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Commons Chamber

Volume 424: debated on Thursday 20 June 1946

House of Commons

Thursday, June 20, 1946

The House met at Half past Two o'Clock

Prayers

[Mr. SPEAKER in the Chair ]

Private Business

CITY OF LONDON (VARIOUS POWERS) BILL [Lords]

Read the Third time, and passed.

Cardiff Corporation Bill

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

NEWCASTLE-UPON-TYNE CORPORATION BILL [Lords]

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

Oral Answers to Questions

National Insurance

Publicity

asked the Minister of National Insurance if he is now in a position to indicate how he proposes to have the principles and provisions of the National Insurance Scheme explained to the general public.

My right hon. Friend appreciates the importance of making the practical details of the National Insurance scheme known to all members of the public, and it will be his aim to do so by every available means of publicity. He must, of course, await the passing of the Bill into law and the making of certain regulations before authoritative statements can be issued. As my hon. Friend knows, the rates of old age pensions for retired persons are to be increased in October, and the first of the series of explanatory statements will relate to this.

Can the Parliamentary Secretary say if my right hon. Friend is considering setting up a distinct section of the Department to do this very necessary piece of work?

Whilst I cannot guarantee that it will be a distinct department, there is a section of the office giving special attention to the general question of publicity and public relations.

Will my hon. Friend consider broadcasting to the people when this Bill becomes an Act, to explain the details to the whole country?

Will the Minister consider issuing a little booklet such as was issued previously?

Yes, Sir, but my right hon. Friend is advised that we cannot make any move, although we are taking internal steps, until the Bill is the law of the land.

Supplementary Pensions

asked the Minister of National Insurance if he will consider revising, when the new old age pensions become operative, supplementary pension rates in order that aged persons now in receipt of supplement may have the benefit of increases consistent with the high cost of living.

This is a matter for consideration in the first instance by the Assistance Board who assure my right hon. Friend that they are watching the position closely and that they would not hesitate to initiate action if in their view the situation should at any time require it.

I think the position is very serious and we cannot rely too much on what the Assistance Board may do. I think the Minister is aware—[HON. MEMBERS: "Speech."]—Is my hon. Friend aware that many of these people are now receiving the amount or rather more than the amount of the new pension rate, and that they have no other financial resources? They have a very meagre existence. I wish the Minister could look into this question.

There is very close relationship between the Chairman of the Assistance Board and my right hon. Friend, and I can assure the hon. Member that the matter is being given very close attention on both sides.

Family Allowance Claims

asked the Minister of National Insurance how many claims to family allowances have been received so far; and how and when claimants may expect to hear the result of their applications.

Nearly 1,900,000 claims have so far been received and notifications to successful applicants will begin to be sent out on 10th July. I may remind the House that the first pay day is Tuesday, 6th August. The allowance order books, by means of which allowances will be drawn, will not be sent direct to applicants, but in the notification they will be told the name of the post office where they can obtain their book. Notifications to unsuccessful applicants will begin to be sent out about the same time, and except when it seems clear that the claim was made under a misapprehension, each applicant will receive a franked postcard for use if she wishes to appeal against the disallowance to one of the independent referees.

May I ask what proportion of the number of claims expected have been received and what was the percentage which had been wrongly filled in?

As I said, we have already received 1,900,000 claims. The total which could have been received is 2,500,000. Of the claims so far received, only 2 per cent. have had to be rejected. That figure was less than 1 per cent. in the early stages. It has risen to 2, and it may rise a little more as we progress because there is a tendency now for claims to be sent in which are perhaps just a little questionable. No doubt some of these questionable claims have been sent in on the advice of Members of Parliament in order to test whether or not they have a claim.

Will the Minister consider employing further publicity methods in order to increase the number of applicants who are entitled to family allowances?

I think the House will agree that to have received to date nearly 2,000,000 from a total of 2,500,000 is not at all a bad proportion. We did not expect at any time that the whole of the 2,500,000 entitled to claim would in fact claim. We are now fully satisfied as to the rate at which we are receiving the claims.

They are very largely rejections arising in cases where people who have one child of 18 and another of 12 think that, because they have two children, they can claim for one.

Is the Minister aware of the general feeling in the country that housewives are grateful for the clarity with which this matter has been expressed and for the courtesy of the Minister, which sets a new "high"?

Adult Dependant Benefits

asked the Minister of National Insurance how far, and in what circumstances, his regulations permit a person, other than a wife who is incapable of self-support on account of physical or mental infirmity, to be treated as an adult dependant of an insured person under the National Insurance Bill.

I assume my hon. Friend has in mind a case where the dependant is not in receipt of insurance benefit or pension in her own right. If no increase of sickness or unemployment benefit is being paid in respect of a wife the ordinary increase for an adult dependant will under Regulations be payable in respect of another prescribed relative who is living with and wholly or mainly maintained by the claimant whether or not he is crippled or mentally defective. Similarly a wife wholly or mainly maintaining her husband, who is incapable of self-support, will be entitled to an increase of benefit for him.

Having regard to the number of cases, of which the Minister is aware, where there is an adult dependant not covered by the Bill in any way, is his right hon. Friend taking care to put some provision for such people in any consequential Measure?

Yes, Sir. Hon. Members will know that there has been an announcement of a Bill to be introduced jointly by the Minister of Health and by my right hon. Friend. Negotiations are going on between those two Ministers and cases such as the hon. Member has in mind will be covered.

Superannuation Schemes

asked the Minister of National Insurance what regulations affecting the position of local government employees and others at present covered by superannuation schemes he proposes to make, when the new social Insurance Bill becomes an Act.

I assume that my hon. Friend is referring to regulations which may be made under Clause 69 (4) of the National Insurance Bill. Regulations under this provision will not be made by the Minister of National Insurance but by the appropriate Minister or Government Department, or by the Chief Registrar of Friendly Societies, as may be determined by the Treasury in the particular case.

Old Age Pensions (Dominions)

asked the Minister of National Insurance what arrangements have been made to enable old age pensioners who emigrate to the Dominions to draw the old age pensions to which they would have been entitled if they had remained in this country.

There is statutory provision under which contributory old age pensions may be paid in any part of His Majesty's Dominions, and the necessary arrangements for payment are made by my Department on being informed by the pensioner of the date of his leaving this country. In all the principal Dominions the pensions are paid by approved agents; where no agency arrangements have been found possible remittances are sent by post from this country.

Questions

N.F.S. (Administrative Authority)

asked the Secretary of State for the Home Department why, in the case of a large town like Swindon, whose fire brigade serves about 100,000 people, he has appointed the county council to administer the fire service.

The Government's decision as to the line to be adopted in future legislation on this matter was announced in a statement which I made to the House on 21st March last, and to which I would refer my hon. Friend.

Is the Minister aware that Swindon Council have been told they cannot get control of the fire service unless they become a county borough?

I would not go quite so far as that. Discussions are taking place as to the extent to which delegation may be possible within counties.

Aliens (Personal Case)

asked the Secretary of State for the Home Department why the Aliens Department did not reply to letters from M. Francois Valentyn, of Brussels, dated 12th March, 17th April and 6th May, 1946.

The letters referred to should have been addressed to the British Passport Control Officer, Brussels, since they related to matters with which it was appropriate for His Majesty's representative in that country to deal. I find that hitherto such letters have not received replies from the Home Office. As a result of my inquiries I have given instructions that in future they should be forwarded to His Majesty's representative abroad with a request that he should deal with them.

Juvenile Offenders

asked the Secretary of State for the Home Department whether he will give statistics as to the numbers of male and female persons, respectively, found guilty of indictable offences by juvenile courts or ordinary courts of summary jurisdiction since the end of the war; how these figures compare with the war years and the pre-war years, respectively; and if he will show, separately, the numbers under the age of 14 years, between 14 and 16 years and between 16 and 21 years.

As the answer involves a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

I wonder if the Minister would say whether in view of the figures which he is about to circulate, he is satisfied with the present system; and what is being proposed to improve the treatment of juvenile delinquents?

I am quite certain the present system is capable of improvement and I am considering legislative proposals to deal with it.

Is the Home Secretary aware that many of the juvenile offenders at the moment have to serve the first part of their sentence in an ordinary prison without any provision for segregation? Is he aware of the very deleterious effect which may result, and will he try to prepare a new scheme for the treatment of juvenile offenders?

INDICTABLE OFFENCES.

Number of Persons found Guilty by Magistrates' Courts.

Year.

Under 14.

14 and under 17.

17 and under 21.

21 and Over.

Totals.

M.

F.

M.

F.

M.

F.

M.

F.

M.

F.

1938

14,723

835

11,413

904

8,181

1,266

26,296

6,233

60,613

9,238

1939

16,723

941

11,994

885

7,760

1,375

23,682

6,270

60,159

9,471

1940

23,164

1,449

15,768

1,497

9,103

1,900

22,262

7,930

70,297

12,776

1941

23,075

1,530

16,638

1,973

11,667

2,752

31,159

10,257

82,539

16,512

1942

20,381

1,563

14,359

1,903

11,167

2,574

33,592

11,762

79,499

17,802

1943

21,055

1,666

13,839

1,813

9,159

2,567

32,761

11,751

76,814

17,797

1944

22,520

1,558

14,207

1,836

9,418

2,442

32,987

11,036

79,132

16,872

1945

22,920

1,500

16,681

1,722

11,037

2,134

35,467

10,403

86,105

15,759

April, 1945, to March, 1946.

21,764

1,432

16,159

1,601

10,672

2,114

35,809

9,873

84,404

15,020

Political Propaganda (Foreign Assistance)

asked the Secretary of State for the Home Department whether he will consider the introduction of legislation to render criminal the acceptance of money by a British subject from a foreign Power for the conduct of political propaganda in Britain.

I have had this matter under consideration but certain practical difficulties have prevented me from formulating legislative proposals.

Do I understand that my right hon. Friend will be prepared to reconsider the matter if representations are made to him?

I have previously stated here that I am concerned at the lack of accommodation for dealing promptly with juveniles who have received the attention of the court. I desire that appropriate training in a suitable institution shall be given as soon as possible. I have already taken some steps towards attaining that end and I hope to take further steps as opportunity, time, labour and materials become available.

Will my right hon. Friend also bear in mind, apart from the issue of figures, the issue of a statement showing the major causes and factors which give rise to juvenile delinquency?

That is so highly controversial a matter that I doubt if I could publish any statement that would command general acceptance.

Following is the answer:

I am still considering the matter and I shall be very grateful for any ideas that can be conveyed to me.

Is it not a fact that the only two occasions hitherto known or mentioned concern a member of the Communist Party in Canada and a former member of the Socialist Party in Great Britain?

He was also a former member of the Tory Party in this country, and most of his supporters have been previous members of that party.

Will the right hon. Gentleman consider making it necessary for political parties to publish their annual accounts?

That is one of the detailed considerations I have in mind. One of the difficulties is to define what is a political party.

Is it not the case that the only two men who were hanged for betraying the country were Conservatives?

Police (Powers of Search)

asked the Secretary of State for the Home Department if he has considered criticisms, communicated to him by the hon. Member for Hampstead, concerning action taken by the police in stopping people in the street in daytime and requiring them to reveal the contents of their pockets and handbags; and if he will make a statement on the subject.

Yes, Sir. The Metropolitan Police Act, 1839, gives power to a constable to stop, search and detain persons reasonably suspected of having or conveying in any manner anything stolen or unlawfully obtained.

My right hon. Friend is very careful to keep his depredations within the law. However careful police officers may be in the exercise of these powers, it is inevitable that inconvenience should be caused from time to time to perfectly innocent persons who may attract their attention, for instance, because they are carrying a bundle of what might be stolen property in an area where there has been an epidemic of housebreaking. I am satisfied that these powers are not used unnecessarily by the police, and that it is generally appreciated that they are of value to the community as a means of preventing and detecting crime.

Air Raid Shelters (Local Liability)

asked the Secretary of State for the Home Department whether he has considered the letter sent to Cornwall House, dated 5th June, by the Borough of Bromley, regarding expenditure amounting to £15,686 10s. 9d., which Bromley are being called upon to meet in connection with shelter construction; and if he will state whether there is any means of meeting this expenditure from national funds.

£11,925 of the amount mentioned is the balance payable by the authority on expenditure incurred prior to 19th October, 1940. On this point, I would refer the hon. Gentleman to the reply I gave to my hon. Friend the Member for South Croydon (Mr. Rees-Williams) on 28th February last. The remainder represents the balance of a sum of over £26,000 expended on shelter construction on which a grant of £22,900 has already been approved. After careful consideration, I cannot see my way to increase this amount.

Why should the local authority be liable for an amount in expenditure over which they have no control?

I hope the hon. Member will allow me to complete the answer before he contradicts me. They had complete control, and, in fact, carried out their shelter policy, after being warned, to a standard higher than that which was approved by the Ministry of Home Security at the time.

Artificial Limbs

asked the Minister of Pensions how far his Department is able to meet the demand for artificial limbs and their repair and maintenance; and if there is now any delay in dealing with cases.

I am glad to say that during the last six months deliveries of artificial limbs have exceeded orders placed. I have no reason to think that this position will not be maintained and I therefore anticipate that the time will soon arrive when the supply and repair of artificial limbs will be effected more expeditiously.

Will the right hon. Gentleman do everything he can to give the most immediate and prompt service to these men, because of the effect on their morale?

I realise that it is important, and we are doing everything we can to speed up the matter and deal with the arrears.

Will the Minister expedite the consideration of cases where the applicant has returned to the overseas Empire and cannot get maintenance without authority from his Department? Is he aware of a recent case or 100 per cent. disability which was sent to his Department, on which no answer was given until the threat of raising the matter in this House was made?

Public Health

Central Advisory Water Committee

asked the Minister of Health if he will now given the names of the members of the Central Advisory Water Committee together with the qualifications for their appointment.

I will, with permission, circulate a statement in the OFFICIAL REPORT.

Following is the Statement:

CENTRAL ADVISORY WATER COMMITTEE MEMBERSHIP.

Mr. Henry Berry, M.P., M.I.Mech.E., A.I.Struct.E., F.R.S.A., late Chairman, Metropolitan Water Board and member of the British Waterworks Association;

Mrs. E. M. Braddock, M.P.;

Sir Jocelyn Bray, D.L., J.P., Chairman Thames Conservancy Board, and member of the Catchment Board's Association;

Sir Wynne Cemlyn-Jones, member of the Anglesey County Council and of the County Councils Association;

Mr. J. Chaston, O.B.E., F.C.I.S., F.S.S., Town Clerk, Kettering, and member of the Urban District Council's Association;

Sir Robert Doncaster, O.B.E., J.P., member of the Rural District Council's Association;

Mr. D. McAdam Eccles, M.P.;

Lieut.-Colonel Sir Arthur Heneage, D.S.O., J.P., member of the Central Landowners Association;

Colonel F. Hibbert, C.B.E., M.Inst.C.E., F.C.I.S., Chief Engineer, Liverpool Corporation Waterworks, and member of the British Waterworks Association;

Mr. S. R. Hobday, O.B.E., Director and General Manager, Lee Conservancy Board;

Mr. J. E. James, Imperial Chemical Industries Ltd., member of the Federation of British Industries;

Mr. H. Johnson, Secretary, Bleachers Association Ltd., member of the Federation of British Industries;

Mr. M. Kissane, Secretary, Manchester Ship Canal Co.;

Mr. J. N. McLean, Vice-President of the National Farmers Union;

Sir Cecil Newman, Bart., Acting Chairman of the National Association of Fishery Boards;

Mr. Philip Porteous, M.Inst.C.E., Managing Director, Cambridge University and Town Waterworks Co. and member of the Water Companies Association;

Lord Rea;

Lord Walkden;

Alderman N. F. S. Winter, Halifax Town Council, member of the Association of Municipal Corporations;

Mr. G. A. Worth, Soham Internal Drainage Board, member of the Association of Drainage Authorities.

Sewage Farm, Goring-on-Thames

asked the Minister of Health whether he has now considered the report of his inspector on the public local inquiry held to investigate the provision of a sewage farm at Goring-on-Thames, in the vicinity of Hartslock Woods; and whether he will make a statement.

I have considered the report of my inspector who held the local inquiry into this matter, and I am satisfied that a scheme of sewerage and sewage disposal is necessary for the parish of Goring. I have, however, informed the Henley Rural District Council that I shall defer my decision on their application in respect of the proposed site for the sewage disposal works until they have surveyed all practicable alternative sites.

Skin Diseases (Advertised Cure)

asked the Minister of Health whether he is aware that a preparation particulars of which have been supplied to him, is now being advertised in the London area, claiming that it heals skin troubles within a few days and that it is prescribed by skin specialists; and, in view of the importance of these claims, if he will have this preparation examined and make known the results.

I do not know the merits of this preparation at all. But, as I have no effective powers of intervention in these cases, I do not think I should be justified in adopting my hon. Friend's suggestion.

Is the right hon. Gentleman aware that this preparation, the advertising of which has cost the firm concerned some hundreds of pounds in the last fortnight on London Passenger Transport Board vehicles, makes the most specific claim to cure all manner of skin diseases in a few days? Has my right hon. Friend no power to interfere in a racket of this kind, in which money is taken by false pretences out of the people's pockets?

I regret to say that I have no power. I know that, in very many instances, the public are grossly deceived by exaggeration.

Is it not a fact that the Government did exactly the same thing at the General Election?

Housing

Agricultural Areas (Rents)

asked the Minister of Health if he will make a further statement on the rentals to be charged for new cottages erected in agricultural districts, in view of the advice his Department has recently given to the Hungerford Rural District Council that the promised rental of 7s. 6d. a week must now be regarded as a notional figure.

The figure of 7s. 6d. was the figure assumed for calculation of the subsidy which should be paid to rural district councils for houses built for the agricultural population. This is only the assumed average rent and no promise was given that that should be the actual rent in every case. The actual rent to be chaged for any houses provided by a local authority is a matter for the authority to decide.

Will the Minister explain what his Department means by "notional"? My dictionary says "imaginary." Does his Department agree with that definition?

It is obvious that the hon. Member has exercised his imagination quite considerably in putting this Question down, because, on several occasions, I have explained to the House that the 7s. 6d. rent was a rent based upon housing costs and upon the subsidy provided by the Exchequer and the subsidy provided by the local authority. The average house could be rented at 7s. 6d. on that basis.

Selby

asked the Minister of Health what is the reason for the delay in approving the housing proposals of the Selby Urban District Council; and whether he will ensure that in future housing schemes are not held up by his Department.

The first tender for the erection of permanent houses by the urban district council was approved in February for 50 houses. In the middle of April, plans were submitted for a further 78 houses, and these were approved on 11th June. The reason for the time taken, which was substantially longer than usual, was that the plans were for one type of house only, and discussions were necessary in order to secure amended plans providing for different types of houses. It is not the case that housing schemes are held up in my Department, but discussion must take place where proposals are not satisfactory.

Will the right hon. Gentleman say if it is anything more than a coincidence that his Department has given approval for the erection of these houses, after weeks of delay, only after this Question had appeared on the Order Paper?

It is always the case that, when a local authority is preparing its plans, it is working upon them, but that, when the plans are in my Department, the assumption is that they are being delayed. What we want to do is to supply diversified houses, and I am sure the hon. and gallant Gentleman would not wish to uglify the country by having uniform houses everywhere.

Refrigerators

asked the Minister of Health how many refrigerators during the last six months have been installed in local authority built houses.

I regret that my records do not show how many refrigerators have been installed in local authority built houses.

Is the Minister aware that I am informed that persons are visiting tenants of these new houses and offering ridiculously high sums for these refrigerators, and that some are being sold on that basis? If the right hon. Gentleman is aware of it, can he inform the House what steps he is taking in the matter?

If the hon. Gentleman will give me particulars, I will have an investigation made.

Questions

Public Assistance (Family Allowances)

asked the Minister of Health whether he will introduce legislation to authorise public assistance authorities to disregard family allowances, when these become payable, in assessing the amount of relief to be given to applicants for public assistance.

No, Sir. I would refer to the answer given to my hon. Friend the Member for Central Hackney (Mr. H. Hynd) on 30th May last.

Is my right hon. Friend aware that the introduction of family allowances is, in itself, an admission that children's needs are not at present being adequately met, and that they will, obviously, be less adequately met when parents are on relief, and will he not meet the desire of public assistance authorities that they should be entitled to disregard family allowances in assessing the amount of relief?

My hon. Friend is aware that I can only do that by legislation. It is contemplated that next Session there will be legislation dealing with residual categories left after the National Insurance Bill and the National Health Service Bill have come into operation, and that will be the appropriate way of dealing with the matter.

Cannot something be done in the meantime, while that legislation is being considered, to prevent the poorer sections of the community being deprived of benefit from family allowances?

The legislative time-table is hopelessly overcrowded, and we cannot anticipate the main Bill by bringing in an amending Bill in the meantime.

Is my right hon. Friend aware that local public assistance authorities themselves refuse to take children's allowances into consideration?

I was not asked about their powers; they have those powers. All I am asked is whether I can make them enforceable.

Can we take it that if public assistance authorities do decide to disregard children's allowances and to make up the payments, this will not be considered a matter for surcharge by the district auditor?

I cannot answer a hypothetical case of that sort, because in that matter I have to exercise judicial powers, and I cannot anticipate what the decision will be.

Education

Large Classes

asked the Minister of Education if the figures giving the number of classes with over 50 on roll, and between 40 and 50 on roll, in the schools under her jurisdiction, have now been collated; and if she will state them.

I am afraid it will be impossible, for the reasons already given to my hon. Friend, to have the figures available before the autumn.

During the war the collation of these figures was stopped and local authorities have only recently been asked to provide them. Obviously, they cannot be collated until we have got them all in.

Huts

asked the Minister of Education how many huts, for the purpose of raising the school-leaving age, in accordance with Administrative Memorandum No. 142, have been requisitioned by local education authorities; and how far the demand has been met.

The programmes so far received from local education authorities cover 3,241 classrooms and 1,204 rooms for practical instruction. Arrangements are being made to meet all these requirements before the date when the accommodation will be needed.

School Meals, Southminster

asked the Minister of Education if she is aware that children have been deprived of school meals at Southminster, Essex, owing to local disagreements; and if she will secure the restoration of this service as soon as possible.

The Southminster Voluntary School children were provided with school dinners at the local British Restaurant, but the arrangement was discontinued owing to difficulties about the time of the meal. I understand it has now been agreed that the meals shall be sent to the school.

Training (Financial Assistance)

asked the Minister of Education if, in view of the generous financial provisions now being made by her Department for the training of future teachers, she will consider relieving present ones of financial liabilities incurred by them in respect of loans for their training from education authorities and reimburse the latter for any financial loss they may sustain thereby.

I am strongly opposed to the granting of loans to intending teachers and have made this clear to local education authorities in connection with the new grant arrangements. I am, however, advised that any general remission of past loans would be of doubtful legal propriety, but I hope that authorities will consider whether they can properly make a total or partial remission in any particular case. The resulting expenditure will rank for percentage grant from my Department if it complies with the regulations.

May I ask the right hon. Lady whether she is sending a notification to local education authorities to consider this matter—

As I have said in my answer, I have already made this appeal to local authorities.

Perhaps the publicity given to the Question which the hon. Gentleman has put down will meet that requirement.

Is my right hon. Friend aware that some education authorities have even pursued men into the trenches and on to the battlefield with requests for token payments of loans made before the war, and that these men need their money in order to start homes? Could not the ex-Serviceman, at least, be excused?

This is a matter for the local authorities. They are the people who have made the loans and they are entitled to recover them, if they choose to exercise their rights, and, in that matter, I have no power whatever. All I can say, in reply to the hon. Member who raised the point, is that I hope the authorities will consider individual cases on their merits.

Technical Teachers (Salaries)

asked the Minister of Education what is her policy in regard to technical teachers not yet qualified; and whether such teachers, who obtain the necessary certificate to enable them to be graded as qualified, will receive retrospective new Burnham technical scale of salaries as from 1st April, 1945.

The regulations relating to educational institutions, to which the Burnham (Technical) Report applies, require that the teaching staff should be suitable, sufficient in number and adequately qualified. There is no requirement that teachers so employed should have been approved as holding a particular status. Scales of salary prescribed in the report for fulltime assistants apply as from the 1st April, 1945.

University Scholarships

asked the Minister of Education whether she will make the provisions of Circular 104 retrospective so that holders of current scholarships to universities may benefit.

Holders of current scholarships to universities have already had the opportunity of competing also for State scholarships and the major scholarships given by local education authorities. The purpose of the arrangements set out in Circular 104 is to make sure, so far as possible, that those who go to universities from now on with open scholarships and exhibitions shall be spared the necessity of having to seek other means of supplementing their scholarships and of having to compete in a series of examinations. In the circular I have asked local education authorities to continue to assist holders of university scholarships or exhibitions who are not eligible for supplemental awards from the Ministry.

Holidays (Staggering)

asked the Minister of Education when it is proposed to take steps to stagger school summer holidays.

I am not satisfied, after consideration, that a general staggering of school holidays is either practicable or desirable. I have already asked local education and school authorities to adjust school holidays to fit in with the arrangements of local industries, and I am considering, in consultation with my right hon. Friend the Minister of Labour, what further measures are necessary. I am afraid I can give no date by which these measures will be introduced.

Is the Minister aware that there is an appalling shortage of holiday accommodation this year and that a shortage is anticipated for many years to come, partly as the result of the destruction of property and partly owing to the increase in the number of paid holiday workers in Britain, which has now been extended to millions, and that, unless school holidays can be staggered, it will not be possible to take advantage of even the available accommodation?

All those matters were taken into consideration when we went into the subject thoroughly, but there are also a great number of other practical considerations. The only way to deal with the matter is to arrange the staggering of holidays with the local industries. When there is general staggering, we may easily get into the position where they are not staggered pari passu with local industries.

Could arrangements be made to stabilise the summer before staggering the holidays?

Service Increments

asked the Minister of Education whether she is aware that students leaving emergency training colleges are forced to wait months before receiving Service increments to their salary scale as teachers, thereby causing hardships, particularly to married men; and what action she proposes to take.

I am not aware that there has been undue delay on the part of local education authorities in assessing the starting salaries of teachers on entering service after courses of emergency training. Rules governing this matter are laid down in the Burnham Report which make it clear that war service shall be recognised for the purpose. In many cases, other experience may also be taken into account, and I propose to give local authorities general guidance as to the types of such experience which I am able to approve, so that there may be no delay in reaching a decision on particular cases.

Is the Minister aware that an emergency trained teacher left Goldsmith College last September, and that a decision has not yet been made? Further, that in the case of Alnwick Castle, in Northumberland, 67 per cent. of the teachers are married and that they say that great anxiety and hardship are being caused because of the fear of delay? I am quite prepared to let the right hon. Lady have the records.

I do not see why 67 per cent. of married teachers in Alnwick Castle should feel any anxiety or hardship because one person at Goldsmith College has not received the grant.

I am giving two examples to the right hon. Lady, of both of which I have records which I shall be pleased to send to her.

Further Education Grants (Liverpool)

asked the Minister of Education whether she is aware that it takes over three months for students in the Department of Education, Liverpool, to receive their grants for further education; that this delay is causing hardship, particularly to married men; and what action she proposes to take.

The summer term payments to students holding awards in the Department of Education at Liverpool University have been made and I assume, therefore, that the hon. Member is referring to candidates who have not yet been notified of the amount of their award. If he would care to send me the names of any particular students he has in mind, I will have inquiries made.

Is the right hon. Lady aware that not one of the students has yet received his grant and that this is in the third month of the course? There must be some reason for this.

I have already explained to the hon. Member on various occasions the great difficulties my Department have had in view of the large number of awards that have had to be made and the steps we have taken to overtake the arrears. I am glad to say that the arrears are being rapidly overtaken, but that does not mean that in some particular college there may not be persons who have not yet received their awards. Any individual case the hon. Gentleman cares to send me I will have looked into at once

British Broadcasting Corporation

Charter

asked the Assistant Postmaster-General when the new draft Charter for the B.B.C. will be made available to Members of this House.

I have been asked to reply. His Majesty's Government have the matter under active consideration, but it is not yet possible to make any statement

Before the draft Charter is finally approved by His Majesty's Government, would the hon. Gentleman consider the question of allowing the revision within a year or so from the date when it is brought into effect?

I am sure the hon. Gentleman will understand the peculiar rôle that I am occupying at the moment. My hon. Friend will, no doubt, take notice of that suggestion.

Is the hon. Gentleman aware that there is on the Order Paper a Motion in the name of my right hon. Friend the Member for Warwick and Leamington (Mr. Eden), the hon. Member for Anglesey (Lady Megan Lloyd George), the hon. Member for Rugby (Mr. W. J. Brown), and a number of us asking for an inquiry? Surely the Government are not going to produce this Charter without giving an opportunity for discussion of this important matter? All we ask for in all quarters of the House is a Joint Select Committee of inquiry.

I am unable to give an answer to such a question. I am sure that every possible facility will be given to the House to ventilate the whole matter.

Surely it is possible for the hon. Gentleman to say if he has read the Order Paper and seen this Resolution? What is he proposing to do about it?

Is it not a fact that what is being discussed is a draft Charter and, presumably, a White Paper will be issued and facilities will surely be given to have the matter discussed here?

Wireless Licences (Renewal)

asked the Assistant Postmaster-General why the Post Office refused to renew, before 1st June, wireless licences which expired during the last week of May.

As broadcast receiving licences are valid up to and including the last day of any particular month, I assume that the hon. Member's Question refers to licences which expired on 31st May. Such licences were not due to be renewed before 1st June, and accounting and administrative reasons made it necessary that the new types of licence forms incorporating the conditions which then came into force should not be issued in advance of that date.

Is the hon. Gentleman aware that owing to the fact that the Post Office have not made the situation clear to the public, there are many people who are, perhaps falsely, accusing the Government of meanness and chicanery, and will the hon. Gentleman not do something to clarify the public mind in this matter?

Germany

British Information Services

asked the Chancellor of the Duchy of Lancaster the name of the officer in charge of the information control section of the Military Government in Germany, together with the names of his chief staff officers and the journalistic experience of each of them.

Mr. M. L. Balfour is in charge of the British Information Services Control Branch in Germany. His chief staff officers for Press control are Major N. B. J. Huijsman and Mr. P. de Mendelssohn. All three served during the war in the Ministry of Information and in the psychological warfare division of S.H.A.E.F. Before the advent of the Nazis, Mr. de Mendelssohn was on the staff of the "Berliner Tageblatt" and of the "Frankfurter Zeitung." Later he was deputy chief of the continental news department of the Exchange Telegraph Company and a special correspondent of the "New Statesman and Nation."

Their experience was largely in the information service of S.H.A.E.F. under the Ministry of Information during the war.

asked the Chancellor of the Duchy of Lancaster how many journalists are employed in the production of newspapers by the British section of the Allied Control Commission; and whether they are paid rates in accordance with the standard laid down by the National Union of Journalists.

I understand that the standard rates of the National Union of Journalists apply only to qualified reporters and sub-editors. The Information Services Control Branch does not employ officers in these capacities, but among other things it supervises the production of newspapers by German journalists. In any case, the rates of the National Union of Journalists would not be suitable for special duties in a foreign country. The staff of the Information Services Control Branch, many of whom have journalistic experience, are paid either as temporary civil servants or as Army officers.

Is my hon. Friend aware that the rates paid are far below what is generally acceptable in Fleet Street, and how does he expect to get responsible reporters and journalists there unless the proper rates are paid, and above the rates paid here?

I must point out that there is no basis for comparison between these rates and the rates paid in Fleet Street. These are not sub-editors or reporters; nor, in fact, are they employed strictly on journalistic work. The journalistic and editing work is done in 32 out of the 36 papers in the zone, and three of the remaining four are being handed over to the Germans in due course. These men are being engaged on supervising duties in connection with the Control Commission and are generally officers or of officer status.

Are we to understand that the Minister is using the civil servants to "blackleg" on journalists?

Not at all. This is not ordinary journalistic work. This is the control of information services, which goes far beyond the supervision of German edited news services, and includes films and books, and it is necessary that the men who do that work should have wide experience.

Is my hon. Friend not aware that there is great dissatisfaction about this matter in Germany, and that owing to the fact that decent rates are not paid, they are not getting the right quality people out there?

We have had no suggestion of any such complaint from Germany, nor any submission of any kind from other sources.

Coal Industry (Trade Unions)

asked the Chancellor of the Duchy of Lancaster if he is aware that a district of the North German Coal Control recently issued a circular to the effect that trade union notices were not to be posted on the premises under their control; and if he will see that full facilities are accorded by this body to recognised trade unions and their officers.

I have asked for a report, and as soon as it is received I will communicate with my hon. Friend.

Is my hon. Friend aware that the president of the Westphalian Regional Labour Office, who has the confidence of the manpower division, has on one occasion been forcibly removed from mine premises under the control of this body, and will he take steps to see that this sort of thing does not occur again?

That is not in the Question, but if my hon. Friend will give me particulars I will have it inquired into.

Displaced Persons (Information)

asked the Chancellor of the Duchy of Lancaster whether he can give an assurance that His Majesty's Government desire displaced persons in the British zone to have full knowledge of the facts relating to their countries of origin and to the choice open to them; whether he is aware that some of them are planning, in accordance with Canadian legislation, to join relatives in Canada and to become British subjects; why and by what authority displaced persons in the camp at Goettingen are prevented from seeing Canadian newspapers printed in their own language; and why such papers when obtained by them have been confiscated.

Yes, Sir. I can give that assurance. I have not had time to make inquiries in Germany, but I assume that the newspapers to which the hon. Member refers were those in the Ukrainian language originating from the Ukrainian Canadian Committee. They were confiscated because of the anti-Soviet propaganda they contained.

Questions

Frisian Islands (Detention Camps)

asked the Chancellor of the Duchy of Lancaster whether he will publish a list of detention camps used at any time for prisoners of war, S.S. men or political prisoners in the Frisian Islands.

There are no detention camps on any of these islands, nor is there any record of any such camps having existed there since the beginning of the occupation.

Demobilisation (Total Releases)

asked the Minister of Labour if he will state the number of men and women released from His Majesty's Forces in May, 1946.

Yes, Sir. I will, with permission, circulate a full statement in the OFFICIAL REPORT. The releases reported during May amounted to 284,380. The total number of men and women released and discharged from 18th June, 1945, to the end of May, 1946, was 3,249,870.

Can the Minister say to what extent each Service shows an increase or decrease over the target figures for release?

Yes, Sir. All three Services have exceeded their programmes; the Navy by 12,550, the Army by 25,790, and the Royal Air Force by 17,050, making a total of 55,390. However, I should add that the release of women falls short of the target by about 10,000, mainly due to the fact that it has been necessary to retain them to speed up the demobilisation of the men.

In future when these figures of releases are given, will the right hon. Gentleman state for the same period the number of men conscripted, giving the other side of the picture as well?

Does the 25,000 for the Army include the 15,000 deserters?

RELEASES AND DISCHARGES FROM THE FORCES AND AUXILIARY AND NURSING SERVICES.

1. Cumulative figures 18 th June, 1945 to 31 st May, 1946. 1946.

Service.

MEN.

WOMEN.

Programme.

Releases and Discharges.

Excess (+) or Deficit (-) on Programme.

Programme.

Releases and Discharges.

Excess (+) or Deficit (-) on Programme.

Royal Navy

442,000

* 454,550454,550

+ 12,550

56,960

53,830

- 3,130

Army

1,861,000

1,886,790

+ 25,790

160,260

153,330

- 6,930

R.A.F.

576,450

593,500

+ 17,050

107,580

107,870

+ 290

Total

2,879,450

2,934,840

+ 55,390

324,800

315,030

- 9,770

* These figures include an estimate of 17,500 men and 1,650 women whose release had been effected at 31st May, 1946, but not yet recorded at the Admiralty These figures include an estimate of 17,500 men and 1,650 women whose release had been effected at 31st May, 1946, but not yet recorded at the Admiralty

2. Analysis of Releases and Discharges 18 th June, 1945 to 31 st May, 1946. 1946.

Service.

Class A.

Class B.

Other Releases and Discharges.

Total.

MEN.

Royal Navy

404,340

17,510

32,700

454,550

Army

1,566,040

165,200

155,550

1,886,790

R.A.F.

506,940

49,860

36,700

593,500

Total

2,477,320

232,570

224,950

2,934,840

WOMEN.

Royal Navy

48,920

260

4,650

53,830

Army

135,450

2,500

15,380

153,330

R.A.F.

95,030

790

12,050

107,870

Total

279,400

3,550

32,080

315,030

TOTAL—MEN AND WOMEN.

Royal Navy

453,260

17,770

37,350

508,380

Army

1,701,490

167,700

170,930

2,040,120

R.A.F.

601,970

50,650

48,750

701,370

Total

2,756,720

† 236,125

257,030

3,249,870

† Individual specialist releases include 14,897 men and 462 women.

Is it not very invidious for a hon. Gentleman who has not had the courage to take unto himself a wife to decide that women are very much happier in the Forces than out?

Following is the statement:

3. Releases and Discharges reported during May, 1946. 1946.

Service.

Class A.

Class B.

Other Releases and Discharges.

Total.

MEN.

Royal Navy

46,630

2,650

1,010

50,290

Army

130,720

16,370

6,470

153,560

R.A.F.

53,500

2,260

1,690

57,450

Total

230,850

21,280

9,170

261,300

WOMEN.

Royal Navy

5,380

20

140

5,540

Army

7,290

110

450

7,850

R.A.F.

-9,130

60

500

9,690

Total

21,800

190

1,090

23,080

TOTAL—MEN AND WOMEN.

Royal Navy

52,010

2,670

1,150

55,830

Army

138,010

16,480

6,920

161,410

R.A.F.

62,630

2,320

2,190

67,140

Total

252,650

21,470

10,260

284,380

Employment

Laundries, Seaside Resorts

asked the Minister of Labour what steps he is taking to assist the laundries at seaside reports in finding the labour which they badly need.

Officers of my Department have met representatives of the industry and discussed the problems of recruitment with them. Despite the exhaustive efforts that have been made, I regret that little improvement has been effected. My Department will continue to urge workers to undertake this essential work, but the industry on their part must take steps to see that the wages and conditions of employment are made sufficiently attractive.

Will the right hon. Gentleman approach his colleagues in the Service Departments to see that any employees of laundries in the Services who are not yet released, are released as quickly as possible under a Class B or Class C scheme?

Not if it means directing these people to take up employment which they do not desire to take.

Is the Minister aware that a really quick solution to this problem would be for holidaymakers to take their dirty linen home and wash it themselves?

Personal Case

asked the Minister of Labour when the hon. Member for Solihull can expect a reply to his letter of 15th May, 1946, is respect of Mr. H. J. R. Tillway, 9, Onslow Crescent, Solihull.

My reply to the hon. Member's letter of 15th May was sent to him on 27th May. I am sending him a copy today.

Questions

Further Education Grants (Volunteers)

asked the Minister of Labour whether his regulations provide for a girl who enlists voluntarily for the Services obtaining a Government grant for further education on resuming civil life.

Men and women who volunteer to join the Services are eligible for further education and training grants equally with those called up under the National Service Acts.

If a girl who cannot at present get into a university enlists voluntarily for two years will she be entitled to have a further educational grant? If not, the educational training scheme will not succeed.

That matter is under consideration, as to what should be the grant and the arrangements under the new enlistment scheme.

National Finance

National Insurance (Cost)

asked the Chancellor of the Exchequer if he will state the cost of the National Insurance Bill in terms of Income Tax.

This Bill involves no immediate increase in the charge to the Exchequer. There will be a substantial progressive increase in the future, but it would be misleading to express this as a rate of Income Tax based on present yield.

Is not the fact of the matter that the right hon. Gentleman is afraid to say what the terms are in plain English?

No, Sir. What I am afraid of is giving an answer that will be outside the comprehension of the hon. Member.

Ought not answers given in this House in reply to questions which hon. Members have a right to ask, to be given in the sense of being comprehensible to the House as a whole?

I would say to the right hon. Gentleman the Chancellor that I do not expect a silk purse out of a sow's ear.

Purchasing Power

asked the Chancellor of the Exchequer if he is aware that increases in the prices of essential articles are causing hardship to persons of moderate fixed incomes; and what steps he proposes to take to check this inflationary process.

asked the Chancellor of the Exchequer whether he will set up an inquiry into the causes of the depreciation in the domestic purchasing power of the pound sterling in recent years, with a view to establishing a stable currency for the future.

I would refer to my replies to the hon. Member for Orpington (Sir W. Smithers) and the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport) on 7th and 21st May respectively.

Is the right hon. Gentleman aware that the public cannot understand what appears to be an unreasonable increase in the price of articles? Is the Essential Prices Regulation Committee really taking active steps to prevent unfair and unreasonable prices?

Yes. The Essential Prices Regulation Committee works under my right hon. Friend the President of the Board of Trade. I think they are doing very valuable work in restraining prices which would have risen in many cases more than would otherwise have been the case.

Is my right hon. Friend aware that today £1 will not buy what 4s. would 40 years ago? Will he explain where the 16s. difference has gone.

I do not think that arithmetic is quite correct. I think my hon. Friend has somewhat exaggerated the inevitable consequences of six years of war.

Pensions (Increase) Act

asked the Chancellor of the Exchequer whether he is now able to say when he contemplates introducing a new and improved Pensions (Increase) Act in respect of retired State servants.

Questions

Museums and Art Galleries

asked the Chancellor of the Exchequer if it is proposed to implement the recommendations made in the report of the Committee on the functions of the National and Tate Galleries and in respect of paintings in the Victoria and Albert Museum.

Yes, Sir. I welcome the recommendations of the Massey Committee and the Standing Commission on Museums and Galleries. I intend to give effect to some of these recommendations by administration, but legislation will be needed to establish the Tate Gallery in the new form proposed. This will be introduced as soon as time permits.

Will the House have an opportunity of debating the report as a whole, especially the recommendations regarding the Chantry Bequest?

The question of the time of the House is not for me but for the Leader of the House. There will be some scope for discussion in connection with a Supplementary Estimate which will be presented relating to the assistance to the Tate Galleries. Beyond that I do not think it is possible for me to go.

Will that include the recommendations in the report in regard to the Chantry Bequest, which are highly important?

Government Departments (Staffs)

asked the Financial Secretary to the Treasury if he will state the number of Government employees, giving the industrial staffs separately, who were employed in 1939 and similar figures at the latest available date; and giving the details of those Departments such as the Ministry of Food and the Ministry of National Insurance which employ large numbers, separately.

As the answer to this Question contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Is not the hon. Gentleman using a technique to get away with it without giving the facts? To what extent do the Government propose to go in increasing the number of drones in the hive, which is killing industry in the country?

On a point of Order. Is it not quite wrong for hon. Members to impute motives in supplementary questions?

I have said several times that imputations and inferences must not be included in Questions.

Following is the answer:

The numbers of non-industrial civil servants, counting each part-timer as one half, were 399,599 and 695,950 on 1st April, 1939, and 1st April, 1946, respectively. The corresponding figures for industrials were 240,181 and 426,610. For more detailed information about the numbers of civil servants in particular Departments, I would refer the hon. Member to the statement on civil staffs employed in Government Departments on 1st April, 1946, which is available in the Vote Office today.

State Service (Ex-Service Recruits)

asked the Financial Secretary to the Treasury whether the concession to ex-Service recruits to the Civil Service, proposed in Clause 1 of the Superannuation Bill, under which wartime service in the Forces is to be allowed to reckon in part for pension purposes, is to be extended to ex-Service recruits to other forms of State service such as police, firemen, teachers and local government officers.

His Majesty's Government appreciate that the point which Clause 1 of the Superannuation Bill is intended to meet will arise in relation to ex-Servicemen recruited to the other forms of State service referred to by my hon. Friend. In so far as the Government are contributing already to the cost of the pensions of these classes, they would be prepared to pay their share of the cost of a similar concession to ex-Service recruits. The matter, however, is one which concerns the local authorities as well as the Government, and accordingly discussions have been started with those authorities on the practical application to ex-Service recruits to these other forms of State service of an arrangement on the lines of that proposed for civil servants in Clause 1 of the Superanuation Bill.

Penicillin (Prescriptions)

asked the Minister of Supply why S.R. & O., 1946, No. 731 requires prescription of penicillin by a registered medical practitioner, whereas prescription by a duly qualified medical practitioner satisfies the Pharmacy and Poisons Act, 1933.

I am advised that by virtue of Section 34 of the Medical Act, 1858, the two expressions are synonymous and that current drafting practice favours the former.

In this Order can any provision be made for supplies of penicillin on prescription by a veterinary surgeon?

Mufti of Jerusalem

asked the Prime Minister whether he has any statement to make about the ex-Mufti of Jerusalem's arrival in Egypt and reception by the King of Egypt.

The presence of the Mufti of Jerusalem in Cairo has been confirmed by His Majesty's Ambassador, who is in consultation with the Egyptian Prime Minister as to what measures should be taken. According to a communique issued by the Royal Cabinet, the Mufti was received by King Farouk last night.

I hope to hear a further statement from the Government upon the measures which they take to apprehend this marked enemy of the whole cause of the Allies during the war.

Perhaps the right hon. Gentleman will put down another Question next week, and I will give him any further information that comes in.

Palestine

British Officers (Kidnapping)

asked the Secretary of State for War if he has any statement to make regarding the kidnapping of five British officers in a club at Tel Aviv, and about the attempt made to capture two British majors in Jerusalem; and if he will say whether the injuries of the latter are serious.

At 1.15 p.m. on 18th June a party of five armed Jews entered the N.A.A.F.L Officers' Club in Hayarkon Street, Tel Aviv, and held up all the officers present at the point of a pistol. They proceeded to select four British Army officers and one R.A.F. officer, and took them to a taxi. Two officers who attempted to resist were struck with a piece of iron piping. The taxi in which they were removed was later found abandoned.

At 2.40 p.m. on the same day, in King-George Avenue, one of the main streets of Jerusalem, two Army officers were shot and wounded by a Jew who alighted from a taxi nearby. One of the officers grappled with the man, whereupon automatic fire was opened up on the two officers from inside the taxi. The Jew then jumped back into the taxi which was driven off. Both officers were removed to hospital with wounds in their legs and lower bodies. I have also received information about another officer who is missing. A nursing officer who was on leave from Cairo at the Y.W.C.A., Haifa, is also missing. Both are believed to have been kidnapped.

Investigations are proceeding and a further statement will be made as soon as possible. British troops deserve the highest praise for the restraint they have shown in the face of unprovoked attacks of this sort. I should also like to take this opportunity of expressing my sympathy with the relatives of those concerned in these outrages.

Can the right hon. Gentleman say whether martial law is in existence at this moment, and whether the military commander on the spot has all the necessary authority to take any action which he may deem fit?

The question was whether the British commander on the spot has the necessary authority, in an emergency, to take any action which is necessary, and I presume that the answer to that is, "Yes."

Will the right hon. Gentleman give instructions that in future all British troops and officers will at all times be armed, in order to guard against these dastardly attacks?

That has already been done, and the troops are going about together in couples.

Is the right hon. Gentleman aware that Jews everywhere, who are mindful of, and ever grateful for, what Britain did to save them from the Hitler menace, are filled with horror and shame at these dastardly attacks by terrorists, and will give full support to the Government in any steps they think necessary to re-establish the rule of law in Palestine?

I am sure that the House appreciates the hon. Gentleman's statement, and that the country will also appreciate it.

In view of the fact that British soldiers' lives are at stake, will my right hon. Friend consider making it perfectly clear that if this sort of thing goes on he will do to the Jewish leaders what was done to the Arab leaders—deport them from the country? Will he consider giving immediate instructions that all arms depots in Jewish settlements are to be swept up by our Army?

I can appreciate the deep feeling of the House upon this matter, and I can assure Members that the Government share that feeling. But I think the House will understand that these officers and nurses are in peril of their lives. A single word in this House may do infinite harm and increase their danger—[HON. MEMBERS: "Nonsense."]—and I prefer not to say any more.

Is it not the case that these men belong to particular forms of terrorist organisations? Should they not be referred to by the names of these organisations and not as Jews, as the Jewish people as a whole have nothing whatever to do with them?

I think we are getting a little far from the original Question, which was addressed to the Secretary of State for War. Some of these points are matters for other Ministers and not for the right hon. Gentleman.

In the event of there being casualties in Palestine, will the right hon. Gentleman see that the next-of-kin here get the news first from the War Office, rather than through the Press or the wireless?

We take the earliest opportunity of giving, in such sad circumstances, any information at our disposal.

Anglo-American Committee's Report

I have a question which is cognate to Business, but which is also relevant to the topic which we have been discussing. It might be convenient to ask the Prime Minister now whether, in view of the fact that the Report of the Anglo-American Committee on Palestine has now been in his hands for two months, he could say when a decision is likely to be reached, when the Government will be able to make an announcement to the House? I do not suggest that an immediate Debate is essential, but we should like to hear what the decision is, a statement, so that we can then make up our minds.

I will certainly consider, as soon as possible, when a statement can be made.

Perhaps a statement could be made next week. We are quite willing to wait until then.

Business of the House

May I ask the Leader of the House what is the Business for next week?

The Business for next week—

On a point of Order. We understood on Tuesday, Mr. Speaker, that a statement would be made today on the question of British wives joining their husbands in B.A.O.R. Are we to have that?

That statement will be taken after Questions; we are still on Questions.

The Business for next week will be as follows:

Monday, 24th June, and Tuesday, 25th June, until 7 o'clock—Conclusion of the Committee stage of the Finance (No. 2) Bill.

After 7 o'clock on Tuesday—Consideration of Lords Amendments to the Borrowing (Control and Guarantees) Bill; Committee stage of new Money Resolutions relating to the Cable and Wireless and New Towns Bills; Motions to approve the Union of Sheriffdoms Order and the Biscuits (Charges) (Amendment) Order.

Wednesday, 26th June—Supply (12th Allotted Day):—Committee; Debate on Civil Aviation.

Thursday, 27th June—Supply (13th Allotted Day):—Committee; the subject for Debate will be announced later.

Friday, 28th June—Further progress will be made with the Burma Legislature Bill [ Lords ]. Afterwards we shall consider the draft Government of Burma (House of Representatives) (Amendment) Order, and make further progress with the Superannuation Bill and the Diplomatic Privileges Bill [ Lords ].

I presume that in respect of Tuesday's Business the expression, "after 7 o'clock," does not mean that there will be a rigid close to the discussion on the Committee stage of the Finance (No. 2) Bill. There must be elasticity in that matter. Am I right in thinking that?

We have no power, as the right hon. Gentleman will appreciate, to fix a rigid time, but we were hoping that after having had two days and another full day on Monday the Committee stage would be concluded at 7 o'clock on Tuesday. We cannot, however, lay down a rigid time.

I did not want any misunderstanding. As regards Wednesday's Debate on Civil Aviation, it is understood that it will be as wide in scope as possible, and that it will allow, in particular, for discussion of international or Imperial air agreements, as well as matters concerning our civil organisation at home and abroad.

That would be a matter for Mr. Speaker; I am not sure that I am competent to give an answer.

I am sorry I cannot answer that; it is a matter for the Chairman of Ways and Means.

For the information of the House, may I say that in so far as it rests with us, we shall put down all the appropriate Votes on which we can raise these matters?

If the right hon. Gentleman will arrange for the usual channels to be informed as to the scope of the matters which Members opposite wish to raise, we shall cooperate so far as we are responsible.

On the subject of the Finance Bill, in view of the fact that the Committee yesterday disposed of 19 Clauses and that there are still awaiting attention some very heavy Schedules bristling with important Amendments, could the right hon. Gentleman give an assurance that that stage of the Bill will not be taken at an unreasonable hour and that the Committee will not sit beyond midnight?

If note is taken of the hon. and gallant Gentleman's observation on both sides of the Committee, I am sure that we shall get through before an unduly late hour.

Could the right hon. Gentleman indicate whether the House will have an early opportunity to discuss the fullest use of our scientific resources and manpower?

Not so far as I know. I did humbly suggest to the House earlier that if it was possible to utilise a Supply Day for that purpose, it would be a very interesting subject, but it is not for me to determine what Supply Days shall be used for.

Germany (British Personnel, Families)

I am happy to be able to announce that His Majesty's Government have now found it possible to give sanction to families of British Servicemen and of Control Commission staff to join their husbands in Germany. Only those men who have at least 12 months to serve in Germany will be entitled to apply to have their families there. When the families reach Germany, they will be accommodated as near as possible to the places where their husbands are stationed. This arrangement will facilitate social life and the education of children, a matter to which close attention is being given. I do not propose to go into further details of the arrangements which are being made for the reception of families except to point out that it will take some time to procure the necessary shipping and to complete and implement the administrative plans. It may not be possible to despatch the first families until late in August, and then only if conditions in Germany are suitable. But when the scheme comes to fruition, I trust that it will do much to reward British servicemen and the Control Commission staff for the patience and goodwill which they have shown in carrying out their duties in Germany.

Will civilian members of the Control Commission staff have to make their application for accommodation through the military or civilian channels before their wives arrive?

Will the wives of men who have been separated from their families for more than five years be given priority where the facilities are available?

Does the right hon. Gentleman appreciate that it would be much better that a statement of this kind should not be made at all, unless effect is to be given to it without delay? Is he aware of the very great disappointment that will arise if soldiers serving abroad learn that on the one hand arrangements are being made but on the other these arrangements are held up almost indefinitely, and will he do his best to see that the plans are got on with as quickly as possible?

I can assure the hon. and gallant Gentleman that the plans are in preparation now and that there will be no unnecessary delay, but it was my duty to utter a word of caution in case people thought they could go tomorrow.

Could the Minister say whether any educational facilities will be provided for the children of Servicemen who may be taken over to Germany?

When the plans have been completed, will it be possible to circulate them in a White Paper, or in the OFFICIAL REPORT?

May I ask the Minister whether when the families of Servicemen arrive in Germany, they will be on the Service scale of rations or the civilian scale?

Why do we have to wait weeks and months for these plans to be made? Why were they not made in advance?

I have already said that the plans have been in a state of preparation for some time, but that I thought it necessary to utter a word of caution in case people thought they could go next week.

Would the Minister ensure that, in actual practice, this scheme will not give preference to the wives and families of officers?

I thought I had made it quite clear in the answer that it applies as much to other ranks as to officers. I can assure the House that we know that they are going to get the advantage of it.

Will the Minister ensure that when the details are finally settled the radio will be used to disseminate the facts in order to prevent misrepresentation in the Opposition Press?

Orders of the Day

Ways and Means [19th June]

Resolution reported:

"That income tax shall be charged on benefit under any Act of the Parliament of Northern Ireland relating to national insurance or any Act amending any such Act and on family allowances payable under the Family Allowances Act (Northern Ireland), 1945, or any Act amending that Act."

Resolution agreed to.

Ordered:

"That it be an Instruction to the Committee on the Finance (No. 2) Bill that they have power to make provision therein pursuant to the said Resolution."

Finance (No. 2) Bill

Again considered in Committee.

[Major MILNER in the Chair]

CLAUSE 20.—(Amendments of Finance (No. 2) Act, 1940, s. 28.)

3.47 p.m.

I beg to move, in page 13, line 42, at the end, to insert:

It is clear, therefore, that the retail traders will stand to suffer considerable losses upon the stocks they hold of goods of all kinds, as and when the Purchase Tax is abolished or reduced. I understand that this hardship is admitted by the Treasury and by the Chancellor of the Exchequer. The difficulty is, I understand, in finding an effective means of meeting this case of hardship. In speaking of this matter last October, I said that in my view it would be administratively impracticable to operate a system of rebates upon particular classes of goods acquired by retailers upon which they will inevitably make a loss. We have therefore put upon the Order Paper an Amendment which suggests a somewhat different, but, I think, simpler and more effective, system. Shortly, the proposal in the Amendment is that in relation to any particular class of goods upon which Purchase Tax is either abolished or reduced, the Treasury shall prescribe a period which is intended to be an average period over which traders turn over their stocks.

Of course, the period may vary considerably in relation to different classes of goods. It may be that chemists, for example, turn over their stock of razor blades at the present time very quickly. There may be other classes of articles where the average period of turnover of stock runs into several weeks, if not months. But the idea in the Amendment is that there shall be prescribed by the Treasury a period in relation to each class of goods affected by the reduction of Purchase Tax. Thereupon, the retail trader will be able under the Amendment to recover from the seller the amount of the Purchase Tax upon furnishing the invoices received by him for goods supplied during the period prescribed by the Treasury, and, in his turn, the seller of the goods to the retailer will be able to recover from the Board of Customs and Excise an amount represented by the abolition of, or the reduction in, the rate of Purchase Tax upon those invoiced goods. This is a simpler proposal than a complicated scheme of rebates upon individual supplies of taxable goods. In particular cases it may work out slightly to the advantage of the revenue on the one hand, or slightly to the advantage to the retail trader on the other, but it represents an attempt—it may be an imperfect attempt—to meet an admitted hardship.

I understand that there have been some discussions between the National Chamber of Trade and representatives of the Board of Customs and Excise in regard to this matter. Those discussions have no doubt been confidential, but the Secretary of the National Chamber of Trade has been good enough to supply me with a copy of a letter which he recently wrote to the Chancellor of the Exchequer. In the examination of the proposals set forth in our Amendment, certain administrative difficulties admittedly arise. It is not, of course, for His Majesty's Opposition or for the Members of the House of Commons to devise a perfect and precise method of meeting every difficulty and every hardship which may arise. This difficulty undoubtedly does arise. This deserving class in the community will be subjected by reductions in the Purchase Tax to losses which they have done nothing whatever to deserve, and it is for the experts at the Board of Customs and Excise and in the Treasury to devise the best means of meeting these admitted difficulties. We have done our best in the Amendment, but it may be that the Chancellor has some alternative or better method to suggest to the Committee. If that is so, we shall, of course, be pleased and we shall give the Chancellor our fullest support in endeavouring to carry this matter to a satisfactory conclusion.

I would, however, point out that this is not a case merely of a hardship inflicted upon a particular section of the community. That hardship exists and is admitted. But the mischief of the matter goes much deeper than that, for this reason. We are all interested in having more consumer goods in the shops. That, as the Chancellor has stated on more than one occasion, is the only real safeguard against uncontrolled inflation. It is, therefore, vitally important that the normal channels of distribution of goods should not be unnecessarily and meretriciously interfered with by extraneous circumstances. As the position stands, whenever a reduction of Purchase Tax on any class of articles is mooted in the public Press, or whenever an Amendment to exempt a particular class of articles from Purchase Tax appears on the Order Paper of the House of Commons, the immediate result of that publicity is bound to be that retail traders hold off buying, and allow their stocks to run down to a dangerously low level. There is, therefore, an important matter of public policy involved here. If the normal channels of distribution do not continue to operate smoothly, if traders do not continue to buy with confidence stocks which are available at the manufacturers' end, and if the warehouses and storage facilities of the country become choked up with goods which the retailers will not buy because they apprehend that in this Budget or the next Budget there may be some reduction in the Purchase Tax, then the normal supply of goods to the public will be prejudiced. It is of great importance that the Chancellor, if he is not satisfied with the means we propose in the Amendment to deal with this hardship, should himself suggest a practical alternative.

4.0 p.m.

I hope the Committee will consider this Amendment to be one of importance, since it affects scores of thousands of traders up and down the country. I took the opportunity of raising this matter, as the Chancellor of the Exchequer will remember, during the Budget Debate, and while he was then not at all unsympathetic, he pointed out the administrative difficulties that might be involved. At the same time he was good enough to promise that the matter should be looked into again. I think it is of sufficient importance to justify our coming back to the subject at this stage. The purpose of the Amendment has been adequately explained by my right hon. Friend. It is, of course, to relieve the many thousands of traders with stocks still on their hands on which Purchase Tax has been paid but upon which it has since been remitted either in whole or in part.

If I may be permitted to reduce the matter to more simple proportions than the wording of the Amendment itself, I would like to assume that the Solicitor-General and I are both conducting our own ironmongery business and that when this tax was abolished or reduced, he had a stock in hand of, say, a very large number of watering cans—though in this type of weather they would not be a very suitable stock—upon which tax has been paid. He will be in great difficulty in disposing of those unless, in some way or other, that tax can be remitted. I, on the other hand, may have succeeded in disposing of the whole of my stock a few days before the tax was remitted, and I may be having delivered, a few days afterwards, my incoming stock to replenish my empty store rooms. I ask the Solicitor-General, would he consider it fair that our two positions, mine so favourable and his so unfavourable, should be left unadjusted? I think, in justice to traders whose position will vary in that way, that we ought to do what we can to render justice to each.

My right hon. Friend referred to the position of wholesalers. It is perfectly true that when there is any intimation given that tax on an article is to be reduced, orders for such article at once dry up. That is the case when, as in the past, we have been accustomed to see taxes entirely reduced on certain products. We are landed in much greater difficulties where, as in this case, of the Purchase Tax, there are various rates of tax in existence, some of which are to be wiped out altogether, as in this case, and others reduced. And, of course, we may expect further reductions from time to time. Therefore, there will be continuing uncertainty, looking a year or two ahead, as to what wholesalers may have to deal with, and they will have to consider whether it is good business to manufacture on such a scale as will meet the demands of their thousands of customers, or whether they should be more cautious in view of the uncertainty of the tax position. Therefore I think we must devise some means of removing the difficulties which these continuing taxes, and the variations in their rates, from time to time unfortunately impose.

As my right hon. Friend has said, in drafting this Amendment we have endeavoured to meet the difficulties which we recognise exist in administering a remission of the kind for which we are asking. I had hoped that as my right hon. Friend was himself a former Financial Secretary to the Treasury, he would succeed in drafting a Clause which would meet all the requirements of those now sitting on the Government Benches. Be that as it may, I hope the Chancellor, in the circumstances, and realising the great experience of the former holder of the office of Financial Secretary to the Treasury, will perhaps pay greater respect to the Amendment than he would have done had it been drafted by some one with far less experience. One final word in justification of this Amendment. The remission being made in the Purchase Tax is for the purpose of cheapening the cost of articles in urgent need by the common people of this country at present. That is a very powerful reason why, if we are endeavouring to meet a public need, as the Government are doing here, if that involves hardship upon those who are dealing in these goods, it is the duty of Parliament to remove any financial disabilities, any losses, which the traders may be forced to incur through no fault of their own. Therefore, I hope the Chancellor will be prepared favourably to entertain this Amendment.

May I take a little further the illustration given by my hon. Friend the Member for Stockport (Sir A. Gridley)? He suggested that the Solicitor-General and he might be two proprietors of ironmongery businesses, and that when the tax was remitted, either in full or in part, the Solicitor-General found himself in possession of a large stock of watering cans. May I also give a reason why the Solicitor-General in those circumstances might be in possession of large stocks whereas my hon. Friend was not? It was because the Solicitor-General was a recently demobilised soldier who had bought his stocks not long ago and had, therefore, paid a higher rate of tax than my hon. Friend who, in view of his years, had been in business for a long time and had been able to dispose of practically all his existing stocks by the time that the tax was remitted.

In all seriousness that is what is happening all over the country, and this inability at present to remit the difference to those who have paid the higher rate of tax is falling particularly hard on ex-Service men who have recently resumed business and have comparatively large stocks. I would therefore ask the right hon. Gentleman to bear that in mind in his approach to this problem. Then is it not inevitable that if some people have goods on which they pay the higher rate of tax, and others have paid less, the public will be charged two prices for the same article? Will it not be that, if they go to a shop where the owner has paid the higher rate of Purchase Tax, he will add that to the price, or else accept a reduced profit? I think it will be very unsatisfactory if that sort of thing obtains. Anyhow from the point of view of justice, it seems to me that as the owner of the shop has simply been laying out money on behalf of the Government in good faith and has had to pay that higher rate, when that rate is reduced by the action of the Government, he should be entitled to remission. I should have thought that in all private transactions that would obtain, and so I hope that the Chancellor will give sympathetic and favourable consideration to this Amendment.

I feel sure that the Chancellor already has a formula which will solve this problem, because it needs a solution. There is not the slightest doubt that it is a very grave hardship on retailers, among whom we have to include the co-operative societies. I happen to be the secretary of a co-operative society and on the day following the Budget speech, I went to my office and inquired how it affected our stocks. To my amazement and disappointment I found that, as we were retailers, we were losing hundreds of pounds, and it caused a great deal of perturbation. The point is that the tax was never supposed to be a tax on the retailer; it was a tax on consumer goods. There were special reasons why the tax was imposed. The idea was to limit the sale of luxury goods during the period of the war, to make it unprofitable for people to buy those classes of goods. Now the situation has changed and the process is being reversed, but it is exceedingly hard on the retailer.

My own personal reaction to this reduction was to give instructions that in future, instead of holding stocks of certain goods, which might have the effect of causing the organisation to suffer loss when Purchase Tax was removed, I suggested that we only stocked demonstration models. Now I am sure that will happen all over the country; retailers will see how dangerous it is to have large stocks of certain types of goods, and they will keep their stocks at a dangerous minimum. I feel sure that the Chancellor, seeing the consequence of this, will meet at least the spirit of the Amendment, and will provide a formula to obviate this obvious injustice to the retailer.

I hope the Chancellor will have great sympathy with this Amendment, and I rise in support of my right hon. Friend and hon. Friends on this aside of the Committee for this reason: So far the case has been made of the hardship to the small shopkeeper, with which I think we all agree, but there is one point which has not been fully brought out and that is that it can have an effect on food production. It may seem a long way from the question of food to this Amendment, but I will explain what I mean. In my Division there is a particular shop which deals with all the agricultural affairs round about. It has been working at great pressure during the war because there are very few people there and so a licence was granted to enable the owner of that shop in Liskeard to hold a large stock of collar cloth. The lady in question is extremely anxious because collar cloth, of which she holds a large stock, may suddenly suffer a heavy loss if the tax on it is removed. Surely the hon. Member opposite, who suggests that Purchase Tax only applies to luxury goods, would not consider collar cloth for horses a luxury. Now what should she do? She must either not hold her stock, which would not benefit agriculture and in which case we may find ourselves short in that district or, in order to supply it, she holds the collar cloth in stock and runs the risk herself. I am certain that when the Purchase Tax was originally put on, the intention was not to put the responsibility on to the small man or woman holding such goods. I make that point in support of the other arguments that have been made from this side of the Committee, and I hope that the Chancellor will agree to the Amendment, or at any rate give an assurance, if the words of the Amendment are not satisfactory, that some similar words will be introduced to cover the point.

4.15 p.m.

Not everybody is in a position to cut his stocks. Some traders, owing to the nature of their trade, have to carry heavy stocks in order to provide a selection for their customers, and it is, of course such people who are hit much the heaviest. I have in mind particularly gramophone records. One of my constituents who deals in gramophone records had a large stock, such as every gramophone dealer must carry, in order to give his customers a choice of the records they want. That man has been hit very heavily indeed. I have been in correspondence with the Financial Secretary on this subject. I emphasise to the Chancellor that, although this may be a comparatively small matter to people who are turning over their goods quickly, it can be very nearly ruinous to people who, owing to the nature of their business, have to carry heavy stocks.

I will not follow the hon. Member for Northampton (Mr. Paget) on gramophone records. I have had some correspondence with the Chancellor on this subject, and I quite realise that when a change in taxation is being made, undoubtedly and inevitably there must be some difficulties. When faced with difficulties of this kind, if the tax is only a temporary one, the difficulties can be left, but the real weight of the argument this afternoon lies not only in the details that have been mentioned, but in the very important fact that this tax is to become permanent, or at any rate is to have a considerable length of life. The Chancellor has said more than once that, in such circumstances, it is the duty of the Committee, and still more his duty, to endeavour to see how the unfairnesses can be equalised. I feel sure that the Chancellor would be able to do that, and I am sure that he could do it with the help of the Amendment. The Chancellor is not always in a helpful mood. I have approached him on this matter, and I have received a letter from him. It is all very well for the Government to tell traders to do this and that, but in regard to this particular matter, I had considerable difficulty in knowing precisely how to break the news of the Chancellor's letter to a chamber of trade. This is what the letter said:

I hope the Chancellor will be able to accept the Amendment. If he objects to the Amendment in its present form, I feel sure, nevertheless, that he must have some solution for this difficulty, which is bearing very heavily on the private traders in my constituency and also on the co-operative societies there. I am not one of the bosses of the co-operative societies, as are hon. Members opposite; I am just a poor humble individual. There is, however, no reason why I should not stand up for the co-operative societies in the time of hardship and oppression which the Chancellor is putting upon them. I hope I shall not have to take back to my co-operative societies a message that the Chancellor absolutely refuses to consider their point of view, that he goes out of the Committee for a cup of tea when their leading lights are speaking, and that he neglects the co-operative societies, and does not think of them. I hope I shall not have to do that, because it would hurt me very much if I had to be unkind in that manner.

This question has been very carefully examined and very fully considered by my right hon. Friend and his Department. With regard to the scheme proposed in the Amendment, we feel, after consideration, that there are quite insuperable difficulties about it, and I will explain what those difficulties are. I will, however, preface my remarks by saying that it seems to me that the hardship has been considerably overstated. That would appear to be the result of the investigations which have been carried out by my right hon. Friend's Department. I will now address myself to the scheme, which emanates from a former Financial Secretary who, in moving the Amendment, said that it was a more or less impossible scheme, and that he hoped the Chancellor would throw it aside and find something completely different. [HON. MEMBERS: "No."] I must address myself to the scheme in the Amendment on the Order Paper.

Suppose that we take two ironmongers, myself and the hon. Member for Stockport (Sir A. Gridley). Suppose that the Treasury fix six months as the period which is to be the designated period before the order altering the rate of taxation comes into force. The hon. Member has stock, and I have stock. The stock consists of a number of different articles. Suppose that a man or woman comes into the shop and wants to buy one of those articles. There is nothing whatever to compel either of us to reduce our prices to the purchaser by reason of the fact that Purchase Tax has been reduced. Those articles will in all probability remain in our shops at precisely the same prices. What will happen if the scheme is adopted is that we will go on selling the articles at exactly the same prices to the ordinary purchaser, and we will get from the Treasury, through the wholesaler, an unlooked for windfall in the shape of Purchase Tax which the wholesaler claims from the Treasury and pays to us. That is quite a fatal defect in the scheme.

All that would happen if the scheme were put into operation would be that the Treasury would pay over very large sums of money which would come out of the pockets of the taxpayers as a whole; those large sums representing the amount of the reduced tax would go the wholesaler, and would go from the wholesaler to the retailer—that is to say, to myself and the hon. Member for Stockport—and there it would remain in our pockets. The advantage would not be passed on to the ordinary purchaser. He would not know anything about it. He would know, with regard to the articles that he purchases, that there might have been some discussion about them in the newspapers, but although he might have a vague idea that Purchase Tax had been lowered, he does not carry schedules and lists in his head. He goes into the shop, and if he sees an article with 2s. 6d. marked on it, he buys it, whether the Purchase Tax has been reduced or not. If the scheme in the Amendment were adopted, all that would happen would be that retailers would benefit to the extent of a very large unlooked for windfall in the shape of Purchase Tax which comes back from the Treasury, through the wholesaler, to them.

Has not the retailer to make a return to the Treasury of the amount of Purchase Tax he has paid, and would there not be taken into account the fact that he was to get a refund of Purchase Tax? In many instances, when one buys an article one is told the net cost and the Purchase Tax is put on the bill separately.

The hon. Member must preserve a sense of reality. In an ordinary retail shop, selling a variety of goods, with people coming in every five or 10 minutes and buying something, is there going to be discussion between purchaser and retailer on the question whether the article is sold at a reduced price because of the reduction in Purchase Tax? In 999 cases out of 1,000 the purchaser goes into the shop, sees a thing in the shop at a certain price, and, without bothering about anything else, buys it. That is the case, with the exception of certain brands of goods, such as gramophone records, where the rate of Purchase Tax is well known to the public, and where a person buying them probably knows what the Purchase Tax is. That, however, applies only to a very limited category of articles. Ordinarily, a person would pay to the retailer the purchase price, which would be charged the whole time, and he would not get any benefit from the tax which came back to the retailer. There is no way of compelling retailers to reduce their prices. If an order were made saying that they were to do so, it would be practically impossible to enforce. It would mean that there would have to be an enormous staff of inspectors to see that the order was obeyed, and the thing would become administratively impossible. If this scheme were adopted, the result would be that the retailers would gain to the extent of the whole amount of the tax, or very nearly the whole amount, which had been remitted as a result of the reduction of the Purchase Tax.

I do not think the Solicitor-General would conduct his business as an ironmonger on very good lines, if he honestly believes in the illustration he has given. All that would happen would be that the customer would go into the Solicitor-General's shop and, seeing a wheelbarrow marked 25s., would say, "Over the other side of the road, in Gridley's shop, wheelbarrows cost 17s. 6d. I'm going there."

That assumes—if I may refer to "Gridley's shop" without being out of Order—that Gridley's shop would have reduced the price. Why should it have done so? The whole point is that "Gridley's price" and my price would be exactly the same as they have been the whole time.

May I ask the hon. and learned Gentleman a question?

4.30 p.m.

I really must pursue my argument. Suppose there were a number of Gridley's shops which did see the light and reduced their prices. I, being more avaricious, might find over a period of months that my sales were falling off, because the other shops were selling at a lower price. I accept that possibility, but I still say that, by and large, retailers would go on selling at exactly the same price and that the loss would be passed on to the ordinary man and woman in the street. Hon. Members opposite may agree with what I have said or not, but that is the point of view that we hold. We think that it is a fatal obstacle to acceptance of the proposals in the Amendment.

There are other obstacles. How is one to fix, with any sort of fairness, what the period is to be? All sorts of periods have been mentioned but no way of assessing the period with any reasonable degree of accuracy has been found. In the very nature of the case it must be by a purely arbitrary measure that one decides whether the period should be one month, six months or a year. People carry on their shops and businesses in different ways. They try to attract customers by selling different types of goods. The only way to overcome our difficulty with any degree of fairness would be by examination of each individual shop, in an effort to see what would be the fairest period. Otherwise, it would be a matter of guesswork in addition to the fact that there would be an enormous burden of work. The result would not be satisfactory in the end.

Let me continue with the example of the two ironmongers, one with experience of the trade and the other perhaps a demobilised soldier knowing very little about the business. The experienced ironmonger, during a six months' period, if we take that as the chosen period, will have been able to dispose of a good deal, if not of most of his stock. The demobilised soldier, on the other hand, owing to his inexperience in the trade, would still have most of his stock on his hands, if the proposed scheme were put into operation.

If the demobilised soldier had only recently come into the business, he would not be in exactly that position.

The point is that one trader would have succeeded in disposing of a great deal of his stock, while the other trader, his rival, would not have succeeded in doing so but would still have much of it on his hands. Each trader would get precisely the same amount of tax from the authorities, proportionate to the amount of stock which he had taken into his premises. The result would be grossly unfair to the trader who had not succeeded in disposing of his stock. He would begin to find himself in difficulties unless he reduced his prices. The trader who has disposed of his stock quickly would get the same amount of tax reduction and would suffer no loss. Therefore, the proposal would work out grossly unfairly between trader and trader. One of my hon. Friends said that his cooperative society had suffered a loss of some hundreds of pounds.

Before my hon. and learned Friend leaves that point I would recall to him the position in regard to branded stock. When new supplies of branded stock come in, the wholesaler usually forces the retailers to reduce their prices.

My hon. Friend cannot have heard me say that I did make an exception in the case of branded stock. With some forms of branded stock the retailer has to reduce his prices. The main question is whether that fact makes a sufficient case for introducing some general scheme of this sort upon the Statute Book. There is not a sufficient measure of loss. I ask the Committee to say that this proposal would not work at all fairly and would simply mean a loss being passed over to the public. Some retailers of branded stock suffer a loss as a result of the reduction of Purchase Tax, but the great majority suffer no loss, or very little loss. All that would happen if the scheme were operated would be that those retailers would have an unlooked for windfall, in the shape of Purchase Tax which they got back. There is no case, therefore, for the scheme proposed in the Amendment, and I ask the Committee to reject it.

What is the proper perspective in which to look at this problem? We are discussing a concession, a tax reduction, which would benefit retailers by and large. The hon. Gentleman who quoted a letter which he had received from the Chancellor of the Exchequer did not, I thought, quite gather the import of the letter. What the Chancellor of the Exchequer meant was that, admittedly, individual retailers might sustain some loss, in the case of branded goods a greater loss and in the case of ordinary general goods a lesser loss or perhaps no loss at all. The effect of the reduction of tax would be an increased demand in the retail trades concerned and the retail trade as a whole would eventually benefit. It has been suggested that we should consider this matter in relation to production as a whole.

I thank the hon. and learned Gentleman for giving way to me. There may seem to be an advantage in the way he suggested, but really the individual trader has paid the tax on his goods, and must suffer a loss on those goods. That is unfair. It is no good saying to him that the Chancellor of the Exchequer has stated that in the long run everything will be all right. The point is that an injustice will have been inflicted upon tens of thousands of poor people—not upon very big shops like the cooperatives—by the present Government.

That shows how much the hon. Gentleman has examined the figures. I have been at pains to try to explain that the ordinary retailer not only must suffer loss if the scheme is adopted but that he will also have an unlooked-for benefit. If the scheme is adopted he will go on selling his goods at the same prices. He may suffer a loss in the case of branded goods, or a larger loss, but that is all that will happen. The whole hypothesis of the hon. Gentleman is that there would be a loss, but we say that the loss will be very trifling, if there is any loss at all.

What my right hon. Friend said in that letter is what he has said to other hon. Gentlemen: That the particular retail trade will have to suffer a temporary loss or disadvantage, but that on the long-term view the retail trade will get a great advantage from the reduction of tax. That is something which constantly happens when you reduce tax. In the long run, the reduction creates a demand in the retail trade, which may suffer at first but in the long run secures a benefit. The right hon. Member for North Leeds (Mr. Peake) suggested that we should consider the possible impediment to the devlopment of trade. It may well be that retail traders will, for a short time, hold up extra purchases from their wholesalers, but that would be acting exceedingly imprudently and I think that very few retailers will do it. They may slow down for a short time, but the benefits from an increase in the flow of trade when people know what the decrease in the tax is going to be, will easily outweigh any temporary depression in the trade and will make up for it. There is little further I can say on this point. For all the reasons I have given I ask the Committee to reject the proposal. It would only cast the loss on to the ordinary man and woman in the street. It would work unfairly as between one retail trader and another. There is no real place for it, anyhow. It is simply taking a short-term view.

The Committee have just listened to one of the most extraordinary answers I have ever heard given in this House. I have only one piece of advice wholly friendly to offer to the Solicitor-General. It is that if ever in the future the legal profession should fail him, he should not turn as an alternative to the retail trade. If he does, and conducts his business on the principles which he has explained to the Committee this afternoon, it would not be long before he put up his shutters and gave up business. I must confess that I have not only been thoroughly disappointed but very surprised by the hon. and learned Member's reply. When we raised this matter in October—I have not with me the actual references, I am afraid—my impression is that the Chancellor of the Exchequer was far from saying that there was no hardship involved. He pointed out what we all admit, that there is great administrative difficulty in removing that hardship. Certainly, the case which has been put before the Committee this afternoon is not that which those chiefly concerned, such as the National Chamber of Trade, believe

I have here a copy of a letter which they wrote to the Chancellor of the Exchequer only this week. A copy of it has been sent to the hon. and learned Gentleman for the reason that they were in negotiation with the Treasury and with the Commissioners of Customs and Excise. They were frightened—so confident were they, owing to their reception, that some solution would be found of this difficulty—that a Debate of this character might impede a solution. They had no idea that a representative of the Government would get up today and say that all the negotiations that had gone on since last January to find a solution of the problem were quite unnecessary because, in fact, there was no problem to solve and no case for the Treasury to answer. The Solicitor-General has based his total rejection of the case of the traders on the extraordinary premise that taking off the Purchase Tax makes no difference to the price at which articles are sold. When he was challenged by hon. Members he sought higher authority. He did not just say, "I believe that"; he said, "We hold that reducing the tax makes no difference to the price." Is that the view held by the Chancellor of the Exchequer? Are we to believe, in all the discussions which we are to have next week upon various items, that though the Purchase Tax may be reduced, there will be no difference in the prices at which those items will be sold?

We read this morning the statement, welcomed by us all last night and made by the Chancellor of the Exchequer, that the right hon. Gentleman is prepared to devote £2,000,000 to the reduction of Purchase Tax. During our discussions next week, are we to suppose that the whole of that £2,000,000 will go into the pockets of the retailers and that none of it will be passed on to the consumers? I ask the Chancellor of the Exchequer to tell us in the course of the Debate whether he holds the opinion that reduction of Purchase Tax will have no effect upon prices.

4.45 p.m.

I will give way, although the hon. and learned Gentleman did not see fit to give way to me.

I did give way to a large number of hon. Members, including the hon. Gentleman. I made it perfectly clear in saying that the Purchase Tax would be passed on to the man and woman in the street. At first, while the trader still had stock on his hands he would go on selling that stock at the same price. I said that over and over again, and made it perfectly clear. Of course I agree, and never said anything to the contrary, that as the months go by and as he disposes of his stock, he will have to reduce his prices, but I made it clear to everyone, I think, except the right hon. Gentleman that at first as long as he had stock on his hands he would go on selling that stock on which he had paid Purchase Tax at the same price, but in due course he would have to reduce his price.

The hon. and learned Gentleman has merely repeated what is, I think, to all Members of the Committee who have practical experience sheer nonsense. We all know, and the Chancellor of the Exchequer will agree, that in the vast majority of cases the removal of Purchase Tax is accompanied by an immediate fall in price, partly voluntarily for reasons I will explain later, and very often compulsorily. Not only are there a number of branded goods to which reference has already been made, but many goods which are subject to price control which includes the element of Purchase Tax and where therefore the removal of some part of that element of Purchase Tax has to be followed by a fall in price.

The Chancellor of the Exchequer will no doubt explain that. In the case of branded goods and price controlled goods, where reductions are compulsorily applicable, it is the general experience that in almost every case the retailer has to reduce his price immediately the Purchase Tax is taken off. The Solicitor-General gave us an account of a shopping expedition. That may be the way in which Members on the Socialist Front Bench do their shopping, but I do not believe it is the way in which the great mass of the people of this country shop. The Solicitor-General sees something in a shop and asks "What is the price?" They say it is 3s. 9d. or £1 10s., as the case may be, and he says, "All right, I will have it." The ordinary shopper does something different from that. He has a fair idea before going into the shop what the price will be, and when he goes in, he does not always buy at once. Very likely he goes to a shop round the corner and asks there. Finally he may even go into a cooperative shop and ask there. Whatever accusations are going to be made against the private trader, surely within an hour of the removal of the Purchase Tax cooperative stores are going to reduce their prices proportionately.

In fact we have had practical testimony from a practical man that that is what they do. The hon. Member for Greenwich (Mr. Reeves) said that the morning after the Budget he went to his office to see what loss his cooperative society would be involved in by the automatic reduction of price to the reduction in the Purchase Tax. It is quite certain as a result of the Debate this afternoon my hon. Friend the Member for Torquay (Mr. C. Williams) when he goes to his constituency will be able to tell all retail traders there, private traders and cooperatives alike, that this Government have no sympathy for the loss in which they are involved through no fault of their own, and that it is not, as some of us expected, a mere difficulty of finding a formula. A trusting hon. Member behind the Chancellor, the hon. Member for Greenwich, said, "I am sure the Chancellor has a formula." If only the hon. Member had not gone out in that trusting belief—

But I notice that as a result of what has happened, the hon. Member has gone at least two benches further back. I and all my hon. Friends believe that the speech of the Solicitor-General was profoundly inaccurate. We believe that there is here a hardship, an avoidable hardship, on a large number of traders in the community. We believe it is the duty of the Government to find a way out of that hardship. It is imposed upon individuals through no fault of their own and, as has been shown by my right hon. Friend the Member for North Leeds (Mr. Peake), through a mere matter of luck which falls unevenly between one and another. There is not only the question of individual hardship that ought to be remedied. There was another point made by the hon. Member for Greenwich of a more general character, which I think is extremely important. There is no doubt—at least I hope there is no doubt—that at whatever rate it is possible to do so, we are going to see over the next year or two progressive reductions in the range of Purchase Tax. Therefore, these hardships which up to now, owing to the small number of reductions which have taken place are not great in quantity, are going to be greater and greater. The result will be that in future people are not going to keep stocks if they can possibly help. They want a loss of this kind, if it is to be incurred, to fall on someone else. It is quite true that in the time in which we live, a time of great scarcity, even if they wanted, it is not always possible for traders to build up ample stocks. The Chancellor of the Exchequer does not look forward to that always being so. He told the Bournemouth Conference that the danger of the future was the danger of deflation.

That will be a moment when the right hon. Gentleman will welcome and want to encourage the holding of stocks down the whole pipeline in order that production may be kept going. Who, in face of the answer which has been given, can expect the trader to maintain those stocks? As the result of the profoundly unsatisfactory speech of the Solicitor-General, my hon. Friends and I intend to press this matter to a Division with the greatest determination—and the greatest disappointment.

The Solicitor-General concluded his speech by saying that there was no real case for the Amendment now. Previously he said that no loss was suffered by traders. He also said that there was no difference in the price charged. He also said that traders would only reduce prices gradually. I have here some correspondence from one of my constituents, the Dale Forty Company Limited, a very well-known firm of pianoforte manufacturers and merchants, with branches all over the country. They wrote a letter to me recently in which they said:

"Whilst appreciating the reduction from 100 per cent. to 33⅓ per cent. on musical instruments including player pianos, gramophones, etc., the position in which we find ourselves in relation particularly to stocks of gramophone records, upon which the higher rate of tax has been paid, is most unsatisfactory."

Then they go on to say:

"In spite of very strenuous efforts made by our trade association to secure fair play, all have been ignored and our trade is now in the iniquitous position of either selling goods at higher rates to cover the tax paid, or reducing the prices to the new level and thereby incurring a heavy loss through the sole reason that it was thought fit by the responsible authorities to appoint the traders as the unpaid tax collectors for the Government.

In short, the position is one of extreme injustice, and there is not one single argument which could be brought forward against the complete justness of our claim for consideration."

Following upon that letter, I asked the Chancellor a Question. I asked him what steps he was proposing to take to put right this injustice. I was encouraged to ask the Chancellor that Question because of what he said last year when he said "I will see how it can be improved," and I thought I would have sympathetic consideration from him. The reply was:

"Retailers are under no obligation to reduce the prices of stocks on which tax has been paid at the higher rate. In any case, they soon benefit by increased demand due to tax reduction."—[OFFICIAL REPORT, Tuesday, 7th May, 1946; Vol. 422, c. 780.]

When I passed that reply on to my constituents, this is what they said:

"The reply of the Chancellor of the Exchequer is really no answer of course, because it would have required nation-wide agreement among the distributing houses, and more particularly the stores. The last named at once, and next morning, dropped the tax to the new rate. Naturally, other houses could not afford to stand out and collect the tax at the full rate, since business would obviously be lost."

There is the answer to the Solicitor-General—a complete answer. He says that there is no real case for it anyhow. My constituents say there is a case for it. He says there is no loss suffered. My constituents say loss is suffered. He says the price would be reduced gradually. My constituents say it was reduced next morning. The Solicitor-General has misinformed the Committee. There is direct evidence that exactly the opposite has happened to what he said would happen, or had happened. It is clear that the Solicitor-General has been grossly misinformed on this position, and I hope that in view of the evidence which hon. Members are now putting before the Committee, and in view of the sympathetic way in which the Chancellor of the Exchequer said on the last occasion that he would consider this position, steps will be taken to obviate the serious position in which traders are finding themselves, and will find themselves in the future, as and when Purchase Tax is reduced.

5.0 p.m.

What we are up against is that when Purchase Tax was reduced in the Budget, the cost was thrown on to the shoulders of the retailers. There is no question whatever but that the information which has been given to the Committee by the Solicitor-General is entirely erroneous and his advice to the retailer not to make a loss by going on charging the old sum is, I should say, almost dishonest business. It is obvious, however, that it cannot be done, for it overlooks altogether the commonsense of the British housewife who is not going to stand that sort of thing. She knows perfectly well that before Purchase Tax was introduced an article cost 5s. and after the Purchase Tax was introduced it cost 6s. 6d. She knows that in April last the Chancellor of the Exchequer took the Purchase Tax off that article entirely and she now expects to pay 5s. and not the price plus Purchase Tax. The main argument in favour of this Amendment is that it is unfair to make the retailer bear the initial cost of the reduction of Purchase Tax.

I want to refer to one further point which was mentioned in passing by my right hon. Friend the Member for North Leeds (Mr. Peake). This imposition is going to have the effect on the trading of this country for years. It will have an effect until Purchase Tax is finally removed. Retail traders will say to themselves, "Well, there are any number of articles on which Purchase Tax is still imposed. These taxes will be reduced or abolished some day or other," and when a Budget comes round the retailers will say, "We do not know which of these taxes is going to be reduced or abolished this year. We are not going to hold large stocks. We will keep our stocks down at Budget time in the case of all goods that still bear Purchase Tax. We will keep them down to the lowest degree possible." What the Chancellor wants at present is increased output. He wants manufacturers to make goods and retailers to buy them. This imposition will depress the retail trade, and therefore the trade of manufacturers, so long as Purchase Tax remains on any article whatsoever unless the Chancellor is prepared today and in the future to compensate the retailer who has to reduce the price of the article held in stock by the amount by which Purchase Tax is reduced from time to time.

I do not think we can say that the argument of the Solicitor-General is due to bad information. I think it is due to bad political principle. It is quite clear from what has been said by my hon. Friends and by hon. Members opposite, that the retail trade know the facts and have brought them to the notice of the Government, but, of course, certain Socialists believe that all traders are crooks. The real burden of the argument is that the Solicitor-General says that the traders will keep up the price when the tax has gone down, and that they will, in other words, "do in" the customer as long as they possibly can. I say that comes from the bad political principle of thinking that profit is the only thing that anybody ever goes for, and that the trader always goes for the quick profit. There is, however, a thing called "goodwill." Although goodwill is not an article in which either the right hon. or hon. Gentlemen opposite are very expert, none the less it is the thing which keeps a business going. If any hon. Member really thinks a shop can retain its goodwill when it continues to sell its goods at a high price while round the corner they are being sold at a lower price after the Purchase Tax has been taken off, I am sure he is making a mistake.

I understand that when the tax was put on the retailer was prohibited from raising the price. I would ask the hon. and learned Gentleman how many retailers cheated in that case. Did they then quickly try to make a profit by raising the price? I suggest that they did not and that they played the game. Having played the game then, I think they would certainly play the game now. As so often happens in these cases, it is the good shopkeeper who has a large stock of things who will suffer most. It is always the prudent person who gets hit hardest by these things I am convinced that the facts are against the Government. They have not found an administrative way to deal with this matter and they justify it by this thoroughly bad view of human nature, namely, that everybody who is in private business is in his heart a cheat.

May I say how bitterly disappointed I am that this Amendment, moved as I thought in a most reasonable way and supported on every side of the Committee, should have been treated in such a very cavalier fashion? When the Chancellor went out during the speech of one of his own supporters I thought that the Solicitor-General was likely to be left on a very "sticky wicket," and so it was that he found himself. I am surprised that on a matter where injustice is clearly admitted, the Chancellor should not have thought fit to rise in his place and to give any answer to this Amendment. We shall carry the matter to a Division and we shall let the attitude of the Government be publicised widely in all parts of the country.

Two can play at that game and if there is political propaganda to be made we will have a bit of competition about it. However, since I have been challenged to say a word or two, I gladly accept. In the first place, the National Chamber of Trade disown the Amendment which has been put on the Paper. I have in my hand the letter to which reference has already been made. It was addressed to me, and in that letter they indicate what, of course, is the case, that they have been in touch with representatives of my Department for some time. This discussion has not reached the final conclusion. What was said by my hon. and learned Friend was that the right hon. Gentleman's Amendment, which is what we are now discussing, is administratively unworkable and that is why we are not going to accept it. It is administratively impossible for reasons that have been given. This particular attempt at solving this problem is a failure. That is why we ask the Committee to reject it. I also say that the only real remedy for this grievance, if it really is a serious one—and on that I will say a word in a minute—would be to cease altogether from the practice of reducing the Purchase Tax at any time on any article. That is the only way, if it is a grievance which cannot be removed.

I do not think that would be a wise and sensible thing to do. That is another way of saying that the grievance has been grossly exaggerated and brought totally out of focus. In so far as there is a hardship on the retailer, it is a short-term hardship. So far as it exists at all, it exists only during such time as he is still seeking to dispose of the stocks on which tax was paid at the higher level which he held in his shop when the change of tax was announced. For the whole of eternity after that, until we alter the tax again, he is advantaged by the fact that the Purchase Tax has been removed. It has been suggested that we are proposing to put an additional burden on him. On the contrary, we are removing burdens and we are seeking by remission of the tax altogether, and reductions in other cases, to promote the flow of trade at lower price levels throughout the country. Therefore, in so far as there is a grievance it is a very short-term grievance and it has to be set against a long-term advantage. I do not really believe that the traders of this country would prefer that I should now make a moratorium on all future reductions or remissions of Purchase Tax, yet some hon. Gentlemen opposite would suggest that that would be desirable. This is a moment when the grievance, in so far as it is a grievance, is at a very low point because, as the right hon. Gentleman the Member for West Bristol (Mr. Stanley) pointed out, at this moment stocks are very low. Therefore, the loss, in so far as there is a loss, is very small as compared with the gain that will be secured as production picks up, as it is now picking up and will continue to pick up over the future months and years.

I do not rule out any further discussion—of course not. My relations with the National Chamber of Trade have been very friendly since the days when I was President of the Board of Trade. I know Mr. Gratwick, the gentleman who signed this letter, very well. The gentleman who was Secretary before him passed away just before he was able to receive an honour which was awarded to him on my recommendation as President of the Board of Trade. I mention that so that there will be no doubt as to the relationship which exists between myself and this body. I am always willing to meet them and to have my officials meet them. What I say is that no workable administrative scheme has been hammered out. The discussions can proceed. If later on we were to find a workable administrative scheme I should have no objection at all to accepting it; but it is exceedingly difficult. As the hon. Gentleman the Member for St. Marylebone (Sir W. Wakefield) has reminded me, I did say that we would see whether the position could be improved. We have gone into it with great care and we have not been able to find any practical way in which this particular grievance can be removed. Certainly, the pursuit of this rather elusive goal can be continued. At present we have not found the answer nor has the right hon. Gentleman who moved the Amendment. For that reason we ask the Committee to reject this Amendment. I repeat that this thing has been greatly exaggerated by hon. Members opposite in so far as there is a loss, and no account has been taken of the great over balance which is gained by this provision.

I know that the Chancellor finds it difficult to make himself understood by certain hon. Members on this side of the Committee—as he said at Question time—but in so far as I could understand his speech I think the second part differed from the first. The first part was attempting, perhaps half heartedly, to support the speech of the Solicitor-General, but the second part was to say exactly the opposite to what had been said by the Solicitor-General. I confess I had expected that that would be the answer. The right hon. Gentleman said he would try to find a way to meet the difficulties and that

what stood in the way was the difficulty of finding a practical solution and not, as the Solicitor-General said definitely and repeatedly, that there was no case to meet. I am afraid, in view of such obvious divergence of views between the two spokesmen of the Front Bench, we can have no confidence at all in the half hearted suggestion that has been thrown out that he will go on thinking about it. He has really been trying since October to solve administrative problems. We remember the triumph yesterday with which the Solicitor-General said that for 76 years people had been trying to tax chicory essence and at last the right hon. Gentleman had found a way of doing it. Surely, to a man with triumphs of that kind behind him, a problem of this kind is not insoluble? What is wanting in this matter is not the wit to solve it but the will.

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

The Committee divided: Ayes, 129; Noes, 223

Division No. 196.]

AYES

[5.14 p.m.

Agnew, Cmdr. P. G.

Gridley, Sir A.

Orr-Ewing, I. L.

Aitken, Hon. Max

Grimston, R. V.

Peake, Rt. Hon. O.

Allen, Lt.-Col. Sir W. (Armagh)

Hannon, Sir P. (Moseley)

Peto, Brig. C. H. M.

Assheton, Rt. Hon. R.

Harris, H. Wilson

Poole, O. B. S. (Oswestry)

Astor, Hon. M.

Harvey, Air-Comdre. A. V.

Prescott, Stanley

Baldwin, A. E.

Haughton, S. G.

Price-White, Lt.-Col. D.

Beechman, N. A.

Headlam, Lieut.-Col. Rt. Hon. Sir C.

Renton, D.

Birch, Nigel

Henderson, John (Cathcart)

Roberts, Emrys (Merioneth)

Boles, Lt.-Col D. C. (Wells)

Hinchingbrooke, Viscount

Roberts, Maj. P. G. (Ecclesall)

Boothby, R.

Hollis, M. C.

Ropner, Col. L.

Bower, N.

Holmes, Sir J. Stanley (Harwich)

Ross, Sir R.

Boyd-Carpenter, J. A.

Hulbert, Wing-Cdr. N. J.

Savory, Prof. D. L.

Braithwaite, Lt.-Comdr. J. G.

Hurd, A.

Scott, Lord W.

Bromley-Davenport, Lt.-Col. W.

Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

Shepherd, W. S. (Bucklow)

Brown, W. J. (Rugby)

Hutchison, Col. J. R. (Glasgow, C.)

Smiles, Lt.-Col. Sir W.

Bullock, Capt. M.

Jeffreys, General Sir G.

Smith, E. P. (Ashford)

Butcher, H. W.

Joynson-Hicks, Lt.-Cdr. Hon. L. W.

Spearman, A. C. M.

Byers, Lt.-Col. F.

Kingsmill, Lt.-Col. W. H.

Spence, H. R.

Challen, C.

Langford-Holt, J.

Stanley, Rt. Hon. O.

Clarke, Col. R. S.

Legge-Bourke, Maj. E. A. H.

Stewart, J. Henderson (Fife, E.)

Clifton-Brown, Lt.-Col. G.

Lindsay, M. (Solihull)

Strauss, H. G. (English Universities)

Cole, T. L.

Linstead, H. N.

Sutcliffe, H.

Conant, Maj. R. J. E.

Lipson, D. L.

Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

Cooper-Key, E. M.

Lloyd, Maj. Guy (Renfrew, E.)

Thomas, J. P. L. (Hereford)

Crookshank, Capt. Rt. Hon. H. F. C.

Low, Brig. A. R. W.

Thorneycroft, G. E. P. (Monmouth)

Crosthwaite-Eyre, Col. O. E.

Lucas-Tooth, Sir H.

Thornton-Kemsley, C. N.

Crowder, Capt. J. F. E.

MacAndrew, Col. Sir C.

Thorp, Lt.-Col. R. A. F.

Darling, Sir W. Y.

Macdonald, Capt. Sir P. (I. of Wight)

Touche, G. C.

Davidson, Viscountess

Mackeson, Lt.-Col. H. R.

Turton, R. H.

De la Bère, R.

MacLeod, Capt. J.

Vane, W. M. T.

Digby, Maj. S. W.

Macmillan, Rt. Hon. Harold (Bromley)

Wadsworth, G.

Dodds-Parker, A. D.

Macpherson, Maj. N. (Dumfries)

Wakefield, Sir W. W.

Donner, Sqn.-Ldr. P. W.

Maitland, Comdr. J. W.

Ward, Hon. G. R.

Drayson, Capt. G. B.

Marples, A. E.

Webbe, Sir H. (Abbey)

Duthie, W. S.

Marshall, D. (Bodmin)

White, J. B. (Canterbury)

Eccles, D. M.

Marshall, S. H. (Sutton)

Williams, C. (Torquay)

Erroll, F. J.

Medlicott, F.

Willoughby de Eresby, Lord

Fleming, Sqn.-Ldr. E. L.

Mellor, Sir J.

Winterton, Rt. Hon. Earl.

Fraser, Sir I. (Lonsdale)

Morris, Hopkin (Carmarthen)

York, C.

Galbraith, Cmdr. T. D.

Morrison, Rt. Hon. W. S. (Cirencester)

Young, Sir A. S. L. (Partick)

Gammans, L. D.

Nicholson, G.

George, Lady M. Lloyd (Anglesey)

Nield, B. (Chester)

TELLERS FOR THE AYES:

Glossop, C. W. H.

Nutting, Anthony

Mr. Drewe and Mr. Studholme

Gomme-Duncan, Col. A. G.

O'Neill, Rt. Hon. Sir H.

NOES.

Adams, Richard (Balham)

Guest, Dr. L. Haden

Paton, J. (Norwich)

Adams, W. T. (Hammersmith, South)

Gunter, Capt. R. J.

Peart, Capt. T. F.

Allen, A. C. (Bosworth)

Haire, Flt.-Lieut. J. (Wycombe)

Perrins, W.

Anderson, A. (Motherwell)

Hale, Leslie

Piratin, P.

Anderson, F. (Whitehaven)

Hall, W. G. (Colne Valley)

Poole, Major Cecil (Lichfield)

Attewell, H. C.

Hamilton, Lieut.-Col. R.

Popplewell, E.

Austin, H. L.

Hannan, W. (Maryhill)

Porter, E. (Warrington)

Awbery, S. S.

Hardy, E. A.

Porter, G. (Leeds)

Ayles, W. H.

Harrison, J.

Price, M. Philips

Ayrton Gould, Mrs. B.

Hastings, Dr. Somerville

Pryde, D. J.

Bacon, Miss A.

Henderson, A. (Kingswinford)

Pursey, Cmdr. H.

Barstow, P. G.

Henderson, Joseph (Ardwick)

Randall, H. E.

Barton, C.

Hewitson, Capt. M.

Ranger, J.

Battley, J. R.

Hicks, G.

Rees-Williams, D. R.

Bechervaise, A. E.

Hobson, C. R.

Reid, T. (Swindon)

Benson, G.

Holman, P.

Rhodes, H.

Binns, J.

Holmes, H. E. (Hemsworth)

Richards, R.

Blackburn, A. R.

House, G.

Roberts, Goronwy (Caernarvonshire)

Blyton, W. R.

Hoy, J.

Rogers, G. H. R.

Boardman, H.

Hughes, Emrys (S. Ayr)

Royle, C.

Bottomley, A. G.

Hughes, Hector (Aberdeen, N.)

Sargood, R.

Bowden, Flg.-Offr. H. W.

Hughes, Lt. H. D. (W'lverh'pton, W.)

Scott-Elliot, W.

Bowles, F. G. (Nuneaton)

Hutchinson, H. L. (Rusholme)

Segal, Dr. S.

Braddock, T. (Mitcham)

Hynd, H. (Hackney, C.)

Shackleton, Wing-Cdr. E. A. A.

Brooks, T. J. (Rothwell)

Janner, B.

Sharp, Lt.-Col. G. M.

Brown, T. J. (Ince)

Jeger, Dr. S. W. (St. Pancras, S.E.)

Shawcross, C. N. (Widnes)

Bruce, Maj. D. W. T.

Jones, D. T. (Hartlepools)

Shurmer, P.

Buchanan, G.

Jones, P. Asterley (Hitchin)

Silverman, S. S. (Nelson)

Butler, H. W. (Hackney, S.)

Keenan, W.

Simmons, C. J.

Callaghan, James

Kinley, J.

Skeffington, A. M.

Chamberlain, R. A.

Kirby, B. V.

Skeffington-Lodge, T. C.

Champion, A. J.

Lang, G.

Skinnard, F. W.

Chater, D.

Lee, Miss J. (Cannock)

Smith, Ellis (Stoke)

Chetwynd, Capt. G. R.

Leonard, W.

Smith, H. N. (Nottingham, S.)

Clitherow, Dr. R.

Lever, Fl. Off. N. H.

Smith, S. H. (Hull, S.W.)

Cluse, W. S.

Lewis, A. W. J. (Upton)

Snow, Capt. J. W.

Cobb, F. A.

Lewis, T. (Southampton)

Soskice, Maj. Sir F.

Cocks, F. S.

Lindgren, G. S.

Stamford, W.

Collindridge, F.

Lyne, A. W.

Steele, T.

Colman, Miss G. M.

McAdam, W.

Stephen, C.

Cove, W. G.

McAllister, G.

Stewart, Capt. Michael (Fulham, E.)

Crossman, R. H. S.

McEntee, V. La T.

Stokes, R. R.

Daggar, G.

McGhee, H. G.

Swingler, S.

Daines, P.

McKay, J. (Wallsend)

Taylor, H. B. (Mansfield)

Dalton, Rt. Hon. H.

Mackay, R. W. G. (Hull, N.W.)

Taylor, R. J. (Morpeth)

Davies, Edward (Burslem)

McKinlay, A. S.

Taylor, Dr. S. (Barnet)

Davies, Ernest (Enfield)

Maclean, N. (Govan)

Thomas, Ivor (Keighley)

Davies, Harold (Leek)

McLeavy, F.

Thomas, George (Cardiff)

Davies, Haydn (St. Pancras, S.W.)

Mainwaring, W. H.

Tiffany, S.

Davies, R. J. (Westhoughton)

Mallalieu, J. P. W.

Timmons, J.

Deer, G.

Mann, Mrs. J.

Titterington, M. F.

de Freitas, Geoffrey

Manning, Mrs. L. (Epping)

Tolley, L.

Delargy, Captain H. J.

Middleton, Mrs. L.

Turner-Samuels, M.

Diamond, J.

Mikardo, Ian

Walkden, E.

Dobbie, W.

Millington, Wing-Comdr. E. R.

Walker, G. H.

Dodds, N. N.

Mitchison, Maj. G. R.

Wallace, G. D. (Chislehurst)

Driberg, T. E. N.

Montague, F.

Warbey, W. N.

Edelman, M.

Morgan, Dr. H. B.

Watson, W. M.

Edwards, A. (Middlesbrough, E.)

Morley, R.

Weitzman, D.

Evans, E. (Lowestoft)

Morris, P. (Swansea, W.)

Whiteley, Rt. Hon. W.

Evans, S. N. (Wednesbury)

Morrison, Rt. Hon. H. (Lewisham, E.)

Wilkes, Maj. L.

Evans, John (Ogmore)

Mort, D. L.

Willey, F. T. (Sunderland)

Fairhurst, F.

Murray, J. D.

Willey, O. G. (Cleveland)

Farthing, W. J.

Nally, W.

Williamson, T.

Foot, M. M.

Naylor, T. E.

Willis, E.

Foster, W. (Wigan)

Nichol, Mrs. M. E. (Bradford, N.)

Wilson, J. H.

Fraser, T. (Hamilton)

Nicholls, H. R. (Stratford)

Wise, Major F. J.

Gallacher, W.

Noel-Buxton, Lady

Woodburn, A.

Glanville, J. E. (Consett)

O'Brien, T.

Yates, V. F.

Goodrich, H. E.

Oldfield, W. H.

Young, Sir R. (Newton)

Greenwood, A. W. J. (Heywood)

Orbach, M.

Younger, Hon. Kenneth

Grey, C. F.

Paget, R. T.

Zilliacus, K.

Grierson, E.

Paling, Will T. (Dewsbury)

Griffiths, D. (Rother Valley)

Parker, J.

TELLERS FOR THE NOES:

Griffiths, Capt. W. D. (Moss Side)

Paton, Mrs. F. (Rushcliffe)

Mr. Pearson and Captain Bing.

Clause ordered to stand part of the Bill.

CLAUSE 21.—(Increase of earned income reliefs, etc.)

I beg to move, in page 14, line 41, at the end, to insert:

The first thing necessary in considering this case is to go into the history of the earned income allowance. From 1907 to 1920, it appears that there was one rate of tax for earned income, and another for income which was unearned. In 1920, a Royal Commission recommended that the fraction of one-tenth of a person's income should be allowed as a deduction from the total income, in order to arrive at the taxable income, with a maximum of £200, which meant to say that, on an income limit of £2,000, one-tenth was allowed. In 1925, the fraction was raised to one-sixth and the maximum was increased to £250, which meant that the higher income limit which received the full benefit of the one-sixth was thereby reduced from £2,000 to £1,500. The next alteration took place in 1931, when the fraction was increased to one-fifth and the maximum was increased to £300, again leaving the higher income limit at £1,500. Up to 1931, an income of £1,500 was considered the right figure on which the allowance for earned income should be calculated.

In 1940, a reduction was made back to one-sixth, with a maximum of £250, but, again, the limit was £1,500. In 1941 another and a rather drastic reduction took place, to one-tenth of the income, with a maximum of £150, leaving the upper income limit again at £1,500. Any extra taxation which was paid by reason of the personal allowance and the earned income allowance being reduced was to be repaid to the taxpayer by means of postwar credits. In the autumn of 1945 the right hon. Gentleman cancelled the postwar credits and took away from the taxpayer the credit which, until then, he had been receiving, but the right hon. Gentleman has not yet fully restored those allowances. The position now is that the fraction under the proposed Finance Bill should be one-eighth, with a maximum of £150, and an income limit reduced to £1,200. The Amendment on the Order Paper is one-eighth, with a maximum of £200, with an income limit of £1,600.

So much for the history of the case. I should like now to draw some conclusions from the chronological survey which has just been made. The first is that the income limit established by the Royal Commission in 1920 was £2,000. After a thorough survey, they decided, in their wisdom, that a person earning anything up to £2,000 should be allowed to have the fraction, which the Chancellor decided was appropriate, deducted from that income for earned income purposes. It was reduced to £1,500 in 1925, and has remained at the upper level of £1,500 ever since. It may be that the right hon. Gentleman considers the Report of the Royal Commission a little out of date. I do not know what the view of the Treasury bench is about the Royal Commission's Report. It is fairly old, inasmuch as it was made in 1920.

The right hon. Gentleman says it is out of date, but it was used by the Financial Secretary last autumn in order to resist an Amendment to give an allowance to a man who was compelled, by infirmity, to employ an attendant, and if the Royal Commission's Report is good enough for the Financial Secretary with his great powers, it is good enough for a humble Member of this Committee like myself. Therefore, for the first time in the history of the earned income allowance, the right hon. Gentleman is proposing to reduce the limit of £1,500, at which it has hitherto stood, to £1,200. That is the first conclusion to be drawn from the history of this income allowance. The second conclusion is that every increase or decrease in the fraction which has been allowed as a deduction from income for unearned income purposes, has been accompanied by a corresponding increase or decrease in the upper limit which has been allowed as a deduction. This is the very first occasion on which that has not taken place. The Liberal Party, of whom 10 per cent. are now present, have an Amendment on the Order Paper which states that the amount to be deducted should not be £150, but £187 10s., and I take it, from the sole representative of the Liberals here today, that the idea is to maintain the upper income limit, on which a fractional allowance is allowed, at £1,500. To my mind, £187 10s. is rather a clumsy figure and, as the Chancellor has told us what a generous man he is, I have no doubt that he would consider £200 was a more streamlined figure, which, when multiplied by eight, makes the income limit which will benefit by this Amendment £1,600.

I should like to quote some examples of what happens under the Chancellor's present scheme. Under the old allowance of one-tenth, an income of £1,500 would receive an unearned income allowance of £150. The Chancellor has given a man with an income of £1,500 no benefit at all in his Budget, so far as the earned income allowance is concerned. If the Chancellor thinks otherwise I will give way, but I think he agrees.

With an income of £1,200, the old allowance of one-tenth meant that a man would receive £120 and the new allowance of one-eighth means that he receives £150, so that he gets a benefit of £30. But every income between £1,200 and £1,500 receives less benefit until, finally, at £1,500, there is no benefit over the previous Finance Act so far as earned income is concerned.

We will come to that in a moment; the Chancellor must not rush his fences. He will find that a man earning £1,500 who has five or six children is paying more now than he was in 1941 when the postwar credit was taken into account, and I will prove that in a moment. As the Chancellor has got to that hurdle, I might as well get there myself; there is no reason why, when the Opposition have such good Amendments as this one, they should not be prepared to meet the Chancellor on his own ground in his own time.

I will now turn to postwar credits. The right hon. Gentleman has not fully restored those allowances which were really the counterpart of the postwar credits. The reduction in 1941 of the maximum from £250 to £150 was one of the cuts which rank for postwar credits, and it is the only one which is not restored, either wholly or in part. I think that is correct, but, again, if the Chancellor wishes to intervene, I am willing to give way. With the Committee's permission I will give some examples which the Chancellor rather doubted just now regarding the relative position of a man today as compared with 1941 when he was receiving postwar credits. Since 1941, with a great flourish of trumpets, the Chancellor has reduced the standard rate of tax. He has also increased the personal allowance and, to a certain extent, the earned income allowance. But, in 1941, a man earning £1,500 with six children — [ Laughter. — hon. Members opposite may laugh, but I thought they were anxious to increase production—counting the postwar credit in 1941, would pay a tax of £361 2s. 6d. Now, after the Chancellor has given away all these benefits, he pays an extra £4 2s. 6d., making a total of £365 5s.

For every child, from the sixth onward, he has to pay another £2 10s. to the right hon. Gentleman by way of tax Therefore, the more children he produces, the worse off he is. There are a number of incentives to have children, and those that can be interfered with by the present Socialist Government, have been interfered with. Fortunately, for this nation, there are some incentives with which they cannot interfere. Therefore, taking into account the postwar credits, the right hon. Gentleman has not helped the person with £1,500 who has five or more children. He has not restored these postwar credits in full. So much for the historical side of it, and the comparison between 1941 and the present day.

Now for the psychological aspect of the situation. I am a great admirer of the right hon. Gentleman—in fact, he has no greater in this Committee than myself—because every time I have a Debate in which he is concerned, I always read one of his many books. I go to the Library and they say, "Here is one by the Edgar Wallace of the political world." The right hon. Gentleman's book, "Public Finance," is an excellent publication. It was first published in 1922. I have here the ninth (revised) edition, enlarged, revised and reset in 1936. The publisher's note says:

The psychological effects of the Chancellor's proposals have been more drastic than he and hon. Members opposite really think, for the following reason. There are numbers of business people in this country who earn between £1,250 and £2,000 and who are convinced that the right hon. Gentleman is carrying out a vendetta against them. I will give a case in point to illustrate what I mean. There is a man I know, and I think the Chancellor will know him, too, who started with no money at all and built a tremendous number of flats and houses in this country which house something like 10,000 people. That is about ten times the number of houses which the right hon. Gentleman the Minister of Health is building at the moment. I was horrified to learn the other day that this man was going to leave the country for South Africa in a boat weighing 350 tons. When I inquired the reason, I was given two reasons. The first was that it did not really pay him to earn anything because the Chancellor took the money. He said, "That is not the only reason because, if it were, I would stay. But I see no reason why I should be treated as a social outcast and not given the benefits enjoyed by others of the community." That is the feeling of a number of people in this country who do, and can, earn large sums of money, and it is becoming more widespread.

At the present moment the Chancellor is undoubtedly deliberately discriminating against people who are in the fortunate position of being able to earn above a certain sum of money. That discrimination does not really matter so far as this Committee is concerned; it only applies to the individual. Unfortunately, the community will suffer by losing the services of these particular members of it. Some of them are talented and mobile enough to be able to leave this country, as this gentleman did, and to go elsewhere. From the psychological point of view, I ask the Chancellor to agree to this Amendment of £200 as the upper limit. Then he will have restored the earned income allowance to a figure of £1,600, which is fairly near the earned income limit to which the fractional relief was granted in the past.

5.45 p.m.

I would like to quote again from this very good book. [An HON. MEMBER: "From the Japanese section?"] I quoted from the Japanese section in an Adjournment Debate, and they were very pleased about it in Japan. The right hon. Gentleman said that the principle of taxation must be called "The principle of maximum social advantage." Those words were in capital letters. He goes on to say a little further on: it. The point is that the Chancellor himself agrees that an incentive should be given, because this country is now turning over from wartime production to peace production, and it has more need for organisers and people who know something about staff, who can organise business and keep the production lines moving. The need in the country at the moment for this kind of person is great. In a few years' time, when we have settled down under the dead hand of nationalisation, those men will not be needed so much, but the year which is covered by the Finance Bill is the year in which we really need the people who can make decisions, and we ought to encourage them as much as possible. Therefore, from that point of view I would ask the right hon. Gentleman to increase the limit from £150 to £200.

Before the hon. Gentleman leaves that point, I would like to know if he has considered its financial aspect. Has he formed an assessment in his own mind of its approximate cost?

Yes. If the hon. and gallant Gentleman will read HANSARD he will see that in answer to a Question on Tuesday, the right hon. Gentleman said it would cost £4½ million—a mere bagatelle. If the right hon. Gentleman can give justice—and it is only justice—in the restoration of the postwar credits for a mere £4½ million, finance itself does not stand in the way at all. Before I was interrupted, I was on the question of incentive. I remember the Lord President of the Council being brought in to assist the Minister of National Insurance, when there was a certain amount of rebellion on the back benches, and just a little on the Front Bench below the Gangway.

Below the Gangway. Well, actually, I agree with the hon. Gentleman there, but the difficulty about the Socialist Party is that they have not yet learned to reconcile the difference between the soap box and the Despatch Box. I remember the Lord President of the Council being brought in to rescue the Minister of National Insurance who was getting in rather deep waters. He turned to the back benchers and the hon. Gentlemen on the Front Bench below the Gangway and said, "You cannot solve this problem by slogans." He went on to say that we must watch the nation's money for the simple reason that we are having trouble now with Pay as you earn because the workers do not want to pay.

Why should a man who is earning between £1,200 and £1,600 be any different from a man who is earning between £300 and £500, or £700? The Lord President of the Council, who was on the soap box all the time, was making exhortations to the people to produce more. It would be far better if the right hon. Gentleman would give this small amount which is asked for in this Amendment, because we would then have more incentive. I think the right hon. Gentleman the Leader of the House is very persuasive, and very nice sometimes, but if the Chancellor would give me more cash I would produce more for him. I know that hon. Members opposite do not like men in this world who earn certain salaries. They may have qualities which, perhaps, we do not all admire; I do not know. But I do think, rightly or wrongly, that those men can "deliver the goods," and if they can "deliver the goods" they ought to have the encouragement so far as cash is concerned. I know some hon. Members opposite believe that such men ought to be paid well, because some of those hon. Members are extremely able representatives of capitalism and industry, and the country ought to be grateful to them for practising something they do not preach. I suggest that so far as incentive is concerned, the right hon. Gentleman must appreciate that in this Amendment my hon. Friends and I are not pleading for the idle rich or the recipient of unearned income. We are asking on behalf of the worker who is industrious and earns his money. It will not help the Surtax payer, but it will help the people who earn their money and do a decent day's work.

I looked very carefully at the Chancellor's Budget speech in the autumn. He promised to consider raising the fractions when this question was brought up, but he said he could give no promises regarding the upper limits. What he said in the autumn, however, has no bearing necessarily on what must happen now, because I remember that in the autumn some extraordinarily able arguments were put forward by my right hon. Friend the Member for West Bristol (Mr. Stanley) on the question of the payment of postwar credits to people of advancing years. The right hon. Gentleman got up, and, waving his arms in a characteristic manner, "windmilled" his way through the able arguments of my right hon. Friend, and said that it was made abundantly clear that it was not administratively possible. That destroyed the idea that the autumn speech of the right hon. Gentleman was to be considered as something which should be adhered to closely. This Amendment means little or nothing to the rather hated class of Surtax payers, of which the right hon. Gentleman is a fairly distinguished ornament. If I may say so with respect, the right hon. Gentleman comes from good stock, and I would ask him to spare a crumb from the rich man's table for the hard-working professional classes. I see the Liberals have multiplied their numbers since I began to speak—

If there were another two Liberal Members present, I think they would have 50 per cent. Lloyd George advised Lord Snowden "to mix a few molasses with his acid." If I might parody that advice, I would ask the right hon. Gentleman to temper his class warfare with just a little genuine finance and give encouragement to that worthy class of people in this country, the professional worker who is earning between £1,200 and £1,600.

I would like to say a few words in support of the eloquent plea made by my hon. Friend the Member for Wallasey (Mr. Marples). I feel that the main economic victims of the war have been the professional middle classes; that is to say, the bank manager, the solicitor, the business manager, and so on. They have been ground between the two millstones of high taxation and rising prices. If I were to talk about inflation I would incur the displeasure of the Chair and, therefore, I shall not do so. "Inflation" is a bad word because it all depends what one means by it. But from the point of view of the professional classes, the matter is quite simple because all that matters to them is that prices have increased, are increasing and show no sign of diminishing. That is what they are up against—an income which has not gone up, which has been very much reduced by taxes and wasted by higher prices.

The first result is a disgenic birthrate. I think my hon. Friend the Member for Wallasey was rather optimistic about families with six children; they are very uncommon. One often finds one child or no children at all in a family for this very reason. The second result is that we have this great discouragement to enterprise. Before the war everybody talked about the big barrister being discouraged by high taxation, and now they talk about the mineworker being discouraged by high taxation. The fact is that everybody is discouraged by taxation and particularly by what they regard as an unfair reduction in the standard of living. Historically whenever we have had a rise in prices, wages have always followed. Very often one gets strikes and maladjustments, but, on the whole, wages go up in proportion. If we could believe the cost of living index—and, of course, we cannot—we would say that wage earners have not done too badly. The cost of living index is up something like 30 per cent., and the average wage is up something like 70 per cent. But the higher paid people have not had their pay put up anything like in proportion. I think I am correct in saying that higher paid civil servants have had a rise of about 16⅔rds per cent. during the war. Admirals have had a rise of 26 per cent. and generals, needless to say, have had a reduction. The difficulty is that in order to put the hard-working professional man back to anything like the standard of living he had before the war, his percentage increase in pay has got to be very large. He has got to have an increase of 50 per cent. and more in his pay to put him back on the standard of living he had before the war. It is most improbable that an increase of pay on that level will come about. Therefore, I would strenuously urge the Chancellor to give favourable consideration to this Amendment. My hon. Friend the Member for Wallasey said he regarded him as the Edgar Wallace of the financial world, but I am afraid that if he does not help these people he will be regarded by them as the Crippen of the financial world.

6.0 p.m.

I rise to support the Amendment so ably moved by my hon. Friend the Member for Wallasey (Mr. Marples). As he has told the Committee, the Royal Commission which sat in 1920 fixed the upper limit of £2,000 on which earned income relief was to be allowed. Although it was reduced in 1925 to £1,500, many of us would agree that £1,500 in 1925 went very much further than it does at present. Again, the allowance was reduced from £250 to £150 in 1941. The difference was made up by the postwar credit for some time, and with the advent of a Labour Government many people were inclined to regard those postwar credits as mere pieces of paper. We are glad to see that the new Government have carried out the intention of the Chancellor of the Exchequer who introduced these postwar credits, of honouring them at the earliest convenient opportunity. When figures are quoted to show that with the inclusion of the postwar credits the Chancellor is, in fact, increasing the amount of tax paid by people in the £1,500 range, that is perfectly true.

This Amendment proposes to increase the upper limit to £1,600, so that the benefit in tax relief will be £200 per annum, not even the £250 which was enjoyed for a time prior to 1941. Of course, what we would like to hear from the Government—and we have asked them time and time again what is their wage policy—is whether they regard an earned income above £1,200 a year as an indecent sum for anybody to receive at the present time. There are various views as to what exactly is earned and what is not. Members of the public might have some doubt whether hon. Members opposite are, in fact, worth what they receive at the present time. [An HON. MEMBER: "What about the other side?"] We consider on our side, that we are performing a very useful purpose in drawing to the notice of the public the omissions and failures of hon. Gentlemen opposite in carrying out their pledges. There are other members of the community, apart from Members of the Government, about whom the general public have doubts whether their income is fully earned at the present time. [An HON. MEMBER: "Where has the hon. Member obtained his information?"] I have just returned from a meeting at the Board of Trade. On this occasion, for the first time for six months, I hope the results will be successful. Nevertheless, in that building there are many passages, and there are lots of cups of tea. What is the Chancellor's reply to be when he is asked why he cannot grant these concessions? As has been pointed out, the sum of money involved is only £4½ million. We know the Chancellor is a little anxious whether he will be able to make up his next year's deficit by his savings drive. Is it reasonable that the Chancellor should expect economy everywhere else in the country but in Government Departments? [An HON. MEMBER: "What has this to do with it?"] I am trying to suggest why the Chancellor will oppose this Amendment. As has been said, the present rate, allowing only the £1,200 group to benefit from the earned income allowance, definitely discriminates against certain classes of the community—those with special skill or experience in either industry or the professions. I say seriously to the Government, that, if they are in earnest in their drive for greater production and prosperity, they should give an incentive to those people who can more quickly bring that about.

I think the hon. Member for Skipton (Mr. Drayson) rather misconceived his case. In almost the last sentence of his speech, he said that the Chancellor was only allowing £1,200 incomes to benefit. That is not the position. Every income benefits from earned income relief, no matter what its size—whether it is £500 or £5,000. The point to which the hon. Member for Wallasey (Mr. Marples) addressed himself, and to which the hon. Member for Skipton did not address himself, was whether the maximum amount of relief should stop at £1,200, £1,500, £1,600 or any other figure. Let us be quite clear about this. The maximum amount of earned income relief in terms of tax which is applicable to any income, starting at £1,200 and working upwards, is £67 10s. per annum. That is a rough figure. If the income is £1,200, then in terms of tax it is worth £67 10s.; if it is £1,500 it is still worth £67 10s; if it is £2,000 it is still worth £67 10s. It does not get cut off at £1,200. By cutting off above £1,200 it would not only allow that income group to benefit. Let us go down the scale a bit and compare the earned income relief given to a £1,200 salary, with that given to a £300 salary, because it is one-tenth or one-eighth all the way up in terms of tax. To a £300 salary the earned income relief is worth not £67 10s. but £4 10s. Surely that is a sensible way of doing this? It is important to remove the misconception, if indeed it exists in the mind of anybody but the hon. Member for Skipton, that this is cut off at £1,200. It is not.

The hon. Member for Wallasey, in a very eloquent speech, said that he and his colleagues were new Members of the Committee who had not yet got across the Chancellor of the Exchequer. If they go on reading the works of the Chancellor of the Exchequer, from which many of us have benefited so much, they will find themselves in considerable agreement with us. I can assure the hon. Member that the translation into Japanese, 'o which he referred, was of great benefit to the Japanese Liberal Government of 1931 when it instituted a new financial system.

Unfortunately—not because of its financial policy, which was very sound, but for other reasons—that Government did not last long. I can assure the hon. Member that that translation was of great use to the Japanese Government.

Let us look at some of the things which the hon. Member for Wallasey said. He said: "Cannot the Chancellor give a crumb to these people? Cannot he offer some consolation, instead of grinding them down?" I would probably incur your displeasure, Mr. Beaumont, if I were to go through the argument whether a crumb has or has not been given in this or past Budgets in respect of relief. What the hon. Member for Wallasey was careful to say all the time was that relief had not been given to these people in respect of earned income. He might have gone on to say that no relief has been given in respect of child allowances, and that no relief has been given in respect of dependent relatives' allowances, or many other matters. What we have to look at is, not whether relief has been given in respect of any one section of the community, but what is the overall liability which determines whether a crumb has been given or not.

I suggest, as I have done on previous occasions, that considerable crumbs are being given. Let us consider a man getting £1,500 a year. In the financial statement for 1946–47 a single person is now paying £531 15s. per annum. Before, he paid £606. Now, of course, we will get the old argument, "What about the postwar credits?" That argument will doubtless never be settled. I am quite sure, if the hon. Member bases himself on psychology, as he did, that psychologically it is much sounder—and that, remember, was his approach—to put £70 into his pocket now than to charge him a higher rate of tax and say that in so many years' time he will get some of it back. That I believe to be what the Chancellor has done. Has incentive been removed? I recommend to the hon. Member for Wallasey in the further pursuit of his financial studies—and I hope he will enliven our discussions with more speeches like that which he has just made—the pamphlet on the national income of the United Kingdom. It is well worth studying. It has provided me with more ammunition on financial subjects than any other pamphlet I know, and it would be cheap at double the price.

The price is 9d. net. In 1938, the number of salaries over £1,000 was roughly 300,000. In 1944, the number of salaries over £1,000 was 640,000. It will be seen, therefore, that the number is rising. There is still incentive; incentive has not been cut away, and it would be wrong to suggest that it had been. Surely we are all agreed on the necessity for remissions of tax at the earliest possible moment? None of us likes tax at 9s. in the £; none of us likes an earned income relief of one-eighth if we can get an earned income relief of one-fifth. This is a Socialist principle which hon. Members opposite will have to get used to. When this Government is in power it relieves the poorest and neediest first. That seems to me to be a principle which has been preached by so many people for so many years that it really ought to have gone home by now. What the Chancellor has done throughout the whole of his two Budgets is to take the tax off the poorest, to lighten the burden on their shoulders, at the same time giving a modicum of relief to people further up the scale. That, I suggest, is a desirable principle.

Would the hon. Gentleman explain how it is that with increased personal allowances, with the reduction of a standard rate and the increase of the earned income allowance, a man with £1,500 still pays more than he paid in 1941, taking the postwar credits into account? He has not had a crumb; he pays more.

I really cannot return to that ground again. I did try to cover it five minutes ago. I do not think it is worth spending a lot more time on it. It is something hon. Members opposite will never try to understand. It is not worth while delaying this side of the Committee on it, at any rate. We have relieved the lower income groups of the community. The number of incomes below £500 a year is 5,200,000. Those are the people who have the main bulk of relief in this matter, and they are the people who ought to get relief first. They are the people on whom the burden falls hardest. I do not believe there is any difference between us on that. The only difference is one of time, namely, when these reliefs can be given.

I do not believe this section of the population, for whom I have a great deal of sympathy—in which I agree with the hon. Member for Flint (Mr. Birch)—will be left permanently with an earned income relief of one-eighth on a maximum of £1,200. As these reliefs can be given, that is a class of the community which ought to be encouraged—the managers and technicians, the people who provide the brains. Certainly, they ought to get an advantage, and it shall be given. But if we have to make a choice between removing Income Tax altogether from people who are getting £2 10s. a week, and giving a little more relief to those who are getting £1,500 a year, I know where my vote must go. Nevertheless, I hope my right hon. Friend will, as one of his earliest reliefs in future, increase the earned income relief at all points. I do not think the difference of one-eighth on earned income and investment income is enough; it ought to be much wider. There is no case for having such a narrow differentiation between a man who has really earned his income and a man who derives his income from investments or inheritance.

6.15 p.m.

I listened with great attention to the hon. Member for South Cardiff (Mr. Callaghan) but I feel that he missed the point of the Amendment. The real principle in the Amendment before the Committee, and in the Amendment which I have on the Order Paper, but which has not been called, is the line of demarcation between earned and unearned income. I want to emphasise that from 1907, when that great Liberal, Mr. Asquith, first made this differentiation between the two classes of income, the limit of the line of demarcation was never less than £1,500, and that most of the time it was £2,000. On this occasion, for the first time in the history of Income Tax, it has been lowered to £1,200. If the Committee will bear with me, I want to read a part of the speech of Mr. Asquith when he introduced his Finance Bill in 1907, especially as most of the good things in this House have come from the Liberals. Mr. Asquith said the Select Committee's Report recommended £3,000 as the line of demarcation, and that he gathered that the Committee were unanimous as regards the figure of £2,000. He went on: £1,500 to £1,200. My Amendment sought to bring the relief to £187 10s. That was worked out by dividing £1,500 by eight. One has to be something of a clairvoyant in this House in order to read the mind of the Minister. I felt that while I would have preferred the figure of £2,000 I did not think he would grant any increase above £1,500, and that the most I could hope for was the £1,500 limit, rather than the £1,600 limit which was in my hon. Friend's Amendment. At the present time, a man in the £1,000 to £1,500 income range is having a very difficult time. There is no question that the cost of living has increased very much more than the official figures show. The report of the Select Committee on Members' Salaries provides plenty of arguments one could use on an occasion like this.

Civil servants, employees of local authorities, and the managerial class in industry—to whom we all owe a great debt for what they did in the war—have had smaller increases of salaries than the lower grades of workers. I think we are reasonable in asking the Chancellor of the Exchequer to make this concession. I am fully aware of the difficulties, and I know that it means a sum of just over £4 million but, nevertheless, there must be a sense of justice in a Budget and, if at all possible, no discrimination. I do not think there is any justification for the Chancellor, at this time, introducing a figure below the established figure of £1,500. If he will not accept the Amendment, I plead with him to accept in due course my figure, which would mean preserving the status quo.

I do not quite understand what deduction the hon. Member for South Cardiff (Mr. Callaghan) wished the Committee to draw from the figures he gave of the increased number of people in this country earning over £1,500 a year, but my deduction is that that class of people are playing an increasingly important and vital part in our economic life, and are deserving of special consideration. I entirely, agreed with the hon. Member when he said that the principle underlying this Amendment is the necessity for drawing a sharp distinction between unearned and earned income at every stage. What I am afraid of is the Chancellor's refusal to grant this concession, and it looks to me as if he is likely to refuse, although, of course, the eloquence of my hon. Friend the Member for Flint (Mr. Birch), and my hon. Friend the Member for Wallasey (Mr. Marples), may cause him to change his mind. If the right hon. Gentleman refuses to make this concession — and, after all, £4 million in a Budget of £3,000 million is not a very large sum—I suggest to the Committee that that will be further evidence of the belief, which is becoming increasingly widespread in the country, that the Chancellor is prejudiced against what I describe as the professional and middle classes. We hear a great deal nowadays about the advent of a managerial society, an idea first put forward by Mr. James Burnham. It is becoming increasingly popular, and I think it is true. Managers have an absolutely vital part to play in our economic life, and deserve special consideration. I do not think the managerial class has sufficient inducement to work flat out at the present time, and I do not believe the Chancellor would deny that although our export trade figures are showing a substantial improvement at the moment, nevertheless, overall output in this country per man hour and per unit of production, still leaves a great deal still to be desired.

The word "incentive" has been used a great deal in this Debate. In my view, if cannot be over emphasised. When I was in Canada, in the spring of last year, Mr. Ilsley, the able Minister of Finance, said that he had been more and more impressed by the deterrent effect upon production and incentive of the high wartime rate of Income Tax, and he said that as greater production and greater mobility of labour were now more required than at any time before, he proposed to make a substantial reduction in direct taxation. He did so, and the results are plain to see. I suggest to the Minister that what my hon. Friend the Member for Flint said is largely true. The professional middle class, at the moment, is being ground to powder between rising prices—and they are rising—and this intolerable burden of direct taxation.

Productivity is the answer to all our economic problems, as the Chancellor has said. The answer to the problem of the danger of inflation is more goods. We all agree. The present high rate of high taxation is a definite deterrent to incentive to output, and I know of no Socialist principle—it is not applied in the Soviet Union—which would prevent the Chancellor from making the far greater distinction between earned and unearned income. That is the principle which underlies this Amendment. The Chancellor seemed startled last year when this point was put to him; it seemed not to have occurred to him that beyond the restoration of the Income Tax allowance at the lowest range, this principle should be applied to the rather higher ranges as well. I, myself, would prefer it to apply to every range. However, if the Chancellor cannot grant this concession now, I ask him to speak a few words of sympathy for the poor, ground down, middle class taxpayer, who is doing the bulk of the work and who is carrying, by far, the greatest burden.

The hon. Member for East Aberdeen (Mr. Boothby) has just indicated a suitable conclusion to the short speech which I am about to address to the Committee. This discussion was initiated by a most attractive speech by the hon. Member for Wallasey (Mr. Marples)—attractive, not only because he seemed to have been reading a book which I wrote long years ago, but for many other reasons as well. Development of these reliefs must be progressive through this five year Parliament. We begin with the war hardly over, when all our burdens are at their maximum, and we are gradually going forward from one financial stage to another—at least I hope we shall—diminishing first here, and then there, the burdens on the different sections of taxpayers.

6.30 p.m.

My hon. Friend the Member for South Cardiff (Mr. Callaghan), who made one of his incisive and well-documented interventions in our Debates, recalling orators to statistical realities, said very truly that the only difference on this matter is one of timing. Can this particular relief, over and above other reliefs which I have proposed to the Committee, be given now or must it wait awhile for introduction in a later Budget? I cannot accept the Amendment now; it would cost £4,500,000. The Opposition must not be so irresponsible about money, and they must not say that £4,500,000 is really nothing—they are going to ask for a lot more later on—and least of all the noble Lord who makes stimulating speeches on the beach at Swanage to people who are patriotically trying to save and who go on doing so in spite of him. We cannot afford to "chuck" £4,500,000 away as though it were 4½d.

We have greatly narrowed this year the gap between expenditure and revenue and I think that there was agreement in all parts of the Committee when I said that next year we must keep ourselves within striking distance of a balanced Budget. But whether we have struck or not next year must depend upon a number of considerations that cannot very well be foreseen. That means that we must maintain revenue and not at this stage throw away much more, I made a tentative estimate last night in another connection as to what might be possible when we get to the Schedules on the Purchase Tax. We really must be responsible about money in all parts of the Committee, and I cannot at this moment agree to sacrifice a further £4,500,000, even though this is a case in which I hope I shall be able to meet the wishes which have been expressed by the Committee if we continue for a year or two longer on the good course of increasing prosperity which has set in under this Government, when I hope that we shall be able to do more in many directions and for many sections of the community.

As I have said on earlier occasions, I still think it is very important—and my hon. Friend the Member for South Cardiff emphasised this again today—when dealing with Income Tax, gradually to relieve the lower level of exemption and allowances attaching to the poorer section of Income Tax papers. That is very important, but among the things which it is desirable to do, and which I should like to do, is to make further improvement in the earned income relief of that kind as to the fraction of relief—that is how I think it is most easy to count it although Mr. Asquith began it a different way—and then to have certain ceilings beyond which that relief shall not go for any individual taxpayer. I should not like to do this in the present Budget but on some future occasion, I trust not too far removed, I hope to be able to increase both the fraction of relief given in respect of earned income and the ceiling which is what we are now discussing. I should like to do that, and it is quite wrong to say that the group of persons who would be primarily affected if this Amendment were accepted, namely, those earning between £1,200 and £1,600 a year, all voted for the Conservative party in the last election. It would be quite wrong to think that they would do so next time, and it is very wrong to say that this is the class of persons who have not been recognised and helped by the two governments with which I have been associated.

My hon. Friend the Member for South Cardiff quoted some figures and I will, if I may, put the same facts in a slightly different way. Let me take a married couple, say with two children and an income, all earned, of £1,500 a year. Whereas before this Budget came into operation this person was paying £526, as stated by my hon. Friend, he is going to pay only £455 now. That is a substantial alleviation for an income of that magnitude. Another way of putting it is to say that whereas he was paying 7s. in the £ effective rate of Income Tax last year he has only to pay 6s. 1d. this year, consequent upon the various reliefs which are contained in this Budget. That is not bad going for the first Budget in the first full year of peace and Labour Government, and more shall be added—

Suppose he is 65; would the right hon. Gentleman work out the figure on the assumption that the married man of whom he is speaking is now 65 and is going to draw his postwar credits?

Yes, I am quite prepared to offer the figure, but this is not really a case which arises very often in real life. We are considering now the case of people with two children, which means of course two children of school age. If the man is 65 and is going to draw his postwar credits—although, of course, the Opposition does not know that he is going to do so; they voted against it on the Second Reading of the Bill, but we are assuming that if we get through he is going to draw his postwar credits at 65—then, in the illustration I have given, the advantage he gets from his Budget is to be measured by the figure shown here plus, in addition, the value of the postwar credits which he receives. The hon. Gentleman's argument is not therefore advantaged by asking this question because this is the year in which postwar credits are no longer things which are calculated hypothetically, as they have been up to now, and balanced against certain Income Tax and other payments. This is the year in which the repayment of postwar credits actually begins, and therefore this argument which was put on a hypothetical basis in last year's Budget discussions now takes on another picture.

But in fact I was not here making this additional point which I am entitled to make about postwar credits. I was merely comparing Income Tax as it is now with what it was last year; it is now only 6s. 1d. in the £ as against 7s. last year. Therefore, alarm and despondency cannot properly be spread among this class of people with earned incomes of between £1,200 and £1,600 a year, who are, of course, for the most part, a very valuable and essential element in the life of the community. That is why they have received a substantial measure of relief under this proposal, much more than a number of other sections and, in particular, more than people receiving the same income but all from investment. I repeat that this is a question of timing and of deciding when we can go a step further with this particular relief. As I have said, we are working according to a five year plan which is gradually being unfolded as events move forward. Each year that the Labour Government remain in power more benefits will be given and will be distributed among all sections of the people and, I hope and believe, the particular section for whom the hon. Gentleman was eloquently and charmingly solicitous this afternoon, if I may put it quite sincerely in those terms. I hope that that section of the community, in addition to what they have gained from this Budget, may benefit, among others, from further reliefs on a later occasion. I must ask the Committee, and particularly the hon. Gentleman who spoke just now and who so often speaks of the dangers of inflation, to have a certain responsibility in these matters.

We are seeking to increase production and to bring the Budget as quickly as possible into a state of balance—not pedantically, as the hon. Gentleman knows, in any 12 months' period. We are seeking to bring our national finances into a planned equilibrium over a suitable period of time. Since this is so we must not throw money away recklessly before we can afford it, and I therefore ask the hon. Gentleman who proposed this Amendment so well if he can be satisfied with my explanation and see his way to withdraw his Amendment. If he is unable to do so, we shall be obliged to vote him down.

Before the hon. Gentleman answers that question, if he ever intends to do so, I should like to say that I am very disappointed at the Chancellor's speech, particularly after the eloquent way in which this Amendment was proposed. We on this side of the Committee are not in the least impressed by the Chancellor telling us that he is working on a great five year plan. The only plan of which we have had any direct experience recently was the feeding stuffs plan, and that went so badly astray that I do not see—

It is the same Government, and it does not give us very much confidence in future planning. The Chancellor says, quoting the figures provided by the hon. Member for South Cardiff (Mr. Callaghan)—

I see, the Chancellor gave the hon. Member the figures. I have the document in question, but the point is whether the Chancellor and the hon. Gentleman both had a copy or whether one gave it to the other. The Chancellor, quoting the fact that there will be less tax paid by a particular section of the community, says that that is a reason why alarm and despondency cannot be spread among them. I do not know that it has to be spread; the whole evidence and tenor of the speeches we have heard is that the despondency is there already.

I do not know what the hon. Gentleman is driving at, but if he has an observation to make I shall be glad to give way to him.

Is it not a fact that the Opposition are responsible for the alarm and despondency? Every speech from that side of the Committee tries to create in the minds of the people of the country at the present time fear of what the future holds. The Leader of the Opposition him self has said—

The hon. Member must confine himself to the Amendment.

I merely wish to point out that it is the Opposition who are creating despondency in the minds of the people.

That is not necessary in the least. It is there already. So far as this great plan is concerned the despondency arises not because this year they will be paying less in actual taxation—it is admitted that they will be and the figures are there. The despondency exists because there is discrimination against this particular section of the community. Although I know the right hon. Gentleman never cares to hear about it, I must come back to the point which has been made before. It was made in the previous Budget discussions. He says that it is a question of timing and that he intends, some time or other, to put back the fractions and the other figures dealing with earned income allowances. The point is that now is the right time for it because he has brought to an end the system of postwar credits. Now is the time when it should be done and the right hon. Gentleman should so arrange his affairs to carry out the pledges which were given when these allowances were cut and when the postwar credit was introduced. That is why it is really important in our view that he should have done it now.

6.45 p.m.

Let me once again remind the Committee of the position. Before the war there was a £300 maximum and a one-fifth allowance. When the war started that was reduced to £250 and one-sixth, but in 1941 that was further dropped to £150 and one-tenth, and that was the time when, as a compensation for that reduction in this and other allowances, the late Sir Kingsley Wood and the Government of the day, of which the right hon. Gentleman was an ornament, introduced the postwar credit system.

That has come to an end. Therefore, it is bound to be in the nature of the case that if we still had the postwar credit system running and the allowances had been reduced, and there had been a reduction in Income Tax this particular section of the community would be to that extent better off. The Chancellor has cut off the postwar credit system, but he has not brought the status back to what it was before their system was introduced. That is my grievance about it. Sir Kingsley Wood said: status quo. As we cannot discuss that exact replacement because the Amendment has not been called, this present Amendment would certainly go some way towards it, because by having the £200 maximum instead of the £250, which was concerned before, it goes some of the distance. While the effect is slightly different at the top, in that it brings in the £1,600 people instead of the £1,500 people, it does go part of the way, and if the Chancellor would accept it, it certainly would help not only these people, but the whole range of taxpayers because the benefit, after all, is not limited to those whose incomes are between £1,200 and £1,600, but affects the whole range. I am sorry that the Chancellor has not taken this opportunity finally of clearing up the system of postwar credits. This was the time to clear up the situation and to start afresh, and make any other alterations in the allowances and so on afterwards, whether it is the standard rate or anything else. He has elected not to do it, and I think it is a very great pity, particularly because the taxation is undoubtedly extremely heavy on this particular range of occupations and persons, who feel that there has been discrimination against them.

They are the people who, perhaps most of all, have suffered and are suffering a reduction in their standard of living because, as my hon. Friends have pointed out, they are between the two millstones. Indeed, no more powerful indictment of the Chancellor has been made during the course of the discussions than what was said by his predecessor in this House on this very issue. I hope the right hon. Gentleman, before he really parts with all this problem, will refresh his mind as to what the right hon. Member for the Scottish Universities (Sir J. Anderson) said on 10th April, in cols. 1945 and 1946 of HANSARD, which I certainly will net quote but it would not do the right hon. Gentleman any harm to read them again. I hope he will do that because he will see the charge which my right hon. Friend makes, which he has not answered. These were my right hon. Friend's own words: status quo, it does go some way towards that end and I shall support it.

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

The Committee divided: Ayes, 130; Noes, 248.

Division No. 197.]

AYES.

[6.50 p.m.

Agnew, Cmdr. P. G.

Grimston, R. V.

O'Neill, Rt. Hon. Sir H.

Aitken, Hon. Max

Hannon, Sir P. (Moseley)

Orr-Ewing, I. L.

Allen, Lt.-Col. Sir W. (Armagh)

Hare, Lieut.-Col. Hn. J. H. (W'db'ge)

Peake, Rt. Hon. O.

Assheton, Rt. Hon. R.

Harvey, Air-Comdre. A. V.

Peto, Brig. C. H. M.

Astor, Hon. M.

Haughton, S. G.

Ponsonby, Col. C. E.

Baldwin, A. E.

Headlam, Lieut.-Col. Rt. Hon. Sir C.

Poole, O. B. S. (Oswestry)

Beechman, N. A.

Hinchingbrooke, Viscount

Prescott, Stanley

Birch, Nigel

Hollis, M. C.

Price-White, Lt.-Col. D.

Boles, Lt.-Col. D. C. (Wells)

Holmes, Sir J. Stanley (Harwich)

Raikes, H. V.

Boothby, R.

Hudson, Rt. Hon. R. S. (Southport)

Roberts, Emrys (Merioneth)

Bower, N.

Hulbert, Wing-Cdr. N. J.

Roberts, Maj. P. G. (Ecclesall)

Boyd-Carpenter, J. A.

Hurd, A.

Ropner, Col. L.

Bracken, Rt. Hon Brendan

Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

Ross, Sir R.

Braithwaite, Lt.-Comdr. J. G.

Hutchison, Col. J. R. (Glasgow, C.)

Scott, Lord W.

Bromley-Davenport, Lt.-Col. W.

Jeffreys, General Sir G.

Shepherd, W. S. (Bucklow)

Bullock, Capt. M.

Joynson-Hicks, Lt.-Cdr. Hon. L. W.

Smiles, Lt.-Col. Sir W.

Butcher, H. W.

Keeling, E. H.

Spearman, A. C. M.

Byers, Lt.-Col. F.

Kingsmill, Lt.-Col. W. H.

Spence, H. R.

Challen, C.

Langford-Holt, J.

Stanley, Rt. Hon. O.

Clarke, Col. R. S.

Legge-Bourke, Maj. E. A. H.

Stoddart-Scott, Col. M.

Clifton-Brown, Lt.-Col. G.

Lindsay, M. (Solihull)

Strauss, H. G. (English Universities)

Cole, T. L.

Lipson, D. L.

Stuart, Rt. Hon. J. (Moray)

Cooper-Key, E. M.

Lloyd, Maj. Guy (Renfrew, E.)

Sutcliffe, H.

Crookshank, Capt. Rt. Hon. H. F. C.

Low, Brig. A. R. W.

Taylor, C. S. (Eastbourne)

Crowder, Capt. J. F. E.

Lucas-Tooth, Sir H.

Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

Darling, Sir W. Y.

MacAndrew, Col. Sir C.

Thorneycroft, G. E. P. (Monmouth)

Davidson, Viscountess

MacDonald, Sir M. (Inverness)

Thornton-Kemsley, C. N.

De la Bère R.

Macdonald, Capt. Sir P. (I. of Wight)

Thorp, Lt.-Col. R. A. F.

Digby, Maj. S. W.

Mackeson, Lt.-Col. H. R.

Touche, G. C.

Dodds-Parker, A. D.

MacLeod, Capt. J.

Turton, R. H.

Donner, Sqn.-Ldr. P. W.

Macmillan, Rt. Hon. Harold (Bromley)

Vane, W. M. T.

Drewe, C.

Macpherson, Maj. N. (Dumfries)

Wadsworth, G.

Duthie, W. S.

Maitland, Comdr. J. W.

Wakefield, Sir W. W.

Eccles, D. M.

Manningham-Buller, R. E.

Walker-Smith, D.

Erroll, F. J.

Marlowe, A. A. H.

Ward, Hon. G. R.

Foster, J. G. (Northwich)

Marples, A. E.

Watt, Sir G. S. Harvie

Gage, Lt.-Col. C.

Marshall, D. (Bodmin)

White, J. B. (Canterbury)

Galbraith, Cmdr. T. D.

Marshall, S. H. (Sutton)

Williams, C. (Torquay)

Gammans, L. D.

Medlicott, F.

Willoughby de Eresby, Lord

George, Maj. Rt. Hn. G. Lloyd (P'ke)

Mellor, Sir J.

Winterton, Rt. Hon. Earl.

George, Lady M. Lloyd (Anglesey)

Morris, Hopkin (Carmarthen)

York, C.

Glossop, C. W. H.

Morrison, Maj. J. G. (Salisbury)

Young, Sir A. S. L. (Partick)

Gomme-Duncan, Col. A. G.

Nield, B. (Chester)

Gridley, Sir A.

Nutting, Anthony

TELLERS FOR THE AYES:

Mr. Studholme and Major Conant.

NOES.

Adams, Richard (Balham)

Chater, D.

Fletcher, E. G. M. (Islington, E.)

Adams, W. T. (Hammersmith, South)

Chetwynd, Capt. G. R.

Follick, M.

Allen, A. C. (Bosworth)

Cluse, W. S.

Foot, M. M.

Allen, Scholefield (Crewe)

Cobb, F. A.

Foster, W. (Wigan)

Anderson, A. (Motherwell)

Cocks, F. S.

Gallacher, W.

Anderson, F. (Whitehaven)

Collick, P.

Gilzean, A.

Attewell, H. C.

Collindridge, F.

Glanville, J. E. (Consett)

Austin, H. L.

Colman, Miss G. M.

Goodrich, H. E.

Awbery, S. S.

Cooper, Wing-Comdr. G.

Gordon-Walker, P. C.

Ayles, W. H.

Corbet, Mrs. F. K. (Camb'well, N.W.)

Greenwood, Rt. Hon. A. (Wakefield)

Ayrton Gould, Mrs. B.

Corvedale, Viscount

Greenwood, A. W. J. (Heywood)

Bacon, Miss A.

Cove, W. G.

Grey, C. F.

Baird, Capt. J.

Daggar, G.

Grierson, E.

Barstow, P. G.

Daines, P.

Griffiths, D. (Rother Valley)

Barton, C.

Dalton, Rt. Hon. H.

Griffiths, Capt. W. D. (Moss Side)

Battley, J. R.

Davies, Edward (Burslem)

Guest, Dr. L. Haden

Bechervaise, A. E.

Davies, Ernest (Enfield)

Gunter, Capt. R. J.

Bellenger, F. J.

Davies, Harold (Leek)

Haire, Flt.-Lieut. J. (Wycombe)

Benson, G.

Davies, Haydn (St. Pancras, S.W.)

Hale, Leslie

Bevan, Rt. Hon. A. (Ebbw Vale)

Davies, R. J. (Westhoughton)

Hall, W. G. (Colne Valley)

Bing, G. H. C.

Deer, G.

Hamilton, Lieut.-Col. R.

Binns, J.

Delargy, Captain H. J.

Hardman, D. R.

Blackburn, A. R.

Diamond, J.

Hardy, E. A.

Blyton, W. R.

Dobbie, W.

Harris, H. Wilson

Boardman, H.

Donovan, T.

Harrison, J.

Bowden, Flg.-Offr. H. W.

Driberg, T. E. N.

Hobson, C. R.

Bowles, F. G. (Nuneaton)

Dugdale, J. (W. Bromwich)

Holman, P.

Braddock, T. (Mitcham)

Edelman, M.

Holmes, H. E. (Hemsworth)

Brooks, T. J. (Rothwell)

Edwards, A. (Middlesbrough, E.)

House, G.

Brown, T. J. (Ince)

Edwards, W. J. (Whitechapel)

Hoy, J.

Bruce, Maj. D. W. T.

Evans, E. (Lowestoft)

Hubbard, T.

Buchanan, G.

Evans, S. N. (Wednesbury)

Hughes, Emrys (S. Ayr)

Callaghan, James

Evans, John (Ogmore)

Hughes, Hector (Aberdeen, N.)

Castle, Mrs. B. A.

Fairhurst, F.

Hutchinson, H. L. (Rusholme)

Champion, A. J.

Farthing, W. J.

Hynd, H. (Hackney, C.)

Isaacs, Rt. Hon. G. A.

Nally, W.

Smith, S. H. (Hull, S.W.)

Janner, B.

Naylor, T. E.

Snow, Capt. J. W.

Jeger, G. (Winchester)

Nichol, Mrs. M. E. (Bradford, N.)

Solley, L. J.

Jeger, Dr. S. W. (St. Pancras, S.E.)

Nicholls, H. R. (Stratford)

Soskice, Maj. Sir F.

Jones, A. C. (Shipley)

Noel-Baker, Capt. F. E. (Brentford)

Stamford, W.

Jones, D. T. (Hartlepools)

Noel-Buxton, Lady

Steele, T.

Jones, P. Asterley (Hitchin)

O'Brien, T.

Stewart, Capt. Michael (Fulham, E.)

Keenan, W.

Oldfield, W. H.

Stokes, R. R.

Kinghorn, Sqn.-Ldr. E.

Oliver, G. H.

Summerskill, Dr. Edith

Kinley, J.

Orbach, M.

Swingler, S.

Kirby, B. V.

Paling, Rt. Hon. Wilfred (Wentworth)

Taylor, H. B. (Mansfield)

Lang, G.

Palmer, A. M. F.

Taylor, R. J. (Morpeth)

Lawson, Rt. Hon. J. J.

Paton, Mrs. F. (Rushcliffe)

Thomas, John R. (Dover)

Lee, Miss J. (Cannock)

Paton, J. (Norwich)

Thomas, George (Cardiff)

Leonard, W.

Pearson, A.

Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

Leslie, J. R.

Peart, Capt. T. F.

Thorneycroft, H. (Clayton)

Lewis, A. W. J. (Upton)

Perrins, W.

Thurtle, E.

Lewis, T. (Southampton)

Piratin, P.

Tiffany, S.

Lindgren, G. S.

Poole, Major Cecil (Lichfield)

Timmons, J.

Lyne, A. W.

Popplewell, E.

Titterington, M. F.

McAdam, W.

Porter, E. (Warrington)

Tolley, L.

McAllister, G.

Porter, G. (Leeds)

Tomlinson, Rt. Hon. G.

McEntee, V. La T.

Pryde, D. J.

Turner-Samuels, M.

McGhee, H. G.

Pursey, Cmdr. H.

Vernon, Maj. W. F.

McGovern, J.

Randall, H. E.

Viant, S. P.

McKay, J. (Wallsend)

Ranger, J.

Walkden, E.

Mackay, R. W. G. (Hull, N.W.)

Rees-Williams, D. R.

Walker, G. H.

McKinlay, A. S.

Reeves, J.

Wallace, G. D. (Chislehurst)

Maclean, N. (Govan)

Reid, T. (Swindon)

Wallace, H. W. (Walthamstow, E.)

McLeavy, F.

Richards, R.

Warbey, W. N.

Macpherson, T. (Romford)

Roberts, Goronwy (Caernarvonshire)

Watson, W. M.

Mainwaring, W. H.

Rogers, G. H. R.

Weitzman, D.

Mallalieu, J. P. W.

Royle, C.

Whiteley, Rt. Hon. W.

Mann, Mrs. J.

Sargood, R.

Wigg, Col. G. E.

Manning, C. (Camberwell, N.)

Scott-Elliot, W.

Wilkes, Maj. L.

Manning, Mrs. L. (Epping)

Segal, Dr. S.

Willey, F. T. (Sunderland)

Martin, J. H.

Shackleton, Wing-Cdr. E. A. A.

Willey, O. G. (Cleveland)

Mathers, G.

Sharp, Lt.-Col. G. M.

Williamson, T.

Messer, F.

Shawcross, C. N. (Widnes)

Willis, E.

Middleton, Mrs. L.

Shinwell, Rt. Hon. E.

Wilson, J. H.

Monslow, W.

Shurmer, P.

Wise, Major F. J.

Montague, F.

Silverman, S. S. (Nelson)

Woodburn, A.

Moore, Lt.-Col. Sir T.

Simmons, C. J.

Yates, V. F.

Morgan, Dr. H. B.

Skeffington, A. M.

Young, Sir R. (Newton)

Morris, P. (Swansea, W.)

Skeffington-Lodge, T. C.

Younger, Hon. Kenneth

Morrison, Rt. Hon. H. (Lewisham, E.)

Skinnard, F. W.

Zilliacus, K.

Mort, D. L.

Smith, Capt. C. (Colchester)

TELLERS FOR THE NOES:

Moyle, A.

Smith, Ellis (Stoke)

Mr. Joseph Henderson and

Murray, J. D.

Smith, H. N. (Nottingham, S.)

Mr. Hannan.

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

7.0 p.m.

The Amendment which the Committee has just rejected covered a narrow aspect of this Clause, but there still remain other matters to which I desire to make a brief reference. The Clause as a whole, of course, does grant certain welcome reliefs, and it would be ungrateful not to acknowledge that. A half loaf or, perhaps I should say in this case, one-eighth of a loaf, which is what it is, is better than no bread. On the general perspective of the Clause there are one or two observations which should be made before we part with it. The history of the earned income allowance was touched upon in the previous Amendment. In 1939 it was reduced from one-fifth with a maximum of £300 to one-sixth with a maximum of £150, and in April 1941—which, if I may say so, is the date of the greatest importance in looking at this—it was reduced from one-sixth to one-tenth, and the maximum came down from £250 to £150. That is only one of those additional burdens which has not been restored, either wholly or in part. That arises out of the previous Amendment, but there are other matters regarding the Clause as a whole and, at the risk of inflicting pain upon the hon. Member for South Cardiff (Mr. Callaghan), I must say that while the right hon. Gentleman has restored the postwar credit system, he has not fully restored the previous allowances. This whole Clause in its broad aspect brings that out again. In the discussion in the autumn—

The hon. and gallant Gentleman seems to be repeating almost the whole of the arguments adduced upon the previous Amendment which, of course, it is not permissible to do. He is only entitled to deal with other matters appearing in the Clause as a whole.

It was not my intention to repeat the whole of the argument, Major Milner; I was merely endeavouring to lay a foundation stone for discussing the Clause as a whole. I was about to regret the absence of my hon. Friend the Member for Bath (Mr. Pitman) who, I am quite certain, would have expedited our business, had he been here, with a graph to show to hon. Members opposite.

The hon. and gallant Member will appreciate that the absence of the hon. Member for Bath (Mr. Pitman) has nothing to do with the Clause either.

But it has something to do with our progress, Major Milner. There were two Amendments, each in the name of my right hon. Friend the Member for West Bristol (Mr. Stanley), which have not been selected; they were designed to restore the earned income allowance to its pre-postwar credit position, if I may use that expression, which means the position which existed before the institution of the postwar credits. Those Amendments have not been called and they raise an aspect of this matter which we would like to submit to the Government now. The hon. Member for South Cardiff, when resisting our argument on the previous Amendment, brought before us the whole table which exists. We always listen to him with interest, knowing the great background of knowledge he has in these matters. Whether his inspiration be drawn from the Bench in front of him, from the dark recesses under the Gallery, or from his own knowledge, we always listen with great respect; but on these matters I always prefer the evidence of one who is a taxpayer to that of one who has been a tax gatherer, because that is the hon. Gentleman's background in this matter.

When he referred to the machinery of this Clause and confronted us with some figures which showed that those in the higher incomes groups had increased, I think he said since 1938 or immediately before the war, had it occurred to him that there is another aspect of this matter which is extremely relevant? The general rise in the standard of remuneration which has occurred during the war years is, of course, itself no small evidence as to the inflationary position which has developed; and surely, when we are discussing tax relief and the burden which we all have to carry, what we have to bear in mind is not so much the nominal figure as the purchasing power of it. Real wages have not risen at all in fact. My hon. Friend the Member for Devizes (Mr. Hollis) also tabled an Amendment which has not been selected, to insert a new Subsection. That would have restored the children's allowance from the present level of £50 to £60. I do not know whether one can make a passing reference to that, Major Milner.

For one reason or another it was not thought proper to select that Amendment, and therefore it is not proper to discuss it. Only the Clause as it now stands is open for discussion.

I do not know whether I may make reference to the impact of this matter on marriage. Parenthood was referred to earlier on.

I can only express regret that parenthood is out of Order at the moment, and also the hope that the right hon. Gentleman may reconsider the matter. We can hope on and hope ever, though I for one do not share his optimism about the progressive betterment of our financial position during his regime.

Since my Amendment was not selected I shall not attempt to discuss its details and intrinsic merits, which I would have advocated, for I would not be in Order, apparently, if I tried to do so. However, there are one or two observations which I think I am entitled to bring to the notice of the Committee. My Amendment, as my hon. and gallant Friend has suggested, was intended to raise the children's allowance from £50 to £60. An Amendment to that effect was moved at the time of the last Finance Bill, and was only defeated by a considerably smaller majority than any other Amendment then debated for, whereas on that afternoon the previous Amendment received 284 votes against it, and a subsequent Amendment received 294 votes against it, that Amendment received 230 votes against it. Not only, therefore, was it quite clear that there was a general feeling in the Committee that there was great intrinsic strength in the case put forward, but also the right hon. Gentleman the Chancellor, in rejecting it, was kind enough to make it quite clear that the rejection was in no sense at all on the intrinsic merits of the proposition. He said:

"I disagree with nothing that he said, except on the single point of whether this is the moment to do what he proposes."

And he said again:

"I am very anxious to do in effect what has been suggested by the hon. and gallant Gentleman as time and circumstances permit."—[OFFICIAL REPORT, 28th November, 1945; Vol. 416, c. 1376.]

That being so, surely we are justified in asking the right hon. Gentleman whether, now that the danger of inflation has, as he has told us, substantially passed, time and circumstances do permit of that, and to ask him to give consideration to the introduction at a subsequent stage of this Bill of words to the effect of that Amendment.

I am sorry to interrupt the hon. Gentleman, but I do not see anything about children's allowances in the Clause.

This Clause, Major Milner, I submit with respect, deals with the allowances in general, although there is no reference to children's allowances.

It does not in any event, deal with the question of children's allowances, though it may deal with other reliefs, so that the hon. Gentleman is out of Order in his remarks about children's allowances.

I hoped that I would be able to bring to the attention of the right hon. Gentleman the fact that the Amendment was not rejected on its intrinsic merits but on the matter of timeliness, but seeing there is nothing left for me to say—for I suppose I am precluded even from quoting from his own book—I can but appeal to his pity and sit down.

I hope I shall be renowned for having a clear run in successfully keeping within the rules of Order, and I will endeavour to do so by saying that I am very grateful to the Chancellor for the various reliefs which he has introduced, which is the general purpose of this Clause. I wish I could share his optimism as to the general financial trend of the country under Socialist rule, and that we may anticipate that more reliefs may be forthcoming on some future occasion, but in my view such reliefs are not likely to be forthcoming. Nevertheless, for such as we have had, even if they are the last lot we are likely to receive from this Government, we are grateful, and we hope that the right hon. Gentleman's optimistic forecast will indeed prove to be correct.

This Clause has been based mainly on the recommendations of the Royal Commission which sat in 1920 but, in the last quarter of a century, conditions have changed greatly since the Royal Commission made its report. At that time the incidence of Death Duties, Surtax and Income Tax was much less than it is now. I suggest to the Chancellor that, in view of the changed circumstances, a certain part of this Clause might well be reconsidered. I refer to that part in which there is a limitation of £150 to the total amount of relief for earned income.

7.15 p.m.

That point was discussed on an Amendment and the Committee decided against that hon. Member's contention. The hon. Member may not raise the matter now.

I did not propose to deal with any point that had been raised on an Amendment. I suggest that the time has come when the Chancellor should consider whether this limit to the total of earned income should not be removed. I see no reason why a man who earns a large income should be limited in the amount of relief he can claim. If the limit is one-tenth, he is limited to a total relief of £150—that is to say, on £1,500. If his earned income were £5,000 or £10,000, the one-tenth relief would enable him, if the limitation were removed, to have a total allowance of £500 or £1,000. I suggest that the time has come for the Chancellor to reconsider the situation. The circumstances now are entirely different from the circumstances that existed when the Royal Commission made their recommendations. The professional classes, the managerial classes, the inventors and so forth, who earn these large incomes, are able to earn them for only a comparatively short period of years. I suggest that because of the immense importance of this section of the community to the community as a whole, they should be given greater incentives than they now have. A man or woman, after many years of hard work, gets into a position in which he or she earns a big income for a few years. If this limitation were removed—

The hon. Gentleman is arguing that there should not be a limitation, but the Committee has already decided that there shall be a limitation, so that the matter is not open for further discussion.

I am obliged to you, Major Milner. I was under the impression that what we had decided was that the limitation should not be increased I am proposing to do away with the limitation altogether.

The Committee has decided that the limitation shall be £150. Clearly, it would not now be in Order to argue that there should be no limitation.

I bow to your Ruling, Major Milner. I will not pursue the matter further, beyond expressing the hope that the Chancellor will give it consideration before the next Finance Bill.

I should be very much obliged if the Chancellor would explain the date of 5th October, 1946, which is mentioned at the end of Subsection (1) of this Clause. I am not quite clear precisely why the date should come in there. This date is of some substance. I feel sure the Chancellor would like to make it plainer to the country as a whole precisely why that date is taken.

I am quite able to do that. I spend a great deal of time reading such things. I should also be glad if the Chancellor would explain why the following words are included:

"Provides, in the case of married persons, for a deduction of tax on one hundred and eighty pounds, increased, in a case where the total income of the claimant includes earned income of his wife, by an amount equal to nine-tenths of that earned income or eighty pounds, whichever is the less."

I want to know precisely what advantage is likely to be given to the taxpayer under that provision by which he gets nine-tenths, or whichever is the less. What is the range of possibility between the nine-tenths and the other sum? That is the sort of thing that everyone of us wants to know, and it is rather hard that we should have to get professional advice ourselves, when we have a first class Law Officer who could give us the information now, so that we could pass it on to our constituents, which is what we are here to do. The provision then goes on to state:

"shall have effect as if the words 'one hundred and ten pounds' were substituted for the words 'eighty pounds' and as if the words 'seven-eighths' were substituted for the words 'nine-tenths'."

I am not quite clear how big an advantage is being given there. I want to know whether there is an advantage in this or not. I believe there is, because I am willing to take a generous and charitable view of the Chancellor. We have to be frightfully careful about these things. We have been warned about everything; we have been warned by the Minister of Fuel and Power and by the Minister of Transport—

I am sure the hon. Gentleman knows quite well that the subject of the Ministries of Transport and Fuel and Power is out of Order now.

I was referring to it only as an illustration—I did not intend to take any time over it—why I feel we should exercise great care in these matters and should ask the Chancellor or the Solicitor-General to give us an explanation of how precisely they will affect the taxpayers, so that we may tell the taxpayers where they stand, and not on every occasion that these interminable difficulties arise have to disturb the Chancellor in his thoughts. I am sure there is an advantage, and I want to know what is the precise amount of it, and not to be referred to some Blue Book. I want to have it from the Chancellor's mouth.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 22.—(Continuation of certain expiring reliefs.)

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

I would not have intervened on this Clause but for the gross discourtesy of the Chancellor is not answering my speech on the last Clause. I put a question to the right hon. Gentleman, and I received no answer whatever. Such discourtesy to a representative of the people is wrong.

I entirely accept that, Major Milner. The Committtee will notice that the first part of Clause 22 is for the purpose of readjusting certain incomes which have been affected by war conditions. Obviously, that refers to the type of income received by a man who has been engaged in war work and who has suddenly had a drop in his income. Such a provision is quite fair. It is right that in those circumstances a special attempt should be made to give alleviation of difficulties brought about entirely by the war. We welcome that provision. But we have not been told what these incomes are, and what type of income is affected. The second point I wish to raise is equally of interest, and one which the Government will be able to answer if they choose to do so. It has reference to relief in respect of insurance premiums. How far does that go? I would like to know why it has been brought in at this time. I want to know from where the application came, what type of people made it, and, if the right hon. Gentleman has negotiated with them whether they have expressed satisfaction? This is a complicated matter, and I should be grateful if the Solicitor-General or some other Member of the Government would give me an answer.

Some of us have something serious to say on this Clause, and I would like to take the time of the Committee for a few minutes. When there are important matters to discuss, let us talk about them. The provision in Subsection (1) of the Clause has been introduced every year since 1940, and considered by the Committee. The point I want to put to the Solicitor-General is whether the time has not now arrived when, instead of this provision being included automatically in every Finance Bill, it should be taken out. I think there are strong grounds for saying that it does not now apply to the cases for which it was originally intended. When it was introduced Pay as you earn was not in existence, and, of course, Pay as you earn has meant that people have been assessed on the current year's earnings, and, therefore, the provision has not been of benefit to them. It does catch a certain number of people. During the war a large number of people have made inflated profits over and above their prewar profits. The operation of this provision is such that if the profits start to fall back to something resembling their pre-1940 figure, those people are entitled to claim the benefit of this Subsection in order to relieve themselves of tax on income they have had. It works out in that way. There will be certain cases of hardship but they will become fewer, and they might be dealt with by some other procedure. The provision to which I refer has been passed in Finance Acts year after year without discussion, and it might now be a very good thing if the Government would promise that during the next 12 months they would look at it and see whether it should not be dropped altogether.

7.30 p.m.

The hon. Member for South Cardiff (Mr. Callaghan) has rather lent point to the argument which I wish to address to the Committee in the hope of eliciting information from the Treasury concerning the Clause. It must have struck the taxpayer that the Clause provides for the continuation of certain expiring reliefs an then goes on to make provisions which were clearly inserted on account of the war. The Clause refers to Section 11 of the Finance (No. 2) Act, 1939, which, it says,

There is another aspect of the matter, in the light of what the Chancellor of the Exchequer was saying the other day in connection with inflation. I do not propose to discuss inflation. I shall keep strictly within the* bounds of Order. It is, however, important for us to know the approximate extent and the amount of these reliefs. How much do they cost the taxpayer? It is difficult to appreciate, in 1946, the classes and categories of relief which are afforded on this 1939–40 basis. The Committee are entitled to more information about those categories, and about the total amount of relief which the taxpayers will have to pay out under the Clause.

This is a very important Clause and it will be worth the time if the Committee will give a somewhat longer consideration to it. Anyone who is familiar with Income Tax administration knows how prolonged and uncertain these claims and counterclaims can be, and how upsetting they are to business men. I suggest to the Chancellor that this should be the last time that such an item as Clause 22 (1) should appear in the Finance Act. There are more taxpayers now, generally speaking, than ever before. Hon. Members will be aware that those taxpayers find it extremely difficult to manage their taxation because of complications of this kind, which not only embarrass and unsettle taxpayers, but tend to bring the taxation canons of this country into disrepute. They also cast a tremendous burden upon the tax collecting organisation. Hon. Members will be aware that in countless offices throughout the country large, bulky files are kept, running back five or seven years, in order to deal with such problems as these expiring reliefs. Anything that the Chancellor can do to simplify this matter will not be without advantage to the taxpayer, and must make for simplification in taxation.

Moreover, Subsection (2) is not unimportant. It raises a question on which a constituent of mine communicated with me a few weeks ago. He told me that before the war he had a salary of £600 a year. He was entitled to insurance rebates up to one-sixth of his income and then one-sixth of the premium. His salary suddenly became £2,400 a year. He then became entitled to relief at one-sixth of his new income and one-sixth of the premium, but when he came to pay his tax he was back upon the £600, and was not entitled to the reliefs. I can only say that if an insurance rebate is to be given it should be done upon a more generous scale and with a much greater degree of certainty. It seems to me to be in the interests of the Chancellor of the Exchequer as well as of the country as a whole that people should be encouraged to make provision by way of insurance for the inevitabilities of life. Anything that can be done to simplify and codify these arrangements will not only be convenient to the taxpayer, but will be profitable to the Exchequer.

The case I have already cited is very difficult, of the man with an income of £600 rising to £2,400 during the war, and falling back again to £600. The reverse is also particularly difficult, the case of a man with £2,400 and entitled to one-sixth of the income, and then dropping to £600. It means that he must cancel the rebates because his income has fallen. The whole position is uncertain and confusing, and tends to make the taxpayer rely upon assessors, solicitors, chartered accountants, agents and other experts. That sort of multiplication of bureaucracy is unnecessarily tedious and wearisome. Something should, therefore, be done to simplify the procedure.

When my hon. Friend the Member for Torquay (Mr. C. Williams) addressed a few observations to the Committee on this Clause, the hon. Member for South Cardiff (Mr. Callaghan) rose and somewhat impatiently remarked that he had a serious contribution to make in connection with this Clause. I listened with the greatest interest to the hon. Gentleman. He certainly raised a serious point, but I was quite unable to agree with it. I should like to underline the questions which were asked by my hon. and gallant Friend the Member for Chichester (Lieut. -Commander Joynson-Hicks). Am I right in assuming that the official end of the war is generally promulgated by Order in Council? We talk about war conditions continuing or ceasing, but, for the purpose of war contracts and things of that kind, the official end of the war is, I believe, generally declared by Order in Council. That date governs all contracts and legal agreements of one sort and another. The hon. Member rightly told us that the machinery of the Clause came into existence before the introduction of Pay as you earn. Like myself, the hon. Member was in the Services during the war and he will be aware that Pay as you earn never invaded the Services at all. There were monthly deductions of pay for the payment of Income Tax, but those payments were not based upon current earnings, but upon earnings in the previous year. Therefore, a man coming out of the Services feels a real need for the machinery provided under the Clause.

It might apply to 5 per cent. of the cases, but I believe that 95 per cent. of the Forces taxpayers will benefit by being assessed on the preceding year rather than on the current year basis.

If the hon. Member is thinking of humble folk like himself and me—

The hon. Member must know that there is a very large number of cases of men who reached considerable seniority in the Services. I am thinking of the case of a lieut.-colonel who has just returned to his desk in a bank. He is a very good example. With various allowances of one kind or another, he must have been drawing, during hostilities, about £1,200 a year. That is the kind of case we have in mind. Therefore, I cannot agree with the hon. Gentleman in the alteration in procedure which he suggests, although he raised a point of considerable interest. I hope the Government will stand firm against the suggestions made by the hon. Member, and will not allow this infiltration.

I will endeavour to answer briefly the various points that have been raised, and I will start with those brought forward by the hon. Member for Torquay (Mr. C. Williams). The incomes affected are those covered by Section 11 of the Finance (No. 2) Act, 1939, that is to say, those charged under Schedules B and D, and, at that time, Schedule E. The introduction of P.A.Y.E. has excluded practically all the Schedule E incomes from the scope of the relief, because the relief is no longer necessary in their case. Perhaps I might just remind the hon. Member of the relief that that Section affords. The original Section 11 of the Act of 1939 provided that if a person could show that,

Subsection (2), as the hon. Gentleman knows, provided that a certain percentage of relief should be granted in respect of premiums paid for life policies, defined in a certain way, which I will not go into now. The relief was granted in respect of the premiums, but there was a limitation to the relief, namely, that it could not be more than one-sixth of the income of the person paying the reliefs A further measure of relief was granted and it was that, in ascertaining the one-sixth part of the income we could take the higher income of 1938–39, or the actual income of the war year. If the actual income was below that of the year 1938–39, the claimant could elect to choose the 1938–39 income, as the income by reference to which he would be assessed for that sixth part. All that the present Clause does is to say that those two reliefs shall be continued for one more year.

745 p.m.

My hon. Friend the Member for South Cardiff (Mr. Callaghan) was rather apprehensive about this matter, and he asked that we should look at it, because it might be abused. I do not really think there is very much danger in that direction. The claimant for relief must affirmatively prove that his income has fallen owing to war circumstances. It is not a question of anything being left in the air. He does not get his relief unless he can affirmatively prove that there has been a fall owing to war circumstances.

With that safeguard the onus is as it were on the individual who claims the relief and I should have thought that the position would be satisfactory. In other words, in each case where a plan for relief is put forward, the person who asks for the relief is put under the burden of showing affirmatively that there were certain war circumstances which affected him and caused his income to fall. I should have thought that a sufficient safeguard for the Revenue. The hon. and gallant Member for Chichester (Lieut.-Commander Joynson-Hicks) asked if this as going to be saddled upon us for good and referred to the question of the official termination of the war.

It was interpreted by the hon. and gallant Member for Holderness (Lieut. - Commander Braithwaite) as being the termination of the war, but the official termination does not come into it. We have to ask what are war conditions within the meaning of the Act. Then we have to say whenever a claim is made, providing it is during the year in respect of which the relief is being continued, such as the present year, what are the war conditions which affect the applicant, and how do they lead to a diminution of his income. But taxpayers can only say that in each year in which the system of relief is extended. They can say it for this year under this Clause, but next year the Government will have to consider whether they will continue reliefs for another year. They may say that there cannot be said to be any category of persons who can fairly claim to have had their income reduced owing to war circumstances. It may well be, but I do not make any forecast that it will not be continued. I do not know one way or another, the position will have to be reconsidered then. This Clause only extends the two forms of relief for one extra year.

The hon. and gallant Member for Chichester referred to the question of inflation and asked what it would cost. I am afraid that he will not be satisfied with the answer. It is almost impossible to estimate what the relief which will be claimed under the first Subsection will cost. From the nature of things, it is very difficult to forecast how many claims will be put forward, how solid the basis on which they will be founded will be thought to be by those who have to investigate those claims, and what measure of relief they will seek to obtain. So it is virtually impossible to forecast.

Before the hon. and learned Member leaves that point, could he give an indication of what the cost was last year?

I can obtain the information and let the hon. and gallant Member have it. I have not got it in my possession at the moment, but it would not afford any sort of reliable guide, as conditions change radically every year. In regard to the second form of relief, my answer is a little more positive. The amount claimed would be negligible, very small indeed, and cannot have any appreciable effect in relation to the problem.

I am very glad that the vigilance of my hon. Friend the Member for Torquay (Mr. C. Williams) and also his disappointment that the Chancellor of the Exchequer did not reply to the very important points he raised on a previous Clause, have led to such a useful discussion on this Clause. I had been rather afraid that the Clause would slip by undiscussed and this shows how valuable it is to have a discussion on a Clause which at first blush did not seem to arouse the interest of many hon. Members of the Committee. We on this side of the Committee are quite satisfied with the explanation given by the Solicitor-General, and are certainly entirely satisfied with the answer he made to the hon. Member for South Cardiff (Mr. Callaghan). Therefore, I think I can assure you, Mr. Chairman, that we on this side will put no difficulties in the way of the Clause.

I would like, with the permission of the Committee, to thank the Solicitor-General for the reply he gave me. I appreciate it very deeply, and I appreciate his courtesy in looking into this matter. As my right hon. Friend the Member for the City of London (Mr. Assheton) says, we are satisfied with the Clause as it stands as a whole, but I feel I ought to thank the hon. Member for South Cardiff (Mr. Callaghan) for his contribution to the Debate. I think he has made a very important observation on this Clause. Nothing could have been worse than if this Clause had gone through without any discussion. The Solicitor-General has promised my hon. and gallant Friend the Member for Chichester (Lieut.-Commander Joynson-Hicks) to let him know the approximate cost of these reliefs as he did not know it at present. But, if that had happened in previous days a lot would have been said about it. For that reason alone, I am very glad we have had the Debate. I think it is a shocking state of affairs when we are giving relief of this kind that we, the Committee of the House of Commons, who are supposed to be responsible for the taxpayers as a whole, have no idea how big the reliefs are, and how many will be benefited. We are not certain whether under these reliefs there are certain anomalies which are not in the interest of the general taxpayers. But having said these things, and realising that the Government cannot be expected to know very much about their policy, I wish to thank the Solicitor-General for his explanation.

Question put, and agreed to.

Clause ordered to stand part of the Bill.

CLAUSE 23.—(Repayment of postwar credits in certain cases.)

I beg to move, in page 16, line 6, at the end, to insert: Motion that the Clause stand part of the Bill. The Amendment deals with persons who are deceased. The operative words of the Clause are contained in the first Subsection, and they are these:

The Chancellor seems to proceed upon the motto of Captain Hook that "Dead men tell no tales." Dead men also make no applications, or at any rate no applications in writing. Therefore, deceased persons have no claim to the repayment of their postwar credits. As I understand the scheme of the Clause it is that living persons, in the case of men over 65, and women over 60, can claim their postwar credits. In the case of deceased persons the question of whether or not there is entitlement to repayment seems to depend upon the age of the beneficiary of the deceased person. We think that is a rather ridiculous and a highly inconvenient procedure. It is ridiculous because in some cases where a man has died the beneficiary, who may be a relative, will receive the postwar credit, and in other cases he will not. If a man attains the age of 65 and gets his application in and manages to survive until all the formalities have been completed, he receives the postwar credit. If he dies at the age of 64, then whether the postwar credit is drawn depends upon whether the beneficiary under his will or intestacy is, or is not, in the case of a man or woman above the prescribed age. If a man dies at the age of 64 and leaves his property to a sister aged 66, that sister will be able apparently to draw the money; but if he leaves his property to his widow aged 55, that widow will not be able to obtain the payment of the postwar credit.

Moreover, we get into this fantastically inconvenient position that there may be more than one beneficiary; there frequently are. It is quite usual for a man to leave his property either by will or on intestacy to either a number of children, or relatives, and some of the relatives may be over the prescribed age, and some under the prescribed age. So far as I understand the Clause—and I am not quite sure that I do understand it—I believe that if there are a number of beneficiaries under a will or intestacy those who are over the prescribed age obtain the proportions of the postwar credit according to the total number of beneficiaries. Thus, if there are one sister aged 63 and two brothers aged 57 and 55, the sister will draw one-third of the postwar credit of the deceased person. That in itself seems to me to be highly inconvenient; it is extremely difficult to divide a postwar credit which at the present time consists merely of a slip of pink paper. There will be a great deal of administrative work necessary to get in the existing slip of pink paper and replace it by a number of pink slips issuable to a number of persons and repay part only of a postwar credit.

There is a more formidable objection to the refusal to pay out postwar credits where persons are deceased. The proposal in the Amendment is that where persons are deceased the postwar credit is due forthwith to the executors or administrators. That is a highly convenient procedure for this reason, that it is the duty of executors and administrators to get in the estate and divide it. If there is an outstanding claim for postwar credit it cannot be brought into the estate on account of the provisions of the Clause. The work of administrators is going to be extremely difficult; in fact I do not know what they are going to do. Their duty is to get in the estate and divide it up under proper proportions under the will or intestacy between the beneficiaries of the estate.

As the Clause stands, it is quite impossible in the case of a deceased person to get into the estate of the deceased the amount of the postwar credit. Surely, the simple and practical thing would be to say that in the case of death the postwar credits should be payable to the executors or the administrators and then the estate could be wound up and the whole matter settled. It seems to me the procedure laid down in the Bill is exceedingly complicated and difficult to administer and in many cases will be very unfair.

8.0 p.m.

I wish to support the Amendment put forward by my right hon. Friend the Member for North Leeds (Mr. Peake). Naturally we on this side of the Committee welcome the purport of this Clause, inasmuch as it implements the proposals which we put forward ourselves last November, but we would like to see certain improvements made upon it. I feel it is very much in the public interest that the next step to be taken should be the repayment of postwar credits to estates of deceased persons. There are two reasons why that should be done which have been mentioned by my right hon. Friend the Member for North Leeds. First, it will enable the executors and law agents to clear up a great mass of estate business. In the City of Edinburgh, where there are many legal firms, many estates cannot be wound up because of this matter which will involve a good deal of work for a long time to come in various law firms where small estates are outstanding. This makes for untidy and cumbersome administration in these firms. Of course, it is highly inconvenient from the point of view of the beneficiaries and trustees who want to divide out these credits and get the whole business cleared up.

The second point is that many of the estates concerned belong to people of modest means and it seems a little hard for them to be excluded from the opportunity of getting the benefits of these postwar credits. I do not think that the total sum involved can be very great. Perhaps it might be possible for the Financial Secretary to the Treasury to give some estimate. I do not think that the payment of this additional sum of money would lead to any substantial increase in the public purchasing power or to a risk of inflation. Of course, we have heard from the Chancellor of the Exchequer both in the House, during the course of the Debate on iron and steel a few weeks ago, and more recently at Bournemouth, that in his opinion the danger of inflation is passing away. I, therefore, cannot see the objection from his point of view, though I am bound to admit many hon. and right hon. Members on this side of the House are not so optimistic. There is one other point. The Chancellor in answering a question recently on the subject of war damage declined to make some payments on the ground that it would make for untidy and cumbersome administration. It would leave much untidiness in these financial matters, he said. Here is a wonderful opportunity to tidy up a mass of small estates and enable the business to be cleared up. For those reasons I hope the Government will accept this very reasonable and sensible Amendment.

This is a most reasonable Amendment which will mean very little from a financial point of view, and I wish to support it. Although it will mean little from a financial point of view, it will mean a very great deal to those elderly men who have perhaps been working on with the hope of retiring and who are now 60 or 61, and require the small amount of money which is due to them under postwar credits to set up a small house or establishment or to assist them in some small way—

Major Milner, I think I have anticipated matters. I would like to continue my remarks at a later stage.

There are not many more points which I would like to add in support of this Amendment. I wish to give the Financial Secretary a few instances of where I think the present arrangements will react in a very severe way upon people whom I am quite certain he would be the last to want to suffer at all. Particularly, this applies to widows who have sons or daughters who are just over the age of 21 when the widow dies, say, at the age of 60. If there are those children, they may have to wait for a long time before these matters are settled. It is perfectly obvious that a great deal of distress would be caused and it seems to me most important that we should try as much as possible to ease the burden which they, their guardians or the executors will have to bear. Even more, it is going to react in the case of the intestate. I believe there will be a very difficult position as the Bill now stands. I may be wrong and if I am I hope the Financial Secretary will correct me. It appears to me that it is only right that everything should be done for the dependants of old people, bearing in mind a little of what the old people would have wished themselves. We have heard the Minister of Health say that he has not a great regard for that sort of thing in these days, but I believe the Financial Secretary has, and I hope he will give consideration to this.

There is one further point which was raised by the right hon. Gentleman the Chancellor during his Budget speech and I think it may be over-influencing him in what he has put into this Bill. On 9th April he said: pros and cons of Pay as you earn at this stage and I have no intention of so doing, but I would ask that some effort should be made to simplify that very complicated system which is giving a great many people in that Department a lot of extra work. If they were relieved of that extra work, I believe they would be able to devote a little more time to postwar credits. It is highly important that postwar credits should be honoured as soon as possible. The whole matter is causing considerable concern in the minds of a great many people. As I pointed out, in the Chancellor's first Budget when we came to consider the matter of postwar credits, the Chancellor himself was confused. He said at one moment that it was a great benefit and the next moment he said it was an intolerable burden. I think that the Financial Secretary, by accepting this Amendment, would have a chance of giving at least more concession than has already ben given. Here I believe we have a really bona fide case amounting almost to a national hard luck story.

We have these people who died, leaving dependants very little over the age of 21 and who may have to wait, as far as we can see, many years before the final figure is worked out. I suggest that the whole of the Inland Revenue Department should go hard at it to get the postwar credit released now, so that these people in these groups should be paid out as soon as possible. I believe that any further delay will cause the Government great inconvenience in future.

I should like to add a word or two to the arguments already advanced. What worries me is this. There are undoubtedly at present many types of estates which cannot be dealt with owing to the fact that the only beneficiaries are over 65 or 60 years of age, as the case may be, and entitled to these postwar credit refunds. There is probably a considerable sum of money involved, in amounts of £50 or £100, which are all-important to these people. Unless they can receive these sums, I am afraid the danger will arise that they will be anxious to get this money, which they are not entitled to do for some years to come, and there will be a great temptation to traffic in it. We shall get unscrupulous people coming along and saying, "You are very anxious to get hold of your £50, or whatever it may be. If you hand over your rights to me, I will let you have £40." [HON. MEMBERS: "No."] It is all very well for hon. Members to say "No," but that kind of thing does go on and people easily fall for temptation of that kind in the hope of getting ready cash for something for which they may have to wait for some time to come.

I am sorry the next Amendment on the Order Paper has been ruled out of Order, and I must, therefore, be careful in what I say in supporting the Amendment moved by the right hon. Member for North Leeds (Mr. Peake). I hope, however, that the Chancellor will be prepared to do something for the beneficiaries of the many thousands of estates which are still kept open, and which only means additional expense going on as long as the estate is kept open, to the obvious disadvantage of the beneficiaries. It is necessary that the estates should be wound up and that the administrators or trustees should be enabled to carry out their duties. I hope that, if the wording of this Amendment does not fully commend itself to the Chancellor, this point will, nevertheless, receive sympathetic consideration, and, perhaps, if the right hon. Gentleman is not prepared to accept it now we may be given every reason to believe that further consideration will be given to this important point between now and the Report stage.

I should like to add my points to those which have been contributed from both sides of the Committee. I do think there are very adequate reasons why the Chancellor would be well advised to accept the Amendment, either in these terms or very similar terms. The first reason is that there are a very limited number of estates involved. After all, to qualify for the rebate, at the moment, a man must have been 60 and a woman 60 at the time when postwar credits were instituted in, I think, 1941. Therefore, the only cases with which we have to deal in this Amendment are the cases of people within those age groups in 1941, and who have not survived until the present day. The number, surely, must be exceedingly limited, and it is, I suggest, because the numbers are so small that it might be well worth while to deal with them, because it is so much easier to have a tidy scheme.

I have not the figures with me, but I believe that the maximum amount of postwar credit that can be achieved by anybody, and one has to earn an extraordinarily large income to do it, is approximately £60 a year, but, of course, the average run of the postwar credit is nowhere near that, but, probably, £10 to £15 or £20. Perhaps the Financial Secretary could give us some information on that point. The reason that will appeal to the Chancellor most, I think, is that, when he referred to this matter in his Budget Statement on 9th April, he said this: sincerity. Do they want to get these credits paid off as speedily as they possibly can? I take the Chancellor at his face value and think that they do, and that they will do a great deal for administrative simplicity.

Surely, therefore, the right and proper way to handle this matter is to say that, where the age of the person is 65 in the case of a man or 60 in the case of a woman, that person is entitled to a postwar credit and that it shall be released either to that person, or, if the person is no longer alive, to his personal representative. I believe that might make for economy in administration and efficiency and that it would do away with many of these cases of hardship to which hon. Members have referred. I want to make an appeal to hon. Gentlemen opposite. I hope very much that they are not going to regard this as a party matter. This House of Commons is entrusted with the task of improving legislation, and I hope that some of those hon. Members opposite who have sat here so patiently and so silently for so long will join with us in urging that these credits shall be paid back to these people, whom they, in common with us, represent.

I can say straightaway to the hon. Member for Holland with Boston (Mr. Butcher) that we do not look upon this as a party matter at all. It is purely a case of distributing in the best possible way, and under circumstances which will do good and not harm, the very considerable sum which has accrued to individuals under the title of postwar credits. The hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison) asked whether I could indicate what was the total amount involved. The figure has often been given; it is in the neighbourhood of £800 million. That is the total which is due under the title of postwar credits to individual taxpayers in this country

If the Financial Secretary will pardon me for interrupting him, I would like to point out that the figure I asked for was the amount required for the repayment of postwar credits to the estates of deceased people.

I could not possibly give that figure, but I can give the cost in this Budget of repaying postwar credits for certain years to women over 60 and men over 65. The cost will be, approximately, £26 million, and the number of beneficiaries, so far as we can estimate, will be in the neighbourhood of 1,000,000. How much the Exchequer would have to pay if this Amendment were accepted, I do not know, and I am not sure, offhand, whether it would be possible for us to ascertain the figure for the reason that we can only estimate how many people are going to die and what the relative ages of certain individuals are as compared with those who would benefit under this Clause.

I will give way if the hon. and gallant Gentleman wishes, but I would prefer to continue my explanation.

The argument which the Financial Secretary has just adduced will, surely, always apply; he will never be able to assess the number concerned.

I was going to answer that later on, but I might as well deal with it now because it was the main burden of what the hon. and gallant Gentleman the Member for the Isle of Ely (Major Legge-Bourke) had to say. It appeared to me from his arguments that he thought these postwar credits were never going to be paid, that they were going to hang on from generation to generation down the ages and that people now about 21 would continue to hope until they were quite old and perhaps, not get them even then. That is not an unfair paraphrase of the arguments he used. It is our expectation and hope that these postwar credits will have been liquidated between now and, say, the next five, and certainly ten, years. I personally will be very disappointed if the bulk of them have not been liquidated before this Government goes to the country in four or five years' time for a renewal of its mandate, which I believe it will get.

We have to realise that the physical labour of paying out these postwar credits is very great. Apart, altogether, from the danger of liberating all this money at once, there is the further physical difficulty of the Inland Revenue coping with the vast mass of work which it would involve straightaway. If we accepted this Amendment, it would throw completely out of gear our expectation of paying to men over 65 and women over 60 the postwar credits for the first three years which have been promised, and which we hope to begin soon after 1st August. The existing proposal has meant the printing, as the Committee will no doubt appreciate, of a very great number of forms and has involved a great deal of organisation. Those forms have gone out, or are going out, and if this Amendment were accepted it would mean that all that work, or the major part of it, would be wasted and it would be quite impossible for the Inland Revenue to pay out, as it hopes to do early in the autumn, the postwar credits promised to women over 60 and men over 65. There are obvious reasons, therefore, why—

Supposing a man makes an application as a claimant and then dies, will his personal representatives draw the money, or will the claim be abandoned?

I do not know whether my hon. Friend was present when we were discussing the Amendment, or whether he is aware of its terms.

I thought it was crystal clear to all of us who took part in the discussion that the whole thing turns on the age of the beneficiary. If the beneficiary is—

I am talking about the wording of the Clause. Under the Clause, a man of 65 can claim, but supposing he dies after filling up the form, do his personal representatives get the money or do they not?

If he dies between the date of filling up the form and receiving the money, it depends on whether the beneficiary or personal representative is over 60 years of age, if a woman, or 65 years of age, if a man. That is one of the reasons why the right hon. Gentleman the Member for North Leeds (Mr. Peake) moved this Amendment. He thought, and others thought with him, that that was an anomaly and would lead to all sorts of difficulties, and that if this Amendment were accepted it would simplify things considerably. That is the point and we must address ourselves to it.

I am here on behalf of the Government to say that it is quite impossible for us to accept this Amendment. A good deal of play was made with the fact that personal representatives would have a lot of trouble over postwar credits which could not be realised, and that they would, therefore, be unable to wind up an estate. That difficulty will exist even if we accept this Amendment, because, quite clearly, the terms of the Clause refer only to postwar credits for a specific period. Postwar credits for 1944–45 and 1945–46 do not come into the picture at all. One of the reasons for this is that the Inland Revenue has been so overworked and so short staffed that it has not been able to get down to the work involved in settling what the postwar credits are and to sending out the certificates. This argument, which would appear to be a very real one and which was used by the hon. Member for Stockport (Sir A. Gridley), does not apply because it is perfectly easy for any personal representative or executor to handle the postwar credit of those who have died. They can assign it to a beneficiary or beneficiaries who can continue to hold it whether it is assigned to one or is divisible under a will between several. One has only to apply to the local inspector of taxes and he will divide up the certificate in the ratio provided under the terms of the will. All that is provided for.

May I interrupt the hon. Gentleman to ask what is the position where one out of five or six beneficiaries is over the qualifying age and the remainder are below it?

The position in such a case is that any beneficiary who is over the qualifying age would get the portion of the postwar credit due to him. Other beneficiaries who were not of the prescribed age would have their shares assigned to them by way of certificate, and would continue to hold them for, possibly, in the case of some of them, not more than a year, when they would be paid out under the scheme as it developed. I agree that a good deal of this is cumbersome, but it is the only way to deal with this matter in the circumstances in which we find ourselves. Last year from all quarters of the House my right hon. Friend the Chancellor of the Exchequer was asked to think of the old people. It was generally agreed that it was impossible in the circumstances then existing—and they still exist—to pay out the whole of this money in one fell swoop. But hon. Members opposite waxed very eloquent They said, "Think of the old age pensioner—the man over 65 and the woman over 60. Can you not do something for them?" Now we are doing something for them, but hon. Members opposite are not satisfied. We would like to go further, but it is impossible for us at this juncture so to do. I am sorry therefore that I must ask the Committee to reject this Amendment.

8.30 p.m.

I was somewhat comforted by the concluding remarks of the Financial Secretary, who took us back to the Debate we had in the autumn on this subject when, in resisting our proposal, he made a speech which I think he will find almost identical with the speech he made just now about the impossibility of making concessions for which we then asked. I believe that when he has thought over this matter again, he will find that there is much more merit in our suggestion and a great deal less in the way of administrative obstacles than he would have us believe. Death Duties, surely, will be paid on these postwar credits.

When paid they would fall into the estate, as would any other sum of money due to a deceased person, and in that sense, of course, they would fall to be considered when Death Duties are assessed. The hon. and gallant Gentleman will remember that in another part of this Bill we are exempting from Estate Duty estates of lower amounts.

That is admitted, but it is not my point. There might be such a case as was mentioned by the hon. Member for Oldham (Mr. Hale) in which the man dies before the money is due. That postwar credit would come into the estate and would justify its being put into a higher category. So when the Financial Secretary talks about administrative difficulties, surely, he is preparing a most fearful rod for his own back in the hanging up of a whole number of Death Duty estimates which will affect the whole revenue of the country.

The amount is quite clearly known. It is not a question of not knowing what the amount will be. The only question at issue is when it may be paid.

The Treasury are going to extract Death Duties in the current year in respect of a piece of paper which will not become due for payment for several years hence. I think we are now becoming enlightened as to what the Government have in mind. They are going to charge Death Duties on these postwar credit certificates. The duty will have to be paid in the current year and brought into the current revenue. Some years hence the beneficiaries may get their money. Is that a tidy administrative proposal? It seems to me to be exactly the opposite, and the Government would do well to have another look at it. Would it not be better to try to get these accounts of deceased persons cleared up? There cannot be many of them The hon. Member for Holland with Boston (Mr. Butcher) was right when he said that the number of persons who have died in this narrow age group—men 60 years of age and women 55 years of age since 1944—cannot be very big. I would have thought that the administrative advantage of trying to get those estates wound up and making these payments available to the beneficiaries, would far outweigh the difficulties which the Government are making for themselves by hanging them up. I would have thought that there was a good case here for taking advantage of the interval between now and the Report stage for getting the advice of the extremely able Treasury officials who are available, and learning what they have to say. Then, perhaps, when a further examination has been made, if the Government come back on the Report stage and say, "We have examined this matter again and there is nothing we can do," I do not think hon. Members on this side of the Committee would be unreasonable. But I am bound to say that up to the present, the Minister had done nothing to persuade me that this Amendment is not preferable to the system which the Government have in mind. I see that he has been supplied with some information by the hon. Member for Chesterfield (Mr. Benson), who is extremely well informed on these matters, and who may have the complete answer to what I am putting. If so, may we have it?

I was astonished to hear the Financial Secretary say that the Inland Revenue authorities would be sending out forms in connection with the repayments of these claims. In the Chancellor's Budget speech in April he said quite the contrary. He said:

"Payments will be made on application—but no one who does not want his credits need apply; he can leave them with me."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1834.]

The people of this country are not so form-minded that the moment they receive a form from a Government Department they will immediately forget about everything else they are doing and complete it, but I think that if these forms are sent out telling people that they may

claim, the Financial Secretary will find that the vast majority of people will claim and that the Chancellor's wishes that the money should be left with him or invested elsewhere will be frustrated. Why give people the opportunity of claiming money that they do not want, when they are perfectly happy to leave it until some future occasion, and deny it to people who do need it for administrative convenience such as clearing up an estate, or to a widow aged 57 who needs the money to move, or something of that sort? If that is the Government's idea of tidy administration, it is not mine.

Motion made, and Question proposed, "That those words be there inserted."

The Committee divided: Ayes, 121; Noes, 228.

Division No. 198]

AYES.

[8.38 p.m

Agnew, Cmdr. P. G.

Grimston, R. V.

Orr-Ewing, I. L.

Allen, Lt.-Col. Sir W. (Armagh)

Hannon, Sir P. (Moseley)

Peake, Rt. Hon. O.

Assheton, Rt. Hon. R.

Harris, H. Wilson

Peto, Brig. C. H. M.

Astor, Hon. M.

Harvey, Air-Comdre. A. V.

Ponsonby, Col. C. E.

Baldwin, A. E.

Haughton, S. G.

Poole, O. B. S. (Oswestry)

Birch, Nigel

Headlam, Lieut.-Col. Rt. Hon. Sir C.

Prescott, Stanley

Boles, Lt.-Col. D. C (Wells)

Hinchingbrooke, Viscount

Price-White, Lt.-Col. D.

Bossom, A. C.

Hollis, M. C.

Raikes, H. V.

Bower, N.

Holmes, Sir J. Stanley (Harwich)

Roberts, Emrys (Merioneth)

Boyd-Carpenter, J. A.

Hurd, A.

Ropner, Col. L.

Braithwaite, Lt.-Comdr. J. G.

Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

Ross, Sir R.

Buchan-Hepburn, P. G. T.

Hutchison, Col. J. R. (Glasgow, C.)

Sanderson, Sir F.

Bullock, Capt. M.

Jeffreys, General Sir G.

Shepherd, W. S. (Bucklow)

Butcher, H. W.

Joynson-Hicks, Lt.-Cdr. Hon. L. W.

Smiles, Lt.-Col. Sir W.

Byers, Lt.-Col. F.

Keeling, E. H.

Spearman, A. C. M.

Carson, E.

Kingsmill, Lt.-Col. W. H.

Stanley, Rt. Hon. O.

Challen, C.

Langford-Holt, J.

Strauss, H. G. (English Universities)

Clifton-Brown, Lt.-Col. G.

Legge-Bourke, Maj. E. A. H.

Stuart, Rt. Hon. J. (Moray)

Cole, T. L.

Lindsay, M. (Solihull)

Studholme, H. G.

Conant, Maj. R. J. E.

Lucas, Major Sir J.

Sutcliffe, H.

Crookshank, Capt. Rt. Hon. H. F. C.

Lucas-Tooth, Sir H.

Taylor, C. S. (Eastbourne)

Crosthwaite-Eyre, Col. O. E.

MacAndrew, Col. Sir C.

Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

Crowder, Capt. J. F. E.

MacDonald, Sir M. (Inverness)

Thomas, J. P. L. (Hereford)

Darling, Sir W. Y.

Macdonald, Capt. Sir P. (I. of Wight)

Thorneycroft, G. E. P. (Monmouth)

Davidson, Viscountess

Mackeson, Lt.-Col. H. R.

Thornton-Kemsley, C. N.

Digby, Maj. S. W.

MacLeod, Capt. J.

Thorp, Lt.-Col. R. A. F.

Dodds-Parker, A. D.

Macmillan, Rt. Hon. Harold (Bromley)

Touche, G. C.

Donner, Sqn.-Ldr. P. W.

Macpherson, Maj. N. (Dumfries)

Turton, R. H.

Dugdale, Maj. Sir T. (Richmond)

Maitland, Comdr. J. W.

Vane, W. M. T.

Duthie, W. S.

Manningham-Buller, R. E.

Wadsworth, G.

Eccles, D. M.

Marples, A. E.

Wakefield, Sir W. W.

Erroll, F. J.

Marsden, Capt. A.

Walker-Smith, D.

Foster, J. G. (Northwich)

Marshall, D. (Bodmin)

Ward, Hon. G. R.

Fraser, Maj. H. C. P. (Stone)

Marshall, S. H. (Sutton)

Watt, Sir G. S. Harvie

Gage, Lt.-Col. C.

Mellor, Sir J.

White, J. B. (Canterbury)

Galbraith, Cmdr. T. D.

Moore, Lt.-Col. Sir T.

Williams, C. (Torquay)

Gammans, L. D.

Morris, Hopkin (Carmarthen)

Williams, Gerald (Tonbridge)

George, Lady M. Lloyd (Anglesey)

Morrison, Maj. J. G. (Salisbury)

Winterton, Rt. Hon. Earl.

Glossop, C. W. H.

Morrison, Rt. Hon. W. S. (Cirencester)

York, C.

Gomme-Duncan, Col. A. G.

Nield, B. (Chester)

Gridley, Sir A.

O'Neill, Rt. Hon. Sir H.

TELLERS FOR THE AYES:

Sir Arthur Young and Mr. Drewe.

NOES.

Adams, W. T. (Hammersmith, South)

Ayrton Gould, Mrs. B.

Benson, G.

Allen, A. C. (Bosworth)

Awbery, S. S.

Bing, G. H. C.

Allen, Scholefield (Crewe)

Bacon, Miss A.

Binns, J.

Alpass, J. H.

Baird, Capt. J.

Blackburn, A. R.

Anderson, A. (Motherwell)

Balfour, A.

Blyton, W. R.

Anderson, F. (Whitehaven)

Barstow, P. G.

Boardman, H.

Attewell, H. C.

Barton, C.

Bowden, Flg.-Offr. H. W.

Austin, H. L.

Battley, J. R.

Bowles, F. G. (Nuneaton)

Ayles, W. H.

Bechervaise, A. E.

Braddock, Mrs. E. M. (L'pl, Exch'ge)

Braddock, T. (Mitcham)

Hoy, J.

Ranger, J.

Brooks, T. J. (Rothwell)

Hubbard, T.

Rees-Williams, D. R.

Brown, T. J. (Ince)

Hughes, Hector (Aberdeen, N.)

Reeves, J.

Bruce, Maj. D. W. T.

Hutchinson, H. L. (Rusholme)

Reid, T. (Swindon)

Buchanan, G.

Hynd, H. (Hackney, C.)

Richards, R.

Callaghan, James

Hynd, J. B. (Attercliffe)

Rogers, G. H. R.

Castle, Mrs. B. A.

Irving, W. J.

Royle, C.

Champion, A. J.

Isaacs, Rt. Hon. G. A.

Sargood, R.

Chater, D.

Janner, B.

Scott-Elliot, W.

Chetwynd, Capt. G. R.

Jeger, G. (Winchester)

Segal, Dr. S.

Cluse, W. S.

Jeger, Dr. S. W. (St. Pancras, S.E.)

Shackleton, Wing-Cdr. E. A. A.

Cobb, F. A.

Jones, A. C. (Shipley)

Sharp, Lt.-Col. G. M.

Cocks, F. S.

Jones, D. T. (Hartlepools)

Shawcross, C. N. (Widnes)

Collick, P.

Jones, P. Asterley (Hitchin)

Shurmer, P.

Collindridge, F.

Keenan, W.

Silverman, J. (Erdington)

Colman, Miss G. M.

Kinghorn, Sqn.-Ldr. E.

Silverman, S. S. (Nelson)

Cooper, Wing-Comdr. G.

Kinley, J.

Simmons, C. J.

Corbet, Mrs. F. K. (Camb'well, N.W.)

Kirby, B. V.

Skeffington-Lodge, T. C.

Corvedale, Viscount

Lang, G.

Skinnard, F. W.

Crawley, Flt.-Lieut. A.

Lee, Miss J. (Cannock)

Smith, Capt. C. (Colchester)

Daggar, G.

Leslie, J. R.

Smith, Ellis (Stoke)

Daines, P.

Lewis, T. (Southampton)

Smith, H. N. (Nottingham, S.)

Dalton, Rt. Hon. H.

Lindgren, G. S.

Smith, S. H. (Hull, S.W.)

Davies, Edward (Burslem)

Lyne, A. W.

Snow, Capt. J. W.

Davies, Ernest (Enfield)

McAdam, W.

Solley, L. J.

Davies, Harold (Leek)

McAllister, G.

Soskice, Maj. Sir F.

Davies, Haydn (St. Pancras, S.W.)

McGhee, H. G.

Stamford, W.

Deer, G.

McKay, J. (Wallsend)

Stewart, Capt. Michael (Fulham, E.)

Delargy, Captain H. J.

McKinlay, A. S.

Summerskill, Dr. Edith

Diamond, J.

Mainwaring, W. H.

Swingler, S.

Dobbie, W.

Mallalieu, J. P. W.

Taylor, H. B. (Mansfield)

Donovan, T.

Mann, Mrs. J.

Taylor, R. J. (Morpeth)

Driberg, T. E. N.

Manning, Mrs. L. (Epping)

Thomas, Ivor (Keighley)

Edelman, M.

Marshall, F. (Brightside)

Thomas, John R. (Dover)

Edwards, A. (Middlesbrough, E.)

Mathers, G.

Thomas, George (Cardiff)

Edwards, W. J. (Whitechapel)

Messer, F.

Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)

Evans, John (Ogmore)

Middleton, Mrs. L.

Thorneycroft, H. (Clayton)

Evans, S. N. (Wednesbury)

Mikardo, Ian

Tiffany, S.

Fairhurst, F.

Mitchison, Maj. G. R.

Timmons, J.

Farthing, W. J.

Monslow, W.

Titterington, M. F.

Fletcher, E. G. M. (Islington, E.)

Morgan, Dr. H. B.

Tolley, L.

Follick, M.

Morris, P. (Swansea, W.)

Tomlinson, Rt. Hon. G.

Foot, M. M.

Morrison, Rt. Hon. H. (Lewisham, E.)

Turner-Samuels, M.

Foster, W. (Wigan)

Mort, D. L.

Ungoed-Thomas, L.

Fraser, T. (Hamilton)

Moyle, A.

Viant, S. P.

Gaitskell, H. T. N.

Murray, J. D.

Walkden, E.

Gibbins, J.

Nally, W.

Walker, G. H.

Gibson, C. W.

Naylor, T. E.

Wallace, G. D. (Chislehurst)

Gilzean, A.

Nichol, Mrs. M. E. (Bradford, N.)

Wallace, H. W. (Walthamstow, E.)

Glanville, J. E. (Consett)

Nicholls, H. R. (Stratford)

Warbey, W. N.

Goodrich, H. E.

Noel-Baker, Rt. Hon. P. J. (Derby)

Watson, W. M.

Gordon-Walker, P. C.

Noel-Buxton, Lady

Weitzman, D.

Grey, C. F.

Oldfield, W. H.

Westwood, Rt. Hon. J.

Grierson, E.

Oliver, G. H.

Whiteley, Rt. Hon. W.

Griffiths, D. (Rother Valley)

Orbach, M.

Wigg, Col. G. E.

Guest, Dr. L. Haden

Paling, Rt. Hon. Wilfred (Wentworth)

Willey, O. G. (Cleveland)

Gunter, Capt. R. J.

Palmer, A. M. F.

Williams, Rt. Hon. T. (Don Valley)

Guy, W. H.

Paton, Mrs. F. (Rushcliffe)

Williamson, T.

Hall, W. G. (Colne Valley)

Paton, J. (Norwich)

Willis, E.

Hannan, W. (Maryhill)

Perrins, W.

Wilson, J. H.

Hardy, E. A.

Poole, Major Cecil (Lichfield)

Yates, V. F.

Harrison, J.

Popplewell, E.

Young, Sir R. (Newton)

Henderson, A. (Kingswinford)

Porter, E. (Warrington)

Younger, Hon. Kenneth

Hewitson, Capt. M.

Porter, G. (Leeds)

Zilliacus, K.

Hobson, C. R.

Pritt, D. N.

Holmar, P.

Pryde, D. J.

TELLERS FOR THE NOES:

Holmes, H. E. (Hemsworth)

Pursey, Cmdr. H.

Mr. Joseph Henderson and

House, G.

Randall, H. E.

Mr. Pearson.

I beg to move, in page 16, line 40, at the end, to insert:

"Provided that any certificate of age required by the Commissioners shall be obtainable free of charge."

Clause 23 (5) provides that:

The Treasury may make regulations … for requiring claimants to produce such evidence in support of their claims … as may be required by the Commissioners of Inland Revenue."

If the evidence required is to consist of a birth certificate, I hope the Government will accept this Amendment, that there should be no charge for it. If, on the other hand, they propose to accept evidence other than a birth certificate, I hope they will now tell us what that evidence is.

I would like to support this Amendment. The question of securing a certificate is not a heavy item, but the Financial Secretary will be aware that as a result of negativing the last Amendment it might well be that a claimant would have to produce two certificates, one in respect of the person who is entitled to the postwar credit, and one to show that in the case of a man he was over 65 or, in the case of a woman, she was over 60. The Financial Secretary shakes his head. He does it often, when he is just as wrong as he may be now. Surely, it may be necessary for a birth certificate to be produced when the person entitled to the postwar credit is over 65 or 60 years of age. That is almost inevitable, or are the Inland Revenue prepared to take other evidence of birth? If we are to impose on people the burden of getting these certificates we should, at least, be able to let them get the certificates free. The Financial Secretary told us earlier that only £26 million would be paid, and that only about 1,000,000 people would claim under the present provisions. Many of them will have their own birth certificate handy, and there will not be any substantial loss of revenue to the Treasury. I hope the hon. Gentleman will tell us that he will be able to accept the Amendment.

I think we can dispose of this Amendment quite briefly. There is no reason why we should accept it, because we shall not require the majority of people, possibly none, to produce a birth certificate.

Because we think it is not essential to the Clause. We are not anxious to add words which mean nothing. That may be the form of procedure which commends itself to the hon. Gentleman, but not to his Government. What will happen, as the Clause indicates, is that in order to make sure that a man is 65 or a woman is 60 certain evidence will be asked for. [HON. MEMBERS: "What?"] I will tell the Committee, if hon. Members will wait. A large number of people will be old age pensioners, and all that they will have to do is to produce their pensions books. That will be sufficient evidence; no birth certificate will be necessary. All will have a national registration card, and if that is produced we shall be able to judge whether they are of the prescribed age or not. If they produce their national registration card it will be possible, very often, to find out, simply and easily, what the age of the person will be.

Will the Financial Secretary tell us what he means by "very often"?

For the majority of people it will be a simple matter to discover their age. [HON. MEMBERS: "How?"] Because we can trace it. If a person produces his national identity card it will be simple, if the Inland Revenue have any doubt about his age, to follow the matter through, and see whether he is of the prescribed age or not. It would be possible for the Inland Revenue to request the individual to forward his birth certificate. For these reasons, we have no need to add the words proposed by the Amendment, which I ask the Committee to reject.

I do not think we ought to leave the matter there. We have had an extraordinary speech from the Financial Secretary. He said that the age could be traced through the identity card, and he ought to explain how, because I do not think anyone has the faintest idea of what he had in mind. As this is a rather legal question, perhaps we can have an explanation from the Solicitor-General.

I would like to put two questions to the Financial Secretary. He said that the identity card would enable the age to be known, or traced. I have an identity card, and I am sure that I have never given any evidence of my age. I want to know how an identity card will be used to verify a person's age. Further, the hon. Gentleman admits that in some cases it may be necessary to call for the birth certificate. Will he say what his objection is to exempting such birth certificates from charge? In other words, will he accept my Amendment, although only a small number of people may be involved?

I would like to reinforce what my hon. Friend has just said. Of course, we all accept the fact that old age pensioners will be able to prove their age without production of their birth certificates, but none of us can understand—and perhaps the Solicitor-General can tell us—how an identity card helps anybody to prove his age. The fact remains that there will be cases when the birth certificate will be demanded. The Financial Secretary said just now that if there was any doubt a birth certificate would be demanded. Suppose a man has been mysteriously traced through his identity card, that the authorities have a doubt about his age and ask him to send in his birth certificate, and the certificate proves that his claim to be over 65 was just. What is the objection to saying, "We will refund you the money you spent on the birth certificate?" The Amendment asks for very little, and could be accepted by the Government without any difficulty. The hon. Gentleman should take the opportunity, when his right hon. Friend is away, of showing how reasonable the Government really can be.

Will the Financial Secretary say how postwar credits are to be paid, because that has a great bearing on the subject? Presumably, postwar credit forms must be presented somewhere, and if it is to be at the post office how will the post office know the age of the person? There are many people who will have underestimated their age, through modesty or some other reason, and who may have registered their age on the low side when they obtained their identity card.

I think the Committee are making very heavy weather of this matter. It does not really arise out of this Amendment, but these sums will be paid out by the Inland Revenue by cheques, which can be cashed. The original idea of Sir Kingsley Wood was that the money should be put into a savings bank, or a Post Office savings bank on behalf of the beneficiary. On this occasion at any race, that is not to be so and people will be paid by means of a cheque. My point about the national registration card was that everybody had to give his age in the early days because many were liable for call-up. The forms are still in existence and can be traced quite easily by getting hold of the registration number of any individual. I can assure the right hon. Gentleman the Member for West Bristol (Mr. Stanley) that his age is known and could be traced and if he cares to give me the number of his national registration card I will undertake to tell him his age in a remarkably short space of time.

9.0 p.m.

I should like to ask one more question. Did I understand the Financial Secretary to say that a statement made when applying for an identity card is to be accepted as evidence for paying out this sum of money? That seems to me a most extraordinary, cavalier, slack, and unbusinesslike way for the Treasury to conduct its business.

It was good enough for the call-Up.

There is one very pertinent approach to this problem. Will it be easier to search through the existing records and to look up the AZJLs and RXWVs than to adopt what I believe is the very much simpler method of accepting the Amendment? I should like to say to the Financial Secretary to the Treasury that he is labouring under a delusion when he thinks that, if I gave him the reference to my registration card, he could tell my age. He could not, because every man who has served in the Armed Forces surrendered his original national registration card and has since made application for or received a new one which has a totally different index number from the original. When he applied for the new registration card on discharge he was not called upon to give his age. Therefore, it is not true for the Financial Secretary to say that he can check the age of these people. In any case it would be the most cumbersome procedure imaginable and I think we are straining at the gnat whilst swallowing the proverbial elephant—[HON. MEMBERS: "Camel."]—I am sorry, the proverbial camel. If there are so few cases concerned I would say by all means accept the Amendment and let us provide for a free copy of the birth certificate.

The Financial Secretary's own Ministry has recently been sending out forms in which proof of the age of children was desired. The hon. Gentleman and the Committee will realise that proof could be established in two ways. It could be established by taking the number of the national identity card so that the statement could be checked with the date of registration, but the Ministry, with a big task to do, expressed a preference for the birth certificate to be sent with the application because in their opinion that was easier and quicker.

If the matter is left here we shall, of course, have to press it to a Division, but we are not anxious to divide on what I must say we thought at the beginning was a very small matter. Is it not possible for the hon. Gentleman to consider this again between now and the Report stage? We had a very cogent speech from one of his own supporters who pointed out that this method which the hon. Gentleman proposes is the most cumbersome of all methods. The expense incurred, if the Amendment were adopted, would be negligible and no real objections to it have yet been put forward. I hope that even now the hon. Gentleman may, at any rate, think it over and come back to the matter on Report stage.

We will most certainly look at this again on the understanding that all the chances are that we shall feel that these words are unnecessary, but if we find it would be useful to put them in we will, with an open mind, see that words are inserted on the Report stage to cover the point raised by the hon. Member for Twickenham (Mr. Keeling).

On that understanding I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move, in page 17, line 13, after "section", to insert:

"other than the provisions of Subsection (6) thereof."

If hon. Gentlemen will look at Subsection (6) of Clause 23 they will see that it is one which imposes a penalty for dishonesty in making applications, and if they will look at Subsection (9) they will see that Clause 23 is made retrospective. I feel that the whole Committee will readily agree with me that a penalty provision should not in any circumstances be made retrospective. Clearly a person should not be liable to be convicted of an offence under a provision which has not yet come into force, but is to be subsequently brought into force retrospectively, All the Amendment does is to prevent this penalty provision becoming retrospective. It is designed to cure what is a defect in the Clause as it is drafted. There is nothing more behind it than that and I ask the Committee, with that word of explanation, to give us the Amendment.

Amendment agreed to.

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

Before we part with this Clause, I should like to point out that it raises two issues. First it provides for the repayment, with certain hedgings, of some of the postwar credits, and with that, like everyone else in the Committee, we on this side are most agreeable, although it has to be remembered that this is a proposal we made in December. The second issue which is raised, to cover which we had some Amendments down which were not selected, is the differentiation between men and women who are to receive the postwar credit. I hope the right hon. Lady opposite will not mind my saying it, but we find it very difficult to understand why there should be a difference between men and women in this particular case, and she and others who pressed for equal pay for both sexes probably also wonder why, contrary to what is thought to be the normal case, the men are to suffer on this occasion. A man has to wait until 65 before getting this part of his postwar credit repaid, whereas a woman will be able to obtain it at 60, and I think it would be a good idea if one of the Ministers concerned could tell us on what grounds they made this very novel distinction.

It may be that they will say that the great proportion of the beneficiaries are likely to be old age pensioners, that the ages I have mentioned are those for old age pensioners, and that that is why they are doing this. If so, it is a very strange reversal of the arguments which were put up last year. I would like to remind the Committee of what happened on 29th November. My hon. and gallant Friend moved an Amendment to the then Finance Bill—a new Clause by which at the end of the year there would have been a repayment of postwar credits for all aged 60. We had a very interesting discussion and the Chancellor was extraordinarily lucid in his views, not on the point whether it was desirable to pay them at that time, but on the question of having no qualification other than age. Let hon. Gentlemen realise the view which was taken on their behalf and which they themselves supported—not all of them, but a large majority—in the Lobby:

9.15 p.m.

I was the first person on this side of the House to suggest that postwar credits should be paid out for people over 70, and the reply of the Chancellor was that at that time he could not see his way to do it but he would give it his earnest and, if possible, his favourable consideration when he was introducing his next Budget. He has done that, and he has gone further than some of us suggested, and we want to express our sincere gratitude—

The hon. Member is now making a speech. I was not aware that the hon. Gentleman had caught my eye or was being called.

May I ask a question? Are the right hon. Gentleman and his friends disappointed?

We are not disappointed at all. We are exceedingly gratified that our suggestions have been adopted. I cannot check that the hon. Member was the first person to make this suggestion, as he claims in the semi-speech he has just made, but the Chancellor rejected it just as he rejected our suggestion. The hon. Member put the age at 70. We were far more generous. We suggested 60. He has nothing to pride himself about at all. The Chancellor rejected it on the grounds that it was quite indefensible to do it on an age basis because highest priority would be given to the millionaire and it would not be distributed to the poor and needy.

What has caused this extraordinary change of opinion? Having all these months since November gone about the country defending themselves on those grounds, will it now be open for hon. Members opposite to say that the reason they support it now is in order to give these benefits to the deserving classes, including millionaires, just because they were offered the age 60 for women and 65 for men? It is a very awkward proposition for hon. Gentlemen opposite, and they have my full sympathy for, as time goes on, they will find themselves in similar difficulties through the general maladministration of this Government. It was the suggestion of hon Gentlemen opposite that the postwar credits should go to the needy people, which meant a line of demarcation and the introduction of a means test; but it was not our suggestion. We suggested that there should be a flat rate for men and women.

Now that the only lady Member of the Cabinet has arrived, she will no doubt be able to prompt the Financial Secretary with all the arguments why there should be sex discrimination in this case. I hope the hon. Gentleman will tell us, because we feel it is a mistake. All the ideas of qualification of physical health, family circumstances and so on have been abolished. Why does the hon. Gentleman make the difference between women at 60 and men at 65? Mind you, we do not object to this proposal, because we have urged the repayment of postwar credits to the older members of the community so that they may enjoy them before it is too late, but we should have preferred to see the postwar credits given to men at 60. Perhaps the reason why that has not been done is that it was a suggestion made by us. If so it is a very poor reason. Will the Financial Secretary tell us—we could not discuss it in detail because the Amendment was not called—whether there is any likelihood before the next stage of the Bill of this being reconsidered? It is a real hardship for men to be denied the postwar credit for five years longer than the women. It is the hon. Gentleman and the Government who have raised this and it is up to them to give the Committee an explanation.

As my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) said, I moved a Clause last November to make possible repayment at the age of 60 of postwar credits to persons of both sexes on 31st December, 1945. It will be within the recollection of the Committee that that Amendment was rejected after a very considerable discussion by 265 votes to 117. In the course of the Debate, both the Chancellor of the Exchequer and the Financial Secretary to the Treasury treated our Amendment with, I thought, a certain amount of scorn and poured some ridicule upon it. As my right hon. and gallant Friend has said, the Chancellor of the Exchequer was very shocked at the idea that the millionaire of 60 or over might get repayment of his postwar credits before a poor person who was under the age of 60. He also quoted the appropriate passage in the Chancellor's speech. I do not need to comment on that further beyond the fact that it appeared at that time almost as if the Chancellor had envisaged the repayment of these postwar credits on what I might term a "means test" basis. However, the Committee can take comfort that the Chancellor has had second thoughts on the matter, and has now proceeded to deal with it in a straightforward way, following the sound Tory doctrine of dealing with a national problem in a national way instead of in a purely partisan spirit, as so often happens with proposals emanating from the other side, and we are fortunate to be able to congratulate ourselves upon having educated him to that extent.

For my own part I would have preferred to see in this case a uniform age of 60 but at least we have made a considerable step forward. I am convinced that there is no reason for differentiation between the two sexes in this way. The whole tendency of modern times is to bring in as far as practicable equality between the two sexes, and it is rather regrettable that the Chancellor of a so-called progressive Government should be heading in a different direction at this moment. However, we are not prepared to oppose this Clause, as it does a great deal of what we suggested, although not quite as much as we would wish.

I would support what has been said by the hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison). I am sorry there should be discrimination between the two sexes on this matter. If the Government are determined to have discrimination, it should have been the other way round because an examination of the actuarial figures will show that men, on the whole, die at an earlier age than women. This is not a matter of commercial theories. The actuarial department of the Post Office Savings Bank estimates that, on the average, a woman will live between three and four years longer than a man. Therefore we are faced with the prospect of a relatively small, let us hope, number of men dying between 60 and 65 before they are able to receive their postwar credits, and there seems to be no reason why they should fail to receive this money through this entirely senseless discrimination. Apparently we are also to see that their beneficiaries are to be put to a great deal of trouble before receiving the money after they have been safely put under ground.

I have said that I hope it will be only a small number of men who will be so affected, but again the actuarial figures show that a large number of men die between 60 and 65. Their life's work done, they go into retirement and in many cases they find life has no longer any zest for them and they wither up. [HON. MEMBERS: "Hear, hear."] I am only seeking to interpret the actuarial statistics. Many, therefore, will unfortunately be unable to receive the small sum of money which is their right. I would ask the Government to reconsider the matter and see if they cannot allow these credits to be payable to both sexes at the age of 60.

I want to support what my hon. Friend the Member for Altrincham (Mr. Erroll) has said. I hope we shall have a really lucid explanation from the Financial Secretary about why this discrimination is made between men and women—

On a point of Order, Mr. Beaumont. Inasmuch as there is an Amendment on the Order Paper which dealt with this, which you have not deemed it wise to call, surely this discussion is out of Order? It was so ruled earlier.

I was just about to say that presumably the reason for selecting the ages of 60 and 65 is that those are the ages when retirement pensions come into force. As I understand it, the reason why a woman gets a retirement pension at an earlier age than a man is that her earning capacity does not last so long as a man's; that is to say, in many trades it is harder for a woman of a certain age to earn her living than it is for a man: therefore, logically, she gets her pension at an earlier age. In the case of a postwar credit however, there is no question of a person living on it at all—it is not sufficient for that. A postwar credit is a debt owed by the State to the individual, and the sole reason for paying it to older people is so that they shall have it before they die. As the hon. Member for Altrincham pointed out, a woman's expectation of life is appreciably better than a man's. The actuarial figure, I believe, is that a woman's expectation of life at the age of 60 is 16.50 years, whereas a man's is 14.43, but that is not the figure of comparison because, at 65, a man's expectation of life is only 11.30 years, so the figures to compare are 16.50 and 11.30. I would appeal to the right hon. Lady the Minister of Education, who I know is a very strong advocate of women's rights, to stand up against this odious piece of sex discrimination. How can she expect the male sex, when discussing the report which is coming along soon, to stand up for her sex if this palpable injustice is agreed to? I would ask her, therefore, to rise and pour the vials of her wrath on the Financial Secretary to the Treasury.

The discussion on this Clause has concentrated, I think, round one point exclusively, and that is why there is this differentiation between the sexes. I am delighted to see that the Opposition on this occasion seem to think that women and men should be put on an equality. Some of them, at any rate, were present when our pension laws were put on the Statute Book, and I do not know whether on that occasion they were equally keen to see that women should not get their pensions until men got theirs. The reason why women are being given this at 60 and men at 65 is simply to comply with the ages laid down in the Acts of Parliament on the Statute Book for the payment of old age pensions. Women now get the pension at 60, and I for one do not think for a moment that that means that any of us believe that men and women are fundamentally equal. There are some people who believe that the equality of the sexes should be carried into every conceivable situation and walk of life. They would, I suppose, be willing to see women go back into the coal mines and work at the coal face, just as a man does, but a long time ago this nation decided that whatever views might be held about the equality of the sexes, the right to be forced to work at the coal face was not part of the equality in which they believed, and quite early our Statute Book became littered with enactments, Factory Acts and others, in which differentiation was made between the sexes in favour of women, and no one has ever thought to deduce from that the argument that there should not be any equality between the sexes.

The right hon. and gallant Member for Gainsborough (Captain Crookshank) made great play with the statement of the Chancellor of the Exchequer last autumn when he indicated, and very properly so, in answer to the Debate that then took place on this matter that he could not accede to the request then but would consider it on a future occasion. My right hon. Friend has said much the same thing from this Box on more than one occasion. He said it, for instance, with regard to the earned income allowance. I have not the slightest doubt that next year he will have a statement to make which alters the percentage that is now embodied in this Bill; but because he has to resist now a suggested change, that does not mean that he is convicted of inconsistency. It means simply that at the time it is not feasible for him to take a certain line.

9.30 p.m.

I know that the Chancellor rejected it largely on those grounds at the end of his speech, but his argument was directed against doing it for anybody on an age basis, which he said was indefensible. That has nothing to do with whether or not he has the money with which to do it.

That underlines what many of us have believed for a long time, that my right hon. Friend is big enough to change his view should it be right to do so. Obviously, he has now come to the view, which most of us on this side share, that obviously the simplest way to deal with the matter is to take it on an age basis, and if everyone cannot, unfortunately, be paid at once—I think that is generally accepted in all parts of the Committee—it is much better to do it by ages, and to start with the oldest people first. If one attempted to use any other yardstick, I think everyone will agree we would get into difficulties immediately. Sickness, disability, loss of a limb, or the fact that a woman is a widow or has children or is out of work—if we took any of those things as the criteria, we should get into difficulties. Therefore, my right hon. Friend has taken age as the basis, and I think that is the correct thing to take.

I was asked by the hon. and gallant Member for West Edinburgh (Lieut.-Commander Hutchison) what would be the cost if the age were made 60 for both sexes. The answer is that it would cost an additional £13 million, and about 500,000 people more would be brought into immediate benefit. I ask the Committee to reject any suggestion that we should amend this Clause. The Amendment on the Order Paper has very properly been ruled out. If that Amendment had been accepted, it would have been quite impossible for the Inland Revenue to start paying out these sums in the early autumn. Forms will be going to post offices towards the end of this month, and individuals will be entitled to claim; those claims will be examined later this year, and we hope that in the early autumn, payments will begin to be made. If at this juncture we were to make any change in the basis on which those payments are to be made, it would delay considerably the work which is now going forward to pay women of 60 and men of 65 the postwar credits for the first three years, which are due to them.

The Financial Secretary's speech has appealed to me so much that I am tempted to award to him the palm which hitherto I have unhesitatingly awarded to the Solicitor-General. This is a matter of considerable importance. We have here a provision which discriminates in age between men and women, and it means that a great many men have to wait for an indefinite number of years for a privilege which women of the same age are now enjoying. I think the Committee is entitled to have a serious answer as to why that differentiation has been made. The only answer we have received has been a reference to differentiations in the treatment of men and women in coalmines. What on earth has that to do with the differentiation in postwar credits?

The nearest we got to any explanation was that the Government looked hurriedly through some Acts of Parliament to find out something about ages, and they turned on the Pensions Act, where these ages of 65 and 60 occur. In the Pensions Act the respective ages of 65 and 60 had a meaning. They were inserted deliberately because the experience was that women, on the whole, become unfitted to, or are forced to retire from, work at an earlier age than men. Therefore, the age we selected for pension was the age at which retirement from work was likely to become necessary. But in this case, the Chancellor himself said, in his Budget speech, that he wanted to do this in order to give the old people a chance of enjoying this repayment before they die. Surely, what we have to look at is the expectation of men and women of the life that lies before them, and we find that exactly the reverse considerations apply to those which apply in the case of pensions—that the men have a shorter expectation of life than the women, and that if mechanical justice were to be observed, they would have their postwar credits paid out to them at an earlier age than women.

This is a gross injustice to men. The Government are adopting a deliberate anti-masculine tendency. If they persist in this, I foresee a time when we shall see men chained to the galleries in the House of Commons shouting for the redress of their rights—[HON. MEMBERS: "Wrongs."] I have become so accustomed to hearing talk about women's rights that I have forgotten that the new thing we have to talk about is men's wrongs. There is only one grain of comfort that men can get from this Debate, and that is the possibility that all the explanations the Financial Secretary has given today mean nothing. If we are to take the example of the Chancellor of the Exchequer on this very subject in December, the more cogent the reasons that any Member of the Government gives against doing a thing now makes it almost the more certain that that is the very thing the Government will do in a few months' time. I have no doubt whatever that next April we shall have in the Budget a provision that in future men and women are to be paid at 60. We shall hear the Chancellor say that it is quite indefensible, in a case of this sort, to draw any distinction between men and women, that if we were to draw a distinction it might mean that some rich woman with nothing to support but three aged Pekes would be drawing a postwar credit before the needy and deserving man of 65. He will tell us that he is perfectly prepared to go to the country and defend this proposition against any attacks that may come from this side.

If I may make a guess at the reason which weighs most in the Financial Secretary's mind as a reason for not accepting this proposal, it is the one which he gave in the last few words of his speech. He must be impressed by the main argument that this is a question of returning benefits to people before they die. It has nothing whatever to do with pensions. What I think weighs with him is the fact that directions have been given already for the payments to be made. I believe that is the real reason he is disinclined to accept the arguments that have been made from this side of the Committee. Could he look into the matter again before the Report stage and see whether something can be done to make payments to men between the ages of 60 and 65 later in the year, before the next Budget is introduced, say, by 1st November? If this is predominantly a machinery question, as I think it is, could he not look into the matter again?

Question put, and agreed to.

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

CLAUSE 24.—(Insurance contributions, family allowances and insurance benefit.)

I beg to move, in page 17, line 16, after "under," to insert:

Our understanding of the matter is that eventually there will be merely one card to cover all contributions. If that is so, it will mean that anyone who wishes to make a claim for benefit to which he is entitled will have to make a varying deduction each week. The reason is that under the Industrial Injuries Act every person does not pay the same contribution. There is the 8d. joint contribution in the case of a man, there is less for a woman, and less again in the case of the young person. It seems that that will involve everybody concerned in the matter in a sum of subtraction every week, and in an unnecessary amount of time and detailed work.

All that is quite apart from the merits of the case, and they seem perfectly clear. If, for health insurance and other benefits, contributions are to be dealt with in the way proposed in the Bill, there does not seem to be any conceivable reason why contributions under the Industrial Injuries Act should not be treated in exactly the same way. On the assumption, about which we feel pretty confident, that there has been an oversight on the part of the Government in this matter, I put forward this proposal.

The case which has just been made by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) is one which I am anxious to support. The Committee will appreciate that recent legislation has resulted in two separate and distinct systems of national insurance being continued in this country. On the one hand, is the system of national insurance, widely and generally known, under which contributions are paid in respect of benefits to be obtained in time of trouble: on the other hand, is the National Insurance (Industrial Injuries) Act, which provides that contributions are required for benefits to be obtained in cases of industrial injury.

The Clause, put quite simply, means that contributions paid in respect of the wider scheme of national insurance shall be deducted from income, so that there Income Tax is paid on the lower figure. My right hon. and gallant Friend has pointed out that there seems no reason why a similar situation should not obtain in respect of contributions under the Industrial Injuries legislation. When this matter was discussed in the Standing Committee, and when we realised that we were continuing workmen's compensation in a new form, many hon. Gentlemen opposite were rather bitterly complaining that, for the first time, the workmen had to bear part of the burden of workmen's compensation benefits. That, of course, had never obtained before. There now seems to be an admirable opportunity for lightening that burden to the workman if the Amendment is accepted. I hope the hon. Members who took part in those discussions will support the Amendment.

9.45 p.m.

I hope I can satisfy the Committee as to the reasons why the contributions under the Industrial Injuries Act have been left out. They have not been left out accidentally, but deliberately. Hon. Members will remember the amount affected. Contributions under the Industrial Injuries Act are 4d. in the case of a man over 18, 3d. for a woman over 18, 2½d. and 2d. respectively for boys and girls under 18. The net result of that is that the whole amount payable throughout the whole year, even in the case of an adult man, is only something like 14s., and in the case of a woman it is less, and of people under 18 still less. What is being sought is to make deductible as a deduction from earnings in the case of an adult man only a sum of 14s. annually. Hon. Members may say that the fact that it is a small amount is not a reason for not making it available for a deduction for the purposes of Income Tax. I agree that if the matter simply stood there, there would be a great deal in favour of the argument. But it does not stand there for the reason that it is consonant with the spirit of the Income Tax Acts and also with the Clause as provided that, if we make deductible a contribution which is payable by the workman or recipient of the benefit, whatever it is, we should equally bring in on the other side benefits received. That is only logical. One would be turning the thing upside down if one made the workman or any other beneficiary under any scheme entitled to deduct the amount he has to pay by way of contribution, but not liable to bring in as part of his income, and therefore taxable, benefits he receives, in the event of his becoming entitled to benefits under a particular Act, The National Insurance Act is dealt with and is brought in on both sides. Persons are entitled to deduct their contribution, but they also have to bring in their benefit. That, I am sure everyone will agree, is reasonable and sensible, and if we do not do that we would be making rather a muddle of the Income Tax Acts. It would be logical and consistent, if one allows the 14s. as a deduction in assessing earnings to follow as a matter of reasonable necessity, that one should also bring into computation as part of the earnings of the injured workman any benefits he receives in the event of his being injured or incapacitated and so qualifying for benefits under the Act. If we did that, it would be very much to the disadvantage of the workmen.

Industrial injuries pension is payable in addition to earnings, and frequently, if a person is receiving a pension in respect of industrial injury, he will be brought within the Income Tax and be paying tax. Roughly speaking, a family consisting of husband and wife and two children are not affected if they receive under £6 a week as a family income. It may often be the case, if a person is injured and qualifies for pension that he will become liable to pay tax. It is very much in the interests of the workman not to be entitled to deduct his contribution but at the same time not to be liable to bring in anything he receives by way of benefit under the Act into the computation of his income for the purpose of payment of Income Tax. The alternative is that either we allow him to deduct his contribution 'and make him pay Income Tax on his benefit or we say, "You can't deduct your contribution but at the same time you shan't be liable to pay Income Tax on the benefit you receive." Having regard to the figures and the fact that one is simply speaking of 14s.—

It is something between 10s. and £1, and my arithmetic may be at fault. I worked it out hurriedly at 14s. I think it should be 17s. An hon. Gentleman beside me told me the figure was 14s. I am sure it does not make very much difference to my argument whether it be 17s. or 14s. The alternative is to keep that 17s. as a contribution which qualifies for a deduction and at the same time to have the benefit free of Income Tax, or to have the contribution eligible without a deduction and at the same time to be under the liability to pay tax on the benefit. Payments under the old Workmen's Compensation Act, which the National Insurance (Industrial Injuries) Act revised, were not liable to tax. Likewise, hon. Gentlemen know that payment in respect of war disabilities are not liable to tax. The feeling of the Government, which I think will be shared by hon. Gentlemen on all sides of the Committee, is that if a workman has the misfortune to be injured or to become disabled so that he cannot carry on his work, he should be entitled to enjoy any benefit to which he becomes eligible under the National Insurance (Industrial Injuries) Act free of any deduction at all. That is to say, he should not have to pay Income Tax on it. I agree it does not follow as a necessary consequence that if we deduct the contribution Income Tax must be paid on the benefit. I accept that there is no necessary consequence in law.

I urge upon the Committee the view that sensibly and logically we cannot have the one without the other. Really, it would be making nonsense of the Income Tax legislation if we did that. For those reasons, I ask the Committee to say they accept the view of the Government that it is preferable to leave both contribution and benefit out of the account on both sides. Certainly that would be in the interest of the workman. He would benefit from that. I ask the Committee to say for the reasons I have given that it is right that the Government should leave contributions as a non-deductible sum in computation of earnings for the purpose of assessment of Income Tax. Those are the reasons which actuated the Government and I ask the Committee to say that the Amendment ought not to be accepted.

I am sure we are much obliged to the hon. and learned Gentleman for his very clear explanation. I am speaking quite seriously. I am obliged to the hon. and learned Gentleman for putting so clearly the reasons why the Government have excluded the contribution under the National Insurance (Industrial Injuries) Act from the provisions of this Clause. The contribution under that Act is, as he said after correction, in the case of an adult man the sum of 17s. 4d. and in the case of women, youths and girls the sum is progressively smaller. What we have in mind is that the contributions under the National Insurance Bill and under the National Insurance (Industrial Injuries) Act will be paid by means of a single stamp. I forget precisely what the figure of contributions stands at in the National Insurance (Industrial Injuries) Act, but I think it is 6s. 11d.

I am much obliged to the hon. and learned Gentleman. The man's contribution will be 4s. 7d. a week, and, under the Industrial Injuries Act it will be 4d., making 4s. 11d. That will be paid by means of a single stamp, but it surely will be—

Of course, the total sum will include the employer's contribution, but the point is that, having affixed a stamp to the value of 9s. 7d. on his card, the insured person will be entitled only to deduct for Income Tax purposes a sum smaller by 4d. than the amount of his own contributions. Surely, that will lead to a good deal of confusion. I should have thought that the proper thing to do was to allow, as a deduction for Income Tax purposes, the total amount of the contribution. Then, it will be perfectly clear to everybody what the position is, What the Government apparently intend to do is to say, "No, so far as the industrial injuries contribution is concerned, that is not a deduction for Income Tax purposes." They will go on, as a consequence of that, to subject to Income Tax, in the case of an adult male, the sum of 17s. 4d., and to subject that

amount to tax at a very low annual rate in the case of the ordinary worker, possibly as low as 3s. in the £. They will collect, perhaps, 2s. 6d. per annum from an enormous number of workmen, and introduce this administrative complexity, when the sum paid by way of a stamp each week will not be the same sum which the men are entitled to deduct from their Income Tax assessments. It does seem to us that an administrative complexity is being introduced into this matter which is quite unnecessary and which will only result in a very small addition to the national revenue in consequence. Therefore, I press upon the Committee the view that the additional contribution under the National Insurance (Industrial Injuries) Act should also be allowed as a deduction for Income Tax purposes.

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

The Committee divided: Ayes, 112; Noes, 217.

Division No. 199.]

AYES.

[9.58 p.m

Agnew, Cmdr. P. G.

Headlam, Lieut.-Col. Rt. Hon. Sir C.

Peake, Rt. Hon. O.

Allen, Lt.-Col. Sir W. (Armagh)

Herbert, Sir A. P.

Peto, Brig. C. H. M.

Assheton, Rt. Hon. R.

Hinchingbrooke, Viscount

Ponsonby, Col. C. E.

Astor, Hon. M.

Hollis, M. C.

Poole, O. B. S. (Oswestry)

Baldwin, A. E.

Holmes, Sir J. Stanley (Harwich)

Prescott, Stanley

Birch, Nigel

Hope, Lord J.

Price-White, Lt.-Col. D.

Boles, Lt.-Col. D. C. (Wells)

Hulbert, Wing-Cdr. N. J.

Raikes, H. V.

Bower, N.

Hurd, A.

Renton, D.

Boyd-Carpenter, J. A.

Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

Ropner, Col. L.

Braithwaite, Lt.-Comdr. J. G.

Hutchison, Col. J. R. (Glasgow, C.)

Ross, Sir R.

Buchan-Hepburn, P. G. T.

Jeffreys, General Sir G.

Sanderson, Sir F.

Butcher, H. W.

Keeling, E. H.

Shepherd, W. S. (Bucklow)

Byers, Lt.-Col. F.

Legge-Bourke, Maj. E. A. H.

Spearman, A. C. M.

Carson, E.

Lindsay, M. (Solihull)

Stanley, Rt. Hon. O.

Challen, C.

Lucas, Major Sir J.

Stoddart-Scott, Col. M.

Clifton-Brown, Lt.-Col. G.

Lucas-Tooth, Sir H.

Strauss, H. G. (English Universities)

Cole, T. L.

MacAndrew, Col. Sir C.

Stuart, Rt. Hon. J. (Moray)

Crookshank, Capt. Rt. Hon. H. F. C.

MacDonald, Sir M. (Inverness)

Sutcliffe, H.

Crosthwaite-Eyre, Col. O. E.

Mackeson, Lt.-Col. H. R.

Taylor, C. S. (Eastbourne)

Crowder, Capt. J. F. E.

McKie, J. H. (Galloway)

Taylor, Vice-Adm. E. A. (P'dd't'n, S.)

Darling, Sir W. Y.

MacLeod, Capt. J.

Thomas, J. P. L. (Hereford)

Digby, Maj. S. W.

Macmillan, Rt. Hon. Harold (Bromley)

Thorneycroft, G. E. P. (Monmouth)

Dodds-Parker, A. D

Macpherson, Maj. N. (Dumfries)

Thornton-Kemsley, C. N.

Drayson, Capt. G. B.

Maitland, Comdr. J. W.

Thorp, Lt.-Col. R. A. F.

Drewe, C.

Manningham-Buller, R. E.

Touche, G. C.

Dugdale, Maj. Sir T. (Richmond)

Marples, A. E.

Turton, R. H.

Duthie, W. S.

Marsden, Capt. A.

Wakefield, Sir W. W.

Erroll, F. J.

Marshall, D. (Bodmin)

Walker-Smith, D.

Foster, J. G. (Northwich)

Marshall, S. H. (Sutton)

Ward, Hon. G. R.

Gage, Lt.-Col. C.

Mellor, Sir J.

White, J. B. (Canterbury)

Galbraith, Cmdr. T. D.

Morris, Hopkin (Carmarthen)

Williams, C. (Torquay)

George, Lady M. Lloyd (Anglesey)

Morrison, Maj. J. G. (Salisbury)

Williams, Gerald (Tonbridge)

Gridley, Sir A.

Morrison, Rt. Hon. W. S. (Cirencester)

Willoughby de Eresby, Lord

Grimston, R. V.

Mott-Radclyffe, Maj. C. E.

Winterton, Rt. Hon. Earl.

Hannon, Sir P. (Moseley)

Nield, B. (Chester)

York, C.

Hare, Lieut.-Col. Hn. J. H. (W'db'ge)

Nutting, Anthony

Young, Sir A. S. L. (Partick)

Harvey, Air-Comdre. A. V.

O'Neill, Rt. Hon. Sir H.

Haughton, S. G.

Orr-Ewing, I. L.

TELLERS FOR THE AYES

Mr. Studholme and Major Conant

NOES.

Adams, W. T. (Hammersmith, South)

Goodrich, H. E.

Perrins, W.

Allen, A. C. (Bosworth)

Gordon-Walker, P. C.

Poole, Major Cecil (Lichfield)

Allen, Scholefield (Crewe)

Grey, C. F.

Porter, E. (Warrington)

Alpass, J. H.

Grierson, E.

Porter, G. (Leeds)

Anderson, A. (Motherwell)

Griffiths, D. (Rother Valley)

Pritt, D. N.

Attewell, H. C.

Guest, Dr. L. Haden

Proctor, W. T.

Austin, H. L.

Gunter, Capt. R. J.

Pryde, D. J.

Awbery, S. S.

Guy, W. H.

Pursey, Cmdr. H.

Ayles, W. H.

Hale, Leslie

Randall, H. E.

Ayrton Gould, Mrs. B.

Hall, W. G. (Colne Valley)

Ranger, J.

Bacon, Miss A.

Hannan, W. (Maryhill)

Rees-Williams, D. R.

Baird, Capt. J.

Hardy, E. A.

Reeves, J.

Balfour, A.

Harrison, J.

Reid, T. (Swindon)

Barton, C.

Henderson, Joseph (Ardwick)

Rhodes, H.

Bechervaise, A. E.

Hobson, C. R.

Richards, R.

Benson, G.

Holman, P.

Roberts, Goronwy (Caernarvonshire)

Bing, G. H. C.

Holmes, H. E. (Hemsworth)

Rogers, G. H. R.

Binns, J.

House, G.

Royle, C.

Blenkinsop, Capt. A.

Hughes, Hector (Aberdeen, N.)

Sargood, R.

Blyton, W. R.

Hughes, Lt. H. D. (W'lverh'pton, W.)

Scott-Elliot, W.

Boardman, H.

Hutchinson, H. L. (Rusholme)

Sharp, Lt.-Col. G. M.

Bottomley, A. G.

Irving, W. J.

Shawcross, C. N. (Widnes)

Bowden, Flg.-Offr. H. W.

Isaacs, Rt. Hon. G. A.

Shurmer, P.

Bowles, F. G. (Nuneaton)

Janner, B.

Silverman, J. (Erdington)

Braddock, Mrs. E. M. (L'pl, Exch'ge)

Jeger, G. (Winchester)

Silverman, S. S. (Nelson)

Braddock, T. (Mitcham)

Jones, P. Asterley (Hitchin)

Simmons, C. J.

Brooks, T. J. (Rothwell)

Keenan, W.

Skeffington, A. M.

Brown, T. J. (Ince)

Kinghorn, Sqn.-Ldr. E.

Skeffington-Lodge, T. C.

Bruce, Maj. D. W. T.

Kinley, J.

Skinnard, F. W.

Buchanan, G.

Kirby, B. V.

Smith, Capt. C. (Colchester)

Callaghan, James

Lang, G.

Smith, H. N. (Nottingham, S.)

Castle, Mrs. B. A.

Lee, Miss J. (Cannock)

Smith, S. H. (Hull, S.W.)

Champion, A. J.

Leslie, J. R.

Snow, Capt. J. W.

Chater, D.

Lewis, A. W. J. (Upton)

Solley, L. J.

Chetwynd, Capt. G. R.

Lewis, T. (Southampton)

Soskice, Maj. Sir F.

Cluse, W. S.

Lindgren, G. S.

Stamford, W.

Cobb, F. A.

Lyne, A. W.

Summerskill, Dr. Edith

Cocks, F. S.

McAdam, W.

Swingler, S.

Collick, P.

McAllister, G.

Taylor, H. B. (Mansfield)

Collindridge, F.

McEntee, V. La T.

Taylor, R. J. (Morpeth)

Colman, Miss G. M.

McGhee, H. G.

Thomas, Ivor (Keighley)

Cooper, Wing-Comdr. G.

McKay, J. (Wallsend)

Thomas, John R. (Dover)

Corbet, Mrs. F. K. (Camb'well, N.W.)

McKinlay, A. S.

Thomas, George (Cardiff)

Corvedale, Viscount

McLeavy, F.

Thorneycroft, H. (Clayton)

Crawley, Flt.-Lieut. A.

Mallalieu, J. P. W.

Tiffany, S.

Daggar, G.

Manning, C. (Camberwell, N.)

Timmons, J.

Daines, P.

Manning, Mrs. L. (Epping)

Titterington, M. F.

Dalton, Rt. Hon. H.

Marshall, F. (Brightside)

Tolley, L.

Davies, Edward (Burslem)

Messer, F.

Tomlinson, Rt. Hon. G.

Davies, Ernest (Enfield)

Middleton, Mrs. L.

Turner-Samuels, M.

Davies, Harold (Leek)

Mitchison, Maj. G. R.

Ungoed-Thomas, L.

Davies, Haydn (St. Pancras, S.W.)

Monslow, W.

Viant, S. P.

Deer, G.

Morgan, Dr. H. B.

Walkden, E.

Delargy, Captain H. J.

Morley, R.

Wallace, G. D. (Chislehurst)

Diamond, J.

Morris, P. (Swansea, W.)

Wallace, H. W. (Walthamstow, E.)

Dobbie, W.

Mort, D. L.

Warbey, W. N.

Dodds, N. N.

Moyle, A.

Watson, W. M.

Donovan, T.

Murray, J. D.

Weitzman, D.

Driberg, T. E. N.

Nally, W.

Whiteley, Rt. Hon. W.

Edwards, A. (Middlesbrough, E.)

Naylor, T. E.

Wigg, Col. G. E.

Edwards, W. J. (Whitechapel)

Nichol, Mrs. M. E. (Bradford, N.)

Wilkes, Maj. L.

Evans, John (Ogmore)

Nicholls, H. R. (Stratford)

Willey, O. G. (Cleveland)

Evans, S. N. (Wednesbury)

Noel-Baker, Rt. Hon. P. J. (Derby)

Williams, Rt. Hon. T. (Don Valley)

Fairhurst, F.

Noel-Buxton, Lady

Williamson, T.

Farthing, W. J.

O'Brien, T.

Willis, E.

Fletcher, E. G. M. (Islington, E.)

Oldfield, W. H.

Yates, V. F.

Follick, M.

Oliver, G. H.

Young, Sir R. (Newton)

Foot, M. M.

Orbach, M.

Younger, Hon. Kenneth

Foster, W. (Wigan)

Paling, Rt. Hon. Wilfred (Wentworth)

Zilliacus, K.

Fraser, T. (Hamilton)

Paling, Will T. (Dewsbury)

Gaitskell, H. T. N.

Palmer, A. M. F.

TELLERS FOR THE NOES

Gibbins, J.

Paton, Mrs. F. (Rushcliffe)

Mr. Popplewell and

Gibson, C. W.

Paton, J. (Norwich)

Capt. Michael Stewart

Glanville, J. E. (Consett)

Pearson, A.

I beg to move, in page 17, line 42, to leave out from "grant," to "shall," in line 43.

As the Committee are aware, Income Tax is payable on family allowances. When I first read this Clause, I thought the Chancellor had intended family allowances to be free from tax, except that two commas seemed to intervene. Those of us who were Members of the last Parliament will recollect that when the Family Allowances Bill was going through the Committee stage, it was indicated that the only way of raising the question of exempting payments of this kind from tax was in a Finance Bill. As this, I imagine, will be the last Finance Bill before these allowances are, in fact, payable, and in view of the uncertainty of the Government's intentions, it is just as well to ascertain exactly the present position. I submit to the Committee that these family allowances might very well be paid free of tax, for various reasons. The first reason I venture to give is that, in fact, family allowances are already being paid. In the speech of the Lord Chancellor when Minister of National Insurance, in this House on 17th May last year, he said:

I do not know whether the hon. Member for South Tottenham (Mr. Messer) wishes information on these matters. As I understand it, it is certainly the intention of His Majesty's Government that these payments should be made extremely rapidly. If these payments are made as result of such circumstances, and the maternity grants are payable free from tax, it does not seem unreasonable or illogical that payments made for the support families in family allowances should similarly be free from tax. Finally, there is the practicability of the matter, to which the Chancellor has referred. It will be remembered that under the Beveridge scheme it was proposed to make family allowances of 8s. per week. Under the present family allowance scheme the cash payment is 5s. per week. It was argued by the Coalition Government that a benefit of 3s. approximately was payable in kind. If that is the case, the benefit payable in kind is certainly not liable to tax; only the amount payable in cash can be taxed. What will be the position?

How is this money to be collected? All of us who are fathers of more than one child have put in our claims for family allowances. If, week by week, our wives collect the money and it is put aside, will the Chancellor demand a portion of it back from us if it has been collected over a period of some weeks? I hope the Chancellor will indicate his intention that family allowances shall be allowances for the benefit of the child, that each child will receive the same amount of benefit, and that allowances payable by the Government in respect of each child shall be the same amount for each, and not differing amounts in accordance with the income and position of the child's parents.

10.17 p.m.

My hon. Friend has just pointed out a solid argument why family allowances should be kept as high as possible, and they will be if the Chancellor will agree to remit the tax on them. Sir William Beveridge recommended 9s. for the second and each subsequent child—8s. in cash and 1s. in kind. It is a fair assumption that since then the cost of living has risen by 10 per cent., so that the proper payment, on a subsistence basis, should be 10s. The Government are giving 5s. only in cash and, I think it is 2s. 6d., although it may be 3s., in kind. That leaves a gap of 2s. which has not been filled. If we charge Income Tax on this 5s., and bring it down, in the case of a man earning about £400 a year, who has three children, to 4s. 6d. or 4s., where are we getting? It is not fulfilling the need in any sense. Apart altogether from the tax side of the family allowances scheme, I would like to say a word or two about the situation in which children find themselves as a result of this Finance Bill and the Finance Act which the Chancellor introduced last autumn. It is a remarkable thing that in these two Measures there is discrimination against children in every range of income except the highest. The hon. Member for South Cardiff (Mr. Callaghan) will be interested in this, because he finds his way with such facility through the Financial Statement and the Statement of National Income and Expenditure. On pages 19 and 23 of the Financial Statement, it is clear that, taking the highest scale on, first of all, £5,000 per annum without any children, it improves a man's effective rate of tax by 11d.

I am sorry to interrupt the noble Lord, but that is not a question which arises on this Amendment. The sole question is whether family allowances shall or shall not be exempt from Income Tax.

Then I shall be glad to let the first part of my remarks stand, and reserve what I wanted to say now for a later occasion.

As you, Major Milner, have properly said, the object of this Amendment is to exclude from the charge of Income Tax family allowances payable to the second child and subsequent children under the 1945 Act. Quite clearly, payments to the family income are in the nature of income and, that being so, normally should be chargeable, like any other form of income, to Income Tax. The Income Tax law is definitely based on the principle that recurrent payments which are received as of right must be considered as income, and although all of us desire to assist children in every way possible this is not the way, in our view, to do it. If we desire to do that there are other ways. Under our Income Tax law in this present year of grace the exemption limit is pretty high. For a man with a wife and two children the exemption limit from Income Tax altogether is £6 and it rises by about £1 for every additional child he has, so that it may be said with a fair degree of accuracy that, although we are embodying in this Bill a Clause which permits these allowances to be charged to Income Tax, nevertheless a very large number of families will receive the family allowances but will not have to pay Income Tax on them. The great majority will be in that position.

I am fortified in the view I have tried to put before the Committee by two eminent Members of the House of Commons who sit on the other side of this Chamber. Some time ago the then Solicitor-General, speaking in the House, said:

On a point of Order, Major Milner. May I draw your attention to the fact that in line 42 the word "grant" occurs twice and that this Amendment does not specify which is meant? I put it to you that the Amendment is therefore out of Order.

As I have selected the Amendment I do not think I can take advantage of a technical error at this stage.

May I ask for an interpretation, Major Milner? If this Amendment is passed, would you direct that the word after the first "grant" or the second "grant" be cut out, and if so on what grounds?

I suggest that the answer to the point of Order is that quite obviously the Amendment means the second "grant."

On a point of Order. Is the Committee entitled to discuss the question of death grant?

The hon. Gentleman who moved the Amendment made his intentions quite clear, though, strictly speaking, the word "grant" intended should have been indicated.

Would you, Major Milner, accept a manuscript Amendment from the mover to make clear which "grant" he means?

Is not the matter made clear by the form of the Amendment? If I see aright, after the word "grant" there is a comma; it appears in the text after the second but not after the first "grant."

I rise, not to carry on the discussion on the merits of the Amendment, but to point out that the meaning which is assumed will not necessarily be the meaning that the court will say the Clause has. I point this out in the friendliest way to the Chancellor of the Exchequer. I am certain he and his advisers would like to look at the wording before the subsequent stages of this Bill. It is not a difficult point. The quick minded Chancellor will see it if he looks at this but ignores the commas as the Court will ignore the commas. Apart from the commas it would be uncertain whether the "payments on account of family allowances" are coupled with the payments liable to charge or with the exceptions. It is only the commas which make this clear to us, but as the commas will be ignored by the courts, it is wholly uncertain how this Clause will be construed. If the Chancellor of the Exchequer will put that to his legal advisers, they will tell him it is not as clear as it might be, and he may wish to make the matter clearer at a later stage.

In view of this very ingenious point which has been raised, I shall be glad to consult my very ingenious legal advisers to see whether they can remove any obscurity if, in their judgment, there is any obscurity.

Quite honestly, I feel that if this Amendment is pressed to a Division, it is one I must support. A man with a wife and two children does not at present pay Income Tax unless he is earning over £6 a week, but we are today establishing the principle that family allowances shall be taxable. I think that is wrong, because family allowances were given for the benefit of children, and we are giving with one hand and taking away with the other. Who is to say that the present rates of taxation will remain as they are? We all hope for reductions in Income Tax. Suppose next year the Chancellor of the Exchequer decides to abolish the Purchase Tax on a whole range of articles and get the revenue he loses thereby by an amendment to the Income Tax scales. We might find next year that a man with a wife with two children and earning 50s. a week may have to pay Income Tax, and we shall have established this year the principle that tax will be payable on children's allowances and have the 50s. a week man paying tax on his children's allowances. It is a hypothetical position—

It may be exceedingly unlikely, but the right hon. Gentleman may not be Chancellor of the Exchequer next year. Lots of things may happen. At any rate, he will not be Chancellor of the Exchequer in perpetuity, and we may have one not so kindly disposed. I want to preserve for the children the 5s. a week granted for them. Therefore, if this Amendment is pressed to a Division, I shall have to support it in the Lobby.

10.30 p.m.

I do not want to controvert the Financial Secretary's argument, but I should like, in a couple of sentences, to underline the consequence which follows from it. It is that, if the allowances are to be chargeable to Income Tax, then the recipient of them, who is the Income Tax payer, has first to pay tax on what he receives, and, second, has to make his share of contributon to the general national expenditure. Therefore, as the Financial Secretary more or less admitted the other way round, very few Income Tax payers will benefit from the reception of these family allowances.

I will not pursue the argument. But, considering the contribution that they make to taxation in general, as the Financial Secretary was saying, the great benefit will go to the non-taxpayer, or to those in the lowest income groups. That is all right; I am not objecting to that being so, but I would make the point that those who will benefit by the family allowances are not in the class in which the birth rate has fallen. This benefit, desirable in itself, should not be considered as a contribution to the solution of the birth rate problem, or as an alternative to other generous forms of relief which, I hope, the Chancellor will give.

With great respect to the learned Solicitor-General, I would submit that it is not an addition to income. After all, people who pay Income Tax on family allowances, if I understand it correctly, will have already paid Income Tax on the money that is to be paid back to them as family allowances, because family allowances come out of the Exchequer, and, therefore, they are thus paying for family allowances twice over. That may be thought a little too ingenious. I strongly support the hon. Member for Devizes (Mr. Hollis) and also the hon. and gallant Member for Lichfield (Major C. Poole). Only in today's "Times" attention has been drawn to the fact that the number of boys between the ages of one and five is something like 500,000 fewer than it was some 30 years ago. There is a strong case for increasing every possible incentive to the increase of families, and I am sure the Minister of Labour himself would strongly support that. Then the point is made that where the greatest fall in the birth rate has occurred is in the middle classes. Those are the classes that will fall under this Tax. And not only they, because those who earn more than £5 10s. a week will also be subject to tax on this. Those who earn that amount will resent very strongly, having to pay tax on their family allowances.

I am sorry, Major Milner. I do not very often address the Committee, and I got up because I have something to say. I want to refer to something the hon. and gallant Gentleman the Member for Lichfield (Major Poole) said, because the view he was expressing was one that passed through my mind, and may have passed through the minds of other hon. Members on this side of the Committee. I want to give an answer to it in support of the Government. My first reaction to the proposal that family allowances should be subject to Income Tax was against it. I support what was said by the Financial Secretary, that normally tax should be gathered out of income.

When I come to think it out more closely, I see that practically all the working classes, except the very highly paid, will in fact escape, because they will not have family allowances unless they have two children. Therefore, in a sense this is a harmless Amendment. Then it is said that we may have a rotten Chancellor in the future, and there may be great financial stringency when Income Tax may hit the working classes harder. But there are 400 people in the House to see that that does not happen, and if nothing of that sort does happen, we can consider that hypothetical danger now past. Therefore I am prepared to support the Government.

I can assure the Chancellor that if this Amendment goes to a Division and a Member of his own party votes against him, as the hon. and gallant Member for Lichfield (Major C. Poole) has threatened, then he will find at least one Member of the Opposition in the same Lobby as himself. We are not now discussing the magnitude of family allowances. If the House wish to increase family allowances, they can do so. I rise to say that I think that income should count as income and this Amendment should be resisted.

rose in his place, and claimed to move," That the Question be now put."

I hope that the right hon. Gentleman will not press his Motion as I think that the Committee are almost ready to come to a decision.

I would not have risen to speak except for the sophistries of the hon. and learned Member for Hammersmith (Mr. Pritt). I am among the simpler class of the community and am violently against extremely clever men.

And so may I put the matter as it would appear to a simpler person? For the moment I should like to consider myself as a mother. I learn from my husband that my income has been aggregated and I have been given an allowance. First of all, I receive the statutory allowance, as we are a married couple with four children. The next thing I learn is that I, the mother, am to collect the children's allowance. It is with some disconcerting emotion that I learn that the sum of money which I am collecting gross is to become taxed in my husband's income. This will produce some domestic uncertainty of happiness which might be avoided. I am of the opinion that family allowances should be given not as income but as expenses.

The "hon. Lady" is coy and will not disclose to a Government official representative her aggregate income. The facts are plainly stated. First, I am given a statutory deduction, and then a payment which I look upon as expenses for the maintenance of the children. That expense is treated as taxable income, and I think that is a gross injustice, which simple people, not people like the hon. and learned Member for Hammersmith will resent. I am against the proposal.

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

The Committee divided: Ayes, 204; Noes, 48.

Division No. 200.]

AYES.

[10.40 p.m.

Adams, W. T. (Hammersmith, South)

Buchanan, G.

Diamond, J.

Allen, A. C. (Bosworth)

Butler, H. W. (Hackney, S.)

Dobbie, W.

Allen, Scholefield (Crewe)

Callaghan, James

Dodds, N. N.

Anderson, A. (Motherwell)

Castle, Mrs. B. A.

Donovan, T.

Attewell, H. C.

Champion, A. J.

Driberg, T. E. N.

Austin, H. L.

Chetwynd, Capt. G. R.

Dugdale, J. (W. Bromwich)

Awbery, S. S.

Cluse, W. S.

Edwards, A. (Middlesbrough, E.)

Ayles, W. H.

Cobb, F. A.

Edwards, W. J. (Whitechapel)

Bacon, Miss A.

Cocks, F. S.

Evans, John (Ogmore)

Baird, Capt. J.

Collick, P.

Evans, S. N. (Wednesbury)

Balfour, A.

Collindridge, F.

Fairhurst, F.

Barton, C.

Calman, Miss G. M.

Farthing, W. J.

Bechervaise, A. E.

Cooper, Wing-Comdr. G.

Fletcher, E. G. M. (Islington, E.)

Benson, G.

Corbet, Mrs. F. K. (Camb'well, N.W.)

Follick, M.

Bing, Capt G. H. C.

Corvedale, Viscount

Foot, M. M.

Binns, J.

Crawley, Flt.-Lieut. A.

Foster, W. (Wigan)

Blenkinsop, Capt. A.

Daggar, G.

Gaitskell, H. T. N.

Blyton, W. R.

Daines, P.

Gibbins, J.

Bowden, Flg.-Offr. H. W.

Dalton, Rt. Hon. H.

Gibson, C. W.

Bowles, F. G. (Nuneaton)

Davies, Edward (Burslem)

Glanville, J. E. (Consett)

Braddock, Mrs. E. M. (L'pl, Exch'ge)

Davies, Ernest (Enfield)

Goodrich, H. E.

Braddock, T. (Mitcham)

Davies, Harold (Leek)

Gordon-Walker, P. C.

Brooks, T. J. (Rothwell)

Davies, Haydn (St. Pancras, S.W.)

Greenwood, A. W. J. (Heywood)

Brown, T. J. (Ince)

Deer, G.

Grierson, E.

Bruce, Maj. D. W. T.

Delargy, Captain H. J.

Griffiths, D. (Rother Valley)

Gunter, Capt. R. J.

Morley, R.

Skeffington-Lodge, T. C.

Guy, W. H.

Morris, P. (Swansea, W.)

Skinnard, F. W.

Hale, Leslie

Mort, D. L.

Smith, Capt. C. (Colchester)

Hall, W. G. (Colne Valley)

Moyle, A.

Smith, H. N. (Nottingham, S.)

Hannan, W. (Maryhill)

Nally, W.

Smith, S. H. (Hull, S.W.)

Hardy, E. A.

Nichol, Mrs. M. E. (Bradford, N.)

Snow, Capt. J. W.

Harrison, J.

Nicholls, H. R. (Stratford)

Solley, L. J.

Henderson, Joseph (Ardwick)

Noel-Baker, Rt. Hon. P. J. (Derby)

Soskice, Maj. Sir F.

Hobson, C. R.

Noel-Buxton, Lady

Stamford, W.

Holman, P.

O'Brien, T.

Summerskill, Dr. Edith

Holmes, H. E. (Hemsworth)

Oldfield, W. H.

Swingler, S.

Hughes, Hector (Aberdeen, N.)

Oliver, G. H.

Taylor, H. B. (Mansfield)

Hughes, Lt. H. D. (W'lverh'pton, W.)

Orbach, M.

Thomas, John R. (Dover)

Hutchinson, H. L. (Rusholme)

Paling, Will T. (Dewsbury)

Thomas, George (Cardiff)

Hynd, H. (Hackney, C.)

Palmer, A. M. F.

Thorneycroft, H. (Clayton)

Irving, W. J.

Paton, Mrs. F. (Rushcliffe)

Tiffany, S.

Isaacs, Rt. Hon. G. A.

Paton, J. (Norwich)

Timmons, J.

Janner, B.

Pearson, A.

Titterington, M. F.

Jeger, G. (Winchester)

Perrins, W.

Tolley, L.

Jones, P. Asterley (Hitchin)

Porter, E. (Warrington)

Tomlinson, Rt. Hon. G.

Keenan, W.

Porter, G. (Leeds)

Ungoed-Thomas, L.

Kinghorn, Sqn.-Ldr. E.

Pritt, D. N.

Viant, S. P.

Kinley, J.

Proctor, W. T.

Walkden, E.

Kirby, B. V.

Pryde, D. J.

Wallace, G. D. (Chislehurst)

Lang, G.

Pursey, Cmdr. H,

Wallace, H. W. (Walthamstow, E.)

Lee, Miss J. (Cannock)

Randall, H. E.

Warbey, W. N.

Leslie, J. R.

Ranger, J.

Watson, W. M.

Lewis, A. W. J. (Upton)

Rees-Williams, D. R.

Weitzman, D.

Lewis, T. (Southampton)

Reeves, J.

Whiteley, Rt. Hon. W.

Lindgren, G. S.

Reid, T. (Swindon)

Wigg, Col. G. E.

Lyne, A. W.

Rhodes, H.

Wilkes, Maj. L.

McAdam, W.

Roberts, Goronwy (Caernarvonshire)

Willey, O. G. (Cleveland)

McAllister, G.

Rogers, G. H. R.

Williams, Rt. Hon. T. (Don Valley)

McGhee, H. G.

Ropner, Col. L.

Williamson, T.

McKay, J. (Wallsend)

Royle, C.

Willis, E.

McLeavy, F.

Sargood, R.

Willoughby de Eresby, Lord

Mallalieu, J. P. W.

Scott-Elliot, W.

Yates, V. F.

Manning, C. (Camberwell, N.)

Sharp, Lt.-Col. G. M.

Young, Sir R. (Newton)

Marshall, F. (Brightside)

Shawcross, C. N. (Widnes)

Younger, Hon. Kenneth

Messer, F.

Shurmer, P.

Zilliacus, K.

Middleton, Mrs. L.

Silverman, J. (Erdington)

Milchison, Maj. G. R.

Silverman, S. S. (Nelson)

TELLERS FOR THE AYES:

Monslow, W.

Simmons, C. J.

Captain Michael Stewart and

Morgan, Dr. H. B.

Skeffington, A. M.

Mr Popplewell.

NOES.

Astor, Hon. M.

Holmes, Sir J. Stanley (Harwich)

Renton, D.

Baldwin, A. E.

Hope, Lord J.

Sanderson, Sir F.

Boles, Lt.-Col. D. C. (Wells)

Hutchison, Lt.-Cdr. Clark (Edin'gh, W.)

Shepherd, W. S. (Bucklow)

Bower, N.

Lindsay, M. (Solihull)

Stoddart-Scott, Col. M.

Boyd-Carpenter, J. A.

Lipson, D. L.

Sutcliffe, H.

Byers, Lt.-Col. F.

McKie, J. H. (Galloway)

Taylor, C. S. (Eastbourne)

Carson, E.

MacLeod Capt. J.

Thorneycroft, G. E. P. (Monmouth)

Crosthwaite-Eyre, Col. O. E.

Marples, A. E.

Thorp, Lt.-Col. R. A. F.

Darling, Sir W. Y.

Mellor, Sir J.

Touche, G. C.

Digby, Maj. S. W.

Mott-Radclyffe, Maj. C. E.

Turton, R. H.

Drayson, G. B.

Nicholson, G.

Wakefield, Sir W. W.

Duthie, W. S.

Nield, B. (Chester)

Walker-Smith, D.

Foster, J. G. (Northwich)

Nutting, Anthony

Williams, Gerald (Tonbridge)

George, Lady M. Lloyd (Anglesey)

Poole, O. B. S. (Oswestry)

York, C.

Hannon, Sir P. (Moseley)

Prescott, Stanley

TELLERS FOR THE NOES:

Hare, Lieut-Col. Hn. J. H. (W'db'ge)

Price-White, Lt.-Col. D.

Mr. Butcher and

Hinchingbrooke, Viscount

Raikes, H. V.

Major Niall Macpherson.

I beg to move, in page 18, line 17, after "grant", to insert:

"or any Act of the Parliament of Northern Ireland passed for purposes similar to the purposes of that Act."

I do not know whether it will be in Order, and in accordance with the wishes of the Committee, if I deal with this and the two following Amendments standing in the name of my right hon. Friend at the same time. Their object is simple, namely, to apply the provisions of Clause 24, as regards both the allowance of contributions and the charging of benefits to tax, to the Northern Ireland taxpayer as we are about to make them apply to the British taxpayer. The Northern Ireland Parliament has already passed a Family Allowances Act and it has a Bill on the stocks similar to the Bill with which we dealt in this House recently in regard to national insurance. It is very desirable, as I am sure the Committee will agree, that the position of the Northern Ireland taxpayer should be similar to that of the British taxpayer. These Amendments, of which I now move the first, will enable that to be brought about.

This action is taken in conjunction, and after consultation, with the Minister of Finance of Northern Ireland, and it would seem perfectly proper that we, who, in this matter as in all others, are proud of our union with this country, should bear the same burden of taxation as this country. I trust the Amendment will be accepted.

Amendment agreed to.

Further Amendments made:

In page 18, line 23, after "1945," insert:

"under the Family Allowances Act (Northern Ireland), 1945."

In line 24, leave out "that Act," and insert:

"either of those Acts."—[ Mr. Glenvil Hall. ]

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

We have recently made efforts to have payments under the Family Allowances Act exempted from Income Tax. The Committee has decided in the opposite sense, and, therefore, this income will now be aggregated with the income of the joint family for the purpose of taxation. I rise to ask the Chancellor of the Exchequer whether it is proposed to give the earned income tax relief, or whether it is to be treated as unearned income. I also want to impress upon him very sincerely that the only possible thing to do—if he is determined to tax these sums of money—is to treat them as earned income. After all, this money cannot be paid in terms of family allowance unless there are at least two children in a family, when there is the allowance in respect of one child. Surely if it is a payment in respect of the care and maintenance of two children it should be regarded by the Chancellor as earned income and attract the allowance. We have exemption in the case of a woman who goes out to work in another part of the Bill. I hope the Chancellor of the Exchequer will at least treat the allowance as earned income.

The answer is that this will be treated as earned income.

Question put, and agreed to.

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

CLAUSE 25.—(Surtax on income under settlements.)

I beg to move, in page 19, line 2, at the end, to insert:

I pass to another point, the enormous amount of prejudice which has been raised by confusing settlements on charities, with the settlements made by the Duke of Westminster, who saved Surtax by seven years' covenants in favour of his agent, and of his other servants, while still continuing to enjoy their services. The case of charities is entirely different because the Duke of Westminster in that case made no financial sacrifice—quite the contrary—but it is quite impossible for any settlement to be made on a charity without a net financial sacrifice, great or small, by the donor. Now the Chancellor said in the Budget Debate that it is not the donor who makes the contribution, except to a negligible extent. That is a gross misstatement. I got the figures from the right hon. Gentleman a fortnight later, On 14th May, and they show that while a Surtax total of £1,250,000 is recovered on these charitable covenants, the donors' net contribution after allowing for that is £1,000,000. In other words, the donors pay £2,250,000 out of their pocket and then recover £1,250,000 Surtax, but they are still £1,000,000 out of pocket. I suggest that £1,000,000 is not a negligible proportion of £2,250,000. The only case where the contribution of the donor is negligible is the case in which the donor pays Surtax at the minimum rate. It is quite obvious that the proportion of such Surtax payers is very small indeed. The Chancellor told me yesterday that the average income of all Surtax payers for the last year for which figures are available was £4,500, and the rate of Surtax paid on such an income is quite low. It works out at about three shillings, overall, on the amount subjected to Surtax. Therefore the net sacrifice made by a Surtax payer who makes a charitable settlement is, on the average, very substantial.

11.0 p.m.

I suggest that it would have been more honest for the Chancellor to take the average instead of taking this extreme case. It is entirely untrue to say that, as a general proposition, the proportion paid by the donor is negligible. The learned Solicitor-General complained that, under the existing law, people got kudos from payments to charities which they never made, and which were paid out of the pockets of the taxpayer. I have already shown that in every case there is some financial sacrifice by the settler, and that, on the average, it is substantial. Anyhow, the point about kudos seems to be a very small point to make. It is true that the subscriber's name may appear in the charity's subscription list for a gross amount which is larger, perhaps much larger, than the net amount paid out of his pocket. But if that is thought objectionable, I am quite sure that charities would be willing that subscriptions under covenant should be specially marked, and that it should be clearly stated that the gross amount was greater than the amount which actually came from the subscriber's pocket.

My main ground for moving this Amendment, however, is the very serious effect that the Clause, as it stands, will have on the income of charities. My right hon. Friend the Member for the Scottish Universities (Sir J. Anderson), the former Chancellor of the Exchequer, referred to that. The Chancellor's proposal will be a powerful discouragement to these settlements being made or renewed. It has already had that effect. I am informed by the National Council of Social Service, which is a clearing house for many benefactors, and for many of these covenants, that in April and May last year it handled £20,000 of fresh covenants or renewals of covenants; whereas in the same months of this year that figure had fallen to £5,000. Of course it is true that in the interval the Government have made their attack on hospitals. But there are a great many covenants handled by the National Council of Social Service for charities other than hospitals. I cannot believe that the Committee want to strike this very serious blow against the National Council and other charities. As I have already pointed out, a settlement on an individual, except one's children and one's servants, is already exempted from the operation of this Clause, and my hon. Friend the Member for South Hendon (Sir H. Lucas-Tooth), in the Debate on 17th April asked this very pertinent question:

I would like to repeat the words which were quoted by the hon. Member for Twickenham (Mr. Keeling) as having been spoken by me. We on this side of the Committee have nothing against charities, and we wish well to deserving charities. Nothing could indicate that more plainly than the gesture of my right hon. Friend when he intimated that with regard to the charity which is actually mentioned in the Amendment, that he would move to contribute pound for pound to their jubilee appeal. He indicated that in general terms, without any specific commitment, but that is a symptom of his attitude, and of the attitude of my hon. Friends on this side of the Committee to charities in general. What we complain about is the revenue leakage which these seven year covenants result in. It is not through any animosity towards charity in general, but simply to stop a leakage which the Treasury cannot afford that we have introduced this particular Clause into the Bill. The hon. Gentleman went into certain figures, but before doing so he pointed to what he regarded as an anomaly that one might be prevented from contributing to a charity whereas it was possible to continue to contribute for the benefit of individuals. The reason for that is that the amount contributed to charities far exceeds any amount which is contributed for the benefit and maintenance of individuals under these seven year covenants.

The amount contributed to charities will appear from the following figures. During the last few years these seven year covenants have been increasing enormously. In 1935 there were some 55,000; in 1942 the figure had risen to 185,000; in 1944 it had risen to 221,000 and it is now in the region of 259,000. That means to say that there has been a growing loss to the revenue. The amount paid during last year under these seven year covenants, almost all to charities, was some £4,500,000. Of that sum £2,250,000 was paid by the Treasury in the form of repayment of tax to the charities. Another £1,250,000 represents the amount saved in Surtax to donors under these seven year deeds. The balance of £1,000,000 was contributed by the donors themselves. It is to be remembered that only some of the donors pay Surtax, so that the number of Surtax payers contributed less than £1,000,000. The hon. Gentleman complains that the figures given by my right hon. Friend did not accurately represent the position, but I suggest that they were completely accurate and fair, on this analogy. With 1946 to 1947 rates of Income Tax, a £5,000 donor under these deeds would have contributed at the rate of 6s. 6d.; at £12,000, at the rate of 2s. 6d., and at over £20,000, at the rate of sixpence. The rest would have been contributed by the general body of ratepayers.

If I may interrupt, I should like to ask two questions. First, with reference to the figure of 260,000, we are discussing Surtax, and there are not 260,000 Surtax payers. Secondly, as regards the statement that the Chancellor has been inaccurate, I would refer the hon. and learned Gentleman to the remarks of the right hon. Gentleman on 17th April:

"If people are making contributions to charity, we are very happy that they should continue to do so, but they should not, in effect, claim to make contributions to charity when 19s. 6d. out of every pound they purport to pay is found by the Treasury."—[OFFICIAL REPORT, 17th April, 1946; Vol. 421. c. 2818–9.]

Well, I suggest that he cannot possibly say that 19s. 6d. in every pound is met by the Treasury.

The hon. Gentleman has referred to the question of incomes over £20,000. It is perfectly ridiculous that persons with a high income should be able to contribute to charities with a reputation of being generous benefactors, when the benefactors are the general public—

Perhaps; but in the same Debate I mentioned it. If hon. Members come in for a few minutes and then go out they may get a misleading impression of the Debate. What we say is that people in these levels get the reputation of being generous benefactors when, in fact, they are nothing of the sort That is an absurd position, and one which cannot be allowed to continue, even though it gives a great deal of satisfaction to persons who have incomes of that level and pay those amounts. It is a luxury the State cannot afford and we must put an end to it.

That is what I have to say in answer to this Amendment. I would add this. Charities, within the meaning of the Income Tax Acts, have been defined. It is not as though the word "charity" were limited to a very narrow type of recipient. The meaning of the word "charity" was settled in a case that went to the House of Lords, where it was defined by Lord MacNaghten in extremely wide terms. The fact that it was widely defined is one of the reasons why such an enormous amount of the national revenue goes to charities under these seven year deeds. The charity may exist, not merely for the removal of poverty and the advancement of education and religion; it may be a charity the objects of which are beneficial, in a general sense, to the community. It is because we have this very wide description of charities that this leakage of the national revenue has resulted. That is a position to which we on this side of the Committee cannot possibly accede People with incomes of £20,000 a year contribute virtually nothing to the charities they purport to support; people with incomes of £12,000 contribute only 2s. 6d. in the £, and so on downwards. That is a position to which we must put an end, and for this reason I ask the Committee to reject the Amendment.

We have listened with very serious attention and interest to the hon. and learned Gentleman, because this is a very serious matter to a great many of us, not because we are under the burdensome, onerous infliction of paying Surtax at 19s. 6d. in the £, but because we are seriously disturbed about the effect that this provision will have upon charities. There were a great many matters of detail in the hon. and learned Gentleman's speech to which one could refer by way of criticism and comment, of a debating character. But I do not want to do that. I do, however, want to try to put before the Committee what is, to my mind, a really serious matter.

First as regards the Surtax payer on the high level, the hon. and learned Gentleman referred to the fact that there are 260,000 covenants outstanding at the present time. It is obviously quite impossible that there should be any substantial proportion of that vast number of covenants made by people who are in the high bracket of Surtax payers, because there is nothing like that number of people left in this country—if there was at any time any great number of them—who have incomes in excess of £20,000 a year. Therefore, in endeavouring to achieve what, I fully agree, is a laudable object, the hon. and learned Gentleman is, surely, using a tremendous weapon to deal with what has now become a comparatively small number of people. But I emphatically deny that the purpose is the one he has given. No Surtax payer of that bracket wishes to advertise the fact that he is a rich man by making public donations under his own name to charity. Everybody knows that that simply brings upon him a horde of charitable appeals that make his life a burden; and his one desire is to avoid publicity in any charitable work to which he subscribes. Hon. Gentlemen may laugh, but I can assure them that that is the fact. In any event, if that were the purpose for which the Government were introducing this provision in the Finance Bill, I believe the country would consider it a very unworthy purpose, indeed.

There is another aspect of this matter to which I want to refer. The hon. and learned Member started by saying that the Government have a 50 per cent. warmth of heart for charity, and he quoted the Chancellor's magnanimous offer to contribute pound for pound with the 50 years appeal of the National Trust. He quoted that as an illustration of the Government's attitude towards charity in general—not only charity in so far as it is represented by the National Trust. If that is a fair illustration—and I think I have correctly quoted the hon. and learned Member—then it disposes altogether of the argument that it is improper for the Government to contribute 50 per cent. by way of a return in Income Tax to those charities who benefit by deeds of covenant. Therefore, that disposes of his argument with regard to £2,250,000 of the total sum we are discussing. We are left then with another £2,250,000, of which it is admitted £1,000,000 comes directly out of the pocket of the subscribers and has nothing to do with the Government. Therefore we are considering a total figure of £1,250,000. May I call attention to the sacrifices charities are to incur as a result of the decision of the Government to forgo that grant of £1,250,000? We all know how it is becoming increasingly difficult for charities to raise voluntary funds by ordinary methods, or by any other methods which can be devised. It can be argued by the Government that they are assisting many charities in other ways. Medical charities, hospitals and so forth may benefit by Government activity in other directions.

I would call the attention of the Committee to one—perhaps the most important—of what are technically called charities which does not so benefit and is unlikely to benefit, and that is the charity of the Anglican Church—I am not qualified to speak for the other Churches. The Anglican Church raises a very important proportion of its annual income by voluntary subscriptions, and more and more is it being raised by deeds of covenant. Whatever else the Government are doing for other charities—social charities if one may call them so—they are not proposing to assist spiritual charities by social legislation, as, if one may say so, by spiritual legislation. Therefore the effect of this provision in the Finance Bill is directly, although I do not say intentionally, directed against the maintenance and support of the churches of this country. I hope that I may give the Chancellor credit for believing that he did not realise the serious effect this would have in this particular direction. In view of the fact that it is a trivial sum to the Chancellor—it is not much more than half what he is proposing to give back on Purchase Tax—I hope that he will consider even now, whether he cannot waive this £1,250,000.

The Solicitor-General, in opposing this Amendment, spoke of leakage from the revenue, and repeated that expression several times. I believe that his actual words were "leakage from the general revenue provided by the general body of taxpayers." I submit that that suggestion by the Solicitor-General is absolutely wrong. The whole of the funds in question are provided by the donors. They are not provided by the general body of taxpayers. It is quite true that if I am a donor to a charity, in certain circumstances, up to 19s. 6d. in the £ may be provided from money which would otherwise be payable to the revenue, but, in fact, I have to earn 20s. before it can be paid to the charity. It is a perfectly astonishing thing, but the implication is that in the view of the Labour Government not one penny of a man's income belongs to him; it all belongs to the Chancellor of the Exchequer, and, out of the goodness of his heart, he sometimes gives back 10s. in the pound and sometimes only sixpence in the pound. That is what the reply of the Government discloses in this matter.

One need look only a little further to see how this works out under this Clause. The Solicitor-General has spoken about leakage from the general revenue, but after this Bill becomes law, it will still be open to anyone to make a settlement in favour of a stranger. It will still be open to a man to make a settlement in favour of his illegitimate child—a settlement up to any amount—and if he happens to be a rich man, 19s. 6d. out of that settlement will, of course, come from funds which would otherwise be payable to the revenue. In those circumstances, why does not the Government also seek to stop up that leakage from the general revenue provided by the general body of taxpayers? If a man has a large family of illegitimate children and makes a substantial settlement in favour of each child, he can get a very large proportion of that money provided by just the procedure the Government are now seeking to stop in the case of a perfectly genuine gift in favour of a charity.

The Solicitor-General made some play with the meaning of the word "charity." It is, of course, a difficult word to define, and it is quite true that it has some significance in connection with Income Tax law, which may, perhaps, make it an undesirable word to use in this sort of context. I am not particularly enamoured of the wording of this Amendment, and I would be perfectly willing to see quite clearly defined charitable objects. If the Government would give an indication that they were prepared to consider exceptions on those lines, I am sure my hon. Friends would not wish to press the matter to a Division.

11.30 p.m.

I do not think that the learned Solicitor-General appreciates the effect of some of his own figures. First, may I correct what may be, in his opinion, little more than a technical error, but is an actual error of statement in his speech? The hon. and learned Solicitor-General spoke of a repayment of Surtax as a result of this covenant. Of course, there is no such thing, but where these payments under covenant operate, they are set against income which would otherwise be subject to Surtax. There is no collection of Surtax which is subsequently repaid. I assume for the benefit of the hon. and learned Solicitor-General that he was making a short statement, not meaning to be completely accurate when he talked about repayments.

Let me take a point which has been made in the past by the Chancellor of the Exchequer and today by the Solicitor-General, that where a covenant is entered into by a man with a large income the greater proportion of the payment to the charity would, in fact, otherwise go to the revenue. But what does that mean, assuming that the 19s. 6d. in the pound which goes to the charity was, in fact, money that would otherwise go to the revenue? It follows absolutely from that that the whole of the loss or almost the whole of the loss inflicted by this Clause will fall upon the charity and not upon the covenantor. That is a most important consideration. The Solicitor-General gave very interesting figures, for which I thank him, about the growth of these covenants. But the enormous growth of the amount of covenants was the accompaniment of the enormous increase in taxation. That was the only way in which the charities could hope to secure their income.

The proposals of the Government as submitted by the Solicitor-General really hit the charities in two ways. First there is the high taxation itself. What the Chancellor proposes to do by this Clause would not have nearly such an evil effect if it were not for the very high level of taxation. After all, by the very high level of taxation, the Chancellor makes it impossible for the charities to derive income by any other method. If this method is cut off, then, if we take the Government's argument that the 19s. 6d. which goes to the charity would otherwise go to the revenue, it is wholly the revenue of the charities which is hit. I cannot think that that is really the desire of the Chancellor of the Exchequer.

I conclude with two suggestions which I would ask the Chancellor of the Exchequer to turn over in his mind. I know that there are some charities for which he has a very genuine sympathy, including one in which I have been interested for some time, namely, the National Trust. I think that one point made by the Solicitor-General was his suggestion that Lord Macnaghten's definition of a charity was dangerously wide. If that is the view of the Government—and I am not saying that I agree—surely it would be possible to alter that definition of charity by legislation. There is one other small point. Rather than have the Clause in the form in which it now is, I would ask the Chancellor to consider another form of reduction which is known to Income Tax law, namely, an allowance in respect of life insurance premiums. That is allowed if it does not exceed a certain proportion of the income. Rather than have this total prohibition I would ask the Government to consider whether they could not have some limitation of that kind and not by the Clause as it now stands, because it will inflict a loss which will fall, admittedly, wholly on the charities. Not one penny piece of this loss will fall on the covenant maker. This does not apply at all to existing covenants; it only applies to future covenants. The whole of the loss will fall on the charity. In these circumstances I ask the Committee to support this Amendment, but if it is defeated, I ask the Chancellor to consider whether he really wishes to inflict this crippling loss upon charities.

I hope the right hon. Gentleman the Chancellor of the Exchequer will have been moved by the very powerful arguments urged by hon. Members on this side of the Committee. We know his difficulty very well; we quite understand that he wishes, in the first place, to remove the possibility of certain abuses which have appeared in the past, and we support entirely everything he wishes to do in that direction. I want to ask the Chancellor, however, whether he has fully considered the very heavy blow which he is dealing to charities in this connection. I am not quite certain whether all of us, even on this side of the Committee, had fully appreciated, in the earlier stages of the Finance Bill, how much this meant to charities. It has been brought home to us by communications from many quarters, and I think that the Committee ought at least to be aware that numerous charities will suffer very heavily indeed in consequence of this action. I would like to point out that the incidence of this blow will be very uneven. There are some charities which, it so happens, are receiving considerably more than others as a result of these particular arrangements which have been possible in the past. Those charities will suffer more heavily than others. I might refer, perhaps, especially to the Churches, as did my hon. and gallant Friend the Member for Chichester (Lieut.-Commander Joynson-Hicks). In recent months the Church of England, for example, has been making a tremendous effort to bring up the stipends of the clergy to a figure commensurate with the increase in the cost of living, and they have inaugurated, with the help of the Ecclesiastical Commissioners, a scheme called "Scheme K" with that very object. Many of the contributions which have been made on that score will be prejudiced by the proposals which have been put forward today.

I must say that I thought the arguments of my hon. Friend the Member for South Hendon (Sir H. Lucas-Tooth) were extremely cogent. I am not sure whether every hon. Member on the opposite side quite realises how this has worked in the past. Might I illustrate with the case of a wealthy man who, before the war, had an income of, let us say, £10,000 a year, and who was making very large contributions out of that income to charities in which he was interested? The position now is that a man with an income of £10,000 pays £6,500 in tax, and the balance of his income is therefore £3,500. It may well be that such a man was contributing £5,000 out of his income to charitable objects, and the only way in which he has been able to continue his contributions has been by taking advantage of the law as it stood, and as it still stands. I do hope that hon. Members on the other side will not be too impressed by the arguments of the learned Solicitor-General, who was, I thought, rather inclined to sneer at charitable gifts, which had not been made, as he seemed rather inclined to suggest, with the object of gaining kudos. It really is not true; as an hon. Member behind me suggested, many of these donations are quite anonymous, and no kudos whatever is gained by the individual who makes them. Will the Chancellor reconsider this matter before the Report stage, and see whether he cannot bring forward some modification of this proposal? Possibly some redefinition of charities for this particular purpose might help him, or possibly there may be some other means which he and his advisers in the Board of Inland Revenue might think helpful in this particular connection. We on this side of the Committee feel very strongly over this matter, and perhaps the right hon. Gentleman will say something which may relieve our anxiety, and the anxieties of many worthy charities in this country.

We have had a very long Debate on this subject, which is natural because it arouses interest in all parts of the Committee. I hope it is comprehended that the proposal I am making is, having regard to the circumstances which this involves for the Treasury, a very moderate proposal. The proposal is not retrospective; it does not in any way alter the arrangements which attach to existing seven year deeds which had been entered into before the date of this Budget. Nor does it affect the Income Tax allowance in respect of these. I would say that there are some who have advised me in this matter, who think it would have been perfectly reasonable in all the circumstances of the case, to have removed not merely the Surtax allowance but the Income Tax allowance as well. A case can be made for that, but I have not gone so far as that. I have limited my proposal to Surtax, and I have not altered the arrangements in regard to Income Tax allowances.

To this extent, and this, I think is relevant in reply to what the hon. and gallant Member for Chichester (Lieut.-Commander Joynson-Hicks) said, all charitable donations under a seven years deed do benefit by reason of the Income Tax relief, and that is, in effect, a very substantial encouragement to charitable donations. That, I think, should be taken into account. The point which I have had to consider is the substantial and growing loss to the revenue by reason of the rapid growth in the number of these deeds which are executed. The figure has already been given tonight that, under the head of Surtax we are losing £1,250,000 a year by reason of these arrangements, and this loss is growing at the rate of £250,000 each year as new deeds are entered into. That is not a loss which it is reasonable we should continue to suffer.

I should also like to remind the Committee that this is not a new thought which I am putting forward for the first time. It has often been raised by predecessors of mine. They have never, it is true, come to the point of making these proposals, but in 1927 the present Leader of the Opposition, when Chancellor of the Exchequer, did insert a Clause in the Finance Bill which was designed to stop the loss of revenue resulting from the execution of new deeds of this type. It was introduced in the 1927 Finance Bill. It is true that the right hon. Gentleman did not persist with it in Committee, but it was in his mind at that time. The late Sir Kingsley Wood in 1943, in the course of the Finance Bill Debates, definitely said he would have to consider the question of whether the continuation of these taxation privileges attaching to deeds of covenant could be justified. He was inclined to think not, but, on the other hand, he did not think at that time—we were in the midst of war—he could carry the matter to the point of putting down a Clause in the Finance Bill. Therefore, Conservative predecessors of mine have shared my view that this is not an arrangement which can be defended.

I think the time has now come when we can take definite action along the lines which I have indicated in this Clause. I am always willing, of course—it is my duty and I readily undertake it—to give thought to arguments which have been advanced from the other side of the Committee, but although I promise to give thought to them between now and the Report stage of the Finance Bill, I should say that I have already given a great deal of thought to it. Although I will

promise to give it more thought, I must not be understood to be giving any undertaking that I shall be prepared to modify the proposal when we reach the Report stage. I shall think about it again, certainly; but with no kind of commitment to agree to any modification at all. I think that on balance the argument is very powerful in favour of carrying out this relatively moderate amendment of the present law. I repeat that we leave the Income Tax concession wholly without amendment, and do not take retrospective action regarding existing deeds. I hope the Committee will agree to come to a decision. We have not made much progress today. We have only completed six Clauses. That is very poor going compared with yesterday, but we are not proposing to ask the Committee to sit late tonight. I hope, therefore, we shall now be able to proceed to a Division, if it is still the desire of the Opposition to divide on this, and to get the Clause. After that I am prepared to adjourn further consideration of the Bill until Monday.

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

The Committee divided: Ayes, 79; Noes, 176.

Division No. 201.]

AYES.

[11.46 p.m.

Agnew, Cmdr. P. G.

Grimston, R. V.

Nield, B. (Chester)

Assheton, Rt. Hon. R.

Hare, Lieut.-Col. Hn. J. H. (W'dh'ge)

Nutting, Anthony

Astor, Hon. M.

Haughton, S. G.

Peake, Rt. Hon. O.

Baldwin, A. E.

Herbert, Sir A. P.

Prescott, Stanley

Birch, Nigel

Hollis, M. C.

Price-White, Lt.-Col. D.

Boles, Lt.-Col. D. C. (Wells)

Holmes, Sir J. Stanley (Harwich)

Raikes, H. V.

Bossom, A. C.

Hope, Lord J.

Shepherd, W. S. (Bucklow)

Bower, N.

Hulbert, Wing-Cdr. N. J.

Stanley, Rt. Hon. O.

Boyd-Carpenter, J. A.

Hutchison, Lt.-Cm. Clark (E'b'rgh W.)

Stoddart-Scott, Col. M.

Braithwaite, Lt.-Comdr. J. G.

Hutchison, Col. J. R. (Glasgow, C.)

Strauss, H. G. (English Universities)

Buchan-Hepburn, P. G. T.

Jeffreys, General Sir G.

Stuart, Rt. Hon. J. (Moray)

Butcher, H. W.

Joynson-Hicks, Lt.-Cdr. Hon. L. W.

Studholme, H. G.

Carson, E.

Keeling, E. H.

Sutcliffe, H.

Clifton-Brown, Lt.-Col. G.

Langford-Holt, J.

Taylor, C. S. (Eastbourne)

Crookshank, Capt. Rt. Hon. H. F. C.

Lindsay, M. (Solihull)

Thorneycroft, G. E. P. (Monmouth)

Crosthwaite-Eyre, Col. O. E.

Lipson, D. L.

Turton, R. H.

Crowder, Capt. J. F. E.

Low, Brig. A. R. W.

Walker-Smith, D.

Darling, Sir W. Y.

Lucas-Tooth, Sir H.

Ward, Ho. G. R.

Digby, Maj S. W.

Mackeson, Lt.-Col. H. R.

White, J. B. (Canterbury)

Drayson, Capt. G. B.

McKie, J. H. (Galloway)

Williams, C. (Torquay)

Drewe, C.

Macmillan, Rt Hon. Harold (Bromley)

Williams, Gerald (Tonbridge)

Dugdale, Maj. Sir T. (Richmond)

Manningham-Buller, R. E.

Willoughby de Eresby, Lord

Erroll, F. J.

Marshall, D. (Bodmin)

York, C.

Foster, J. G. (Northwich)

Marshall, S. H. (Sutton)

Fraser, Sir I. (Lonsdale)

Mellor, Sir J.

TELLERS FOR THE AYES

Gage, Lt.-Col. C.

Morrison, Maj. J. G. (Salisbury)

Sir Arthur Young and

Galbraith, Cmdr. T. D.

Mott-Radclyffe, Maj. C. E.

Major Conant.

Gridley, Sir A.

Nicholson, G.

NOES

Adams, Richard (Balham)

Bacon, Miss A.

Bowden, Flg.-Offr. H. W.

Adams, W. T. (Hammersmith, South)

Baird, Capt. J.

Bowles, F. G. (Nuneaton)

Allen, A. C. (Bosworth)

Balfour, A.

Braddock, Mrs. E. M. (L'pl, Exch'ge)

Allen, Scholefield (Crewe)

Barton, C.

Braddock, T. (Mitcham)

Anderson, A. (Motherwell)

Bechervaise, A. E.

Brown, T. J. (Ince)

Attewell, H. C.

Benson, G.

Buchanan, G.

Austin, H. L.

Bing, G. H. C.

Byers, Lt.-Col. F.

Ayles, W. H.

Boardman, H.

Callaghan, James

Champion, A. J.

Hynd, H. (Hackney, C.)

Randall, H. E.

Cobb, F. A.

Janner, B.

Ranger, J.

Cocks, F. S.

Jeger, G. (Winchester)

Rees-Williams, D. R.

Collindridge, F.

Jones, D. T. (Hartlepools)

Reid, T. (Swindon)

Colman, Miss G. W.

Jores, P. Asterley (Hitchin)

Rhodes, H.

Comyns, Dr. L.

Keenan, W.

Roberts, Emrys (Merioneth)

Corbet, Mrs. F. K. (Camb'well, N.W.)

Kinghorn, Sqn.-Ldr. E.

Roberts, Goronwy (Caernarvonshire)

Crawley, Flt.-Lieut. A.

Kirby, B. V.

Rogers, G. H. R.

Crossman, R. H. S.

Lang, G.

Scott-Elliot, W.

Daggar, G.

Lee, Miss J. (Cannock)

Shackleton, Wing-Cdr. E. A. A.

Dalton, Rt. Hon. H.

Lewis, A. W. J. (Upton)

Sharp, Lt.-Col. G. M.

Davies, Edward (Burslem)

Lewis, T. (Southampton)

Shawcross, C. N. (Widnes)

Davies, Ernest (Enfield)

Lindgren, G. S.

Shurmer, P.

Davies, Harold (Leek)

Lyne, A. W.

Silverman, S. S. (Nelson)

Davies, Haydn (St. Pancras, S.W.)

McGhee, H. G.

Skeffington, A. M.

Deer, G.

McKay, J. (Wallsend)

Skeffington-Lodge, T. C.

Delargy, Captain H. J.

Mackay, R. W. G. (Hull, N.W.)

Skinnard, F. W.

Diamond, J.

McLeavy, F.

Smith, Capt. C. (Colchester)

Dobbie, W.

Mallalieu, J. P. W.

Smith, S. H. (Hull, S.W.)

Dodds, N. N.

Manning, C. (Camberwell, N.)

Snow, Capt. J. W.

Donovan, T.

Manning, Mrs. L. (Epping)

Solley, L. J.

Dribarg, T. E. N.

Marshall, F. (Brightside)

Soskice, Maj. Sir F.

Dugdale, J. (W. Bromwich)

Messer, F.

Stamford, W.

Edelman, M.

Middleton, Mrs. L.

Stewart, Capt. Michael (Fulham, E.)

Edwards, A. (Middlesbrough, E.)

Monslow, W.

Swingler, S.

Evans, John (Ogmore)

Morgan, Dr. H. B.

Taylor, H. B. (Mansfield)

Evans, S. N. (Wednesbury)

Morley, R.

Taylor, R. J. (Morpeth)

Fairhurst, F.

Morris, P. (Swansea, W.)

Thomas, John R. (Dover)

Farthing, W. J.

Mort, D. L.

Thomas, George (Cardiff)

Fletcher, E. G. M. (Islington, E.)

Moyle, A.

Thorneycroft, H. (Clayton)

Follick, M.

Nally, W.

Tiffany, S.

Foot, M. M.

Nichol, Mrs. M. E. (Bradford, N.)

Timmons, J.

Gaitskell, H. T. N.

Nicholls, H. R. (Stratford)

Titterington, M. F.

George, Lady M. Lloyd (Anglesey)

Noel-Baker, Rt. Hon. P. J. (Derby)

Tolley, L.

Gibson, C. W.

Noel-Buxton, Lady

Tomlinson, Rt. Hon. G.

Gordon-Walker, P. C.

O'Brien, T.

Ungoed-Thomas, L.

Greenwood, A. W. J. (Heywood)

Oldfield, W. H.

Wadsworth, G.

Grierson, E.

Oliver, G. H.

Walkden, E.

Griffiths, D. (Rother Valley)

Orbach, M.

Wallace, H. W. (Walthamstow, E.)

Guy, W. H.

Paling, Will T. (Dewsbury)

Warbey, W. N.

Hall, W. G. (Colne Valley)

Palmer, A. M. F.

Weitzman, D.

Hamilton, Lieut.-Col. R.

Paton, Mrs. F. (Rushcliffe)

Whiteley, Rt. Hon. W.

Hardy, E. A.

Paton, J. (Norwich)

Wigg, Col. G. E.

Harrison, J.

Pearson, A.

Willey, O. G. (Cleveland)

Hastings, Dr. Somerville

Peart, Capt. T. F.

Williamson, T.

Hewitson, Capt. M.

Perrins, W.

Willis, E.

Hobson, C. R.

Poole, Major Cecil (Lichfield)

Yates, V. F.

Holman, P.

Popplewell, E.

Younger, Hon. Kenneth

Holmes, H. E. (Hemsworth)

Porter, E. (Warrington)

Zilliacus, K.

Hughes, Hector (Aberdeen, N.)

Pritt, D. N.

TELLERS FOR THE NOES:

Hughes, Lt. H. D. (W'lverh'pton, W.)

Pryde, D. J.

Mr. Joseph Henderson and

Hutchinson, H. L. (Rusholme)

Pursey, Cmdr. H.

Mr. Simmons.

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

I know this is not the time to make speeches, but I would like an answer to some points. The first is that the Clause has as its object settlements in favour of servants, but it seems to me that it is possible to get round the tax payment by making the settlement in favour of the wife of the agent or servant. The Clause says that any income arising from a settlement shall be deemed to be the income of the person making the settlement unless it comes within certain exceptions. In order to catch the servant, it is said that that exception shall not apply if that individual is not the individual who makes the settlement. That is quite easy by making the settlement in favour of the wife if one has a married servant. If the Clause had been so worded as to make it prohibitive for the income of the servant to be aggregated in his own income, it would have been subject to tax, but not if it is made in favour of his wife. I should be glad to hear whether I am right or wrong.

The second point which I should like to put is on the provision which deals with the income from a settlement where the person who makes it has divested himself entirely of the property. The Clause also says that the settlor shall not be deemed to have divested himself completely of any property if the income is to be payable to him, or may be payable to him under any circumstances whatsoever. The Committee will recall that I made reference to the payment to an individual for his own use. It seems possible under this Clause that the person who makes a settlement, on an individual may wish it to be exempted from this Clause. But if the individual is in a position to make a will in favour of a settlor, it seems to me that the Clause does not do what it is intended to do because of the fact that it says "under no circumstances whatsoever" and that, to me, seems to cover the gifts of a will.

12.0 m.

The result, therefore, is that this Clause allows a person to give some property absolutely to X, and when X has had the income of the property it is not deemed to be the income of the person who gave it away. I give my money to my hon. Friend the Member for Ripon (Mr. York), and when he has got the income it is not deemed to be mine. The Clause says that if I get it back in any way whatever, then it is deemed to be my income. He could make a will in my favour, and, therefore, the fact that he could make the will—though he would not—is sufficient under the Clause to mean that I have not divested myself of the property absolutely, because it says that if I can get it back in any circumstances whatever, then I have not given it away.

The Clause does not say that. It does not say the hon. Gentleman can get it back in any circumstances whatsoever. It says whether it is payable or applicable to his benefit in any circumstances whatsoever. Not until his hon. Friend has died and his will begin to operate will be begin to get it back.

If the hon. and learned Gentleman will look at the exceptions he will see they are so drafted as to take care of the ordinary run of possible circumstances. For instance, the first exception says that if it comes back because my hon Friend makes it payable to me—which is one of the circumstances that may happen—I shall still be deemed not to have given it away absolutely. If he happens to be a young man under 25, who is entitled to property on attaining the age of 25, and who is unfortunate enough to die, and I get it back—and that is one of the circumstances that may happen—it will not prevent its being deemed that I gave it him absolutely. But in the case of a will, a case which may arise, for any person may make a will in my favour, except a person under a disability—[ Interruption ]. Persons under a disability are married women, lunatics, and infants, all grouped together. Any circumstance whatsoever that might render it payable, I submit, is clearly shown by the exceptions to mean any circumstances except those in the exceptions. Therefore, I should like the learned Solicitor-General, who has, doubtless, thought about these things, to give me an answer to these two points—whether it is possible to make a covenant with one's wife, and to get round the Clause; and whether the fact that a person may make a will is not "any circumstances whatsoever."

The answer to the first question is that he can make a settlement in favour of his wife, but he would not achieve the object if the object was to benefit the servant whose wife she was. In order to escape, the settlement has to be for the benefit of the wife for her own use—

Would the Solicitor-General not talk so loudly as he is disturbing the Financial Secretary?

Perhaps I may be allowed to address the Committee and take the discussion out of the realm of chit chat. If the question is: Can you evade the provisions by making a settlement in favour of the wife when you really want to make a settlement in favour of yourself, the answer is "No." You do not escape the Clause unless you make it for the wife for her own use. If you make it to her with the object of her paying over the proceeds to your servant, I would advise the Committee that it is not within the meaning of the words: "for his own use". In reply to the second question, if you have entirely divested yourself of the property in the sense that you have given it to some other person, the view I should take of the wording is that by the mere fact that you have no power of control over it, it is a remote possibility that in the future the grantee of the capital may decide to give it back by will, or any other way—you would have completely alienated yourself from the property. I understand that a member of the Chancery Bar now wishes to put a question.

The learned Solicitor-General spoke of the remote possibility of his giving it back by will or otherwise. He expressly provided for a possibility of a return in paragraph ( b ).

Question put, and agreed to.

Clause ordered to stand part of the Bill.

I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

Although the hard work of the Committee has not brought us to the stage we had decided to reach, we think that the work of today will be more beneficial if it is done on some future day. Therefore, I beg to move.

I cannot allow that to pass without congratulating the Patronage Secretary on having made the first speech I have heard him make in this Parliament.

If the right hon. Gentleman had been more constant in attendance on his duties he would have heard me speak on several occasions.

I ought to have said that I do not include moving Closures as making speeches.

Question put, and agreed to.

Committee report Progress; to sit again upon Monday next.

Public Accounts

Mr. Hector Hughes, Mr. McAllister and Mr. Williamson discharged from the Committee of Public Accounts; Lieutenant-Colonel Hamilton, Mr. Holmes, Mr. Kirby and Mr. Lever added.—[ Mr. R. J. Taylor. ]

Greece (Elections and Plebiscite)

Motion made, and Question proposed, "That this House do now adjourn."—[ Captain Snow. ]

12.10 a.m.

I am sorry to trouble hon. Members at this late hour, but the matter of the Greek elections and the forthcoming plebiscite is one for which this Government has accepted great responsibility, and it is only right that this responsibility should be closely inquired into. Our purpose in going to Greece has been defined by various people on various occasions. I think that the intention of the right hon. Gentleman the Member for Woodford (Mr. Churchill) has been made clear. He wanted to prevent at all costs the Communists from getting power and, if possible, to get back King George to Greece. I prefer to take the definition of the present Government, given by the Foreign Secretary on 20th August when he said, that our purpose in going to Greece was

When we come to the question of the register, we find, on the evidence given by the observers, a really shocking state of affairs. The electoral registers were based on a census held in 1928–18 years ago. They were supposed to be revised from year to year on a basis of supplementary lists of two kinds, those of the quick and those of the dead—the newly quick and the newly dead—but in fact many of these supplementary lists were never incorporated, and no new lists were issued until 1935. The work of compiling and revising was not properly carried out, and the observers found that many of the lists which they checked were in illegible manuscript, and others, for which they inquired, were said to be at the printers'. There is no evidence in the report to show whether these lists were ever returned from the printers in time for the elections.

The conclusion of A.M.F.O.G.E. on the register was this:

The number of votes actually cast is given as 1,117,379. Against that we have over 600,000 potential illegal voters, so that we have the really shocking situation that the number of potential illegal voters was actually well over half the number of actual votes cast in the election. Even if there had been, as there certainly was, no physical or moral intimidation, it was a situation which would provide for unlimited jiggery pokery of the worst possible kind, and how the right hon. Member for Bromley (Mr. H. Macmillan) could in these circumstances describe these elections as being as fair as any ever held in Greece I cannot understand. How many of these 628,000-odd illegal votes were actually cast? Again nobody knows because the A.M.F.O.G.E. investigation only covered one type of illegal voting, that was, the illegal voting due to the casting of votes by persons who were unidentified. It did not investigate the votes cast several times in the name of living persons—votes cast by people moving from one polling station to another during the course of the election. Therefore, it is impossible to say what number of these 600,000-odd illegal votes were cast, for example, for the Populist Party, which obtained 609,654. Did that party get 100,000 or 200,000 or 300,000? Nobody knows. Despite all this elaborate machinery for election observation nobody can say whether or not at least 50 per cent. of the votes or even more cast for the party now in power in Greece were obtained by fraud.

Again, how many abstentions were there? Nobody knows. The estimate of A.M.F.O.G.E., based on its own calculation of how many people ought to have voted, was 743,000, but the Greek Minister of the Interior gives a lower figure at 731,000. If we deduct the actual number of voters from the number of voters on the electoral list we find that 978,571 people did not cast their votes. That would make the abstention figure as high as 47 per cent. against 40.1 per cent., the estimate by A.M.F.O.G.E. My guess is that probably the number of abstentions was higher than the figure estimated by A.M.F.O.G.E., and that the number of votes legally cast for the Populist Party was lower than the official estimate.

How many persons abstained from voting for political reasons? Can anybody know? A.M.F.O.G.E.'s staff, on the basis of questions asked of 0.7 per cent. of the Greek electorate, estimates the figure of political abstention at 15 per cent., with a minimum of 10 per cent. and a maximum of 20 per cent. The questions were asked of 1,300-odd individuals, and they were asked to say why they abstained. Were these scientific samplers really so innocent as to believe that people who were aware that they might suffer political persecution would openly label themselves as belonging to the abstaining parties, and that in these circumstances they would get correct answers to the question they asked? Quite obviously no; people in these circumstances would give all kinds of other reasons for abstaining. My estimate on the evidence available, and my estimate is as good as that of A.M.F.O.G.E., is that 45 per cent. of the electors abstained, and at least 30 per cent. of these abstained on political grounds. Compare that with the population, and the poll obtained by the Populists, the party now in power in Greece, was 29 per cent. of the total electoral register. If we take into account the illegal votes cast for the Populists, they obtained probably not much above 20 per cent.

So we have a party in power which cannot justifiably claim any more than 20 per cent. of the Greek people supporting it, and the parties which abstained can reasonably claim to have the support of at least 30 per cent. of the Greek people. Nobody can challenge that on the evidence given, and yet A.M.F.O.G.E. comes to the remarkable conclusion that the general outcome represents a true and valid verdict of the Greek people—a really remarkable conclusion to come to. I say no one has a right to come to such a conclusion on the basis of the evidence given by the observers themselves. I can only conclude that they came to this conclusion for reasons of high policy, because they felt they had to come to such a conclusion. The principal observers assumed from the start that they had to find a clean bill of health for whatever Government was the outcome of these elections. So much did they assume it that on the day following the election, before they had even completed their summary report, they held a dinner party in Athens, and at that party their chief guest of honour was the new Greek Prime Minister. It was very unlikely that they could find against him after having treated him so honourably.

So we have, as a result of the policy of the Foreign Secretary, who insisted upon the holding of the elections upon this date, elected a Right Wing Greek Government which is inaugurating what is in effect a police State in Greece, and which is turning round and snapping its fingers at the Government of this country, and compelling our Foreign Secretary to reverse and repudiate the pledge he had given—the pledge that the plebiscite should be held in 1948. I have here the authority of the hon. Members who recently visited Greece to repeat what was told to them by M. Sofoulis in their interview with him, and the permission of M. Sofoulis himself to the Foreign Secretary, that if he gains his desire, to hold the election on 31st March, he, the Foreign Secretary, would see that the plebiscite was not held until 1948. I think this House has a right to know whether that pledge was given to M. Sofoulis, and, if so, why it has been repudiated. Now we are going to have on this basis, a plebiscite on 31st September. It is going to be a "heads I win, tails you lose" plebiscite because it is not about the monarchy; it is going to be, according to the Greek Prime Minister, on the question of whether or not King George shall return to Greece, so that even if the Greek electors say "No," the Greek Government—the Greek Monarchist Government—can still call in another puppet through which to achieve their dictatorial aim.

Why have we done nothing about this? Why have we not insisted that a census be taken before the new electoral lists are compiled as A.M.F.O.G.E. has very strongly advised? Why do not we obtain the concurrence of the French Government before agreeing to this distinct alteration to our policy? Why have we parted company with France in this matter? Why have we allowed this extreme Right Government of highly doubtful legitimacy, to deprive the Greek citizens of their rights, to flout the elementary principles of justice, and to make all preparations for turning Greece into a police State? The answer to this is, "We cannot interfere with the sovereign Greek Government." Then I say, what on earth are British troops and British missions doing in Greece if we cannot use them for the purpose for which they were sent to Greece? For goodness' sake, let us bring them out of Greece before they are again involved in a civil war, fighting on the wrong side in a quarrel not their own.

12.27 a.m.

If the plebiscite takes place this September it takes place in conditions which would appear to make civil war inevitable. It was M. Sofoulis himself who told my colleagues and myself, to the best of my recollection, "Civil war is very imminent and highly probable." If British troops remain in Greece it is more than likely that they will be involved in this potential civil war. This House must remember that Greece is moving rapidly towards a complete Fascist totalitarianism. Only a week ago the Greek Minister concerned with public order promulgated a decree before Parliament had discussed it by which strikes in the distributive and transport industries became illegal, striking was made a criminal offence, the death penalty was imposed for moral instigation of an act which this Fascist Government conceived to be contrary to the interests of the State. The gendarmerie and the police have the right to enter any citizen's house at any time of day or night without any warrant, and, further, the Government take the right to ban all public meetings, and still further set up special courts—special Fascist types of courts—to deal with these new matters. It is this Government which has the audacity to say that under its jurisdiction a fair plebiscite would be held in September this year. I say to this House, remembering my responsibility, that if we participate directly or indirectly in the holding of the plebiscite we shall be assisting in the consolidation of the sole remaining Fascist State in Europe except that of Franco's Spain.

12.30 a.m.

At this late hour I do not want to spend a long time in discussing the way in which events in Greece have evolved over the last four years. But to understand the situation we must go back at least as far as that. The fundamental fact about the political situation in Greece is that, thanks to the contribution which the Greek people made to the Allied cause, thanks to the price which they paid for their resistance to the Nazis, they have suffered as I believe no other people in the world suffered during the war. They have paid a greater price in deaths, in wounds, and in famine, in the break-up of their social, political and economic systems, than any other Allied nation. When liberation came, their economic system was smashed to pieces; their transport system was smashed to pieces, and in a mountainous country, a country which has many islands, when you are without your railways and without road transport, when bridges are smashed and ships are sunk, it is extremely difficult to reconstruct the Government administration, the political system, or the social life of the country.

That, however, was not the worst of it it in the case of Greece. The worst of it was that political passions had been very deeply aroused. The resistance movement, and the example of the Nazis, had brought cruelties into Greek life which were utterly alien to the Greek character. The recovery has been very slow It has been retarded by the most unhappy civil war—the responsibility for which I do not wish to discuss tonight—and by two inflations and a threatened third inflation. In such a situation it is the duty of everybody, Greeks and friends of Greece, to think of the long-term interests of the Greek people. Any Greek politician who puts his party interest before that long-term interest of the Greek people would be no patriot; and any British politician who put ideological considerations before that long-term interest, would be no friend of Greece. I am convinced that the Greek people, in their overwhelming mass, detest violence, and are longing for the return of real stability and for the rule of law.

Now I must talk about the last election in Greece because that is the main question which my hon. Friend has raised. He said, in effect, that the whole thing was an elaborately staged farce, that in spite of the fact that M. Sofoulis was the Prime Minister, and that he had been conducting the administration of the election, and in spite of the fact that it was supervised by a numerous and competent Allied Commission, representing three Governments, with some Dominion help as well—that in spite of all that, it did not in any way represent the will of the Greeks who voted. I begin by saying that on 3rd April we had a report from our ambassador in Athens, that M. Sofoulis had called upon him, and had asked the ambassador to thank my right hon. Friend warmly. He said the election, by and large, had been very fair indeed, though he did not agree with the deductions either of the Right, or of the extreme Left, regarding the lessons to be drawn from the election. I think that is a useful introduction to what I want to say.

Next I want to speak of the electoral lists, about which my hon. Friend made some strong remarks—of which I do not complain, though I do not think they represented the whole truth. Of course, it was difficult in the time available to get the lists ready, but when the lists were illegible they were printed. The lists were exposed to public view for five days, during which time anyone could make complaints against them. If this had not been a contested election, of course, that might not have been of great effect; but it was a contested election in which two sides took part, and in which the two sides at every stage took care to ensure that the thing was not rigged against them. There was the Liberal Party, with M. Sofoulis and those who worked with him, and there were, on the Right, the others. There were many other parties. If my hon. Friend will read the whole paragraph on page 19 of the Report—which I should like to read to the House if I had time to do so—he will find that it amply justifies their main judgment that they found no evidence of deliberate fraud on any important scale in the making up of the lists of qualified voters, nor fraud in—[ Interruption. ] It is said in New York that the side that can prevent the cemeteries from polling will win. There may have been some fraud, but these experts found that there was no considerable fraud during the election. There was complete freedom of meeting. There were meetings of 40,000—

Is it not a fact that at least 16 candidates of M. Sofoulis's party were unable to stand, owing to terrorism in one area?

I should like to have the facts. Will my hon. Friend please let me have them? Meetings up to a size of 40,000 were held in Athens, Piraeus and other centres. Broadly speaking, meetings were free throughout the country. The Press was free. It could say anything it liked. It said a great deal, and papers were, in fact, distributed through most parts of the country.

Is my right hon. Friend aware that I saw M. Sofoulis a few weeks ago, and he said that the tragedy was that his party and supporters had not participated effectively in the election, and that if they had made a real effort they could have had much better representation in the Chamber?

I am much obliged to my hon. and gallant Friend. Those who abstained from voting in the Election made a great mistake, which I hope that they will not repeat in the plebiscite.

I ask my hon. Friend who has raised this question to consider that he is putting his word against that of the expert Commission, numbering hundreds of people who gave months to the work, who were, after all, very well versed in electoral procedure in democratic countries. I offer for his consideration what I have already said. During the polling and counting, both sides were present in the polling booths and the counting room, to control what went on. In that way they had exactly the same guarantee that we have in this country that elections are not faked. While I think that, as the Commission said, there was in certain areas violence on one side and the other, while there were terrorist bands which should have been suppressed, while there were murders committed by both sides in the months before the election—broadly, in spite of these lamentable instances of terrorism, which cancelled out each other, the result was to express the will of the Greek people who voted.

I turn now to the date of the plebiscite. I submit that the postponement of the plebiscite was not originally proposed, as has often been said, by the British Government. But we came to think that it would be wise to postpone it if certain conditions were fulfilled and one was that elections should be held in 1946. We still think that would be right. My hon. Friend the Under-Secretary of State stated the position of His Majesty's Government not long ago. We consistently expressed the view that it would be preferable that the plebiscite should be postponed until 1948, but that is a matter for internal decision in Greece. There was an elected Government there and it was not for us to overrule the will of that Government, when the Government and its supporters in Parliament had made it an issue in the election campaign. Of course, there was no agreement between—

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 made upon 16 th August.

Adjourned at Twenty-one Minutes to One o'Clock a.m.