax law may well be regarded as a hiatus which ought to be filled.

I am afraid I cannot see my way to propose in connection with this Bill an appropriate provision for meeting the point that has been put to the Committee. I do propose, as a matter of fact, to enter upon discussions with representatives of the mining industry to see how best this matter should be dealt with. So far as the Bill is concerned I am afraid I can only say that I think the Amendment is clearly outside the general plan that I submitted to the Committee in the Budget speech last year, and on which the proposals of the Bill are based, and therefore I must ask my hon. and gallant Friend to be content with the assurance that I have just given.

:While I am glad to hear that my right hon. Friend is to enter into those discussions, I am disappointed and rather surprised that he does not consider it possible to contemplate including some such provisions in the Bill. So far as mines overseas are concerned, a definite lead has been given him by the Colwyn Committee. It is true that the Committee recommended that no such allowance should be granted in respect of similar wasting assets in this country, but on mines overseas they made this recommendation:

"When the right to future profits has been purchased from a vendor who is entirely outside the scope of British Income Tax (as, for instance, when a British company purchases from a foreign resident the right to work a foreign mine) we consider that, subject to the limitations of paragraphs 186 to 188 an allowance should be made for the amortisation of the capital sunk in the purchase."

That is a very definite recommendation in principle. I will not trouble the Committee with the contents of the paragraphs referred to, which only limit to some extent the recommendation. We have a recommendation in principle that it would be right, in view of the Colwyn Committee, that mines overseas should be permitted to amortise their capital expenditure upon the purchase of the site. We ought to have some comment from the Chancellor of the Exchequer upon the views expressed by the Colwyn Committee because it is directly in point, on this Amendment.

:I am somewhat alarmed to hear the Chancellor of the Exchequer suggest that he is willing to consider any proposal whatsoever of this nature. What is under consideration now is something entirely apart from the provisions of the Bill. The general intention of the Bill is to provide that a proper depreciation allowance in respect of capital in the form of buildings, plant and machinery and so on, which of their nature become exhausted in carrying on an undertaking, shall be allowed, in computing the liability of the proprietor of that undertaking for Income Tax. That kind of provision, whatever one may say about the details and the way in which it is carried out in the Bill, is a proper provision, because depreciation is a necessary expense of working the undertaking. If the machinery and plant had an eternal life there would be no necessity for such a provision.

When we come to the site or source, or whatever it may be, of the land which is being used for the purpose of carrying on the undertaking, we are in a totally different field. If the principle is to be extended to that, then a great many interesting questions will arise which those who have propounded the Amendment ought to think about before they want the principle extended. It might very well involve the question of the balancing charge, or the balancing allowances in other cases, and if the value of the site went up, there would be a problem of whether there should not be a balancing charge made against the owner of the land upon which some industrial undertaking was being carried out.

More than that; the fallacy of any proposal of this kind relating to mineral resources which of their nature are ex- tracted from the ground and finally become exhausted is in the fact that that exhaustion has been taken into account already in the price which is paid, or in the royalty for the use of the land. To make a further allowance would be duplication and would enable the owner of the land to demand a higher price or a higher royalty for the use of it. Therefore, the very purpose of the allowance would, in all future transactions, be automatically defeated, and there would be no benefit to the active worker of the mine himself. There would only be a benefit to the owner of the site, as owner of the site. Therefore I ask the Chancellor of the Exchequer to be very careful before he enters into discussions of any nature bearing upon this problem. Otherwise he will find that he is opening up an avenue for the evasion of taxation, and not an avenue for the encouragement of productive industry.

7.0 p.m.

:It would delay the proceedings of the Committee to enter into a long Debate on the merits of the argument that the hon. Member for North Battersea (Mr. Douglas) used, but in view of the fact that my right hon. Friend has announced discussions with members of the mining industry on the matters relating to this Amendment, for which I think the industry will be very grateful, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendments made: In page 19, line 29, leave out "become valueless," and insert "be of little or no value."—[ Mr. Eccles. ]

In line 30, at end, insert:

"or, where the source is worked under a foreign concession, which are likely to become valueless when the concession comes to an end to the person working the source immediately before the concession comes to an end."—[ The Attorney-General. ]

:I beg to move, in page 19, line 40, leave out paragraph (iv).

This paragraph is part of the proviso which defines those kinds of expenditure which are not to rank for allowance under Part III of the Bill. This paragraph refers to works constructed for subjecting the raw material at the source to any process. That, clearly, is aimed to exclude refineries and smelters. I was sorry to hear the Attorney-General say in the discussion on a previous Amendment that he did not care for works of that kind. I wish to put to the Chancellor of the Exchequer this case. It sometimes happens that one must put down a refinery near the oilfield because of shipping considerations. The market for the product may be near the oilfield and though it might be more attractive to have the refinery in the United Kingdom, it is, in fact, put down near the oilfield, and when the oilfield is exhausted that particular refinery will probably have no value. One sometimes finds a foreign Government insisting that a British company should not only win the oil or the mineral in its territory, which it must, but also treat it there. In that case the British company has to put up a smelter or refinery in order to get the concession, very likely in competition with some other bidder.

As the Chancellor has just told us, he is looking into this question of putting British companies on a level with foreign companies in trying to get mining and oil concessions. I hope that he will agree that expenditure on works such as are defined in this paragraph ought really not to be made an exception to Clause 21. Of course he is protected by the words in Clause 21 (I, b ) that these works, if they were included in that paragraph, would only rank if they became valueless. Therefore, it would not be right to argue that the smelter or refinery could have some oil or ore sent to it from another source after the mine or oilfield for which it was originally erected was exhausted, because in that case it would continue to have a value and would not rank under Part III of the Bill. I am arguing for the inclusion of plants which have been set up specially to deal with the products of a particular source and which, when that source is exhausted, have little or no value.

:Whenever one draws the line there are always borderline cases, and one of the functions of a Committee stage of a Bill is to see whether the Government can be pushed a little further over the border. My hon. Friend has had some successes. In the case of this Amendment we would recommend the Committee not to accept. I agree that it is an attractive argument to say that it only applies if the works become valueless. There may be a refinery which is tied up to a particular source. I appreciate all that, but we have to draw the line. We are giving special treatment, which is generally welcomed, to mines, to the machinery, to the houses of those who work there, but we feel we should get into difficulty if we went beyond that. As my hon. Friend said, refineries may be near the source, and sometimes may be some distance away. They may in some cases not disappear completely when the mine goes, though it may give them a jolt in their industrial career. They will, of course, qualify under Part I as industrial buildings. There is another point. Under Part I there is provision for balancing charges and allowances, whereas here, under provisions in respect of assets whose value is absolutely linked with the existence of a particular source, there is no provision for balancing charges when the source comes to an end. On the whole we believe we should get into difficulties if we had a rather elaborate code defining whether a refinery was wholly dependent on this source, etc., and the best thing to do is to restrict this concession to the source and the buildings connected with the source, and leave the refineries to the main provisions of Part I and the other parts of the Bill.

:Will machinery used in mining for treatment of the ore qualify for an allowance under this Bill?

:Anything that is part of the mine, any process that takes place in the mining, qualifies. What we are seeking to exclude is something in the nature of a refinery or smelting works which deals with the products which comes from the mine itself in its commercial form.

:Then machinery or plant for turning ore into the final metal, which is part of the final process, would be included and would qualify for an allowance?

:I do not think one can give an answer which would cover all types of mine. I think the conception is a comparatively simple one. Here is a mine, say a tin mine. Here is the form in which tin is ordinarily sold and put on the market by those who work the mine. Everything up to that stage would be included. I do not think I could lay down anything generally.

:I appreciate the Attorney-General's argument. I hope that if it should be found that the competitive position of British mining enterprises really does suffer through the exclusion of some works which are now in this Clause, then perhaps the Government would agree to discuss that point along with the other points they are discussing with the representatives of the mining industry. That being so, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 20, line 2, after "for," insert "occupation by or for."—[ The Attorney-General. ]

:I beg to move, in page 20, line 2, leave out "employed at the source."

:I take it that expenditure on buildings or structures provided for the welfare of workers would come in for an allowance under Part I of the Bill.

:Yes, we have dealt with that already.

Amendment agreed to.

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

CLAUSE 22.—(Initial allowances.)

Amendment made: In page 20, line 15, leave out "become valueless," and insert "have little or no value to him."—[ Mr. Eccles. ]

:On a point of Order, Mr. Williams. Are you not calling the previous Amendment in the name of the hon. and gallant Member for Camborne (Commander Agnew), which is most important—in page 20, line 14, leave out "on the construction of works."

:It may be very important, but on balance its importance did not strike me as such that I should select it. The point it contains can be raised on the Motion "That the Clause stand part of the Bill."

7.15 p.m.

:I beg to move, in page 20, line 19, leave out "one-tenth," and insert "one-third."

The object of this Amendment is to provide more generous, and what I think is a more equitable, allowance, by way of initial allowance, than that which the Chancellor has put into the Bill. The figure of one-tenth, I am advised by those closely connected with the mining industry, is certainly, so far as a mine situated in this country is concerned, and many mines overseas, inadequate for the purpose for which it is designed. It will not create that stimulation to embark upon mining enterprise which is so much needed to-day. Furthermore, this allowance of one-tenth falls very much behind what has become the practice in many other countries.

In previous Debates a list of those countries has been given, and the Chancellor is familiar with the fact that the burden of taxation on mining enterprises is much heavier under United Kingdom laws than under the laws of Canada, Australia, South Africa and the United States, to name a few of the most important mining countries. Therefore, my Friends and I have seen fit to put down what we think is a more suitable figure. I have no doubt that my right hon. Friend will comment that we have suggested a drastic alteration, but we put that figure down, not as a hard and fast one, but to indicate how much the figure in the Bill falls short of what are the reasonable requirements. Indeed, if my right hon. Friend saw his way to accept another figure that marked some improvement of the figure in the Bill, it would give some satisfaction to the industry.

:I do not think that one-third is a good fraction. It goes too far and would give the small speculative mining enterprise too much scope in the early months or years of its Stock Exchange career. I would suggest one-fifth, which is in the South African mining law. It is also the allowance on machinery; and in many cases the prospects are that this expenditure would not have a longer life than the expenditure on a good deal of the machinery.

:Here again we have a provision which will be applied to properties of widely differing characteristics, and, while I can well understand that there may be certain mining properties of an uncertain and perhaps speculative character to which a higher allowance than the one-tenth proposed in the Bill would be held to be appropriate, my view is that this proposal for an allowance of one-tenth, which has only been arrived at after a great deal of consideration and after a certain amount of consultation, is, on the whole, reasonable and appropriate. The allowance which it is proposed to give for the shaft works and so on, other than plant and machinery, which will die with the working out of the mine, is at the rate of one-tenth, and I think, looking at the various rates of allowance proposed in different parts of the Bill, that an allowance of one-tenth is really in keeping. I take the view that a mining property to which an allowance of more than one-tenth could be held to be appropriate would be an exceptional case, and if in the national interest assistance had to be given, it should take a different form.

:I should like to support the Chancellor in the stand he has taken, because the supporters of the Amendment are acting on the principle that, no matter how much is offered, they are going to try and get more. If the Chancellor had given one-third, they would have asked for one-half. If he had given one-half, they would have asked for 100 per cent., and if he had given 100 per cent., they would have asked for a subsidy. That goes on on every occasion, for hon. Members are never satisfied, no matter what concessions are made and what assistance is given. They are continually on the search for more and more concessions for their own concerns, but never for the concern of the country as a whole. It is right that the Chancellor should put his foot down and say, "No more concessions to the industrialists of this country." Whatever concessions they get will in most cases be taken by the interest-mongers. It would be far better and more sensible if the Chancellor took over the finances of the country and if he financed these undertakings instead of having to have all this elaborate machinery for helping those fellows who have to get new machinery and the rest of it. If he would do this and get the banks, the moneylenders and the usurers out of the road, it would save all this trouble about concessions.

:I will not argue with the hon. Member for West Fife (Mr. Gallacher) because it would be quite useless. I wish the Chancellor had been a little more generous, because it is unfair that mining in this country should be at a disadvantage compared with mining enterprise in the United States and other parts of the world. Therefore, I would ask him to reconsider this matter in a more sympathetic way.

:I must confess to some disappointment that my right hon. Friend has not been able to go a little way in improving this Clause. I will admit that my disappointment is increased by my anxiety to do something, more particularly for the mines that are situated in this country and which operate under such great disadvantages as compared with some of the overseas ventures. It would be no good my trying to extract a pledge from my right hon. Friend that he will raise this matter in the discussions with the mining industry, but I would ask him to give it his consideration. Though I am disappointed now, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

:This Clause defines what class of capital expenditure in the mining industry is to rank for the initial allowances. In Clause 21 that capital expenditure is divided into ( a ) and ( b ). ( a ) is the intangible expenditure and ( b ) is the tangible expenditure, the physical works that are created on the site of the mine. In the Clause we are now discussing the initial allowances are confined to. ( b ), that is to say, to the expenditure incurred on physical or tangible work. How badly drafted these two paragraphs ( a ) and ( b ) are, and how difficult it will be to draw the line between the two. ( a ) says:

"on searching for, discovering and testing the deposits, and winning access thereto."

"Access thereto" to any ordinary person may well mean physical works and it would be much simpler for the administration of this Bill if the initial allowances were given on ( a ) and ( b ) together. I am fortified in asking the Chancellor to consider that point by the South African Mining law. The Union of South Africa has had great experience in this question of what is the proper capital expenditure to allow for allowance on the appointed day. The relevant section from the South African law states what capital expenditure means. After first defining "tangible works," it goes on:

"development, general administration and management prior to the commencement of production or during any period of non-production."

That is more or less Sub-section (I, a ) of Clause 21 I would ask the Chancellor whether he would simplify Clause 22 by taking out the words "on the construction of works," and by allowing to rank for the initial allowance both types of expenditure described in Clause 21.

:There was an Amendment on the Paper which, owing to a previous decision of the Committee, was not selected. If it had been, there would have arisen a discussion whether all initial expenditure should be able to rank for the initial allowance.

As my hon. Friend has pointed out, a large and important part of initial expenditure will not apparently attract the initial allowance. At any rate, there is considerable obscurity on this point. In the Debate on the Second Reading of the Bill, I asked the Financial Secretary whether the initial development and shaft-sinking would rank for initial allowance, and I think his reply was couched in some obscurity. I shall be grateful if my right hon. Friend could make it clear that all such work as shaft-sinking, cross-cutting, making winzes and rises and cutting costean pits will rank for allowance. These are technical phrases in mining; they are all part of the essential work which goes under the general heading of development. That is to say, it is not winning the ore itself, but only transforming a mass of granite which enshrines the ore into a rabbit warren, so that you can get to it from all sides and extract it in the most profitable way. Until this Bill was brought forward there was a great anomaly in the incidence of taxation in regard to this matter, and it was true to say that, once you had ruled out the shaft-sinking and got below ground, vertical holes cut into the ground could rank for allowance, but holes cut horizontally could not. My right hon. Friend may say that it was the other way round, but the fact is that these anomalies exist, and I would like an assurance that the development work, as opposed to the actual work of winning the ore, will rank for the initial allowance.

:I am in a little difficulty in dealing with this matter because my hon. and gallant Friend has made use of so many technical expressions, the pre- cise meaning of which is quite unknown to me, that I am left at the end of his speech in some doubt as to the scope of the assurance that he wants me to give. The broad distinction that we want to make here is between work which results in the creation of tangible assets which is included, and the activities in the nature of general administration or exploration or investigation which are not directed to the creation of tangible assets, which are excluded. That is the broad distinction that we mant to make. I do not know that I can give the Committee any more precise explanation than that. I am perfectly willing to discuss how this should be worked, to see that the provision, when the Bill passes into law, is administered in a reasonable and practical way; but I cannot, at this stage, undertake to go into the minute technical details of the mining industry.

7.30 p.m.

:This matter is difficult to explain, as indeed it is difficult to understand, when discussing it in this way. If I may try to put it more simply the point is that, first, the mining experts definitely come to the conclusion that there are some deposits in the ground, in a certain place, that they can chart with their maps. Having done that, they have to develop all round, by cutting a number of tunnels, which may be in the nature of service tunnels. There is no ore obtained in the process of making those cuts. They are made purely so that when somebody gives the word to start processing the ores, they can employ all their labour on the winning of the ores. At the same time, it is good mining practice, while you are obtaining your ore, to employ a small or a large party of men to make fresh development on another centre of ore deposit which your expert has told you exists. The purpose of the inquiry I am making is to have an assurance from my right hon. Friend that the construction of those service tunnels, both vertically and horizontally, will rank for initial allowance.

:I think that the confusion arises through the words "winning access thereto" in Sub-section (1) ( a ) of Clause 21. It is because we know that winning access to an ore body means physical works that we are a little alarmed to see that phrase in Clause 21. If we can be assured that physical works needed to win access to an ore body are included for the initial allowance, I think my hon. and gallant Friend will be satisfied.

:I do not think that there ought to be much doubt about this matter. Any physical work which contributes to the development of the property would normally rank for allowance, and I do not think that one would want to make nice distinctions between one type of operation and another. The test is really the physical development of the property. I think we had better leave it at that.

Question put, and agreed to.

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

CLAUSE 23.—(Annual allowances.)

:I beg to move, in page 21, line 16, at end, insert:

"or the fraction one-twentieth, whichever is the greater."

We thought, on reconsideration, in view of the uncertainty contained in the future of all matters, and particularly of mines, that it was reasonable to have an over-riding fraction of one-twentieth, which could be applied for when the prospective length of the mine might exceed that number of years. Even when the estimates are that the mine will last more than 20 years there is uncertainty about it. Although the mine may last, shafts and other works may cease to be in the right place. We thought that the figure of 20 years would be reasonable, so that people can opt for that. When they get near to the end they can have the prospective fraction of the estimated life of the mine at the time.

Amendment agreed to.

:I beg to move, in page 21, line 16, at end, insert:

"(3)Where the source ceases to be worked or, in the case of a source worked under a foreign concession, the concession comes to an end, the person carrying on the trade may elect that the annual allowances, if any, for the year of assessment in which that event occurs and each of the five previous years of assessment shall be computed as if the reference in the last preceding Sub-section to the total potential future output of the source estimated as at the end of the basis period were a reference to the actual output of the source between the end of the basis period and the happening of the said event, and the said allowances shall be computed accordingly, and, notwithstanding anything in the Income Tax Acts limiting the time for the making of assessments or the allowance of claims for repayment, all such repayments and additional assessments shall be made as are necessary to enable effect to be given to this Sub-section."

It may happen that a mine which has been estimated to last 15 years, and for which everything has gone on merrily, suddenly comes to an end after 10 years. There will then be a very big amount to be written off in the last year and no profits to cover it. This provides for a six years' backspread, and on each of those years the fraction we take is based on what circumstances have shown the actual life of the mine to be.

:I have only to say that I think the Amendment is wholly advantageous to the mining industry, and that the Committee ought most certainly to accept it.

Amendment agreed to.

:I beg to move, in page 21, leave out lines 25 to 31, and insert: a much wider provision. The reason is that in the provision contained in the Bill, the only circumstance which can be taken into account for escaping the formula is bound up with the dates on which expenditure has been incurred.

Suppose that a mine had spent £1,000,000 on getting into production, and 10 years later had spent another £1,000,000 in order to double its output; but something happens in the country, such as a war or, worse still, a general election, and the production which had been anticipated cannot for the time being be obtained. Perhaps years go by before the second instalment of capital expenditure bears fruit. It would be wrong to have regard only to the dates on which the first and the second £1,000,000 were spent, when calculating what should be the proportion of the total expenditure to rank for allowance on the appointed day. Other reasons, such as internal trouble in the country, would have supervened. Therefore, I hope that the Chancellor can widen the provision. On second thoughts, I think that the provision down in my name is too wide, and that it would be better to put in some words like "and where other special circumstances occur." But, to hear the Chancellor's reply, I am moving the Amendment as on the Order Paper.

:The object of this new Sub-section, as my hon. Friend has pointed out, is really to supersede the procedure envisaged under Clause 26. It is designed to retain the present flexibility of contact with the General and Special Commissioners and the Board of Referees over the whole operation of this part of the Bill, and, instead of having a set of rigid regulations, which are somewhat difficult to interpret, especially when you are dealing with the technicalities of mining to enable the trader to approach the taxation authorities and to discuss with them the incidence of taxation on their particular enterprise without being bound by a set of rules. I hope that the Chancellor will see his way to insert in the Bill some proposal based on this idea, as it is thought that flexibility rather than rigidity will not be to the disadvantage of the revenue, but will ensure that the trader has fair treatment in the assessment of the taxation on his enterprise.

:I was rather disappointed that neither of my hon. Friends referred to the very important Amendment which I moved just now, giving an option to take one-twentieth on the estimation of a 20 years' life.

:I was gratified by that Amendment, but it went forward so quickly that I could not say anything about it.

:I was not complaining that my hon. and gallant Friend did not thank us at the time, but the Amendment is very relevant to the reasons which have led my hon. Friends to put down this Amendment. The formula, although it looks complicated when you read it, is fairly simple. It means that you can always, if your estimated life is longer, take the one-twentieth. The Special Commissioners have a high position, and carry out the functions which Parliament has placed upon them to the general satisfaction of those concerned. I think it would be a mistake to have this very wide and unfettered discretion put on them without giving them any guidance as to how they were to apply it. My own view, which I would suggest to the Committee, is that, whereas there was a grievance, or possible grievance, in the case of certain undertakings before we introduced the one-twentieth, it would be much better to stick to the Bill, having any gaps filled up by the Regulations, rather than produce a provision which I think would be rather unprecedented in a field of this kind by simply saying that in every case you have to go to the Special Commissioners and Board of Referees for them to give what is appropriate. I think the ordinary formula is a perfectly fair one in ordinary cases, and that the only grievance that could have been met is in the case of mines with a long life, and that has been met by the twentieth.

Amendment negatived.

7.45 p.m.

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

Clauses 24 to 26 ordered to stand part of the Bill.

CLAUSE 27.—(Manner of making allowances and charges.)

Amendment made: In page 25, line 7, after "profits," insert "or gains."—[ Sir J. Anderson. ]

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

Clause 28 ordered to stand part of the Bill.

CLAUSE 29.—(New allowances for certain capital expenditure.)

:I beg to move, in page 26, line 3, after "agricultural," insert "or forestry."

This Amendment, to include forestry in the same category as agriculture, carries out an undertaking which I gave at an earlier stage.

Amendment agreed to.

Consequential Amendments made.

Further Amendments made: In page 26, line 21, leave out "serving," and insert:

"other than a farm house, being an asset which is to serve."

In line 39, leave out "apart from the provisions of this Sub-section."

In line 40, after "would," insert:

"if he continued to be the owner or, as the case may be, the tenant, of any land."

In line 45, leave out "relief," and insert "allowance."

In page 27, line 23, after "income," insert "and forestry income."—[ Sir J. Anderson. ]

:I beg to move, in page 27, line 23, at end, add:

"(6)Where any expenditure in respect of any sea wall or other embankment is taken into account for the purposes of this Section, no deduction or allowance shall be made in respect of that expenditure for any year of assessment under paragraph ( g ) of Rule 1 of No. V of Schedule A."

This is really little more than a drafting Amendment. It deals with sea walls and it is to prevent the possibility of there being a double allowance. Under the Schedule you can already get an allowance in respect of expenditure on sea walls, and all this is designed to do is to see that you do not get two allowances for the same expenditure.

Amendment agreed to.

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

:There is just one point on which I want to ask the Chancellor of the Exchequer a question. It is in connection with the Amendment to leave out "serving" and insert:

"other than a farm house, being an asset which is to serve."

I do not understand why the farm house should not have the benefit of this allowance. After all, the farm house is the pivot of the whole farm, and the farm would not be of much use without this pivot.

:The farm house has to be treated on a different footing from farm buildings in general because, in fact, it serves a dual purpose. It is a dwelling-house and it is the headquarters of a particular unit in the farming industry, and, therefore, there is a special provision in regard to the treatment of the farm house for the purpose of the allowances under this Bill.

:I want to ask the Chancellor one question. Under this Clause, the farmers get the allowances spread over 10 years, and the Chancellor has already told us that he has an Amendment to Clause 62 so that the contributions made by farmers to, say, a public utility company shall come under the expression "other works" in this Clause. I want to be quite sure that these contributions will be allowed at what one might call the agricultural rate under this Clause and not at the rate which the utility company would collect; in other words, that they would be written off over 10 years.

:Yes, they are written off as any other expenditure incurred by the farmer on plant and machinery would be written off.

Question put, and agreed to.

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

CLAUSE 30.—(Interpretation of Part IV.)

:I beg to move, in page 27, line 44, at end, insert:

"'forestry land' means woodlands in the United Kingdom in respect of which an election is in force for assessment and charge to tax under Schedule D by virtue of the provisions of the Rules applicable to Schedule B, and any houses or other buildings in the United Kingdom which are occupied together with and wholly or mainly for the purposes of such woodlands;

'forestry income' means income chargeable under Schedule A in respect of forestry land, income chargeable under Schedule D in respect of the occupation of woodlands in the United Kingdom, and income chargeable under Section fifteen, Section sixteen or Section seventeen of the Finance Act, 1940 (which relate to excess rents and rents under long leases) in respect of rent of forestry land."

These are the definitions which are made necessary by the Amendment which my right hon. Friend has just moved, with the general consent and approval of the Committee, bringing capital expenditure on forestry into this part of this Bill.

Amendment agreed to.

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

:I want to ask the Chancellor whether, under the first definition in this Clause, the word "husbandry" includes horticulture of all kinds.

:Yes, I think so. I think it includes it. I do not know what my hon. Friend has specially in mind, but it covers all the ordinary vegetable products of the soil.

Question put, and agreed to.

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

CLAUSE 31.—(Annual allowances for capital expenditure on purchase of patent rights.)

Amendments made:

In page 28, line 40, leave out "unless he has sold all the rights."

In line 43, at end, insert:

"unless, before the said first day, he has sold all the rights on the purchase of which the expenditure was incurred."

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

CLAUSE 32.—(Effect of lapse of patent rights, sales, etc.)

Amendment made: In page 30, line 34, leave out "had," and insert "has."—[ Sir J. Anderson. ]

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

CLAUSE 33.—(Charges on capital sums received for sale of patent rights.)

:I beg to move, in page 30, line 38, after "any," insert "United Kingdom."

This Clause deals with the change that the Chancellor has previously announced with regard to the taxation on the sums received for the sale of patents, and I notice that, when my right hon. Friend the Financial Secretary spoke in the Second Reading Debate, he stressed the justification for this procedure, the procedure being that the capital sum be divided into six parts and tax levied in each of six years on the one-sixth part. My right hon. Friend said that this was justifiable because the patentee and vendor would be liable and prone to receive a much larger sum for the sale of the patent if the purchaser were enabled to write off the cost of the patent over a period of years. I do not want to discuss whether that is likely, in the average case, to be true or not, but the point I want to make to the Chancellor is this. Manifestly, any ameliorative conditions which this Bill applies to the British purchaser of a patent, cannot touch the foreign purchaser of the equivalent foreign patent taken out by the British inventor in each of the several foreign countries.

8.0 p.m.

Whatever may be the view on the Chancellor's proposal with regard to the United Kingdom patent, the foreign patent which the British inventor takes out needs further consideration. It cannot be argued that, because the British purchaser can write off for taxation purposes the cost of the patent, the foreign patentee will have no benefit whatever because his purchase will be governed by the financial laws of the country in which he is a citizen. I want to appeal to the Chancellor not to place an added load on the back of the British inventor who takes out foreign patents comparable with the United Kingdom patents. I may say that, with some experience in this matter in a number of countries, we as a nation are very prone to throw away valuable foreign assets because British inventors do not take the trouble, or cannot find the money, to take out the foreign patents appropriate to the United Kingdom patents. Therefore, I feel that, as an act of national policy, we want to encourage British inventors to take out the corresponding foreign patents of their United Kingdom application. This proposal is an added reason why they will not do so.

It is fair to say that the Chancellor has, throughout this Bill, endeavoured to oil the wheels of industry. This particular aspect of the proposals, though it may be that they were not fully foreseen in relation to foreign patents, is so diametrically opposed to the general attitude that the Chancellor has manifested that I am certainly hoping that he will see his way here, without prejudice to his attitude and the principle of the Clause as a whole, to grant that the foreign patents of United Kingdom citizens shall not be subject to the Clause but shall continue to be dealt with in the future as they have been in the past.

:This is a subject which is confined to a very few people who are interested in taking out patents in this country and overseas. I support all that my hon. Friend the Member for Duddeston (Sir O. Simmonds) has said but there is also another factor. In these days of high tariffs put on against this country, the importance of developing patents overseas is very great indeed, and for that reason alone the Chancellor should give patentees in this country every consideration, and I hope that some concession will be granted on this Amendment.

:The concession for which my hon. Friends ask here seems, at first blush, quite a plausible one. They do not ask for special treatment for profits resulting from the sale of patents in general. They ask, as I understand them, only for special treatment as far as patent rights outside the United Kingdom are concerned. The point is one with which I am familiar and I have given it consideration, because in the framing of this Bill, as hon. Members know, my concern has been to do everything that I felt I properly could, consistent with the principles which should be observed in Income Tax administration, to encourage not only development but also research. The development of patents combines both objects. There is involved in the treatment we give in this respect both the encouragement of the inventor of the patent and the encouragement of the developer. The provision in the Bill by which a sum paid to a patentee for the right to develop the patent attracts special allowances is calculated, in my judgment, materially to improve the general prospects of the development of patents and inventions because the risk which the developer takes, if the patent does not prove to have commercial value, is thereby very greatly diminished. It is a counterpart of that provision that the sum received by the patentee from a developer should be made subject to Income Tax. I really cannot see how I could justify the discrimination which my hon. Friends suggest should be made.

My hon. Friend the Member for Duddeston (Sir O. Simmonds) spoke as if the sale of the foreign rights in a patent meant a normal practice of sale to a foreigner. I hope that it will not in fact mean anything of the kind. I would like to see the foreign rights in a British patent disposed of to a developer in this country, and clearly I could not discriminate between a sale of foreign rights in a patent to someone in this country and the sale of British rights in the same patent to the same person. I could think of no argument by which that could be justified. The argument on which my hon. Friend the Member for Duddeston relied was that, when a foreign patent is disposed of—and I assume he meant to a foreigner—we have no assurance that the foreign developer will be given the same sort of treatment as it is proposed by this Bill to give to a developer at home. We really have no concern with that. The developer in that case is outside our jurisdiction but he may, in fact—and I know, for example, that in the United States of America he does—get the same kind of assistance or relief as we are proposing now to give for the first time to the developer of a patent at home. But we cannot really concern ourselves with differences in foreign taxation law. The broad principle, in my view, stands unchallenged that if we give, as I think we should, an allowance for the development of a patent if it comes within our jurisdiction, we are right in treating sums received by a patentee in respect of the sale of his patent, whether the rights are rights in this country or abroad, as subject to Income Tax. Therefore I am bound to ask the Committee not to accept this Amendment.

:I think that my right hon. Friend is not right in one important fact that he states. I have no statistical information to give him, but I should think that well over 90 per cent. of the foreign patents taken out by British subjects are sold to citizens of the countries in which those patents operate. If, therefore, he wanted to exclude, with regard to our Amendment, British citizens who might purchase foreign patents owned by United Kingdom citizens, that, I think, would be wholly acceptable to my hon. Friends, but I do not think, if I may say so, that he has given sufficient attention to the basis on which he propounded this change in the Second Reading Debate on this Bill. It was said specifically then that the justification for increasing this financial levy on the patentee was that he would get more money for his patent because the purchaser would give him more, since the latter could write off the whole of the sum which he paid. As my right hon. Friend has said, manifestly we cannot control the situation in foreign countries from a taxation point of view, but I think there is yet something to be considered by the Treasury in this matter, and in the hope that my right hon. Friend will be willing to consider this before the Report stage, I beg leave of the Committee to withdraw the Amendment.

Amendment, by leave, withdrawn.

:I beg to move, in page 31, line 26, after "income," insert "chargeable to tax."

This is purely drafting.

Amendment agreed to.

:I beg to move, in page 32, line 27, at end, add: shall hope to show that as the Bill is drafted it imposes a substantial injustice upon a patentee who disposes of his rights in that way.

I am told, and no doubt it is the case, that it is a common arrangement, when a patent is to be developed, for a company to be formed for the purpose of developing the invention, and for the inventor to receive as part of the consideration for the transfer to the company of his patent rights an allotment of stock or shares in the company.

8.15 p.m.

The shares which he receives in consideration for the sale of his rights may be of no immediate value at all; but it may be, and it very often is, the case that they are of considerable potential value. As the Bill is drafted, the shares which an inventor receives in those circumstances would presumably be regarded as a capital sum, and he would be assessed to Income Tax in a sum representing one-sixth of the assumed value of the shares for each of the six Income Tax years following the date of allotment. The position of an inventor who received shares in those circumstances would be a very peculiar one. It may be, and I expect that it probably is, the case that for the first years of the company's life no dividend is paid upon the shares at all. Of course if a dividend is paid, the dividend is taxed in the usual way at the source and the inventor pays his Income Tax on the income that he receives from his securities. But if no dividend is ever paid on the shares of the company the unfortunate inventor is left in this situation, that although he receives no income from the shares, and although in fact his shares have no immediate value capable of being realised, he is assessed to Income Tax upon an income that he has never received in a sum equal to the assumed value of the shares.

Of course, if the shares are capable of realisation, I suppose that the inventor, if he was so minded, might realise them—although he might do so at considerable loss to himself—and he could thus provide himself with funds with which to meet the demands of the Income Tax collector. However, these companies are usually private companies and, as the Committee knows, in a private company there are, as a rule, restrictions upon the transfer of the shares, so that the luckless inventor may be in this situation, that he cannot realise his shares, even if he wishes to do so, and even if they have any market value at all, but still, under this Clause, he continues to be liable for Income Tax in respect of the assessed or assumed capital value of the shares.

I submit to the Committee that that is a very unfair position in which to place a man. After all, Income Tax is a tax upon income, and one ought not to levy Income Tax upon a taxpayer who has in fact not received any income and who may very well find himself in circumstances in which he cannot realise any income in respect of the particular securities which are, for the purpose of Income Tax, to be regarded as a form of income. It is essential that if a man is to be assessed to Income Tax, he should be in possession of an income, and that is exactly what these inventors will not be under the present Clause as it is drafted.

This is not an Amendment which challenges in any way the principle of the Clause. The effect of the Amendment would be that if and when the inventor realises his securities and receives the proceeds of the sale, those proceeds will be taxable under the Clause in precisely the same way as though he had received a sum in cash in the first instance. As I have said, this Amendment does not in any sense challenge the general principle of this Clause. All that it does is to postpone the application of the Clause until the inventor is in a position to convert his security into cash, and until he is thus in possession of the necessary funds to enable him to meet the Income Tax. Unless some Amendment on these lines is accepted the result will be that the inventor who is placed in the circumstances which I have just described will be compelled to raise from other resources, if he possesses any, the necessary funds to meet the Income Tax which would be charged upon him in respect of these shares. That is a very unfair and unjust arrangement, and I cannot really believe that my right hon. Friend intends that the Clause should have that effect.

:I think I can to some extent reassure my hon. and learned Friend, because the actual procedure is not quite that which he envisages. It is quite a common feature of Income Tax law that a man is taxed both on the income he receives in the form of cash and the income he receives in the form of money's worth. It would be a very easy matter, if a man received his income in the form of war loan, for him to say, "I cannot pay tax, because I have not received any money." It is true that in some cases money's worth is not by war loan but by shares in a private company, and the task of valuing shares in a private company for Income Tax purposes is one with which the Commissioners are familiar. My hon. and learned Friend kept on speaking about the assumed value of the shares, but, of course, you do not take shares at their face value. If the shares pay no dividend, and it is not known when they will pay a dividend, the taxpayer has a very strong case for saying that they are not worth anything, that their value is nil, or next door to nil. When you are dealing with shares in a private company, for obvious reasons, when they are not readily marketable, the value put on them for this type of purchase is really less to the individual. My hon. and learned Friend says that we ought to postpone the Income Tax until the man realises the shares. I think that would be a wrong principle, for more than one reason. My hon. and learned Friend spoke of a case where the shares had little value at one time, but might have considerable value later. It is very much to a man's advantage to get assessed for Income Tax purposes when the shares are of little value, rather than wait until they have gone up. If we adopted my hon. and learned Friend's principle people who do not regard the paying of the maximum amount of Income Tax as the highest of human duties would be able to deprive the Revenue of what, clearly, would be a fair tax in this case.

:In the circumstances my right hon. and learned Friend has just put to the Committee an inventor would be paying Income Tax upon the dividends which he received on the shares.

:Of course he will, but my hon. and learned Friend does not seem to see the point of this Clause. It is that just as a lump sum paid for use is treated as income so a sum paid for the sale of a patent out-right has to be treated as income. A man may invest or own income which he receives in the form of securities. Under this Clause either the money or money's worth for what he receives for the patent has to bear tax. There are great difficulties and objections in adopting the suggestion that we should wait until the shares are realised. The problem which arises is not an unfamiliar one, because there are cases where something a man receives in the form of shares has to be treated as income, and no difficulty in practice has arisen in the values which are placed on such shares by the Commissioners. The principle that money's worth must be assessed for Income Tax is one from which my right hon. Friend cannot possibly depart, because the suggested solution that we should wait until the shares are realised would provide a ready means for the ingenious to deprive the Revenue of tax.

:I am sure no one challenges the principle which the Attorney-General has just enunciated that money or money's worth equally should be regarded as income and subject to tax, but I am sure he is wrong in thinking it will be a rare case where the inventor who takes payment for his invention in the form of shares has virtually no income in cash out of which he can pay the levy by the Income Tax collector. That is all too common a case because it frequently happens that the shares are in an experimental company. There is a danger in leaving it to the inspector to place upon the shares a cash value, and then calling upon the inventor to pay a sum, not in shares, but in cash which, in a large number of cases, he has not got. One serious result from this Clause is that we may assist a most grievous wrong which is, unfortunately, commonly done to inventors, that their invention is purchased by someone, usually more powerful and wealthy, for a sum in cash which, at the moment, may look attractive but in the development of which, thereafter, the inventor retains no interest whatever. We ought to devise some way, if we can, of encouraging the purchase of inventions in some form and by some means which will secure to the inventor a continuing interest in the development of his invention, and not perpetuate the scandal of a man making an invention and someone else reaping the profits. For that reason I wish my right hon. Friend could see some way of dealing with this case, if not the way suggested by my hon. and learned Friend the Member for Ilford (Mr. Hutchinson), then some other way, in order to secure that the poor inventor who has virtually nothing but his brains shall not find himself in the position where he must either take cash outright for his invention or lay himself open to the very grave difficulty of having a tax levied upon him and not having the wherewithal to meet it.

8.30 p.m.

:If a man invents something, does he not produce a capital asset by creating that thing? There are some people whose profession it is continually to invent things, and they derive their regular livelihood from that profession. In that case it might be income and not capital. Nevertheless, a man who thinks out an idea and makes an invention is as surely a creator as a man who builds a house. Ought not the thing which he creates to be regarded as a capital asset? I should have thought that the Chancellor would have had sympathy with inventors, and would have been anxious to encourage people who have ideas to put them to some creative purpose. An inventor may invent something useful and get £50,000 for it. It may be the result of the one and only bright thought he has had in his otherwise dull life. Under this Bill, if he were to get £50,000 for that invention, he would be assessed for Surtax and Income Tax, and by the time he had got the money in its net form, he would have only a few thousands left, because the £50,000 would be regarded as income instead of as a capital asset. I think this matter ought to be considered very carefully from that point of view, and I hope the Chancellor will give it sympathetic consideration.

:I assure my hon. Friend the Member for Gloucester (Sir L. Boyce) that this matter has been considered very carefully and sympathetically. I do not think it would be in Order on this Amendment to go into the whole question whether a particular asset brought into existence is capital from the outset or whether it starts as income and fructifies into capital, which is the normal method by which capital is brought into existence. All capital except capital represented by land or natural resources starts as income. The income, if it is not immediately spent, is inchoate capital. But if I started to discuss that I should get into a great field of speculation which I want to avoid.

I want only to say, in regard to the Amendment, that I can see no method by which it would be possible to avoid taxing an inventor who disposes of his invention in return for shares in a company, because the shares have to be valued in any event, in the hands of the company. Under the Bill, the shares which represent the purchase price of the patent have got to be written off, and they are written off by an annual allowance, and the ascertainment of that allowance involves the valuation of the shares. When the shares have been valued—and one must arrive at the best and most correct value possible—one has to deal with that amount in the hands of the vendor, the inventor. It is not a question of leaving all this to the inspectors of taxes. The citizen has rights, whether he is an inventor or a more ordinary citizen. There is someone to whom he can make an appeal if he is not satisfied. Every effort is made, in fact, as I believe is generally recognised, to administer the Income Tax law reasonably and without oppression of the taxpayers. Particularly when rates are as high as they are now, it is of the very greatest importance that taxpayers in general should feel that they are being fairly, if severely, treated. There is an alternative course open to the inventor. Instead of taking shares which may be worthless—and that was the assumption of my hon. and learned Friend the Member for Ilford (Mr. Hutchinson)—let him make an agreement for the payment of an annual royalty on the proceeds of the patent. If the shares are worthless, presumably the patent is, and there will be no income upon which the unfortunate inventor will be taxed. He can arrive in a situation in which, if the patent proves to be a source of profit, he receives a steady income on which, like everybody else, he pay tax. If the patent proves a failure, he gets nothing, and the purchaser gets nothing. I think that is not an unfair result.

:I am sure my right hon. Friend does not desire to misunderstand my argument; I fear I failed to express myself sufficiently clearly. I did not say that the shares were worthless. I was assuming a case where the shares were of value, but their value was temporarily incapable of being realised. That is the case where there will be hardship.

:It does not matter, for the purposes of my argument, whether the shares have some potential value but no immediately realisable value, or whether they are in; fact, or ultimately prove to be, worthless. I say that the inventor has various courses open to him, but I do not think he is likely to find, if there is no evidence that the shares have for practical purposes any current value, that the Income Tax authorities will seek to deal with him severely.

Amendment negatived.

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

:I hope my right hon. Friend the Chancellor will reconsider the whole Clause. We all know how sympathetic he is about helping the inventor, helping research, and generally giving assistance to scientific progress. Last year, in his Budget speech, he encouraged inventors to believe something would be done to help them, but I am afraid that the help which inventors thought, from the words of the Chancellor last year, they were going to get has not matured. This Clause, I am afraid, is exactly the reverse of what we all understood was going to happen; that is to say, under this Clause inventors will not get any advantage. In fact they will be substantially worse off than they were before. It is for that reason that I ask my right hon. Friend to reconsider the whole question as to whether it would not be better to leave the Clause out altogether.

As the law stands at present, if an inventor sells his invention outright he receives a capital payment and pays no Income Tax on it. If, however, he licences a company, or another individual, to develop the patent for him he receives a royalty and pays Income Tax on it. Under this Clause not only will he continue to pay Income Tax on his royalty but, if he sells the patent to a developer, he has to pay Income Tax on the proceeds of the sale. The Chancellor says that the developer will be placed at an advantage because he will be able to write off the price paid for the patent, and in that way will be able to offer a greater payment to the inventor. He says it is an anomaly on the one hand to allow the developer to write off the capital cost of the payment but to allow the inventor to1 receive a capital payment on which he pays no Income Tax. I suggest that my right hon. Friend should reconsider the matter and give the encouragement that he promised he would give to the developer by allowing him to write off the purchase price of the invention, but at the same time let him not discourage the inventor by putting him in a worse position. Allow him to retain the proceeds of his invention as a capital sale on which he does not pay Income Tax. The inventor will perhaps receive a little more for his invention, and be that much better off, and in that way will be encouraged, and the developer will be encouraged. Under the present proposal in actual fact the inventor, and research, are going to be worse off than before because the Chancellor is transferring the collection of this tax from the broad shoulders of the developer on to the narrow neck of the inventor and is making a profit on the transaction.

:Let me show how the Treasury is making a profit on the transaction. The developer is allowed 17 years to write off the cost of the invention. The inventor has to pay all his Income Tax in five years and, if the payment is substantial, he has to pay Super-tax as well. That is where the profit comes into the Treasury. If the Treasury wants to give any encouragement, let the inventor spread the tax over 17 years, and let the developer spread it over five. The Chancellor says that, if the developer can depreciate the invention over 17 years, he will pay that amount more to the inventor. I really do not think that that will happen. If an invention is worth £50,000 as the law stands, the inventor takes the lot. The developer is not allowed to write it off. Under the proposals of the Bill the developer may well pay more than £50,000 because he can write it off over a period of years. But the invention has still to be proved. He has still to get his money back and make it a success. He may pay £70,000 or £80,000 but he would not pay £125,000, which is the amount that the inventor would have to receive if he is to get the same amount as he got before, because by the time he has paid 10s. in the £ Income Tax and Super-tax, that is of the order of the sum that he would have to receive to be in the same position under the new proposal as he would be under the old. So my right hon. Friend is not helping inventors by these proposals. If he will not let the inventor retain the capital sum in his own hands, without paying Income Tax on it, and allow the developer to write it off, I hope he will withdraw the Clause altogether and leave the position where it was, because he really is not helping the inventor, he is not implementing the promise that he made last year, and I think he is not giving that assistance which I know he wants to give, and which we all feel ought to be given to inventors and to research if the country is to go ahead.

Taking a long term view, if research and invention are going to be encouraged, as my right hon. Friend said he wanted to encourage them, that means increased activity and greater productivity and, as Income Tax is always calculated on turn over, it stimulates that. So, even if the Chancellor gives up the comparatively small amount of Income Tax which the inventor will have to pay, which means so much to him but very little to the Exchequer, I am certain that in the years to come, by stimulating invention in that way he will get it back and more if he can only give that encouragement to the inventor. So I earnestly hope that the Chancellor will reconsider the position and let the inventor retain, as heretofore, the money that he receives by way of capital payment, paying his tax if he licenses someone else and gets his revenue in by royalties. I do not think it is an anomaly to do that and at the same time give the developer the opportunity to write off the patent over 17 years. But, even if it is an anomaly, if it is going to help the invention and help industry, and achieve all those things that the Chancellor wants to see achieved, let it be done. I hope my right hon. Friend will consider the points that I have made and either leave out the Clause altogether or so alter it that the inventor is back where he was before and at the same time the developer is given encouragement by being able to write off the cost of his invention.

:The real difficulty with which we are faced in putting forward this plea is that the number of persons affected is relatively small. I am afraid the Chancellor will be getting tired of hearing this case advanced. He has seen a number of us privately, and it has been repre- sented to us that there are not many people who would be affected by the omission of the Clause, leaving the law as it is to-day.

Very often I have heard it advanced in this House that certain things should be done because, it is said, so few people would be affected that it would cost little, but I know from experience that that is one of the worst arguments that could be advanced. There is, generally speaking, in a democratic system not very much desire to protect infinitesimal classes of the community, and I would feel happier if I were arguing this case on behalf of hundreds of thousands of persons earning millions of pounds annually. Unfortunately the very reverse is the case. As I understand it, the fact is that this brilliant class of persons, the inventors, are mostly employed by large companies or combines, or else they are regularly engaged in the practice of invention, and invention in their case is defined as their stock in trade. But it is the fact, nevertheless, that some of the greatest inventions of the age have been isolated flashes of brilliance on the part of persons not normally engaged in this kind of business, and the contention of my hon. Friends and myself is that the new proposals for treating such people would be to drive them into the arms of big business or drive them away from these shores altogether.

I cannot believe that a man who might hit upon some unusual idea which he would regard as a capital asset, if his invention were to run in its worth into five figures, which is by no means impossible, would be prepared to sell that in this country if he had to bear the full amount of taxation, even though it were spread over six years. An individual such as an inventor—and I have not the pleasure of acquaintance with any of them—is a free lance who can take himself or sell his wares where he thinks best. Therefore, I cannot see why it should be argued that this class of persons should no longer enjoy the particular protection, if that is the right word for it, which has been theirs for as long as I can remember.

Nobody has said that the position regarding the professional inventor or the man who is employed by a big firm or a combine, or indeed a member of one of His Majesty's Services who has to hand over his invention to the Service con- cerned, is in any way affected, and it is not in any way affected; but I think there is a very good case for the individual, of whom there are all too few—and that is one of the regrettable features of our case—who does, from time to time, produce and perfect some brilliant idea. One I can think of at the moment, although I do not know the name of the inventor—and I do not suppose there is an hon. Member present who is not acquainted with this invention—is the zipp fastener, which was not the production of any firm or of any person whose stock in trade is invention, but of an individual. I believe the rights were sold to one of the best known firms in the country. If, as has happened during this war when it has been in the national interest to find out any new device that may be of value, a person devises some new scheme, it seems very hard that what in the past would have been looked upon as a capital asset should be treated in this way. I join, wholeheartedly, with my hon. Friend in submitting that there should be no change in the law, that it should be recognised as it is to-day, that whereas invention may, in the case of certain individuals, be a regular profession and is treated as such, there are certain instances where it is to the national advantage that special inventions patented by persons who are not so professionally engaged, should be exempted from tax and regarded as capital assets.

:I rise to support with all the power that is at my command the case so ably put forward by my two hon. Friends. I think it is a well established practice not to muzzle the ox that treads out the corn. The Chancellor in this case derives his profits and his taxation from the working of the patents and the putting into practice of the inventions, and he should not get an additional profit from taxing a very small source such as the inventor. The inventor for the most part is a small man, and, as has been put forward already, the amount of money which the Chancellor will get from this proposal will be very small indeed. It will not be worth collecting and it may have all kinds of subsidiary effects in the driving away of inventors from this country. The crux of this matter is whether the invention is a capital asset, or whether an inventor goes on inventing all his life. I was looking round for some inspiration to describe what goes on in the inventor's mind, and I naturally looked to some former remarks of the Chancellor. In the Budget of last year he referred to:

There is one other point on which I think the Chancellor has not been at all generous, and I do not think it bears out his case. In a later Clause he does not allow the inventor to write off against his successful inventions the expenses of his unsuccessful inventions. Obviouly if you are making invention a business, you must allow the inventor to write off his bad shots against his good ones.

:I bow to your Ruling, Major Milner. The treating of a sale of an invention as capital I claim has a precedent in the treatment of the compensation for loss of office. I know that is not a popular payment with the Treasury because it is not taxable in the hands of its recipient but can be written off by the firm which pays it. That is a precedent which is not so worthy as the case we are now arguing. If the Chancellor persists in his attitude we shall find that a doctor who sells his practice will be taxed on the increased value of the practice. The Chancellor shakes his head about it, but it is a receipt, and it seems to me that any receipt in anyone's hands is what the Chancellor is aiming at taxing. I ask him to consider the great amount of feeling there is on this subject, and to look at the matter again.

:I hope that the Chancellor will stand very firm and not be beguiled by the argument put forward by my hon. Friends opposite. I would remind the hon. Member for Swindon (Sir W. Wakefield) that there are two classes of inventor, the mechanical and the imaginative. Perhaps I might describe them both as authors. The author who sells the rights of one of his works outright is allowed in certain instances to account for it over three years of Income Tax. I had to extract this concession with very great difficulty from my right hon. Friend last year, but it appears that the mechanical inventor has the advantage of what amounts to a five years' average under the Bill. Hitherto he has been allowed to treat his receipts as capital payments. This is monstrously unjust and is, in fact, a differentiation between two similar cases which is indefensible. If my right hon. Friend is not going to stand his ground, I invite him to say that the word "inventor" includes both the mechanical and the imaginative author, in which case I shall raise no objection. It must be a case of "Halves, partner, halves!" or nothing at all.

:I have been anxious not to intervene prematurely in the discussion because I realise how keenly my hon. Friends feel about the matter. I think they are wrong, but I am sure their feelings are quite genuine. They have sought to argue a very difficult case. What they say is: "If a man makes a succession of inventions, of course treat him as the Bill proposes. Tax him, and we don't mind. If he makes only one invention and his contribution to the national strength and welfare is limited in that way, and if he is lucky enough on that one invention to get a very large sum of money, he ought not to pay anything to the common good." I find it extraordinarily difficult—and I claim not to be behind any of my hon. Friends in my desire to encourage research and invention in the national interest—to be influenced by an argument of that kind.

My hon. Friend the Member for Swindon (Sir W. Wakefield) set out to show that I was going to make a profit out of the provisions of this Clause. He limited himself to an examination of one or two cases which he had pictured in his own mind. What I hope to do by the Clause is to give every encouragement to the development of research and to make it easy for people—manufacturers, industrialists, individuals—to embark on research which promises no immediate return. The most fruitful research is directed not to an immediate gain but to some general objective. The more people spend on that kind of research the better I shall be pleased. When a research proves fruitful and yields an income, I say, and I say without shame, let the recipient of that income make his due contribution to the community.

A number of hon. Members have spoken about this as capital. Apparently, what is received for inventions if there are several of them is to be taxable as income, but what is received from one invention is, in its nature, capital and should escape taxation. There is a profound misconception there. It is not because the thing which we are now proposing to bring under the operation of Income Tax is capital or has in the past been regarded as capital, that it has hitherto escaped taxation. It has got out by another door altogether, by the operation of the old rule about recurring sources of income expressed in the formula "annual profits and gains." If a man did something only once, if he let a house furnished just once in his life, that was not a profit which was subject to taxation; but if he did it repeatedly, then income tax hit it. That was all right when Income Tax was at a very low level, but it produces and would produce the most extraordinary results at the present high rate of tax if large sums were received as a fruit of human labour and were to escape taxation indefinitely.

Apart altogether from the provisions of the Bill, which are designed to encourage development by allowing relief to an industrialist who purchases a patent in order to develop it, and which, as my right hon. Friend the Financial Secretary pointed out on Second Reading were likely to encourage developers to take chances, I am certain, despite what my hon. Friends have said, that that provision will prove a great advantage to inventors as a class. It is not a question of whether an undertaker, who would be prepared to pay a certain sum under the law as it stood before, would be prepared to pay twice that sum or any other increase on that sum under the new conditions; the advantage is that far more undertakers will be prepared to take a risk, and try out a patent which is not very promising at first sight, will face the risk of a total loss on the particular transaction, because the amount of that expenditure can be written off. It seems to me that that will be of the very greatest benefit to inventors as a class. The fact that an inventor is to be taxed like any other citizen when he receives a payment for the product of his intelligence, should not be more discouraging than direct taxation inevitably is to all classes of people, who find their earnings reduced by the effect of tax.

Of course, it is absolutely clear, as my hon. Friend opposite has pointed out, that if the inventor as a class were, by a deliberate decision of Parliament, to be exempted from the payment of taxation provided only that he did not exercise his productive capacity too often, the author or the painter or musician would have to be included, and get the same benefit. Therefore, while, as I have said, I am most anxious to do everything I can to encourage research and invention—and the two terms are not by any means synonymous—I have no hesitation in submitting to the Committee that the method adopted in this Bill, which lays stress on development, and accepts as right and proper the liability of the inventor to pay tax on what he receives, is the right approach. I feel perfectly certain that in the long run great advantage will accrue to the State from this Measure.

I add this as a final word, in order that there may be no misunderstanding: Quite apart from the provision we are making for the relief of the development, which has been linked up in discussion with the treatment we are now proposing to give to the inventor, any comprehensive review of the Income Tax law would compel us to reconsider the position of the inventor, who hitherto, if he only produced a casual invention, has escaped the taxation which all his fellow citizens have to bear as their contribution to the general good of the community.

:Could the Chancellor say why it is that the developer is allowed to write off the cost of the purchase of the invention over 17 years, while the inventor has to pay Income Tax on it over five years? Could not the position be reversed? In view of the encouraging words of the Chancellor about giving all the encouragement he could, would not that be one of the ways that might assist—to let the inventor pay Income Tax on it over 17 years, and to let the developer write it off over five or six years?

9.15 p.m.

:No; I think it is quite right that writing off in the hands of the developer should be related to the life of the patent, whereas the spread of the receipt is related to the theoretical period of time during which the invention might be assumed to have been maturing in the mind of the inventor. I do not think that there is a necessary connection between the two. I should have thought that a spread-over of five years in the case of an inventor represented generous treatment and is more liberal than has been given recently in the case of the author.

:My right hon. Friend has been arguing that the sum received by the inventor was income and not capital, but if he looks at the marginal heading of this Clause, he will find it says, "Charges on capital sums received for sale of patent rights." Does that not lend colour to the arguments that have been addressed to him and indicate that it is necessary to "vet." the marginal heading?

:I think that I should agree with the last remark of my hon. Friend.

Question put, and agreed to.

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

Clauses 34 to 36 ordered to stand part of the Bill.

CLAUSE 37.—(Spreading of income payments over several years.)

Amendments made:

In page 34, line 24, leave out "paid or."

In line 27, leave out "paid or."

In line 31, at end, add:

"or to any of the rents or other sums to which Section twenty-one of the Finance Act, 1934, and Section seventeen of the Finance Act, 1940, apply."—[ The Attorney-General. ]

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

Clauses 38 and 39 ordered to stand part of the Bill.

CLAUSE 40.—(Application of s.27 of Finance Act, 1944, to certain expenditure and payments incurred or made on or before appointed day.)

:I beg to move, in page 36, line 31, leave out from "as," to end of Clause, and add "a deductible expense."

This Clause deals principally with payments made by traders to research associations for their capital needs. If a research association requires, for example, to set up a laboratory, the contributions received and spent on this object are not allowed in the hands of the traders. Such contributions, if made after 6th April, 1944, and before the appointed day, will be allowed as though they were made on the appointed day. Cases are arising where research associations desire to incur capital expenditure and hope to do so before the appointed day. They fear they will find it difficult to get subscriptions for this purpose if they are not to be relieved from Income Tax until the appointed day comes round. The object of the Amendment is to grant the relief at once, so that it will be made easier for research associations to raise their funds at any time before the appointed day for their capital purposes. It will not cost the Treasury anything, because they get it in the long run. To get money out of trade associations for research purposes is not an easy job, and if they can make the deductions straight away it will help to achieve the object the Chancellor had in view when he made these concessions.

:This Clause is itself a concession, and my hon. Friend wants to go a little further. Section 27 of the Finance Act, 1944, provided that payments of the type in question should be allowed at deductions if made after a certain appointed day—if made before that day no deduction was allowed. I hope the Committee will be content with the concession made in the Clause, that any payment made after 6th April, 1944, up to the appointed day, may be deducted. Another argument against the Amendment is that it would put payments made to central research organisations in a more favourable position than payments made for research by the undertaking itself.

:The research organisations will be very disappointed; but I accept what the learned Attorney-General says, and ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 41 ordered to stand part of the Bill.

CLAUSE 42.—(Other Amendments of s. 29 of Finance Act, 1944.)

Amendments made: In page 37, line 24, at beginning, insert "so much of any."

In line 26, leave out from "day," to end of Sub-section, and insert:

"as, under the provisions of the last preceding Section, is to be treated as having been incurred immediately after the appointed day."—[ The Attorney-General. ]

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

Clause 43 ordered to stand part of the Bill.

CLAUSE 44.—(Extension of right to allowance.)

:I beg to move, in page 38, line 19, after "plant," insert:

"or, where the buildings, machinery or plant have ceased to exist as such, the value of the remains thereof."

This Amendment deals with the exceptional depreciation allowance under the Finance Act, 1941, One might want to deal with buildings which have ceased to exist, and it might be said that you could not value them at that time.

Amendment agreed to.

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

Clauses 45 and 46 ordered to stand part of the Bill.

CLAUSE 47.—(Depreciation to be spread evenly.)

:I beg to move, in page 39, line 40, leave out "or."

This is a rather technical point. It deals with the case of an asset which qualifies for the exceptional depreciation allowance where that asset is put out of use by the trader himself, before it is sold or before the date determined by the Act of Parliament. This Amendment provides that the allowance should be spread over the time during which the asset was actually used, up to the appointed day.

Amendment agreed to.

Further Amendment made: In page 39, line 41, leave out "as the case may be," and insert:

"or the date on which the buildings, machinery or plant finally ceased to be used by the person to whom the allowance falls to be made, whichever is the earliest date."—[ The Attorney-General. ]

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

Clauses 48 to 53 ordered to stand part of the Bill.

CLAUSE 54.—(Apportionment of consideration and exchanges and surrenders of leasehold interest.)

:I beg to move, in page 44, line 12, at end, insert:

"and references to expenditure incurred on the provision or the purchase of property shall be construed accordingly."

This is to make sure that where you have to apportion a price as between different assets, the apportionment shall apply both to the vendor, and the sums in his hands, and the purchaser, and the sums he pays.

Amendment agreed to.

Further Amendment made: In page 44, line 20, leave out from "to," to "as," in line 23, and insert:

"other sale, insurance, salvage or compensation moneys."

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

CLAUSE 55.—(Special provisions as to certain sales.)

:I beg to move, in page 45, line 38, after "buyer," insert:

I am informed that, in the steel industry, for instance, there are at the present time under discussion large schemes of development, and it has been proposed to put down expensive new plant which will be owned by a company formed for that purpose, the shares in which will be held by the leading firms in the industry. Their intention is that this should be a temporary arrangement, and that at a later date this company would be wound up and the assets would be transferred to another company under a really permanent scheme. If the assets are provided after 6th April in the normal case, they would rank for an initial depreciation allowance to be granted on the appointed day. Should the new temporary company be wound up before then and the assets transferred to this permanent company, the initial depreciation allowance would be denied to anyone under the scheme and, in order to make provision for genuine schemes of reorganisation, this Amendment has been drafted.

:I am grateful to my hon. Friend for his acceptance of the main principles of the Clause. Obviously, we must have something like it. It is not, of course, my right hon. Friend's desire in any way to put impediments in the way of genuine transfers by withholding from them allowances under the Bill. The case that my hon. Friend has put is a special case. We think it ought to be looked into and we want to look into it. We are not sure that the Amendment is the right way of dealing with it, but if he will undertake to withdraw the Amendment, I will certainly undertake to look into it.

Amendment, by leave, withdrawn.

9.30 p.m.

:I beg to move, in page 46, line 16, at end, insert:

"Provided that if the purchaser notifies the Board of Inland Revenue that his claim to a deduction under Rule 6 or Rule 7 of the Rules applicable to cases I and II of Schedule D or of Section nineteen of the Finance Act, 1941, or of Part IV of the Finance Act, 1944, shall be restricted to that which would have been competent to the seller no balancing allowance shall be made to or balancing charge shall be made on the seller by reason of the fact that such sale has taken place whether at such a price as the machinery or plants sold would have fetched in the open market or otherwise."

The effect of this Clause appears to me to mean that where there is a genuine amalgamation or a domestic re-arrangement and assets are transferred from one company in a group to another company in the same group either at the written down value for Income Tax purposes, or at something in excess of that figure up to a figure equal to their true market value, the Exchequer will be able to step in and claim tax on the difference between the written down value and the true market value or the limit of recharge. Thus, the effect of attempts to rationalise industry in order to make it more efficient, so far from being encouraged as they should be, would result in the undertakings concerned being penalised by what would amount to a capital levy. The Chancellor of the Exchequer has already recognised that a case exists for consideration arising from such amalgamation and I therefore trust that he will see his way to accept the Amendment.

:I cannot accept the Amendment, and I think that, if he worked it out, it would not have the result which my hon. Friend intended. He might get the allowance twice over. As I said on the last occasion, we will look at this. We do not want to have any difficulties under the Clause, and the criticism which my hon. Friend made is one which ought to be looked into. It has considerable force behind it. I am not accepting the Amendment, but we will look at the matter. We are grateful to hon. Members for making suggestions such as my hon. Friend has made on this Clause, because it will help us to consider its working and see that we do not do any injustice.

:I am obliged to the learned Attorney-General for what he has said. I hope that he will look into this matter, and that, if he is also convinced that there is substance in the representations which I made in support of my Amendment, the Government will bring forward an appropriate Amendment on the Report stage to deal with the point.

:I am not giving a pledge that we will bring forward an Amendment, but my right hon. Friend will look into the matter and, if he thinks there is a point to be dealt with, he will deal with it on the Report stage.

:In view of that assurance, for which I am grateful, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 46, line 22, leave out "allowance," and insert "allowances."—[ Sir J. Anderson. ]

:I beg to move, in page 46, line 23, at end, add:

"(5) The provisions of this Section shall not apply to any transfer of patent rights."

Unless this Sub-section is added, I really do not think that the Clause can be made to work in regard to patent rights. The Clause deals substantially with machinery, equipment and plant, which can be valued. I do not see how it is possible to make a valuation of a patent, when perhaps it has been improved or partly developed, if it changes hands once, twice or three times at various stages. It seems to me that we shall get into great difficulties in trying to make a valuation of a patent at various times when it is in the process of development. I believe that it is not a practicable proposition to try to make such a valuation as would be necessary if patents were included in the provisions of this Clause. It is for that reason I move their exclusion.

:I think there is a real point of substance in this Amendment, which I hope the Chancellor of the Exchequer will take into serious consideration, even if he cannot accept the Amendment in the form in which it is on the Order Paper. To start with, patent rights are very difficult to define. I was president for four years of the Patents Committee of the International Chamber of Commerce and I have had to deal with this subject. Patents are very rarely master patents. There are celebrated cases where you have a particular patent and no other patent is concerned, but in the ordinary industrial process what you deal with is a group of patents, and in those there are very often improvements, some of which are patented and some of which are not. If this Clause is to apply to patents you will have the most difficult type of valuation it is possible to imagine. Many of my friends who occupy positions in industry know in what a very complicated and vague position we are in this country under our system of law, which no doubt is quite right. It must be remembered that a patent in this country cannot claim to be really valid unless you have contested it in a case before the House of Lords. Therefore, this really raises very difficult questions indeed, and to suppose that in the process of transferring from one company to another you are able to value a patent anything like accurately, or what would be the more usual case, a group of patents, is a thing that is unlikely to happen.

I understand that the Inland Revenue have in their minds here cases of possible fraud, where you might write down the value of a patent to a nominal figure, transfer it, claim your balancing allowance, and in that way secure an unfair advantage. But we really must assume that the vast majority of people are honest. I know the Chancellor of the Exchequer has very unfortunate experience—like a divorce court lawyer he is always seeing the worst side of life—but whilst I admit that, I think that the normal procedure that has been followed for many years in this House is the right one. You pass a law which is a just law and if you find that some rogues are trying to get round it, then you must come back to this House and ask for amended legislation. I do not believe that this particular type of trick, especially since it has the light of public opinion on it now, is likely seriously to occur, and I would ask my right hon. Friend, on this difficult and complicated subject, to see whether he cannot do something to deal with this particular case and to exclude in some form or another patent rights.

:I want to reinforce what my hon. Friend has said. I think the Chancellor, to get one rogue in a thousand, will make things very difficult for the 999 odd honest folk. It will make valuation completely unworkable. He has, at the moment, power to prescribe certain conditions as to artificial transactions. There is a war-time power which he has been given, and I think some modification of this might be the solution. I realise that it is easy to form a group of companies and defraud the Revenue if patents are excluded under the exact words of this Amendment, but it should not be beyond the ingenuity of the Chancellor to devise words which will protect the Revenue substantially and at the same time leave the ordinary honest operator a much easier way than he otherwise would have.

:This is a difficult matter. While it no doubt is the case—and I take this opportunity of confirming my view of that fact—that the vast majority of taxpayers are or, at any rate, wish to be scrupulous in meeting their obligations, I think a duty does lie upon all those who are concerned with framing the taxation law to see that adequate provision is made against abuses which are obviously liable to occur if no precautions are taken. It is in the interest of the honest taxpayer that the tortuous methods of the dishonest taxpayer, in however small a minority he may be, should be frustrated. Of that I think there can be no doubt. But I would like to have the opportunity of considering, in the light of what has been said on this Amendment, the extent of the practical difficulties which are apprehended in giving effect to this Clause, the general necessity for which I think is recognised, if it is left, as it now stands, to apply to the transfer of patent rights. I will undertake, between now and the Report stage, to consider carefully with my advisers what would be the best course to take, and in view of that assurance I hope the Amendment will be withdrawn.

:My hon. Friends and I are grateful to the Chancellor for the sympathetic way in which he has dealt with this matter. We appreciate that it is very difficult, and we are anxious to do what is right. In view of what my right hon. Friend has said I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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

CLAUSE 56.—(Effect in certain cases of successions to trades, etc.)

Amendments made: In page 46, line 36, leave out "amount," and insert "price."

In line 39, leave out "become payable," and insert "be made."—[ Sir J. Anderson. ]

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

Clauses 57 to 61 ordered to stand part of the Bill.

CLAUSE 62.—(Subsidies.)

9.45 p.m.

:I beg to move, in page 49, line 36, at the end, add:

(2)In considering, for the purposes of subsection (1) of this section, and of any other provision of this Act referring to expenditure met or to be met directly or indirectly by the Crown or by any authority or person other than the person incurring the expenditure, how far any expenditure has been or is to be so met, there shall be left out of account—

(3)Where, on or after the appointed day, a person, for the purposes of a trade carried on or to be carried on by him or by a tenant of land in which he has an interest, contributes a capital sum to expenditure on the provision of an asset, being expenditure which, apart from the provisions of subsection (1) of this section, would have been regarded as wholly incurred by another person and in respect of which, apart from the said provisions, an allowance would have been made under Part I, Part II, Part III or Part IV of this Act, then, subject to the provisions of the Schedule (Supplementary Provisions as to Allowances for Contributions towards Expenditure of Other Persons) to this Act, such initial and annual allowances, if any, shall be made to the contributor as would have been made to him if his contribution had been expenditure on the provision, for the purposes of that trade, of a similar asset.

In this subsection and in the said Schedule, the expression "trade" includes husbandry and the occupation of woodlands in the United Kingdom in respect of which an election is in force for assessment and charge to tax under Schedule D by virtue of the provisions of the Rules applicable to Schedule B, and the expression "annual allowance" includes an allowance under Rule 6 of the Rules applicable to Cases I and II of Schedule D and an allowance under section twenty-nine of this Act.

I can deal with this long Amendment very briefly, because my right hon. Friend the Chancellor explained it earlier in the day. Broadly, the position as it will result from this Amendment is that subsidies from the Crown or local authorities are excluded and will not be taken into account. Insurance moneys, war damage payments, and so on, will be taken into account whatever form the policy may take, whether it is a replacement policy or an ordinary policy.

:It has been the custom during war time in the case of assisted contracts for putting machinery into factories to have a clause in the contract under which the total wear and tear is claimable by the firm in whose works the plant is put, and if the Treasury has made a 40 per cent. grant, then 40 per cent. of the wear and tear is paid over annually to the Treasury. I want to make sure that that has been taken into account and that there is no difference here.

:The principle is the same. Whether the machinery will be exactly the same, I cannot say.

Amendment agreed to.

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

CLAUSE 63.—(Other provisions as to interpretation.)

Amendments made:

In page 50, line 10, at end, insert:

"foreign concession" means a right or privilege granted by the government of, or any municipality or other authority in, any territory outside the United Kingdom."

In line 16, at end, insert "lessee."—[ The Attorney-General. ]

:I beg to move, in page 50, line 29, at end, insert:

"( b )where the event is the coming to an end of an interest in property on or by reason of the coming to an end of a foreign concession, any compensation payable to that person in respect of that property."

It would be wrong to say this Amendment is simply a drafting Amendment. There is a slight widening of the definition and a re-arrangement, but it does not raise any point of principle.

Amendment agreed to.

Further Amendments made:

In page 50, line 33, leave out from "moneys," to "received," in line 34.

In line 35, at end, insert:

"and any other compensation of any decryption received by him in respect thereof, in so far as that compensation consists of capital sums; and

( c )where the event is that a building or structure ceases altogether to be used or that machinery or plant is put out of use, any compensation of any description received by him in respect of that event, in so far as that compensation consists of capital sums."

In line 41, after "is," insert "expressed to be."

In line 43, after "Act," insert:

"or in subsection (2) of section twenty-nine of the Finance Act, 1944."—[ Sir J. Anderson. ]

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

Clauses 64 and 65 ordered to stand part of the Bill.

NEW CLAUSE.—(Meaning of "the relevant interest.")

(1)Subject to the provisions of this section, in Part I of this Act, the expression "the relevant interest" means, in relation to any expenditure incurred on the construction of a building or structure, the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it.

(2)Where, when he incurs expenditure on the construction of a building or structure, a person is entitled to two or more interests in the building or structure, and one of those interests is an interest which is reversionary on all the others, that interest shall be the relevant interest for the purposes of Part I of this Act.

(3)An interest shall not cease to be the relevant interest for the purposes of Part I of this Act by reason of the creation of any lease or other interest to which that interest is subject, and where the relevant interest is a leasehold interest and is extinguished by reason of the surrender thereof, or on the person entitled thereto acquiring the interest which is reversionary thereon, the interest into which that leasehold interest merges shall thereupon become the relevant interest.

(4)Where the relevant interest is a leasehold interest which comes to an end before the appointed day and the last preceding subsection does not apply, the interest which is immediately reversionary thereon shall be deemed, for the purposes of the provisions of Part I of this Act, in so far as they relate to annual allowances, balancing allowances and balancing charges, to have thereupon become the relevant interest.—[ The Attorney-General. ]

Brought up, and read the First time.

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

We have already referred to this point. We came to the conclusion that it would be convenient to have the definitions of "relevant interest," which were scattered about in Clause 1 and 11, in one Clause at the end of the Bill. It also deals with one or two small points which turned up, the case where a man has a sub-lease and also a reversionary interest and cases where the lease has expired, and it secures that the allowance will be available.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Requisitioned land, holding over of leased land, and other special cases.)

(1)The provisions of Part I of this Act shall have effect in relation to any period of requisition of any land as if the Crown had been in possession of that land for that period by virtue of a lease, and any reference in Part I of this Act to the surrender of a lease or the extinguishment thereof on the person entitled thereto acquiring the interest which is reversionary thereon, or to the merger of a leasehold interest, shall be construed accordingly, and any sum paid to the Crown in respect of any building or structure constructed on any land during any period of requisition of that land, being a sum paid, whether by virtue of any enactment or otherwise, by the person who, subject to the rights of the Crown, is entitled to possession of the land, shall be deemed for the purposes of the said Part I to be a sum paid in consideration of the surrender of that lease:

Provided that where a person carrying on a trade is authorised by the Crown to occupy the land or any part thereof for the whole or any part of the period of requisition, the provisions of the said Part I shall have effect as if the Crown had granted a sublease to that person of that land or, as the case may be, that part thereof, for the period of requisition or, as the case may be, for that part of the period for which the said person occupies the land, and the preceding provisions of this subsection shall have effect in relation to that sub-lease as they have effect in relation to the lease therein mentioned, subject, however, to the modification that for the reference to any sum paid to the Crown there shall be substituted a reference to any sum paid to the said person.

In this subsection, the expression "period of requisition" means a period in respect of which compensation is, or, but for any agreement to the contrary, would be, payable under paragraph ( a ) of subsection (1) of section two of the Compensation (Defence) Act, 1939, by reference to the rent which might reasonably be expected to be payable under a lease granted immediately before the beginning of that period.

(2)Where, with the consent of the lessor, a lessee of any building or structure remains in possession thereof after the termination of the lease without a new lease being granted to him, that lease shall be deemed for the purposes of Part I of this Act to continue so long as he remains in possession as aforesaid.

(3)Where, on the termination of a lease, a new lease is granted to the lessee in pursuance of an option available to him under the terms of the first lease, the provisions of Part I of this Act shall have effect as if the second lease were a continuation of the first lease.

(4)Where, on the termination of a lease, the lessor pays any sum to the lessee in respect of a building or structure comprised in the lease, the provisions of Part I of this Act shall have effect as if the lease had come to an end by reason of the surrender thereof in consideration of the payment.

(5)Where, on the termination of a lease, another lease is granted to a different lessee and, in connection with the transaction, that lessee pays a sum to the person who was the lessee under the first lease, the provisions of Part I of this Act shall have effect as if both leases were the same lease and there had been an assignment thereof by the lessee under the first lease to the lessee under the second lease in consideration of the payment.—[ The Attorney-General. ]

Brought up, and read the First time.

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

This is a rather complicated Clause, but it deals with two or three perfectly simple points. We have to consider how we should treat a position where the Crown has been in possession of a factory, having requisitioned the land, and ultimately sells it to someone else. It has to be treated as if it was the tenant of the land. Then we deal with the case where a lessee, although his lease has come to an end, holds over, and we also deal with the case where the lease comes to an end prematurely, and in Sub-section (5) we deal with a rather curious state of affairs where a railway company lets its surplus land or what is in form a yearly tenancy, but in fact the person to whom it is let has complete security, and expends capital money as though he had a lease of 30 or 40 years. They are all rather technical points.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Temporary disuse of Industrial buildings or structures.)

(1)For the purposes of Part I of this Act, a building or structure shall not be deemed to cease altogether to be used by reason that it falls temporarily out of use on or after the appointed day, and where, immediately before any period of temporary disuse beginning on or after that day, a building or structure is an industrial building or structure, it shall be deemed to continue to be an industrial building or structure during the period of temporary disuse.

(2)Notwithstanding any other provision of this Act as to the manner of making allowances and charges where by reason of the

(3)The reference in this section to the permanent discontinuance of a trade does not include a reference to the happening of any event which by virtue of any provisions in Rule 11 of the Rules applicable to Cases I and II of Schedule D is to be treated as equivalent to the discontinuance of the trade.—[ The Attorney-General. ]

Brought up, and read the First time.

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

There are cases in which an industrial building has temporarily gone into disuse though it is intended to bring it back into use as an industrial building. The words of the Bill as they are, make it a condition that it should be in active use as an industrial building at the time. We desire to cover such a case as I have mentioned, and it is done by this Clause.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Computation of expenditure for purposes of Rule 8 of No. V of Schedule A.)

In computing for the purposes of Rule 8 of No. V of Schedule A the cost to any person of maintenance, repairs, insurance and management, there shall be left out of account any expenditure incurred by him on or after the appointed day, in so far as it has been or is to be met directly or indirectly by the Crown or by any government or public or local authority, or by any person other than the first-mentioned person.—[ The Attorney-General. ]

Brought up, and read the First time.

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

The purpose of this Clause is to make applicable to maintenance schemes under Rule 8 of Number V of Schedule A the same rule as to expenditure made by means of a subsidy as will be applicable to a scheme of allowances under the Bill by virtue of the first part of Clause 32. One can illustrate the need for a provision of that kind by reference to the Housing (Rural Workers) Act. The principle was accepted by the Committee, and this Clause extends it to the allied area of maintenance claims under Rule 8.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Expenditure on alterations to buildings in connection with the installation of machinery or plant.)

(1)Where, on or after the appointed day, a person carrying on a trade incurs capital expenditure on alterations to an existing building in connection with the installation of machinery or plant for the purposes of the trade, being alterations which have no value apart from that machinery or plant, the provisions of Part If of this Act and of Rule 6 of the Rules applicable to Cases I and II of Schedule D shall have effect as if the said expenditure were expenditure on the provision of that machinery or plant and as if the works representing that expenditure formed part of that machinery or plant.

(2)The preceding provisions of this section shall apply in relation to expenditure incurred by a person on or after the sixth day of April, nineteen hundred and forty-four, but before the appointed day, as if it had been incurred by him on the appointed day.—[ The Attorney-General. ]

Brought up, and read the First time.

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

This Clause carries out a promise which the Chancellor of the Exchequer gave in the Debate on the hotel Amendments, when he said that he would consider whether he could treat structural work connected with installation of equipment so that it would qualify for relief as part of the cost of installing that equipment, provided that it had no value apart from the equipment which had been installed. I dare say that those who took part in that discussion are not 100 per cent. satisfied, or may have hoped to obtain a little more, but I hope that they will think that my right hon. Friend has carried out his undertaking. I think that the proposed new Clause does what he undertook to do.

:On a point of Order. May I ask whether it is your intention, Mr. Williams, to call the group of Amendments to the proposed new Clause, which stand in my name?

:Yes. I will call the first one—in line 3, leave out from "trade" to "the," in line 4—and in moving it the hon. Member can cover the other three—in line 6 after "the," insert "proportion of the."; in line 6 after the first "expenditure," insert "attributable to the said installation." and in line 8, leave out "expenditure," and insert "proportion."

:I moved the original Amendment on this subject and the Committee will remember that it was withdrawn when the Chancellor of the Exchequer gave an undertaking to introduce a new Clause and to reconsider the points which we had raised on the question of hotels. As far as I and my colleagues are concerned, we accept the proposed new Clause wholeheartedly, because it not only covers the undertaking which the Chancellor gave us, but goes even further. We certainly do not object to that. It brings in not only the big hotels, but also the small people, who really ought to be helped. I hope that the new Clause will be interpreted in the widest way, to enable these people to improve their premises, and the working conditions of their staffs of hotels, restaurants and boarding houses, and that they will not be hampered by red tape. This will help the invisible exports to which we referred. Speaking for myself, and on behalf of my colleagues, I would say that we welcome this proposal, and thank the Chancellor of the Exchequer for the way in which he has dealt with the matter.

10.0 p.m.

:I am not sure whether the Amendment to the proposed new Clause standing in the name of the hon. Member for Stourbridge (Mr. R. Morgan) will be called, but I wonder whether the Attorney-General would consider that the words "which have no value" are not perhaps unnecessarily severe, and whether he would consider such words as "little or no value." If a bathroom is being put into a hotel, or a room is having a bay window put in, to enable a bath to be fitted into the room, it cannot be said that the extension of the room would have no value, although it might have no substantial value. I wonder whether such a case as that might make it desirable to use rather wider wording than "no value." After all, we have to take the law as it stands and not make some modifications of it. I would like the Attorney-General to give consideration to that point between now and the Report stage, and if he comes to the conclusion that the wording is too drastic, perhaps he will modify it.

:There are also Amendments to the proposed new Clause, as has been pointed out, in the name of the hon. Member for Tamworth (Sir J. Mellor) as well as the Amendment in the name of the hon. Member for Stourbridge (Mr. R. Morgan). I was going to call next the first Amendment in the name of the hon. Member for Tamworth, but it would assist me if I had some intimation as to whether the other Amendment is to be moved. If we had one discussion on the two Amendments that would be satisfactory.

:May I have your guidance, Mr. Williams? Are we still discussing the new Clause? If so, I would like to catch your eye on that. If we are going on to an Amendment, that is a different question, of course.

:We have to read the Clause a Second time before taking the Amendment. We are now dealing with the Question "That the Clause be read a Second time" and the Amendments will come afterwards.

:I desire to support what has been said by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence). It would perhaps be ungracious to quibble about the manner in which those of us who are interested in this matter have been met by the Chancellor of the Exchequer. We are extremely grateful for the lengths to which he has gone in meet- ing us. I hope the right hon. and learned Gentleman who is dealing with this matter, will try to consider some alternative form of words. As they stand at the moment, the words which he has put in his Clause

"alterations which have no value apart from that machinery or plant"

are rather too limited. I am sure it would be possible to get some words such as

"alterations which are ancillary to the machinery or plant"

or

"which are essential to the installation of the machinery or plant,"

or something of that kind. As the words stand at present, the alterations must have no value before they can obtain the benefit of this new Clause. I do not believe that was the intention of the Chancellor of the Exchequer. As I say, it would be most ungracious to appear to be in any way quibbling in this matter, and we are extremely grateful for what the right hon. Gentleman has done for us, but I believe the words are capable of improvement, though the intention is there. I hope that between now and the Report stage it will be possible to do something in order to give expression to the point of view I have indicated. Those of us who are interested in this matter are grateful to the Chancellor of the Exchequer for the extent to which he has met us and the manner in which he has more than honoured the pledges given on Second Reading.

:I have noticed that in two or three Clauses to-day the words "little or no value" were accepted. Would the Chancellor accept those words instead of "no value"?

:The application of this Clause to hotels has been mentioned, but as I read it it also applies to foundations of machinery. I should like to ask if that is so. At the moment machinery foundations are taken separately, and no wear and tear allowance is given on them. If this Clause applies to them I should like to add my grateful thanks to the Chancellor for that valuable concession.

:If there is anything the matter with the words, I am to blame, I suppose, because I think the words are precisely those I used when I promised that an Amendment of this kind should be inserted. It was not in my mind that any words of mine in the course of debate should find their way into the actual Clause. We will consider if there is anything that can be done to improve the actual wording. As regards what my hon. Friend has said, it is the case, as I pointed out on the last occasion, that this Amendment, which has resulted from a decision to meet to some extent, a claim put forward on behalf of hotels, will have general application, and wherever structural work is required in connection with the installation of plant and machinery which will attract the allowance under Part II of the Bill, the cost of the necessary structural adaptation will be treated as if it were part of the cost of the plant and machinery, so my hon. Friend can be happy about that.

Question put, and agreed to.

Clause read a Second time.

:I beg to move, in line 3, leave out from "trade," to "the," in line 4.

The words proposed to be left out are

:I spoke earlier and took the view that the Clause was a little over-restrictive, and I still take that view. The Amendment however strikes me as a little too wide. Quite clearly, the Chancellor could not agree to every structural alteration which was required for the purposes of the installation of machinery and plant. That would be going too far, and I should have thought that some such words as I suggested— "little or no value" or words of that kind—would meet the case. We want something between the Chancellor's proposal and the Amendment.

:I really think we had better look at the wording again. I do not hold to the actual words in the new Clause. I think there is a general under-standng of the intentions of the Government, and I will take counsel with those who advise me, and see if we can improve the wording so as to bring in what we are all agreed in wishing should be included.

:I am much obliged to my right hon. Friend, and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause added to the Bill.

10.15 p.m.

NEW CLAUSE.—(Interpretation of potential future output.)

In this Act the term "potential future output" means the extent of the mineral deposits which may be expected to be won, having regard to the capital expenditure incurred before the end of the basis period of any year of assessment.—[ Commander Agnew. ]

Brought up, and read the First time.

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

At several places in the Bill there are references to "future potential output." In some places the word "future" occurs before "output," and in others it is omitted, but from the meaning of the word, "potential" must refer to the future. In Clause 26 the Commissioners of Inland Revenue are charged with the duty of making regulations for determining, among other things, how total potential output shall be estimated. The First Schedule says:

This new Clause defines potential future output. We think that it should not be based on the opinions of any experts, however eminent, but that there should be a rigid rule, to apply in all cases, and not susceptible to contradiction. Potential future output is related to the capital expenditure on development work, and, therefore, to the amount of ore that may be expected to be won, having regard to the amount of development. I do not claim that the wording of this new Clause is perfect, but I think that, in essence, it provides a fair definition of "potential output," and not one based purely on a surmise which might react very unfavourably to the trader concerned. I hope the Chancellor will give a favourable reply, to the extent that he will accept the principle, although, it may be, in some other words.

:The Committee has passed a number of Clauses in which the words "potential output" enter into the machinery and structure of the Bill, and the only question between us is whether the Bill should remain as it is, and this matter of the standards and principles to be adopted should be laid down by regulations under Clause 26 or whether we should accept the definition which my hon. and gallant Friend put forward in this new Clause. I think he referred to the fact that under Clause 26 there are powers to make regulations. There have already been discussions with the representatives of the mining industry, and I can give the Committee and my hon. and gallant Friend the assurance that before those regulations are drafted, representatives of the mining industry and the Cornish mining industry will be taken into consultation. I am sure that is the best way to deal with it.

The actual proposal put forward by my hon. and gallant Friend really would not work. Take a case in which there are seams one under the other. At a given moment you have a shaft which simply reaches down to seam 1. Everybody knows that when that seam is exhausted, the shaft will be taken down to seams 2 and 3 and the upper part of the shaft is part of the capital, which is designed to last throughout the working of all the seams. But, at the moment, the only seam at which you can get through your capital structure, is the top seam. Equally, you might have other capital expenditure of a surface kind on some technical process, which might be designed to deal with the whole product of the mine, including seams which at the moment, the capital structure is not designed to reach. So I think the proposal would produce difficulties and unfair results, and I think my hon. and gallant Friend will agree that the best thing is to leave this to regulations. We will certainly get into consultation with those concerned with the technical side of this matter and do our best to see that sensible principles are arrived at.

:I am grateful to my right hon. and learned Friend for the conciliatory attitude that he has adopted, and since, before new regulations are drafted, those concerned in the industry will be taken into consultation, I beg to ask leave to withdraw the new Clause.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Balancing charge or allowance.)

Where a balancing charge or a balancing allowance is made in respect of industrial premises such charge or allowance shall not, for the purposes of assessment for income tax and sur-tax of the person in respect of whom it is made, be brought into account only in the year in which it is made, but shall, if such person so elects, be apportioned over the six years preceding or such shorter period during which the annual allowance has been made.—[ Lieut.-Colonel Marlowe. ]

Brought up, and read the First time.

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

The object of this Clause is to spread over a period of six years the balancing allowance or charge which is made under earlier provisions of this Bill. As the position stands at the moment, where industrial premises are sold and there is either a profit or a loss, a balancing charge or allowance comes into effect, and that sum, in the case of an individual trader or a partnership, becomes assessable for tax within that person's ordinary tax income for that year. That seems to me to be rather a hardship. To take a very simple case, suppose that an individual had an income of £2,000 a year and he were to dispose of industrial premises which resulted in a balancing charge of, say, £10,000 becoming payable. The effect would be that his assessable income for Income Tax and Surtax in that year would be £12,000 instead of £2,000, and instead of paying Income Tax and Surtax at the rate attributable to a person with an income of £2,000, he would have to pay at the rate which is appropriate to a person with an income of £12,000. He would virtually move out of the 10s. or 11s. in the £ class to perhaps the 15s. or 16s. in the £ class in one year, and that would cause him a hardship. The allowance which is payable under the Bill is payable over a period of years. All I am asking is that the same principle should be acknowledged when it comes to the question of taxation, and instead of having it thrown into the account for one year the taxpayer should be able to spread it over six years and pay tax accordingly.

I hope that the Chancellor of the Exchequer is in close liaison with his right hon. Friend the Financial Secretary to the Treasury about the matter, because he and I have been in correspondence over it. The only two objections which were raised by the Financial Secretary to the Treasury were these. He was good enough to say in a letter to me:

The only other comment the Financial Secretary had to make about the proposed Clause—and I do not think he had much confidence in this himself because he put it in parenthesis—was incidentally, that it

10.30 p.m.

:I am afraid that I cannot look with the same benevolent eye on this proposed new Clause as on some of the earlier proposals. I freely concede that an argument can be advanced in support of the proposals in the Clause. It is possible to regard both the balancing charge and the balancing allowance as adjustments in respect of the past where events have shown that the allowances previously made have not, in fact, fitted the actual development of a situation. It is certainly clear, as my hon. and gallant Friend the Member for Brighton (Lieut.-Colonel Marlowe) has pointed out, that a backward spread on either an allowance or a charge may, in certain circumstances, benefit the taxpayer. It is also true, as my hon. and gallant Friend said, that the principle, of carrying an allowance back has been recognised in the Bill, in an Amendment, I think, to Clause 23. But my hon. and gallant Friend must not infer from that fact that the principle in its general application would commend itself to the Government.

The special case in which the concession has been made was the case of a mining property which has petered out, where, obviously, there may not be in the last year, for the very reason that the property was petering out, any profits against which the balancing allowance could be set. My main objection is that we really must claim some degree of simplicity in the administration of these complicated provisions. To be at the mercy of the taxpayer, who might, if the proposed Clause were accepted, at any time elect to have the charge or allowance, as the case may be, carried back over any period up to six years and, remembering that this might apply to a vast number of individual transactions, would certainly involve the reopening of settled assessments on an enormous scale. I think that it is quite impossible to contemplate anything of that kind. I think we must take the thing as it comes. The adjustment by way of charge or allowance will always be in respect of some circumstance which has come to light in the year in which the charge or allowance is made, and this of course may operate in favour of the taxpayer in certain circumstances or against him in other circumstances. Naturally, it will never in practice operate against him if, as proposed in the Clause, the choice is always left to him whether he will make the charge or allowance apply in the year in which the circumstances necessitating the charge or the allowance had arisen. But I think that, definitely, the argument of simplicity should carry the day and I must ask the Committee not to accept the proposal of my hon. and gallant Friend.

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

FIRST SCHEDULE.—(Application of Part III to Expenditure before the Appointed day.)

Amendments made: In page 52, line 37, after "buildings," insert "or structures."—[ The Attorney-General. ]

Consequential Amendments made.

Schedule, as amended, agreed to.

Second Schedule agreed to.

NEW SCHEDULE.—(Supplementary provisions as to allowances for contributions towards the expenditure of other persons.)

1. Subject to the provisions of this Schedule, the amount of the allowances and the manner in which they are to be made shall be determined on the following basis—

2.Where, when the contribution was made, the trade for the purposes of which it was made was carried on or to be carried on by the contributor, the following provisions shall have effect on any transfer of the trade or any part of the trade—

3.—

4.The two last preceding paragraphs shall not apply where the trade is husbandry in the United Kingdom or the occupation of woodlands in the United Kingdom, and in lieu thereof the provisions of subsection (4) of section twenty-nine of this Act (which relate to the effect of transfers of land) shall apply with any necessary modifications.—[ The Attorney-General. ]

Brought up, and read the First time.

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

This Schedule deals with the position where a contributor, say a farmer, makes contribution towards capital expenditure, let us say, for an electricity undertaking. It is a complicated problem, but I can summarise quite shortly the general effect of the Schedule. Where a subsidised asset is plant or machinery, the contribution will be at the rate applicable to plant and machinery of that type, except in the case of a farmer or owner of agricultural land. Where the plant or machinery can be regarded as works then he will get the special rate of 10 per cent. applicable to agricultural assets. Where the asset is not plant or machinery the rate will depend upon the contributor's position. If he is a farmer, or owner of agricultural land, the rate of allowance will be 10 per cent. If he is carrying on a mining venture the allowance will be calculated on the outward basis which we have been discussing earlier this afternoon. Where the activities are of the type referred to in Clause 8 (1) of the Bill, which confirms the trades whose holdings are industrial plant, then he will get the 2 per cent. allowance.

Question put, and agreed to.

Schedule read a Second time, and added.

Bill reported, with Amendments; as amended, to be considered upon Thursday, and to be printed. [Bill 54.]

Purchase Tax (Exemptions) (Utility Metal Bedsteads)

Resolved:

"That the Purchase Tax (Exemptions) (No. 1) Order, 1945, dated 17th April, 1945, made by the Treasury under Section 20 of the Finance (No. 2) Act, 1940, a copy of which Order was presented on 20th April, be approved."—[ Captain Waterhouse. ]

Housing Programme (Progress)

Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Buchan-Hepburn. ]

10.40 p.m.

:So long as hostilities were in progress it was the duty of the Government and of the House to give absolute priority to winning the war. Now that victory has been won I wish at the earliest possible moment, to urge upon the Government five quite simple administrative steps which they might take to expedite the provision of houses. First, I wish to urge the immediate release from the Armed Forces of the technicians who are necessary to expedite the preparation of housing sites. There are a number of steps which have to be taken in order to prepare sites for temporary houses. First, there is the obtaining of the necessary sanctions from different Government Departments. Second, there is the acquisition of the sites by the local authorities. Third, there is development, that is, the provision of roads, sewers, water supplies and any other services that may be necessary. Fourth, there is the preparation of the drawings to enable the Ministry of Works to begin laying the foundations. And fifth, there is the handing over of the sites with the necessary drawings to the Ministry of Works.

By the courtesy of my right hon. and learned Friend the Minister of Health, I have been able to obtain the figures showing the present situation with regard to the provision of sites for temporary houses. It is estimated that sites submitted are 92,000, approved are 79,000, and of these 49,000 have been acquired by the local authorities. From then onwards we get a very serious decline. Of that 49,000, only 18,000 have been developed. The chief reason for this is the lack of clerks of works and surveyors for carrying out the necessary work. When it comes to the number handed over to the Ministry of Works there is a still further and more serious decline from 18,000 to 13,000.

So far as the number of sites that are developed is concerned, a very serious bottle-neck is in sight. In the case of those actually handed over to the Ministry of Works we are already behind programme. There, the bottle-neck has been reached. Actually these figures do not show how serious the situation really is because in the first place, these figures have been reached in a large number of cases only where the sites for permanent houses have been transferred by the local authorities from their permanent programme to their temporary programme. In the second place, in the near future we can reasonably expect that a very large number of temporary houses will become available and since the number of sites is still so relatively small, we shall be in the unfortunate position of having the temporary houses manufactured and not having any sites upon which to erect them. In the case of the permanent sites, the position is practically the same.

Therefore, I do ask the Minister of Health to obtain from his colleagues an immediate release of those surveyors and draughtsmen, and other highly skilled per- sons who are needed at the present time for the sites which have to be got ready. In the second place I wish to deal with the case of the Building Research Station at Watford. There is at the present time a shortage of highly qualified personnel, and the station is unable to obtain the release from the Armed Forces of some of the men they urgently require. In the third place, I am asking the two right hon. Gentlemen who are on the Treasury Bench that there should be some alterations in the present demobilisation policy of the Government. I do urge that if the men when they are demobilised are to have houses, it is essential that the release of the men who have been called up from the building industry should be expedited. I am going to ask for two alterations. As regards this I am going to ask that Class B men in the building industry should be released, perhaps only temporarily, but at any rate released before the beginning of the release of Class A men, and as regards quantity, I am going to ask the Government to think again and to depart from the principle laid down by the Minister of Labour last week, that only 10 per cent. of the men in Class B can be released. My right hon. Friend the Minister of Works has succeeded, and I congratulate him on it, in obtaining the use of German prisoners of war for work upon housing. But it is not going to be much use having large numbers of German prisoners available, if there are not the foremen and other people to supervise them. I hope therefore that the Armed Forces will be willing to release the more highly qualified supervising staff which will be necessary in order to enable the Minister to get the maximum work out of the German prisoners of war.

I come to the fourth point. That is the question of building costs. There is a widespread impression that the cost of building materials at the present time is much higher than it should be, owing to restrictive practices among the manufacturers of building materials. I have here a letter written by Sir George Burt, head of the well-known contracting firm of Mowlems, and chairman of the Burt Committee which has done such valuable work in connection with housing. He says:

The fifth point to which I invite the attention of the Minister of Health is that of the circulars under which local authorities are at present operating as regards purchase of land for the permanent housing programme. They are still restricted to purchasing land which is likely to be required for their first two years' programme, which, as has been stated on many occasions, is only 300,000 houses out of the million we urgently require and the 4,000,000 intended under the long-term programme. I know that my right hon. and learned Friend is disposed to say that these circulars are fairly laxly and indulgently administered, but lax administration of circulars issued, is no justification for leaving these circulars in operation.

If I may briefly recapitulate the five administrative points I urge on the Government, the first is the immediate release of surveyors, draughtsmen and other specially qualified persons to ensure the rapid preparation by local authorities of lay-outs for temporary and permanent housing, and of the supervising staff necessary to extract the best work for German prisoners of war. The second is the release of the highly qualified persons required by the Building Research station at Watford. The third is the expedited release of building labour in Class B at a greater rate than is so far promised by the Government, the fourth, effective steps to control and indeed to reduce the prices of building materials, and the fifth, encouragement of local authorities to acquire land on a very much larger scale than they are allowed to do under the circulars at present in operation.

10.51 p.m.

:This is hardly the time or the occasion for a full-dress Debate on housing, but I cannot allow the opportunity to go by without a few words in support of what the hon. Member has said. I agree that something ought to be done to release men engaged in the building industry and technicians as soon as possible, although I am afraid I am hardly in a position to be as dogmatic as the hon. Member as to the rate, or numbers, or time at which they are to be released. After all, there is still a war on with Japan, and I do not want to endanger the success of that war by undue releases, nor I am sure does my hon. Friend. Nor do we want releases which would have the effect of keeping other men who ought to be discharged in the Forces longer than they should be there. This is a matter which must be left to those in charge and I am confident that the respective Ministries dealing with demobilisation will do what they can, having regard to their own appreciation of the seriousness of housing. Subject to that I do say that every attempt should be made to release men as quickly as possible.

On the question of the costs of building materials, I do agree that it is a very important factor. The Minister of Works, a Short time ago, gave the House some figures showing the proportion of the cost of a house to building materials, and the House will be surprised to hear that it does represent roughly two-thirds of the costs, leaving out land costs and costs of services. Therefore it is an important factor in the cost of housing and I am somewhat disappointed that my right hon. Friend has not taken energetic steps to deal with the question of the cost of building materials. One hears a good deal of the costs attributable to labour but in fact, as my right hon. Friend himself pointed out, it represents about one-third of the cost. Moreover that is pre-war cost. There is a statement in the Report recently issued by the Inter-Departmental Committee on Rent Control to the effect that building labour rates have only gone up by 20 per cent. since the outbreak of war, so that the high cost of building to-day is largely attributable to the increases in the cost of building materials. I should hope, although this is hardly the time to develop this argument, that my right hon. and learned Friend will go in more for bulk purchase of materials direct from the producers and distribute them to the various bodies who are engaged in carrying out building operations. I think the real solution of the difficulty that the cost of building materials rises so much, between the manufacturers and the consumers, is to carry out a system of bulk purchase of materials.

Finally I hope that the Minister of Works will do something about the efficiency of the building industry. He knows, as I know, that the efficiency of the industry as a whole—I do not say that there are not individual building firms which are efficient—leaves much to be desired. If we are to depend on the building industry to carry out the vast housing operations which are necessary, we must do something to reorganise it and help it to become more efficient. This is not the time to go into details as to how this is to be done, but I do want to impress on my right hon. and learned Friend that it is most urgent to do something for the building industry. We cannot tolerate a situation with 8,000 employers with 250,000 men. That is an average of four and a half men to each employer and I think it is impossible.

10.56 p.m.

:I wish to raise the question of building temporary houses on open spaces. In my constituency of St. Pancras we have Hampstead Heath, and the borough council are very anxious because there are only a limited number of sites available for housing. The council want to know very urgently whether it will be possible to build a limited number of temporary houses—and I stress the word "temporary," because I really mean the word temporary and so do they—around the outskirts of Hampstead Heath. They still await some direction from one or other of the Ministries, I am not sure which it is. But if we can have a decision in regard to temporary houses on open spaces such as Hampstead Heath, it would be most helpful indeed.

10.58 p.m.

:My two hon. Friends who spoke first in this short Debate are both hon. Members whose help I am privileged to have on my Central Housing Advisory Committee. They are both very rightly concerned, as I can assure the House I am myself, that there should be no avoidable delays in the housing programme. But the hon. Member for The High Peak (Mr. Molson) will realise that the width of the points he raised makes it very difficult to answer them adequately in the time available and, indeed, they fall within the jurisdiction of more Government Departments than one.

I think that three of the points that the hon. Member for High Peak particularly raised related to questions of man-power in one form or another—technical staff needed for preparation of sites, technical staff for the Building Research Station and building trade workers for actual building. I was rather surprised to hear him say—but he was corrected by the hon. Member for Peckham (Mr. Silkin)—"Now that victory has been won." My hon. Friend the Member for Peckham is quite right. There are many fields in which technical men are needed in the Services still and, of course, the main obstacle to our programme is in the field of man-power. Both in the Forces and in industry there are very large numbers of building trade workers, many of whom we cannot hope to see for some considerable period and, indeed, though this is a minor element, there are Government Departments which still need technical men for their work. But I would like to tell the House this—that when we saw the end of the European War approaching, we did take steps for the release of some technical staff for local authorities.

Until quite recently it was not possible to do more than a very little. We could not at that stage properly apply for men who were serving overseas and bringing the European War to an end as quickly as possible. But even under this early arrangement we did secure the release from the Services and industry and from Government Departments of just over 300 men who had been technical officers in the employment of local authorities before the war. Matters went favourably; and at the end of March the Government decided that arrangements could be made to secure the release of technical officers, selected by the Scottish Department of Health in respect of Scotland and by my Department in the case of England and Wales, who would be useful in this very matter of the development of housing sites, even if they were serving abroad—could ask for them from any European front, though not from the Asiatic front. We have, so far as England and Wales are concerned, got the names already of 638 men in the three Services whose release it had not been possible to ask for under the earlier arrangements. I hope these men will soon be available. They are to be released explicitly for housing work, and, I think, their release will be a great assistance. I know only too well under what pressure and difficulties local authorities are working.

The Building Research Station at Watford has been expanding during the last two years. There, however, it is not a case of asking for men back who were on the staff before, for none of their qualified staff, I am told, are now serving in the Forces. It is not, therefore, a question of asking for the release of particular individuals. But the Building Research Station is most concerned to secure as soon as possible the release of further civil engineers and architects who would be willing to work there.

On the building trade generally, I felt that to this particular matter the approach of the hon. Member for Peckham was wiser than that of the hon. Member for The High Peak. Of course, the Government want to build up the industry as quickly as possible. This will be done by the release of men from the Services, by the release of building trade workers from war industry, and by the encouragement of new entrants into the industry. But so far as the men in the Forces are concerned, the principle laid down in the White Paper, that releases under Class B will not begin until a start has been made with releases in Class A, is still firm. If men were to be released in advance of their release-group, even before the first man entitled to release on the basis of age and length of service, I cannot help feeling myself—and it is the view of the Government as a whole—that very great discontent would be caused; and I think the fairness of the whole scheme would become very questionable. But this, of course, does not fall within my Departmental province. I believe my right hon. Friend the Minister of Labour and National Service will be dealing with this very point in the Debate to-morrow—the question of release arrangements for Class B—and I am bound to ask my hon. Friend, on this point, to await the statement which will be made. The statement will, however, I understand, be consistent with the maintenance of the principle I have re-stated. Of course, the arrangements for release under Class B will be aimed definitely at giving the highest possible proportion of labour for housing, which we all put first.

I think the licensing limit will help in the direction we want and that decision to use German prisoners of war for the preparation of sites both for temporary and permanent houses will help too. It is true that there is difficulty over the preparation of sites for the temporary houses, but I think my hon. Friend exaggerated when he referred to the serious decline in the numbers which he quoted. After all, the work to which he referred normally takes something like six months, and it is only seven months since the Temporary Accommodation Act became law. It is not likely that any very large number of fresh sites could have been prepared with roads and sewers during that time. He is right with his number of 18,000 sites that are now developed with roads and sewers and substantially right about the number ready to be handed over to the Ministry of Works.

I ought to pass, because I have such a very short time left, to the question of the acquisition of land. The hon. Member for High Peak is looking well ahead. I do not think that he quoted quite accurately the position with regard to the approval of sites. Approval of sites is not limited to the amount of land required for an estimated two years' programme. The limitation is this, that sanction is given only to the purchase of sites on which it is intended to begin the construction of houses within the first two years. In a considerable number of cases the purchase of large sites has been authorised although it is clear that the development cannot be completed within two years. This sanction is given where it is desirable on planning grounds to purchase the whole of the site. When one considers that the number of housing sites already acquired is over 260,000 and that there are in process of acquisition well over 300,000 more, and when one realises that during the first two years, and indeed after that, there will be going on concurrently with the local authorities' new building the rebuilding of destroyed houses and the building of houses by private enterprise, which I also hope will be going on concurrently, then the acquisition of land does not appear so very serious a difficulty.

Another point to which reference has been made and to which the House will not expect me to reply in detail is that of control of prices of building materials and of the organisation of distribution. The Government's policy was stated, rather briefly of course, in the White Paper on Housing and I cannot add to that statement of policy to-day. Most of the points made are, however, fully recognised and my right hon. Friend the Minister of Works has been here noting what has been said. He authorises me to say that he proposes shortly to issue a full statement on the Government's policy in re- gard to materials and components for the building programme as a whole including the application and the methods of carrying out that policy. Comment was made on the very large proportion of the cost of housing which is represented by the cost of materials, but little account seems to have been taken, if I may say so, by the hon. Member for Peckham, of the fact that the cost of materials very largely consists of the cost of labour and, at the moment, the cost of fuel.

The hon. and gallant Member for North St. Pancras (Wing Commander Grant-Ferris) raised at the end a point with regard to the use of open spaces. All I can say about that is that it is not a question of direction, either by my right hon. Friend or by myself. The point is one on which legislation is required and does not depend merely on a Departmental or Ministerial decision.

It being half an hour after the conclusion of Business exempted from the provisions of the Standing Order (Sittings of the House ), Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order, as modified for this Session by the Order of the House of 30th November.

Adjourned at Ten Minutes past Eleven o'Clock.